Tuesday, December 19, 2017

Monthly Review: November 2017


Welcome to the November review of DivGro, my portfolio of dividend growth stocks! The goal of these monthly reviews is to share updates to my portfolio and to provide a summary of dividends collected. I also consider the impact on DivGro's projected annual dividend income.

In November I opened one new position and added shares to two existing positions. Additionally, I closed three positions, one due to an options assignment and two for tax harvesting.

Five of the stocks in my portfolio announced dividend increases in November, and one stock announced a dividend cut.

As for dividend income, in November I received dividends totaling $1,005 from 16 stocks in my portfolio, a year over year increase of 51%. So far in 2017, I've collected $14,283 in dividends or about 110% of my 2017 goal of $12,960.

DivGro's projected annual dividend income (PADI) now stands at $15,882, which means I can expect to receive $1,323 in dividend income per month, on average, in perpetuity, assuming the status quo is maintained. Of course, I expect the companies I've invested in not only to continue to pay dividends but to increase them over time! Also, until I retire, I hope to continue to reinvest dividends, so DivGro's PADI should continue to grow through dividend growth and through compounding.

Dividend Income


I received dividends from 16 different stocks, for a monthly total of $1,005 in dividend income:
Here is a list of the dividends I received in November:
  • Apple (AAPL)income of $63.00
  • AbbVie (ABBV)income of $128.00
  • CVS Health (CVS)income of $25.00
  • General Dynamics (GD)income of $29.40
  • Hormel Foods (HRL)income of $17.00
  • Nuveen Floating Rate Income Fund (JFR)income of $33.75
  • Main Street Capital (MAIN)income of $85.50
  • National Retail Properties (NNN)income of $71.25
  • Realty Income (O)income of $10.60
  • Omega Healthcare Investors (OHI)income of $260.00
  • Procter & Gamble (PG)income of $68.96
  • Raytheon (RTN)income of $19.14
  • AT&T (T)income of $82.81
  • Texas Instruments (TXN)income of $31.00
  • United Parcel Service (UPS)income of $20.75
  • Verizon Communications (VZ)income of $59.00
Following is a chart showing DivGro's monthly dividends plotted against PMDI. Quarter-ending months are huge outliers:
This is one reason that I now create a rolling 12-month average of dividends received (the orange bars) plotted against a rolling 12-month average of PMDI (the blue, staggered line):
While it would be nicer if dividends are distributed more evenly, it is not something that would drive my investment decisions.

Dividend Changes


In November, the following stocks announced dividend increases:
  • Walt Disney (DIS)increase of 7.69%
  • Hormel Foods (HRL)increase of 10.29%
  • NIKE (NKE)increase of 11.11%
  • NVIDIA (NVDA)increase of 7.14%
  • Starbucks (SBUX)increase of 20.00%
I like seeing dividend increases above 7%, so I'm very happy with this month's increases, especially from SBUX! On the other hand, General Electric (GE) cut its dividend by 50%, which I'm not happy about!

The net result of these changes is that DivGro's PADI decreased by $84.

Transactions


Here is a summary of my transactions in November:
  • Pfizer (PFE) — sold -144 shares and closed position
  • General Electric (GE) — sold -300 shares and closed position
  • Target (TGT) — sold -744 shares and closed position
  • CVS Health (CVS) — added 50 shares and increased position to 100 shares
  • Omega Healthcare Investors (OHI) — added 100 shares and increased position to 500 shares
  • Schwab US Dividend Equity ETF (SCHD) — new position of 100 shares
These transactions decreased DivGro's PADI by about $774.

I closed my PFE position due to an options assignment. PFE consistently ranked below #40 in my monthly pulse articles, so I'm not planning on reinstating the position.

I closed my GE and TGT positions to harvest tax losses. Doing so will allow me to offset capital gains with the losses suffered from these stocks, reducing my tax liability. I'm planning to reinstate my TGT position in the new year, but I've decided to part ways with GE for the foreseeable future.

To somewhat counter the losses in PADI due to the abovementioned sells, I added shares to CVS and OHI. CVS is the number one-ranked stock in my portfolio and it's trading at a solid discount of about 20% to my fair value estimate. CVS also is the top-ranked stock in last month's 10 Dividend Growth Stocks to consider. As for high-yielding OHI, there is lingering concerns about one of the REITs tenants. This gives me an opportunity to increase my OHI stake and reduce my overall cost basis. While a somewhat riskier trade, I believe my investment in OHI eventually will pay off.

Finally, I opened a new position in SCHD, a dividend ETF. Last month, when I updated my Dividend ETF analysis and presented ratings on 32 Dividend ETFs, it was the SCHD that impressed me the most. It has performed very well in recent years, with 3-year returns of 33%. The EFT has a very low expense ratio (0.07%), an annual yield of about 2.95%, and excellent ETF ratings.

Markets


It is worth looking at the markets to understand the environment we're investing in, even though I no longer compare DivGro's performance to those of the markets:

DOWS&P 500NASDAQ10-YR BOND
Oct 31, 201721,948.102,471.656,428.662.121%
Nov 30, 201724,272.352,647.586,873.972.417%

In November, the DOW gained 10.59%, the S&P 500 gained 7.12%, and the NASDAQ gained 6.93%. The yield on the benchmark 10-year Treasury note rose to 2.417%.

Portfolio Statistics


Based on the total capital invested and the portfolio's current market value, DivGro has delivered a simple return of about 51% since inception. In comparison, DivGro's IRR (internal rate of return) is 18.2%. (IRR takes into account the timing and size of deposits since inception, so it is a better measure of portfolio performance).

I track the yield on cost (YoC) for individual stocks, as well as an average YoC for my portfolio. DivGro's average YoC increased from 3.90% last month to 3.97% this month.

Another interesting statistic is percentage payback, which relates dividend income to the amount of capital invested. DivGro's average percentage payback is 10.72%, down from last month's 9.77%.

Finally, DivGro's projected annual yield is at 4.50%, down from last month's value of 4.76%. I calculate projected annual yield by dividing PADI ($15,882) by the total amount invested.

Here's a chart showing DivGro's market value breakdown. Dividends are plotted at the base of the chart so we can see them grow over time:

Goals Review


Here's a recap of my goals for 2017:
  1. PADI: Increase projected annual dividend income to $14,400
  2. Dividends: Earn $12,960 in dividend income
  3. Options: Earn $8,400 in options income
  4. Seeking: Write 64 premium articles for Seeking Alpha
  5. DivNet: Write 6 articles for The DIVNET
The gauges below represent the progress I've made towards achieving my goals. The last gauge is a reference – it indicates where the other gauges should be after 334 of 365 days:
I've accomplished all my goals except for DivNet, which I've abandoned for 2017.

Looking Ahead


Next month I'll be celebrating DivGro's 5-year anniversary! I'm looking forward to tackling my goals for 2018 in the new year.

I would like to wish all my readers a blessed festive season... Happy Holidays, Happy Hanukkah, Happy Kwanzaa, Merry Christmas!

Thanks for reading and take care, everybody!

4 comments :

  1. Excellent work there. Average monthly dividend income of $1,200 in 2017 is exceptional work.

    Happy Investing.
    TDK.

    ReplyDelete
    Replies
    1. Hi, TDK -- thanks for visiting and commenting.

      And, going forward, I can expect to earn at least $1,323 per month! Just loving dividend growth investing!

      Delete
  2. Excellent progress, FerdiS. Terrific dividend increases. I got to enjoy the raises from HRL, NKE & SBUX, too. The dividends and capital gains are really becoming substantial portions of your Market Value Breakdown. Love the comprehensive report! Keep'em coming.

    ReplyDelete
    Replies
    1. Thanks, Engineering Dividends!

      This month's dividend increases were fantastic. As mentioned, I like to see dividend increases of 7% or more, so I've got little to complain about this month :-)

      The capital gains are significant, though one has to realize that a bear market can wipe those out rather quickly. Nevertheless, the most important thing for DGI's is dividends, and that keeps growing nicely!

      Delete

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