Wednesday, April 25, 2018

Monthly Review: March 2018

Welcome to the monthly review of DivGro, my portfolio of dividend growth stocks. The goal of these reviews is to provide a summary of dividends received and to detail buy and sell transactions. I also consider the impact on DivGro's projected annual dividend income (PADI).

In March, I opened two new positions. Five DivGro stocks announced dividend increases in March. The net result of these changes is that PADI increased by about 1.3% in March. Year over year, PADI increased by 43.3%.

As for dividend income, in March I received dividends totaling $2,523 from 30 stocks in my portfolio, a year over year increase of 35%. So far in 2018, I've collected $4,578 in dividends or about 25% of my 2018 goal of $18,000.


DivGro's PADI of $18,074, means I can expect to receive $1,506 in dividend income per month, on average, in perpetuity, assuming the status quo is maintained. But DivGro's PADI should increase over time because I invest in dividend growth stocks. Furthermore, I plan to reinvest dividends until I retire, so DivGro's PADI should continue to grow through dividend growth and through compounding.

Dividend Income


I received dividends from 30 different stocks, for a monthly total of $2,523 in dividend income:
I love quarter-ending months and it is really gratifying to see the new purple bar soar above all the other bars.

Here is a list of the dividends I received in March:
  • Aflac (AFL)income of $26.00
  • Cummins (CMI)income of $47.52
  • Dominion Resources (D)income of $83.50
  • Ford Motor (F)income of $560.00
  • Gilead Sciences (GILD)income of $114.00
  • International Business Machines (IBM)income of $45.00
  • Intel (INTC)income of $171.00
  • Nuveen Floating Rate Income Fund (JFR)income of $33.75
  • Johnson & Johnson (JNJ)income of $45.36
  • Lockheed Martin (LMT)income of $28.00
  • Main Street Capital (MAIN)income of $85.50
  • McDonald's (MCD)income of $27.27
  • 3M (MMM)income of $21.76
  • Microsoft (MSFT)income of $58.80
  • AGIC Equity and Convertible Income Fund (NIE)income of $209.00
  • Northrop Grumman (NOC)income of $17.60
  • NVIDIA (NVDA)income of $3.00
  • Realty Income (O)income of $16.43
  • QUALCOMM (QCOM)income of $228.00
  • Royal Dutch Shell plc (RDS.B)income of $131.60
  • Schwab Strategic Trust (SCHD)income of $26.15
  • Stanley Black & Decker (SWK)income of $31.50
  • T. Rowe Price (TROW)income of $70.00
  • UnitedHealth (UNH)income of $14.25
  • United Parcel Service (UPS)income of $22.75
  • Valero Energy (VLO)income of $144.00
  • Vanguard REIT Index Fund (VNQ)income of $88.28
  • Vanguard High Dividend Yield ETF (VYM)income of $91.26
  • Walgreens Boots Alliance (WBA)income of $32.00
  • Exxon Mobil (XOM)income of $50.05
The chart below shows DivGro's monthly dividends plotted against PMDI. Clearly, quarter-ending months are huge outliers:
To smooth things out a bit, I 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 great if dividends were distributed more evenly, I don't want to change my investment decisions based on the timing or frequency of dividend payments.

Dividend Changes


In March, the following stocks announced dividend increases:
  • General Dynamics (GD)increase of 10.71%
  • Realty Income (O)increase of 0.23%
  • QUALCOMM (QCOM)increase of 8.77%
  • Raytheon (RTN)increase of 8.78%
  • Vanguard REIT Index Fund (VNQ)increase of 3.16%
As a result of these changes, DivGro's PADI will increase by $104.

I like seeing dividend increases above 7%, so I'm pleased to see that three of the five increases top my expectations. GD's 10.71% increase is the only double-digit increase this time around, while RTN and QCOM added 8.78% and 8.77%, respectively.

Transactions


Here is a summary of my transactions in March:
These transactions increased DivGro's PADI by about $132.

Please read the linked articles for details about my CMCSA buy and NOC sell.

I decided to invest in VFH to ride the positive wave hitting stocks in the Financials sector. The sector has been performing well and I expect it would continue to do so. Financials are benefitting disproportionately from tax reforms and the sector should benefit from further interest rate increases this year.

I like Vanguard's ETFs because of their low expense ratios. VFH's expense ratio is 0.10%, 93% lower than the average expense ratio of funds with similar holdings.

The ETF has quarterly distributions, which varies from quarter to quarter. Nevertheless, the ETF has managed to pay higher dividends for seven consecutive years:


   Source: Dividend.com

For ETFs, I use the sum of the four most recent distributions to estimate yield. In the case of VFH, the latest distributions add up to $1.1748. With the ETF trading at $70.16, the fund yields 1.67%.


   Source: Dividend.com

Here are details of the ten largest holdings of VFH:


   Source: Vanguard.com


Markets


Here is a summary of various market indicators, showing the changes over the last month:

DOW
30
S&P
500
NASDAQ
Composite
10-YR
BOND
CBOE
VIX
Feb 28, 201825,029.202,720.947,273.012.868%19.85
Mar 31, 201824,103.112,640.877,063.452.741%19.97

In March, the DOW 30 dropped 3.7%, the S&P 500 dropped 2.9%, and the NASDAQ dropped 2.9%. The yield on the benchmark 10-year Treasury note fell to 2.741%, while CBOE's measure of market volatility, the VIX, increased by 0.6%.

Portfolio Statistics


Given DivGro's current market value and the total capital invested, the portfolio has returned about 47% since inception. But calculating the IRR (internal rate of return) gives a better measure of portfolio performance, as IRR takes into account the timing and size of deposits since inception. DivGro's IRR is 14.8%.)

I track the yield on cost (YoC) for individual stocks, as well as an average YoC for my portfolio. DivGro's average YoC decreased from 4.18% last month to 4.16% this month.

Another interesting statistic is percentage payback, which relates dividend income to the amount of capital invested. DivGro's average percentage payback is 13.9%, up from last month's 13.2%.

Finally, DivGro's projected annual yield is at 5.04%, up from last month's value of 4.99%. I calculate projected annual yield by dividing PADI ($18,074) by the total amount invested.

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

Looking Ahead


Market volatility is up this year, and DivGro's performance has suffered a little as a result. Nevertheless, I'm really happy with yet another monthly dividend income record! We'll see how things go in the next few months.

Please see my Performance page for various visuals summarizing DivGro's performance.

Thanks for reading and take care, everybody!

2 comments :

  1. That is a nice stream of dividend income. I have never noticed until now that you have such a large position in Ford. I love seeing that purple bar go up and up. Thanks for sharing.

    ReplyDelete
    Replies
    1. Thanks, More Dividends -- it is good to see the dividends grow and help to add more dividend growth stocks to the portfolio! As for Ford, I'm using the stock to generate extra income by selling options.

      Delete

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