Saturday, December 8, 2018

Monthly Review of DivGro: November 2018

I write monthly reviews of my portfolio of dividend growth stocks, DivGro, to detail any transactions and to summarize the dividends I received during the month. I also summarize the changes to DivGro's projected annual dividend income (PADI).

In November I received dividends totaling $1,811 from 21 stocks in my portfolio, a year over year increase of 80%. So far in 2018, I've collected $17,591 in dividends or about 98% of my 2018 goal of $18,000.

This month I reduced the size of one of my riskier but higher yielding positions. I opened two new positions and added shares to four existing positions. Five DivGro stocks announced dividend increases in November.

The net result of these changes is that PADI increased by about 1.3% in November. Year over year, PADI increased by 41.6%.


DivGro's PADI now stands at $22,491, which means I can expect to receive $1,874 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


In November, I received a total of $1,811 in dividend income from 21 different stocks:
Following is a list of the dividends I collected in November:
  • Apple (AAPL)income of $73.00
  • AbbVie (ABBV)income of $192.00
  • CVS Health (CVS)income of $50.00
  • EPR Properties (EPR)income of $18.00
  • General Dynamics (GD)income of $32.55
  • Honeywell International (HON)income of $55.00
  • Hormel Foods (HRL)income of $18.75
  • KB Home (KBH)income of $7.50
  • Lowe's (LOW)income of $48.00
  • Main Street Capital (MAIN)income of $107.25
  • National Retail Properties (NNN)income of $81.00
  • Realty Income (O)income of $55.13
  • Omega Healthcare Investors (OHI)income of $330.00
  • Procter & Gamble (PG)income of $143.44
  • Raytheon (RTN)income of $20.82
  • Starbucks (SBUX)income of $72.00
  • Tanger Factory Outlet Centers (SKT)income of $70.00
  • Simon Property (SPG)income of $80.00
  • AT&T (T)income of $250.00
  • Texas Instruments (TXN)income of $46.20
  • Verizon Communications (VZ)income of $60.25
Here is a chart showing DivGro's monthly dividends plotted against PMDI. It is clear that 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 I would prefer receiving more evenly distributed dividends, I wouldn't let that influence my investment decisions.

Dividend Changes


In November, the following stocks announced dividend increases:
  • AbbVie (ABBV)increase of 11.46%
  • Walt Disney (DIS)increase of 4.76%
  • Hormel Foods (HRL)increase of 12.00%
  • Nike (NKE)increase of 10.00%
  • NVIDIA (NVDA)increase of 6.67%
As a result of these changes, DivGro's PADI will increase by $122.

I like seeing dividend increases above 7%, so three of the five increases top my expectations! The arithmetic average of this month's dividend increases is about 9%, so I'm very happy with this month's increases!

Transactions


Here is a summary of my transactions in November:
  • Omega Healthcare Investors (OHI) — sold 250 shares and reduced position to 250 shares
  • Williams-Sonoma (WSM) — new position of 200 shares
  • Iron Mountain (IRM)new position of 150 shares
  • Home Depot (HD)added 8 shares and increased position to 20 shares
  • Honeywell International (HON)added 5 shares and increased position to 20 shares
  • Public Storage (PSA)added 5 shares and increased position to 30 shares
  • Texas Instruments (TXN)added 15 shares and increased position to 75 shares
The past few months I've been focusing on strengthening the risk profile of my portfolio, including adding high-quality dividend growth stocks and REITs, and closing riskier positions.

In the case of OHI, I wanted to trim my position because the stock's dividend safety score is 40 (Unsafe), according to Simply Safe Dividends. As reported in the October edition of DivGro Pulse, my position was 2.42% of portfolio value and 5.95% of portfolio yield. And with OHI trading near its 52-week high, it seemed like a good time to trim my position.

WSM is a new position, which resulted from an options assignment. The multi-channel specialty retailer of home products slumped after the company's comparable brand revenue growth fell short of analysts’ expectations. On expiration day, the stock closed below the $60 put options I had sold, so the puts got assigned. WSM yields over 3% and the dividend is growing quite fast (14% over the past 10 years).

Founded in 1951 and headquartered in Boston, Massachusetts, IRM is a REIT that provides storage and information management services in North America, Europe, Latin America and the Asia Pacific. With a yield of 7.18% at $34.05 and a dividend safety score of 52 (Borderline Safe), IRM is a good replacement for the dividend income I'm giving up selling OHI. 

I first invested in HD and HON in September, and both stocks took it on the chin in October's market correction. So I bought more shares of HD at a cost basis of about 9% lower, and of HON at a cost basis of about 7% lower, than before. These stocks trade at about fair value, so I'll probably increase my positions in the next few months as funds become available. Both offer below average yields (2.38% and 2.36%, respectively), but they make up for that with double-digit dividend growth rates. HD's dividend growth rate is particularly impressive!

I added a few shares to my PSA position, which is up 6% since I opened the position just two months ago. PSA's yield of 3.74% is not particularly high for a REIT, but its dividend is considered Very Safe by Simply Safe Dividends with a dividend safety score of 91. PSA froze its dividend in 2018, so it no longer qualifies as a dividend growth stock. Nevertheless, I'm willing to hold my shares and to see what the future brings. 

Finally, I added to my TXN position and managed to bring the cost basis down to just over $92 per share. The stock is down 23% from its 52-week high and is trading below fair value. With a solid yield of 3.33% and a 5-year dividend growth rate of 24%, the stock looks quite attractive. And Simply Safe Dividends give it a dividend safety rating of 85, which is Very Safe

The net result of all these transactions is that DivGro's PADI will increase by about $172.

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:

DOW
30
S&P
500
NASDAQ
Composite
10-YR
BOND
CBOE
VIX
Oct 31, 201825,115.762,711.747,305.903.159%21.23
Nov 30, 201825,538.462,760.177,330.543.013%18.07

In November, the DOW 30 gained 1.7%, the S&P 500 gained 1.8%, and the NASDAQ gained 0.3%. The yield on the benchmark 10-year Treasury note dropped to 3.013%, while CBOE's measure of market volatility, the VIX, decreased by 14.9%.

Portfolio Statistics


Given DivGro's current market value and the total capital invested, the portfolio has returned about 49% 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 15.7%.)

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 3.67% last month to 3.64% this month.

Percentage payback relates dividend income to the amount of capital invested. DivGro's average percentage payback is 13.0%, up from last month's 12.9%.

Finally, DivGro's projected annual yield is at 4.64%, down from last month's value of 4.69%. I calculate projected annual yield by dividing PADI ($22,491) 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


December is a quarter-ending month, so I'm looking forward to perhaps another record-breaking month for dividend income. I'll easily achieve my goal of collecting a total of $18,000 in dividend income in 2018.

In December I usually review my goals and set some new goals for the following year.

As always, please see my Performance page for various visuals summarizing DivGro's performance or visit my Portfolio page for full details of my holdings.


Thanks for reading and take care, everybody! 
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9 comments :

  1. Congratulations on the great dividend growth and thanks for sharing your portfolio. Would you also be willing to share what software or services you use to track portfolio performance? Thanks!

    ReplyDelete
    Replies
    1. Thanks for your comment -- I don't use any special services, just Google Sheets. Is there anything specific you're interested in?

      Delete
  2. I am trying to find a reliable way to track portfolio total return to compare it to benchmarks. Given the dividends and trades (at least couple each month), I find that measuring my 6mo, 1yr, 3yr, 5yr gets complicated fast. Thanks for your help!

    ReplyDelete
  3. Always enjoy your updates, and congrats on a fantastic month and being on the cusp of reaching your annual goal!

    I have what may be a dumb question on some of your charts, but do you manually record the PADI on a monthly basis to be able to chart that? My spreadsheet currently has only one field for PADI that updates automatically as new purchases are made and dividends received--so I believe I would need to record that manually in another field at the end of every month.

    ReplyDelete
    Replies
    1. Thanks, Divvy Dad -- I appreciate your comment!

      I keep track of dividend increase announcements and manually update a field in my spreadsheet that calculates PADI. I do this at month's end before writing my monthly review article.

      Delete
    2. Thanks FerdiS, I would like to track that as well so will tweak my spreadsheet to record that manually on a monthly basis.

      Delete
    3. I think it is a helpful stat to track -- all the best!

      Delete
  4. Hi Ferdi,

    congratulations! As usual you rank top 3 amongst the most seasoned financial bloggers worldwide in at least one category:

    https://dividendstocks.cash/blog/income-heroes-update-november-2018

    The complete results of all financial bloggers are available here:

    https://dividendstocks.cash/blog/income-heroes

    Keep on investing, tracking your progress and see you next month!

    Torsten

    ReplyDelete
    Replies
    1. Hi, Torsten -- thanks for the update and keeping this list going! Your website is turning out to be a great resource for dividend growth investors. Take care and happy investing!

      Delete

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