Wednesday, April 8, 2020

Monthly Review Of DivGro: March 2020

Once a month, I review my portfolio of dividend growth stocks, DivGro. I present details of any buys or sells, and I provide a summary of dividends collected. Additionally, I look at how the month's activities have impacted DivGro's projected annual dividend income (PADI).

In March, I opened one new position and added shares to seven existing positions. Seven DivGro stocks announced dividend increases in March. The net result of these changes is that PADI increased by about 11.2% in March. Year over year, PADI increased by 16.5%.

As for dividend income, in March I received dividends totaling $3,445 from 44 stocks in my portfolio, a year over year increase of 7%. So far in 2020, I've collected $7,013 in dividends or about 26% of my 2020 goal of $27,000.

Assuming the status quo and given DivGro's PADI of $29,432, I can expect to receive $2,453 in dividend income per month, on average, in perpetuity. Of course, most of the stocks I own are dividend growers, so I expect my dividend income to increase over time! 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 44 different stocks, for a monthly total of $3,445 in dividend income:
Here is a list of the dividends I received in March:
  • Archer-Daniels-Midland (ADM)income of $108.00
  • Aflac (AFL)income of $28.00
  • Amgen (AMGN)income of $80.00
  • Anthem (ANTM)income of $9.50
  • Broadcom (AVGO)income of $97.50
  • Blackrock (BLK)income of $127.05
  • Cummins (CMI)income of $65.55
  • Canadian National Railway (CNI)income of $10.11
  • Chevron (CVX)income of $103.20
  • Dominion Energy (D)income of $94.00
  • Digital Realty Trust (DLR)income of $50.40
  • Gilead Sciences (GILD)income of $136.00
  • Home Depot (HD)income of $90.00
  • Honeywell International (HON)income of $54.00
  • International Business Machines (IBM)income of $48.60
  • Intercontinental Exchange (ICE)income of $30.00
  • Intel (INTC)income of $99.00
  • Johnson & Johnson (JNJ)income of $22.80
  • Lockheed Martin (LMT)income of $33.60
  • Main Street Capital (MAIN)income of $51.25
  • McDonald's (MCD)income of $33.75
  • 3M (MMM)income of $147.00
  • Microsoft (MSFT)income of $51.00
  • NextEra Energy (NEE)income of $35.00
  • AllianzGI Equity & Convertible Income Fund (NIE)income of $380.00
  • Realty Income (O)income of $11.63
  • PepsiCo (PEP)income of $19.10
  • Pfizer (PFE)income of $114.00
  • Pinnacle West Capital (PNW)income of $39.13
  • Public Storage (PSA)income of $90.00
  • Qualcomm (QCOM)income of $21.70
  • Ross Stores (ROST)income of $28.50
  • Snap-On (SNA)income of $27.00
  • TJX (TJX)income of $46.00
  • T Rowe Price (TROW)income of $180.00
  • Travelers (TRV)income of $82.00
  • Unitedhealth (UNH)income of $43.20
  • Union Pacific (UNP)income of $46.56
  • United Parcel Service (UPS)income of $101.00
  • Visa (V)income of $15.00
  • Valero Energy (VLO)income of $181.30
  • Walgreens Boots Alliance (WBA)income of $137.25
  • Wells Fargo (WFC)income of $102.00
  • Exxon Mobil (XOM)income of $174.00
The following chart shows DivGro's monthly dividends plotted against PMDI. 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 make investment decisions based on the timing or frequency of dividend payments.

Dividend Changes


In March, the following stocks announced dividend increases:
  • Archer-Daniels-Midland (ADM)increase of 2.86%
  • Digital Realty Trust (DLR)increase of 3.70%
  • General Dynamics (GD)increase of 7.84%
  • Home Depot (HD)increase of 10.29%
  • Realty Income (O)increase of 0.22%
  • Ross Stores (ROST)increase of 11.76%
  • WP Carey (WPC)increase of 0.19%
These changes will increase DivGro's PADI by about $81.

I like to see dividend increases above 7%, but only three of these increases did so. The arithmetic average of this month's dividend increases is 5.3%, which easily beats inflation.

Transactions


In March, I took the opportunity to turn several DivGro positions into full positions, which I consider (rather arbitrarily) to be about 1% of portfolio value.
  • Bank of Nova Scotia (BNS) — added 125 shares and increased position to 225 shares
  • Royal Bank of Canada (RY) — added 100 shares and increased position to 150 shares
BNS and RY are Canadian banks with long histories of dividend payments. Neither are in the Dividend Champions (CCC) list of dividend growth stocks as their US-dollar equivalent dividends have not increased consistently every year. But, according to Simply Safe Dividends [SSD], both stocks have increased their dividends for at least nine consecutive years and their dividend are considered Safe.

By adding 125 shares of BNS, I reduced my average cost basis to $48.10 and improved my average yield on cost (YoC) to 5.67%. BNS should deliver at least $613 in dividend income annually.

My RY position now has an average cost basis of $72.02 and an average YoC of 4.39%. RY should deliver a dividend income of about $474 annually.
  • Canadian National Railway (CNI) — added 100 shares and increased position to 125 shares
I also increased my position in CNI, another Canadian stock. CNI is a Dividend Champion with a streak of 25 years of dividend increases and a Very Safe dividend, according to SSD.

Adding shares to CNI reduced my average cost basis to $79.77 and improved my average YoC to 2.03%. CNI should deliver about $202 of dividend income annually. 
  • Medtronic (MDT) — added 50 shares and increased position to 100 shares
MDT is another Dividend Champion with a streak of 42 years of dividend increases. SSD gives it a Very Safe dividend safety score. My position now has an average cost basis of $91.74 and an average YoC of 2.35% and should deliver dividends of about $216 annually.
  • Main Street Capital (MAIN)added 100 shares and increased position to 350 shares
MAIN took quite a beating in February and March, trading as low as $14.11 at one point in March. I didn't get in quite that low but took the opportunity to buy 100 shares with an initial YoC of 11.63%. Perhaps I'll get another opportunity to add shares soon, as MAIN is not yet a full position. 

My MAIN position now has an average YoC of 10.96% with an average cost basis of $22.45 per share. It should deliver a dividend income of at least $861 per year, excluding special dividends. 
  • Phillips 66 (PSX)added 100 shares and increased position to 200 shares
  • Starbucks (SBUX)added 40 shares and increased position to 140 shares
I doubled my PSX position and reduced the average cost basis to $85.25, so improving the average YoC to 4.22%. My PSX position is larger than a full position and still quite a bit underwater. While waiting for the share price to recover, I'll collect at least $720 in dividend income annually.

Another position that is not yet a full position in my portfolio is SBUX, even after I added 40 shares. The position's average YOC is 2.59%, while the average cost basis is $63.38. SBUX should deliver a dividend income of about $230 annually. 
  • Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund (ETO) — new position of 600 shares
Finally, I decided to add a new closed-end fund to my portfolio, ETO, a monthly payer with a distribution rate of nearly 12%. In fact, my investment secured an initial YoC of 12.03% and should deliver distributions totaling about $1,296 annually. While my ETO is a full position, I wouldn't mind adding more units below the current net asset value of $17.90 per unit. At one point in March, ETO traded below $13 per unit, which would be a great entry point should the fund trade that low again!

These transactions increased DivGro's PADI by about $2,894.

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
Feb 29, 202025,409.362,954.228,567.371.12740.11
Mar 31, 202021,917.162,584.597,700.100.67053.54

In March, the DOW 30 dropped 13.7%, the S&P 500 dropped 12.5%, and the NASDAQ dropped 10.1%. The yield on the benchmark 10-year Treasury note fell to 0.67, while CBOE's measure of market volatility, the VIX, increased by 33.5%.

Portfolio Statistics


Based on the total capital invested and the portfolio's current market value, DivGro has delivered a simple return of about 28% since inception. In comparison, DivGro's IRR (internal rate of return) is 7.6%. (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 3.61% last month to 3.78% this month.

Percentage payback relates dividend income to the amount of capital invested. DivGro's average percentage payback is 16.3%, down from last month's 16.5%.

Finally, DivGro's projected annual yield is at 4.89%, up from last month's value of 4.61%. I calculate projected annual yield by dividing PADI ($29,432) 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


My portfolio experienced some carnage along with the markets though, fortunately, I'm still sitting on some capital gains. So far, none of my positions have undergone a dividend freeze or cut, and I'm curious to see which of my positions will be first to fall! I have no expectations that my portfolio will go unscathed, as these are extraordinary times!

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

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6 comments :

  1. Damn man thats lot of nice adds and quite a good chunk of dividends.Keep rolling

    ReplyDelete
    Replies
    1. Thanks, desidividend -- I appreciate your comment and encouragement. Hang in there and stay healthy!

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  2. Thanks for sharing your portfolio! A newbie question, after you collect the dividend for a stock, will you reinvest them into the same stock, or use it to invest any other stocks?

    ReplyDelete
    Replies
    1. Hi, stephen -- I collect dividends and when I have enough, I buy shares of whichever stock provides the best deal at the time. The alternative, buying shares of the same company that gives you the dividend would result in lots of small lots, which just adds to admin if, like me, you want to track the average cost basis of each position.

      Delete
  3. Hi from Spain! Thanks for sharing your portfolio and your list.
    You are an inspiration to many investors for your good work. Keep it up. Regards.

    ReplyDelete
    Replies
    1. Thanks, InversorNovato -- I appreciate your comment and kind words. Stay safe an healthy there in Spain!

      Delete

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