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Sunday, April 11, 2021

Quarterly Review Of DivGro: Q1-2021

Welcome to my 33rd quarterly review of my portfolio of DivGro, my portfolio of dividend growth stocks! 

In quarterly reviews, I provide a summary of dividend income, dividend changes, and transactions executed in the past quarter. I also provide some charts showing various portfolio statistics. These reviews are mostly informational and help me to track progress over time.

This quarter, DivGro generated $8,887 in dividend income this quarter, or about 26% of my 2021 goal of $34,500, and I'm projecting dividend income of at least $9,030 per quarter going forward.


Dividend Income


In Q1-2021, I collected dividend income totaling $8,887, up 6% from the dividends received in Q4-2020 and up 27% from the dividends received in Q1-2020.

I collected quarterly dividends from 76 different stocks and funds:
  • AbbVie Inc (ABBV) — income of $260.00
  • Accenture plc (ACN) — income of $8.80
  • Archer-Daniels-Midland Company (ADM) — income of $111.00
  • Automatic Data Processing, Inc (ADP) — income of $111.60
  • Aflac Incorporated (AFL) — income of $33.00
  • Amgen Inc (AMGN) — income of $88.00
  • Anthem, Inc (ANTM) — income of $11.30
  • Air Products and Chemicals, Inc (APD) — income of $21.44
  • Atmos Energy Corporation (ATO) — income of $62.50
  • Broadcom Inc (AVGO) — income of $108.00
  • Franklin Resources, Inc (BEN) — income of $28.00
  • BlackRock, Inc (BLK) — income of $144.55
  • Bristol-Myers Squibb Company (BMY) — income of $98.00
  • The Bank of Nova Scotia (BNS) — income of $158.36
  • Chubb Limited (CB) — income of $78.00
  • Comcast Corporation (CMCSA) — income of $92.00
  • Cummins Inc (CMI) — income of $81.00
  • Costco Wholesale Corporation (COST) — income of $7.00
  • Cisco Systems, Inc (CSCO) — income of $108.00
  • CVS Health Corporation (CVS) — income of $150.00
  • Chevron Corporation (CVX) — income of $314.76
  • Digital Realty Trust, Inc (DLR) — income of $102.60
  • General Dynamics Corporation (GD) — income of $110.00
  • Gilead Sciences, Inc (GILD) — income of $142.00
  • The Home Depot, Inc (HD) — income of $99.00
  • Honeywell International Inc (HON) — income of $65.10
  • Hormel Foods Corporation (HRL) — income of $49.00
  • International Business Machines Corporation (IBM) — income of $163.00
  • Intercontinental Exchange, Inc (ICE) — income of $33.00
  • Intel Corporation (INTC) — income of $104.25
  • Illinois Tool Works Inc (ITW) — income of $68.40
  • Johnson & Johnson (JNJ) — income of $101.00
  • JPMorgan Chase & Co (JPM) — income of $90.00
  • Lockheed Martin Corporation (LMT) — income of $78.00
  • Lowe's Companies, Inc (LOW) — income of $60.00
  • Mastercard Incorporated (MA) — income of $13.20
  • McDonald's Corporation (MCD) — income of $64.50
  • Medtronic plc (MDT) — income of $58.00
  • 3M Company (MMM) — income of $148.00
  • Altria Group, Inc (MO) — income of $172.00
  • Merck & Co., Inc (MRK) — income of $71.50
  • Microsoft Corporation (MSFT) — income of $56.00
  • NextEra Energy, Inc (NEE) — income of $38.50
  • AllianzGI Equity & Convertible Income Fund (NIE) — income of $760.00
  • National Retail Properties, Inc (NNN) — income of $99.84
  • Northrop Grumman Corporation (NOC) — income of $29.00
  • Oracle Corporation (ORCL) — income of $42.00
  • Public Service Enterprise Group Incorporated (PEG) — income of $51.00
  • PepsiCo, Inc (PEP) — income of $173.83
  • Pfizer Inc (PFE) — income of $117.00
  • The Procter & Gamble Company (PG) — income of $19.77
  • Philip Morris International Inc (PM) — income of $144.00
  • Pinnacle West Capital Corporation (PNW) — income of $145.25
  • Public Storage (PSA) — income of $90.00
  • QUALCOMM Incorporated (QCOM) — income of $22.75
  • Raytheon Technologies Corporation (RTX) — income of $57.00
  • Royal Bank of Canada (RY) — income of $129.20
  • Starbucks Corporation (SBUX) — income of $63.00
  • Snap-on Incorporated (SNA) — income of $73.80
  • Stryker Corporation (SYK) — income of $6.30
  • AT&T Inc (T) — income of $312.00
  • The Toronto-Dominion Bank (TD) — income of $123.05
  • The TJX Companies, Inc (TJX) — income of $52.00
  • T. Rowe Price Group, Inc (TROW) — income of $216.00
  • The Travelers Companies, Inc (TRV) — income of $85.00
  • Taiwan Semiconductor Manufacturing Company Limited (TSM) — income of $44.64
  • Texas Instruments Incorporated (TXN) — income of $76.50
  • UnitedHealth Group Incorporated (UNH) — income of $50.00
  • Union Pacific Corporation (UNP) — income of $46.56
  • United Parcel Service, Inc (UPS) — income of $102.00
  • Visa Inc (V) — income of $16.00
  • Valero Energy Corporation (VLO) — income of $181.30
  • Verizon Communications Inc (VZ) — income of $62.75
  • Wells Fargo & Company (WFC) — income of $20.00
  • W. P. Carey Inc (WPC) — income of $104.60
  • Xcel Energy Inc (XEL) — income of $27.95
Additionally, I received monthly dividends from 4 different stocks and funds:
  • Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund (ETO) — income of $427.50
  • Main Street Capital (MAIN) — income of $276.76
  • Realty Income Corporation (O) — income of $211.05
  • Cohen & Steers Infrastructure Fund, Inc (UTF) — income of $465.00
      The following chart shows DivGro's dividend income by quarter:


      Q1-2021 was another record-breaking month for dividend income!

      Dividend Changes


      Last quarter, I reported projected annual dividend income (PADI) of $32,768. This quarter, PADI increased to $34,702. Relative to the total capital invested, DivGro's projected annual yield is 5.10%.

      The following table shows the stocks that announced dividend increases in Q1-2021. I'm including the new annual dividend and yield on cost (YoC):
      Company
       Ticker
      Increase Annual Div
       New YoC
      Oracle Corporation
      ORCL
      33.33%
      1.28
      2.35%
      T. Rowe Price Group, Inc
      TROW
      20.00%
      4.32
      5.05%
      Anthem, Inc
      ANTM
      18.95%
      4.52
      1.57%
      BlackRock, Inc
      BLK
      13.77%
      16.52
      4.18%
      Air Products and Chemicals, Inc
      APD
      11.94%
      6.00
      3.80%
      The Home Depot, Inc
      HD
      10.00%
      6.60
      3.62%
      Intercontinental Exchange, Inc
      ICE
      10.00%
      1.32
      1.41%
      NextEra Energy, Inc
      NEE
      10.00%
      1.54
      3.78%
      Comcast Corporation
      CMCSA
      8.70%
      1.00
      2.57%
      General Dynamics Corporation
      GD
      8.18%
      4.76
      3.94%
      Xcel Energy Inc
      XEL
      6.40%
      1.83
      3.43%
      Intel Corporation
      INTC
      5.30%
      1.39
      6.13%
      The Bank of Nova Scotia
      BNS
      4.11%
      2.81535
      5.85%
      Public Service Enterprise Group Incorporated
      PEG
      4.08%
      2.04
      3.71%
      Royal Bank of Canada
      RY
      3.92%
      3.44533
      4.78%
      Digital Realty Trust, Inc
      DLR
      3.57%
      4.64
      4.17%
      The Toronto-Dominion Bank
      TD
      3.14%
      2.461
      4.35%
      Archer-Daniels-Midland Company
      ADM
      2.78%
      1.48
      3.42%
      Cisco Systems, Inc
      CSCO
      2.78%
      1.48
      4.67%
      Taiwan Semiconductor Manufacturing Company
      TSM
      2.62%
      1.78571
      2.16%
      The Coca-Cola Company
      KO
      2.44%
      1.68
      3.72%
      United Parcel Service, Inc
      UPS
      0.99%
      4.08
      3.57%
      3M Company
      MMM
      0.68%
      5.92
      3.30%
      Realty Income Corporation
      O
      0.21%
      2.82
      4.94%

      DivGro's average YoC is 3.94%, up from the 3.77% reported at the end of Q4-2020. 

      I'd like to see dividend increases of at least 7%. Only ten of the dividend increases in the table topped 7%, but the arithmetic average of all increases is 7.83%! This easily tops the rate of inflation. 

      Dividend Growth


      Some stocks announce dividend increases more than once per year, so when considering dividend growth, it is better to look at year-over-year increases. Here is a chart, courtesy of Portfolio Insight, showing the one-year dividend growth rates of stocks in DivGro, as of 10 April 2021:

      Note the S&P 500 has a negative 1-year (TTM) dividend growth rate, whereas most stocks in my portfolio increased their dividend payouts in the last twelve months. 

      The arithmetic average year-over-year dividend growth rate of dividend growth stocks in my portfolio is 7.62%, which makes me a very happy dividend growth investor!                                           

      Below is a chart of the 5-year dividend growth rates compared with the S&P 500's :


      The majority of DivGro's stocks have larger 5-year DGRs than the S&P 500 benchmark of 5.17%.

      The arithmetic average 5-year DGR of dividend growth stocks in my portfolio is 10.47%.

      Transactions


      This quarter I deployed new capital and options income to add new positions and to expand existing positions. I also trimmed and closed some positions. 

      New Positions
      • Atmos Energy Corporation (ATO)new position of 100 shares
      • Dropbox, Inc (DBX) — new position of 100 shares
      • Gilead Sciences, Inc (GILD)new position of 200 shares
        Increased Positions
        • Chevron Corporation (CVX) — added 200 shares and increased position to 244 shares
        • Northrop Grumman Corporation (NOC) — added 10 shares and increased position to 20 shares
        • PepsiCo, Inc (PEP) — added 30 shares and increased position to 100 shares
        • Pinnacle West Capital Corporation (PNW) — added 25 shares and increased position to 200 shares
        • Taiwan Semiconductor Manufacturing Company Limited (TSM) — added 100 shares and increased position to 200 share
        Closed Position
        • Ross Stores, Inc (ROST) — sold 100 shares and closed position
          Reduced Positions
          • Apple Inc (AAPL) — sold 200 shares and reduced position to 200 shares
          • Cisco Systems, Inc (CSCO) — sold 200 shares and reduced position to 100 shares
          • The Walt Disney Company (DIS) — sold 100 shares and reduced position to 100 shares
          • Philip Morris International Inc (PM) — sold 100 shares and reduced position to 20 shares
          I covered these transactions in monthly reviews and other articles on my blog, so I won't rehash details here. Some transactions resulted from options assignments, while others continued my effort to strengthen DivGro's risk profile and my portfolio's PADI.

          To assess risk, I utilize Dividend Safety Scores provided by Simply Safe Dividends (SSD):


          From left to right, the colors represent Borderline SafeSafe, and Very Safe dividend safety scores. I don't own Unsafe or Very Unsafe dividend growth stocks. DivGro now contains 92 different positions. Of these, 74 are dividend growth stocks, eight are dividend-paying stocks, and three are CEFs (closed-end funds). I also own seven stocks that do not pay dividends. 

          Here is the distribution of DivGro's holdings by sector:


          I now also look at the distribution of my dividend growth stocks by supersector:


          My goal is to slowly move towards an equal super sector distribution, thereby increasing my defensive exposure significantly. 

          Market Value


          At the end of Q1-2021, DivGro's market value represented a simple gain of 89% on the total amount invested. Of course, this does not take into account the timing and size of cash deposits. DivGro's internal rate of return since inception is 16.3%.


          Portfolio Statistics

          In quarterly reviews, I like to present general portfolio statistics. 

          First, consider the weight of individual holdings in DivGro. I prefer to see equal weights, but this is difficult to achieve because I sell covered call options and to do so I need 100 shares (or multiples of 100 shares). Quite naturally, therefore, my portfolio will not be ideally weighted.


          Apple is no longer my largest position, and the honors now fall upon T. Rowe Price I'm happy to see my largest position is now well below 3%!

          Next, let's look at the contribution of each position to DivGro's PADI, which depends not only on the stock's yield but also on the size of the investment. Here, T is the leading contributor with 3.81%:


          Single positions that contribute more than 6% to DivGro's PADI would make me nervous. Fortunately, I have none at this time. Here is a chart showing the distribution of dividend yields of stocks in my portfolio:


          At 6.92%, AT&T is the top-yielding position in DivGro, followed by Altria at 6.68%. The arithmetic average yield of dividend-paying stocks in my portfolio is 2.68%. 

          Finally, let's look at the payback percentage, or how much of my original investment I've received back in the form of dividends. Generally, stocks I've owned for a long time will have larger paybacks, but dividend yield also plays a role: payback will grow faster for stocks with larger yields.


          Main Street Capital is my oldest position with a payback of 50.3%, by far the largest payback in my portfolio.

          Concluding Remarks


          I'm continuing to slowly shift DivGro to a more defensive composition. When deploying new capital, I'm focusing on buying high-quality stocks in the defensive super sector. Additionally, in 2021, I'm favoring higher-yielding stocks.  

          Thanks for reading! Please subscribe to receive an e-mail whenever I post new articles.
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          6 comments :

          1. Thank you for this long post DivGro. I will read it later on, I´m sure it will be interesting as allways. I thought you only posted on closed SeekingAlpha now. Glad about this "free" article. I think it´s a sad development that information seems to get more and more behind restricted pay-sites nowadays. Sad for the newbies./Northernlightsinvestment.

            ReplyDelete
            Replies
            1. My options articles, as well as monthly, quarterly, and annual reviews are non-exclusive, meaning they appear in full here. At least for the time-being.

              Researching and writing quality articles take a long time. I probably won't be in it anymore if not for the compensation available at SA.

              Delete
          2. I have to say "thank you" for all this wonderful info. It's making me think more and more about shifting my investing strategy into dividend stocks.

            ReplyDelete
            Replies
            1. I switched in 2013 and I'm so thankful I did! No regrets, except perhaps that I didn't start earlier!

              Delete
          3. I just stumbled on your blog after reading an article from you on Seeking Alpha, must say very insightful and meticulous in your planning. I enjoyed looking at your goals since you started in 2013. I myself have decided a few months back on a monthly contribution to invest myself rather than use brokers as I have always enjoyed dabbling in stock. Thanks for the inspiration!

            ReplyDelete
            Replies
            1. Thanks for commenting! I'm happy that you find my work inspirational. Congratulations on starting your own investing journey! All the best and happy investing!

              Delete

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