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Sunday, July 25, 2021

Monthly Review Of DivGro: June 2021

Every month, I review my portfolio of dividend growth stocks, DivGro. My goal is to share updates and provide a summary of the dividends I collected. I also monitor DivGro's projected annual dividend income (PADI) and its monthly counterpart, PMDI. 

In June, I added a position due to a spinoff and reduced my holdings in one position. Five DivGro stocks announced dividend increases in June. The net result of these changes is that PADI decreased by about 0.3% in June. Year over year, PADI increased by 10.3%.

As for dividend income, in June I received dividends totaling $5,308 from 47 stocks in my portfolio, a new record for monthly income! So far in 2021, I've collected $18,417 in dividends or about 53% of my 2021 goal of $34,500.

DivGro's PADI now stands at $33,899, which means I can expect to receive $2,825 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 reinvesting dividends, so DivGro's PADI should continue to grow through dividend growth and through compounding.

Dividend Income

I collected dividends totaling $5,308 from 47 different stocks in June:

June's dividend income is a new record for DivGro, though the total includes the value of spinoff shares received from Merck & Co., Inc (MRK).

Here is a list of the dividends I collected in June:

  • Archer-Daniels-Midland Company (ADM) — income of $74.00
  • Aflac Incorporated (AFL) — income of $33.00
  • Amgen Inc (AMGN) — income of $158.40
  • Anthem, Inc (ANTM) — income of $11.30
  • Atmos Energy Corporation (ATO) — income of $62.50
  • Broadcom Inc (AVGO) — income of $108.00
  • American States Water Company (AWR) — income of $28.48
  • BlackRock, Inc (BLK) — income of $144.55
  • Cummins Inc (CMI) — income of $67.50
  • Chevron Corporation (CVX) — income of $134.00
  • Digital Realty Trust, Inc (DLR) — income of $52.20
  • Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund (ETO) — income of $142.50
  • Eaton Vance Tax-Advantaged Dividend Income Fund (EVT) — income of $145.00
  • 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
  • International Business Machines Corporation (IBM) — income of $164.00
  • Intercontinental Exchange, Inc (ICE) — income of $33.00
  • Intel Corporation (INTC) — income of $69.50
  • Johnson & Johnson (JNJ) — income of $133.56
  • Lockheed Martin Corporation (LMT) — income of $104.00
  • Main Street Capital (MAIN) — income of $53.30
  • McDonald's Corporation (MCD) — income of $64.50
  • 3M Company (MMM) — income of $111.00
  • Merck & Co., Inc (MRK) — spinoff shares valued at $1084.14
  • Microsoft Corporation (MSFT) — income of $56.00
  • NextEra Energy, Inc (NEE) — income of $38.50
  • AllianzGI Equity & Convertible Income Fund (NIE) — income of $380.00
  • Northrop Grumman Corporation (NOC) — income of $62.80
  • Realty Income Corporation (O) — income of $35.25
  • Public Service Enterprise Group Incorporated (PEG) — income of $51.00
  • PepsiCo, Inc (PEP) — income of $150.50
  • Pfizer Inc (PFE) — income of $117.00
  • Pinnacle West Capital Corporation (PNW) — income of $166.00
  • Public Storage (PSA) — income of $120.00
  • QUALCOMM Incorporated (QCOM) — income of $47.60
  • Raytheon Technologies Corporation (RTX) — income of $30.60
  • Snap-on Incorporated (SNA) — income of $73.80
  • The TJX Companies, Inc (TJX) — income of $52.00
  • T Rowe PriceT. Rowe Price Group, Inc (TROW) — income of $216.00
  • The Travelers Companies, Inc (TRV) — income of $88.00
  • Tyson Foods, Inc (TSN) — income of $22.25
  • UnitedHealth Group Incorporated (UNH) — income of $87.00
  • Union Pacific Corporation (UNP) — income of $51.36
  • United Parcel Service, Inc (UPS) — income of $51.00
  • Visa Inc (V) — income of $28.80
  • Valero Energy Corporation (VLO) — income of $98.00

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 change my investment decisions based on the timing or frequency of dividend payments.

Dividend Changes

In June, the following stocks announced dividend increases:

  • FedEx Corporation (FDX) — increase of 15.38%
  • Realty Income Corporation (O) — increase of 0.21%
  • Raytheon Technologies Corporation (RTX) — increase of 7.37%
  • UnitedHealth Group Incorporated (UNH) — increase of 16.00%
  • W. P. Carey Inc (WPC) — increase of 0.19%

As a result of these changes, DivGro's PADI will increase by $88.

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 7.8%, which easily beats inflation.

Transactions

Here is a summary of my transactions in June:

  • Taiwan Semiconductor Manufacturing Company Limited (TSM) — sold 100 shares and reduced position to 100 shares
This transaction decreased DivGro's PADI by about $176 and follows the assignment of a covered call. I'm thinking about entirely closing my TSM position as a transition a little away from Cyclical to Defensive super sector stocks. 

Over the next few months, I'd like to continue rebalancing my portfolio based on my recently adopted factor-based target weights. This action should help to improve DivGro's super sector distribution, too, which still is significantly overweight in the Sensitive Sectors:

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
May 31, 202134,529.454,204.1113,748.741.58116.76
Jun 30, 202134,502.514,297.5014,503.951.44315.83

In June, the DOW 30 dropped 0.1%, the S&P 500 gained 2.2%, and the NASDAQ gained 5.5%. The yield on the benchmark 10-year Treasury note fell to 144.300%, while CBOE's measure of market volatility, the VIX decreased by 5.5%.

Here's a chart showing how the stocks and funds in DivGro performed over the past month:

In June, DivGro underperformed the S&P 500.

Portfolio Statistics

Given DivGro's current market value and the total capital invested, the portfolio has returned about 99% 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 16.8%.)

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 3.65% last month to 3.68% this month.

Percentage payback relates dividend income to the amount of capital invested. DivGro's average percentage payback is 20.4%, up from last month's 19.7%.

Finally, projected annual yield is calculated by dividing PADI ($33,899) by the total amount invested. DivGro's projected annual yield is at 4.96%, down from last month's value of 4.99%.

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:

Looking Ahead


I'm looking forward to the second half of 2021. I'm somewhat behind on my PADI goal, which is to increase DivGro's PADI to $37,500. On the other hand, I'm happy to note that DivGro's year to date dividend income is at 53% of my year-end goal of $34,500. We'll see how it goes over the next six months.

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


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

  1. Good afternoon! you write about dividends on an ongoing basis, and post options and changes with a delay of 30-60 days. but in options the theta disintegrates and the value of the article is lost. can you ask to change the approach and do it the other way around?

    ReplyDelete
    Replies
    1. Thanks for your comment. This blog is primarily about dividend growth investing. My options trading is in service of my goal to generate a reliable and growing dividend income stream. My writing about options is not intended to be advice, trade suggestions, or instructions to be mirrored. Rather, it is illustrative of one approach to leverage the value of a portfolio of dividend growth stocks to complement dividend income with options incomes.

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