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Wednesday, August 18, 2021

Quarterly Review Of DivGro: Q2-2021

Welcome to the 34th quarterly review of DivGro, my portfolio of DivGro, my portfolio of dividend growth stocks! 

In quarterly reviews, I summarize 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 more than $9,530 in dividend income. I'm projecting dividend income of at least $8,830 per quarter going forward. So far this year, I've collected $18,417 in dividend income, or about 53% of my 2021 goal of $34,500. 


DivGro's all-time dividend income total is $139,424.

Dividend Income


In Q2-2021, I collected dividend income totaling $9,530, up 7% from the dividends received in Q1-2021 and 34% from the dividends received in Q2-2020.

I received quarterly dividends from 83 different stocks and funds:
  • Apple Inc (AAPL) — income of $44.00
  • AbbVie Inc (ABBV) — income of $260.00
  • Accenture plc (ACN) — income of $8.80
  • Archer-Daniels-Midland Company (ADM) — income of $74.00
  • Automatic Data Processing, Inc (ADP) — income of $111.60
  • Aflac Incorporated (AFL) — income of $33.00
  • Amgen Inc (AMGN) — income of $158.40
  • Anthem, Inc (ANTM) — income of $11.30
  • Air Products and Chemicals, Inc (APD) — income of $24.00
  • Atmos Energy Corporation (ATO) — income of $62.50
  • Broadcom Inc (AVGO) — income of $108.00
  • American States Water Company (AWR) — income of $28.48
  • 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 $163.75
  • Chubb Limited (CB) — income of $78.00
  • Comcast Corporation (CMCSA) — income of $100.00
  • Cummins Inc (CMI) — income of $67.50
  • Canadian National Railway Company (CNI) — income of $61.11
  • Costco Wholesale Corporation (COST) — income of $7.90
  • Cisco Systems, Inc (CSCO) — income of $37.00
  • CVS Health Corporation (CVS) — income of $100.00
  • Chevron Corporation (CVX) — income of $134.00
  • D.R. Horton, Inc (DHI) — income of $10.00
  • Digital Realty Trust, Inc (DLR) — income of $52.20
  • FedEx Corporation (FDX) — income of $48.75
  • General Dynamics Corporation (GD) — income of $119.00
  • 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 $164.00
  • Intercontinental Exchange, Inc (ICE) — income of $33.00
  • Intel Corporation (INTC) — income of $69.50
  • Illinois Tool Works Inc (ITW) — income of $68.40
  • Johnson & Johnson (JNJ) — income of $133.56
  • JPMorgan Chase & Co (JPM) — income of $90.00
  • The Coca-Cola Company (KO) — income of $126.00
  • Lockheed Martin Corporation (LMT) — income of $104.00
  • 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 $111.00
  • Altria Group, Inc (MO) — income of $197.80
  • Merck & Co., Inc (MRK) — income of $1214.14
  • 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
  • NIKE, Inc (NKE) — income of $4.13
  • National Retail Properties, Inc (NNN) — income of $117.00
  • Northrop Grumman Corporation (NOC) — income of $62.80
  • Oracle Corporation (ORCL) — income of $56.00
  • Public Service Enterprise Group Incorporated (PEG) — income of $51.00
  • PepsiCo, Inc (PEP) — income of $150.50
  • Pfizer Inc (PFE) — income of $117.00
  • The Procter & Gamble Company (PG) — income of $21.75
  • Philip Morris International Inc (PM) — income of $24.00
  • 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
  • Royal Bank of Canada (RY) — income of $134.32
  • 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 $260.00
  • The Toronto-Dominion Bank (TD) — income of $128.44
  • 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
  • Taiwan Semiconductor Manufacturing Company Limited (TSM) — income of $87.97
  • Tyson Foods, Inc (TSN) — income of $22.25
  • Texas Instruments Incorporated (TXN) — income of $76.50
  • 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
  • Verizon Communications Inc (VZ) — income of $62.75
  • W. P. Carey Inc (WPC) — income of $104.80
  • Xcel Energy Inc (XEL) — income of $75.49
Additionally, I collected monthly dividends from 5 different stocks and funds:
  • Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund (ETO) — income of $427.50
  • Eaton Vance Tax-Advantaged Dividend Income Fund (EVT) — income of $435.00
  • Main Street Capital (MAIN) — income of $159.90
  • Realty Income Corporation (O) — income of $105.75
  • Cohen & Steers Infrastructure Fund, Inc (UTF) — income of $155.00
      The following chart shows DivGro's dividend income by quarter:


      Q2-2021 was another record-breaking month for dividend income!

      Dividend Changes


      Last quarter, I reported a projected annual dividend income (PADI) of $34,702. This quarter, PADI decreased to $33,899. I'm still hoping to increase DivGro's PADI to $37,500 by year's end.

      Relative to the total capital invested, DivGro's projected annual yield is 4.96%.

      The following table shows the stocks that announced dividend increases in Q2-2021. I include the new annual dividend and yield on cost (YoC):

      Company
       Ticker
      Increase Annual Div
       New YoC
      Lowe's Companies, Inc
      LOW
      33.33%
      3.20
      3.46%
      UnitedHealth Group Incorporated
      UNH
      16.00%
      5.80
      2.40%
      FedEx Corporation
      FDX
      15.38%
      3.00
      1.90%
      Costco Wholesale Corporation
      COST
      12.86%
      3.16
      1.16%
      Union Pacific Corporation
      UNP
      10.31%
      4.28
      2.89%
      The Procter & Gamble Company
      PG
      10.00%
      3.47920
      4.43%
      Medtronic plc
      MDT
      8.62%
      2.52
      2.75%
      Canadian National Railway Company
      CNI
      8.52%
      1.95552
      2.45%
      Northrop Grumman Corporation
      NOC
      8.28%
      6.28
      1.92%
      Raytheon Technologies Corporation
      RTX
      7.37%
      2.04
      4.09%
      Apple Inc
      AAPL
      7.32%
      0.88
      3.84%
      PepsiCo, Inc
      PEP
      5.13%
      4.30
      3.23%
      Johnson & Johnson
      JNJ
      4.95%
      4.24
      2.92%
      QUALCOMM Incorporated
      QCOM
      4.62%
      2.72
      2.60%
      The Toronto-Dominion Bank
      TD
      4.38%
      2.56880
      4.54%
      Royal Bank of Canada
      RY
      3.96%
      3.58187
      4.97%
      Chevron Corporation
      CVX
      3.88%
      5.36
      5.84%
      The Travelers Companies, Inc
      TRV
      3.53%
      3.52
      3.04%
      The Bank of Nova Scotia
      BNS
      3.40%
      2.91111
      6.05%
      Chubb Limited
      CB
      2.56%
      3.20
      2.62%
      International Business Machines Corporation
      IBM
      0.61%
      6.56
      4.74%
      Realty Income Corporation
      O
      0.21%
      2.82600
      5.21%
      W. P. Carey Inc
      WPC
      0.19%
      4.20
      6.23%

      DivGro's average YoC is 3.68%, down from the 3.94% reported at the end of Q1-2021. 

      I'd like to see dividend increases of at least 7%. Eleven of the dividend increases in the table topped 7%, and the arithmetic average of all increases is 7.63%, which easily tops the inflation rate. 

      Dividend Growth


      Some stocks announce dividend increases more than once per year, so when considering dividend growth [DG], it is better to look at year-over-year increases:


      The arithmetic average year-over-year dividend growth rate of DG stocks in my portfolio is 6.86%, which is a little below my target growth rate of 7.00%. 

      Below is a chart of the 5-year dividend growth rates:


      The arithmetic average year-over-year dividend growth rate of DG stocks in my portfolio is 10.18%, and the majority of DivGro's stocks have 5-year DGRs exceeding my target of 7.00%!

      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
      • Allstate (ALL)new position of 50 shares
      • American States Water (AWR) — new position of 85 shares
      • D.R. Horton (DHI) — new position of 50 shares
      • Eaton Vance Tax-Advantaged Dividend Income Fund (EVT) — new position of 1,000 shares
      • Sempra Energy (SRE) — new position of 50 shares
      • Tyson Foods (TSN)new position of 50 shares
      Closed Positions
      • Cohen & Steers Infrastructure Fund (UTF) — sold 1,000 shares and closed position
      • Wells Fargo (WFC) — sold 200 shares and closed position
        Increased Positions
        • Amgen (AMGN) — added 40 shares and increased position to 90 shares
        • Cisco Systems (CSCO) — added 40 shares and increased position to 140 shares
        • Johnson & Johnson (JNJ) — added 26 shares and increased position to 126 shares
        • JPMorgan Chase (JPM) — added 80 shares and increased position to 180 shares
        • Lockheed Martin (LMT) — added 26 shares and increased position to 40 shares
        • Mastercard (MA) — added 20 shares and increased position to 50 shares
        • 3M (MMM) — added 35 shares and increased position to 135 shares
        • Altria (MO) — added 30 shares and increased position to 230 shares
        • Merck (MRK) — added 170 shares and increased position to 290 shares
        • National Retail Properties (NNN) — added 33 shares and increased position to 225 shares
        • Northrop Grumman (NOC) — added 30 shares and increased position to 50 shares
        • Oracle (ORCL) — added 65 shares and increased position to 240 shares
        • PepsiCo (PEP) — added 40 shares and increased position to 140 shares
        • Public Storage (PSA) — added 15 shares and increased position to 60 shares
        • QUALCOMM (QCOM) — added 35 shares and increased position to 70 shares
        • UnitedHealth (UNH) — added 20 shares and increased position to 60 shares
        • Visa (V) — added 73 shares and increased position to 90 shares
        • Verizon Communications (VZ) — added 70 shares and increased position to 170 shares
        • Xcel Energy (XEL) — added 155 shares and increased position to 220 shares
          Reduced Positions
          • Archer-Daniels-Midland (ADM)sold 100 shares and reduced position to 200 shares
          • Automatic Data Processing (ADP)sold 20 shares and reduced position to 100 shares
          • Cummins (CMI)sold 10 shares and reduced position to 50 shares
          • CVS Health (CVS)sold 100 shares and reduced position to 200 shares
          • Chevron (CVX)sold 144 shares and reduced position to 100 shares
          • Intel (INTC)sold 100 shares and reduced position to 200 shares
          • JPMorgan Chase (JPM)sold 70 shares and reduced position to 110 shares
          • Lockheed Martin (LMT)sold 16 shares and reduced position to 14 shares
          • Main Street Capital (MAIN)sold 190 shares and reduced position to 260 shares
          • 3M (MMM)sold 60 shares and reduced position to 75 shares
          • Merck & Co. (MRK)sold 80 shares and reduced position to 120 shares
          • Northrop Grumman (NOC)sold 10 shares and reduced position to 40 shares
          • Realty Income (O)sold 150 shares and reduced position to 150 shares
          • Oracle (ORCL)sold 40 shares and reduced position to 200 shares
          • Raytheon Technologies (RTX)sold 60 shares and reduced position to 60 shares
          • AT&T (T)sold 200 shares and reduced position to 500 shares
          • Taiwan Semiconductor Manufacturing (TSM)sold 100 shares and reduced position to 100 shares
          • United Parcel Service (UPS)sold 50 shares and reduced position to 50 shares
          • Visa (V)sold 33 shares and reduced position to 17 shares
          • Valero Energy (VLO)sold 85 shares and reduced position to 100 shares
          • Xcel Energy (XEL)sold 100 shares and reduced position to 65 shares
          I covered these transactions in monthly reviews and other articles on my blog, so I won't rehash details here. Let me just say that I executed many more trades in Q2-2021 than I would normally do. The reason is I adopted a new approach to determining portfolio target weights. So, many of the trades are rebalancing trades, where I added to underweight positions and trimmed overweight positions. Additionally, I consolidated some positions spread over multiple accounts, mainly to simplify tracking those positions. 

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


          From left to right, the colors represent UnsafeBorderline SafeSafe, and Very Safe dividend safety scores. I don't own Very Unsafe DG stocks and only one Unsafe DG stock.

          DivGro now contains 97 different positions. Of these, 79 are DG stocks, seven are dividend-paying stocks, and three are CEFs (closed-end funds). I also own eight 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 DG stocks by supersector:


          This quarter I've somewhat reduced my exposure to Sensitive Sectors in favor of Defensive Sectors. My goal is to slowly move towards an equal supersector distribution and increase my exposure to Defensive Sectors significantly. 

          Market Value


          At the end of Q2-2021, DivGro's market value represented a simple gain of 93% on the total amount invested. Of course, this does not take into account the timing and size of my cash deposits. DivGro's internal rate of return since inception is 16.8%.


          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.


          T. Rowe Price still is my largest position, now slightly larger than 3% of total portfolio value. I prefer to keep single positions 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.

           
          Single positions that contribute more than 6% to DivGro's PADI make me a little nervous. Presently, ABBV contributes slightly more than 6%, and I'll look into trimming my position appropriately. 

          Here is a chart showing the distribution of dividend yields of stocks in my portfolio:


          At 7.47%, AT&T is the top-yielding position in DivGro, followed by Altria at 7.13%. The arithmetic average yield of dividend-paying stocks in my portfolio is 2.62%. 

          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 87.7%, 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 the highest quality DG stocks trading at reasonable valuations. Additionally, I'm still favoring higher-yielding stocks.  


          Thanks for reading!
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          8 comments :

          1. Just found your wonderful site, love it! If i might ask, what tools do you use to create all the beautiful tables and graphs on your site?

            ReplyDelete
            Replies
            1. I'm primarily using Google Sheets. My system is a messy, interconnected set of sheets that is not sharable. But I'm working with Portfolio Insight to get much of these kinds of charts implemented in their platform.

              https://divgro.blogspot.com/2021/06/i-joined-portfolio-insight.html

              Delete
            2. Thanks for the reply, I am interested in the code mentioned, thanks again.

              Delete
            3. I'll share it as soon as I get it!

              Delete
          2. Great job this quarter! BTW, these are some great analytics you have provided on your portfolio. Did you make these by hand, or do you use some software? What is your story on the methods of your tracking?

            ReplyDelete
            Replies
            1. Thanks, I appreciate your comment. As mentioned above, I primarily use Google Sheets but I'm also working with Portfolio Insight to get similar functionality built into their platform. My system is manually intense and not sharable. We have most of these views available already... and there's just a few more charts to implement!

              Delete
            2. Wow! Impressive. Man of many talents. Keep up the good work!

              Delete

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