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Saturday, October 2, 2021

Monthly Review Of DivGro: September 2021

Once a month, I review my portfolio of dividend growth stocks, DivGro. My goal with these reviews is to share updates to my portfolio and to detail the dividends I received during the month. I also look at how DivGro's projected annual dividend income (PADI) has changed.

In September, I added shares to six existing positions and twelve DivGro stocks announced dividend increases. The net result of these changes is that PADI increased by about 5.9% in September. Year over year, PADI increased by 15.7%.

As for dividend income, in September I received dividends totaling $4,632 from 48 stocks in my portfolio, a year over year increase of 13%. So far in 2021, I've collected $27,762 in dividends or about 80% of my 2021 income goal of $34,500.

DivGro's PADI of $36,400, means I can expect to receive $3,033 in dividend income per month, on average, in perpetuity, assuming the status quo is maintained. But DivGro's PADI should increase over time because I invest in dividend growth stocks. 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

In September, I received a total of $4,632 in dividend income from 48 different stocks, the second-highest monthly total since I founded DivGro in January 2013:

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

  • 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 $31.03
  • BlackRock, Inc (BLK)income of $144.55
  • Cummins Inc (CMI)income of $72.50
  • Canadian National Railway Company (CNI)income of $60.25
  • Chevron Corporation (CVX)income of $134.00
  • Digital Realty Trust, Inc (DLR)income of $52.20
  • Enbridge Inc (ENB)income of $66.21
  • Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund (ETO)income of $224.00
  • Eaton Vance Tax-Advantaged Dividend Income Fund (EVT)income of $203.25
  • Gilead Sciences, Inc (GILD)income of $213.00
  • The Home Depot, Inc (HD)income of $115.50
  • 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
  • Microsoft Corporation (MSFT)income of $56.00
  • NextEra Energy, Inc (NEE)income of $38.50
  • AllianzGI Equity & Convertible Income Fund (NIE)income of $475.00
  • Northrop Grumman Corporation (NOC)income of $62.80
  • Realty Income Corporation (O)income of $35.33
  • 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 $207.50
  • 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 $26.00
  • T Rowe PriceT. Rowe Price Group, Inc (TROW)income of $108.00
  • The Travelers Companies, Inc (TRV)income of $88.00
  • Tyson Foods, Inc (TSN)income of $66.75
  • 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 chart below shows DivGro's monthly dividends plotted against PMDI. Clearly, quarter-ending months are huge outliers:

For this reason 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, that preference wouldn't influence my investment decisions.


Dividend Changes


In September, the following stocks announced dividend increases:

  • Accenture plc (ACN)increase of 10.23%
  • American States Water Company (AWR)increase of 8.96%
  • JPMorgan Chase & Co (JPM)increase of 11.11%
  • Lockheed Martin Corporation (LMT)increase of 7.69%
  • McDonald's Corporation (MCD)increase of 6.98%
  • Microsoft Corporation (MSFT)increase of 10.71%
  • Realty Income Corporation (O)increase of 0.21%
  • Philip Morris International Inc (PM)increase of 4.17%
  • Starbucks Corporation (SBUX)increase of 8.89%
  • Texas Instruments Incorporated (TXN)increase of 12.75%
  • Verizon Communications Inc (VZ)increase of 1.99%
  • W. P. Carey Inc (WPC)increase of 0.19%

I like seeing dividend increases above 7%, and seven of the twelve increases top that expectation. The arithmetic average of this month's dividend increases is 6.99%, which easily beats inflation.

Due to exchange rate fluctuations, the income I project from the following stocks will decrease:
  • Canadian National Railway Company (CNI)decrease of 2.68%
  • Enbridge Inc (ENB)decrease of 0.81%

These changes will increase DivGro's PADI by about $199.


Transactions


In September, I wanted to add mainly high-yielding stocks to my portfolio in a push to achieve my goal of increasing DivGro's PADI to $37,500 by year's end. I targeted discounted stocks in my portfolio that were not yet full-sized positions.

Here is a summary of my transactions in September:

Increased Stock Positions

  • Atmos Energy Corporation (ATO)added 30 shares and increased position to 130 shares
Atmos Energy is discounted by 16% to my fair value estimate of $106. While the stock's yield is only 2.83% at $88.78 per share, its 5-year dividend growth rate of 8.23% is attractive, so I decided to add a few shares. DivGro's PADI will increase by $75 due to this addition. 
  • Chevron Corporation (CVX)added 50 shares and increased position to 150 shares
Chevron is the top-ranked Energy Sector stock in Dividend Radar. With a yield of 5.28% at $104.33 per share, I decided it was a good time to turn my CVX holding into a full-sized position. The buy added $268 to DivGro's PADI.
  • Verizon Communications Inc (VZ) — added 30 shares and increased position to 200 shares
I focused on Verizon in a recent Dividend Increases article, noting that the stock was discounted by about 15%. While VZ's dividend increases are anemic (about 2% every year), the stock yields a generous 4.74% at $54.30 per share. This buy added $76.80 to DivGro's PADI.
  • Altria Group, Inc (MO)added 100 shares and increased position to 330 shares
This buy is due to the assignment of a put option. MO yields 7.91% at $45.86 per share and this buy added $360 to DivGro's PADI. My fair value estimate of MO is $57, so I think the stock is discounted by about 19%!

Increased Closed-End Fund Positions

Last month, I reported particularly thrilling distribution increases from ETO (26%) and EVT (12%). Those increases added $440.40 and $211.20 to DivGro's PADI, respectively. So I thought it was opportune to add more shares to these positions, and also to NIE:
  • Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund (ETO)added 250 shares and increased position to 1,250 shares
  • Eaton Vance Tax-Advantaged Dividend Income Fund (EVT)added 250 shares and increased position to 1,250 shares
  • AllianzGI Equity & Convertible Income Fund (NIE)added 250 shares and increased position to 1,250 shares

DivGro's PADI will be increased by $537.60 (ETO), $487.80 (EVT), and $380.00 (NIE). That's a substantial addition, and I'm looking forward to collecting these distributions in the next year or so!

In all, these buy transactions increased DivGro's PADI by about $2,185.


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
Aug 31, 2021 35,360.73 4,522.68 15,259.24 1.304 16.48
Sep 30, 2021 33,843.92 4,307.54 14,448.58 1.529 23.14

In September, the DOW 30 dropped 4.3%, the S&P 500 dropped 4.8%, and the NASDAQ dropped 5.3%. The yield on the benchmark 10-year Treasury note rose to 1.529, while CBOE's measure of market volatility, the VIX, increased by 40.4% to 23.14.

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



September was a tough month and only a few DivGro stocks ended the month in positive territory. DivGro essentially matched the performande of the S&P 500.


Portfolio Statistics


Given DivGro's current market value and the total capital invested, the portfolio has returned about 118% 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 16.1%.)

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 3.81% last month to 3.91% this month.

Percentage payback relates dividend income to the amount of capital invested. DivGro's average percentage payback is 25.4%, up from last month's 21.0%.

Finally, DivGro's projected annual yield is at 6.22%, up from last month's value of 5.87%. I calculate projected annual yield by dividing PADI ($36,400) by the total amount invested.

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


It would be interesting to see how the markets perform in the last quarter of 2021. September certainly saw a lot of volatility! DivGro is performing quite well, and I'm happy to note that I'm well on my way to achieving my dividend income and PADI goals for 2021!

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


Thanks for reading and take care, everybody!

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