Monthly Review Of DivGro: January 2022

After wrapping up a project that consumed the first three months of 2022, I finally have some time to catch up on my DivGro review articles! So welcome to my January review!

DivGro is my portfolio of dividend growth stocks. In review articles, I provide a summary of transactions and dividends received and consider their impact on DivGro's projected annual dividend income (PADI).

In January, I executed no buy or sell transactions, choosing instead to build my cash reserves. Nine DivGro stocks announced dividend increases in January. The net result of these changes is that PADI increased by about 0.8% in January. Year over year, PADI increased by 20.3%. 

As for dividend income, in January I received dividends totaling $6,023 from 31 stocks in my portfolio, a year over year increase of 165%. This is a new monthly record for dividend income and is due to a couple of special dividends I received from closed-end funds I own. 

So far in 2022, I've collected $6,023 in dividends, or about 14% of my 2022 goal of $43,200.

DivGro's PADI now stands at $39,646, which means I can expect to receive $3,304 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 to reinvest dividends, so DivGro's PADI should continue to grow through dividend growth and through compounding.

Dividend Income

I collected dividends totaling $6,023 from 31 different stocks in January, setting a new record for total dividend income in a single month:

The new record is due to a windfall of special dividends received from two of DivGro's closed-end funds:

• Virtus AllianzGI Equity & Convertible Income Fund (NIE) — $2,192.50
• Virtus AllianzGI Artificial Intelligence & Technology Opportunities Fund (AIO) — $689.94

Here is a list of the regular dividends I collected in January:

• Automatic Data Processing, Inc (ADP) — income of $104.00
• Virtus AllianzGI Artificial Intelligence & Technology Opportunities Fund (AIO) — income of $25.00
• The Allstate Corporation (ALL) — income of $56.70
• American Tower Corporation (AMT) — income of $13.90
• Franklin Resources, Inc (BEN) — income of $87.00
• The Bank of Nova Scotia (BNS) — income of $118.07
• BlackRock Science and Technology Trust (BST) — income of $50.00
• Chubb Limited (CB) — income of $80.00
• Comcast Corporation (CMCSA) — income of $75.00
• Cisco Systems, Inc (CSCO) — income of $88.80
• Digital Realty Trust, Inc (DLR) — income of $52.20
• DTE Energy Company (DTE) — income of $88.50
• 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
• Illinois Tool Works Inc (ITW) — income of $73.20
• JPMorgan Chase & Co (JPM) — income of $110.00
• Main Street Capital (MAIN) — income of $55.90
• Mondelez International, Inc. (MDLZ) — income of $70.00
• Medtronic plc (MDT) — income of $63.00
• Altria Group, Inc (MO) — income of $207.00
• Merck & Co., Inc (MRK) — income of $138.00
• Virtus AllianzGI Equity & Convertible Income Fund (NIE) — income of $475.00
• Realty Income Corporation (O) — income of $36.98
• Oracle Corporation (ORCL) — income of $48.00
• PepsiCo, Inc (PEP) — income of $64.50
• Philip Morris International Inc (PM) — income of $150.00
• Sempra Energy (SRE) — income of $55.00
• Stryker Corporation (SYK) — income of $6.95
• The Toronto-Dominion Bank (TD) — income of $139.84
• W. P. Carey Inc (WPC) — income of $105.50
• Xcel Energy Inc (XEL) — income of $75.49

The chart below shows DivGro's monthly dividends plotted against PMDI.

Quarter-ending months are huge outliers, so I smooth things out a bit by creating 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, I wouldn't let that influence my investment decisions.

Dividend Changes

In January, the following stocks announced dividend increases:

• Archer-Daniels-Midland Company (ADM) — increase of 8.11%
• Anthem, Inc (ANTM) — increase of 13.27%
• BlackRock, Inc (BLK) — increase of 18.16%
• The Bank of Nova Scotia (BNS) — increase of 7.89%
• Comcast Corporation (CMCSA) — increase of 8.00%
• Chevron Corporation (CVX) — increase of 5.97%
• Intel Corporation (INTC) — increase of 5.19%
• Main Street Capital (MAIN) — increase of 2.38%
• The Toronto-Dominion Bank (TD) — increase of 9.39%

As a result of these changes, DivGro's PADI will increase by $320.

I like seeing dividend increases above 7% and six of the nine increases do just that. The arithmetic average of this month's dividend increases is 8.7%, which luckily beats inflation.

Transactions

I had no buys or sells in January, choosing instead to build my cash reserves. 

In November 2021, I reworked my system for determining target weights for DivGro. The system is dynamic and flexible and allows me to calibrate factors when my goals change. Following is a chart showing the current and target weights of dividend-paying stocks in DivGro:

I'm not really interested in trimming positions to bring them back into "compliance," especially for positions in my taxable account. Rather, I'll favor buying more shares of underweight positions to fill any gaps from below.

I'm continuing my theme of increasing DivGro's exposure to Defensive and Cyclical sectors and, effectively, reducing my exposure to the Sensitive sectors.

My exposure to the Defensive sectors increased a little at the cost of the Cyclical Sector, while the Sensitive Sectors stayed unchanged at 39.5%. 

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
Dec 31, 2021	36,338.30	4,766.18	15,644.97	1.512	17.22
Jan 31, 2022	35,131.86	4,515.55	14,239.88	1.782	24.83

In January, the DOW 30 dropped 3.3%, the S&P 500 dropped 5.3%, and the NASDAQ dropped 9.0%. The yield on the benchmark 10-year Treasury note rose to 1.782, while CBOE's measure of market volatility, the VIX, increased by 44.2% to 24.83.

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

The markets took a beating in January, as did DivGro, but I'm happy to note that DivGro outperformed the S&P 500 in January!

DivGro's performance in January helped to make up some lost ground, so the trailing twelve-month comparison puts DivGro's performance right in line with that of the S&P 500:

Note that these comparisons are price-performance comparisons only and do not account for dividends. With dividends included, DivGro would easily outperform the S&P 500!

Portfolio Statistics

Based on the total capital invested and the portfolio's current market value, DivGro has delivered a simple return of about 132% since inception. In comparison, DivGro's IRR (internal rate of return) is 16.7%. (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 3.97% last month to 4.01% this month.

Another interesting statistic is percentage payback, which relates dividend income to the amount of capital invested. DivGro's average percentage payback is 27.4%, up from last month's 26.4%.

Finally, DivGro's projected annual yield is at 6.59%, up from last month's value of 6.54%. I calculate projected annual yield by dividing PADI ($39,646) 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

I'm happy with DivGro's performance in an increasingly volatile environment. We'll see how my portfolio performs in the coming months and whether my rebalancing efforts and increasing DivGro's Defensive sector exposure will bear fruits. 

I'm hoping to tackle my February and March reviews in the next week and compile the first quarterly review of DivGro for 2022 before the end of April. We'll see how it goes!

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

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Thanks for reading and happy investing!
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