Welcome to another quarterly review of my portfolio of dividend growth stocks!My quarterly reviews summarize the transactions executed in the past quarter and provide a summary of dividend income and dividend changes. Additionally, I include charts showing various portfolio statistics. The reviews are mostly informational and help me to track progress over time.
My portfolio generated more than $13,480 of dividend income this quarter, and I'm projecting a dividend income of at least $11,200 per quarter.
I've collected dividend income of $13,487, or about 31% of my 2022 goal of $43,200. DivGro's all-time dividend income total is $172,210.
Dividend Income
In Q1-2022, I collected dividend income totaling $13,487, up 36% from the dividends received in Q4-2021 and up 52% from the dividends received in Q1-2021.
84 different stocks and funds paid me quarterly dividends:
- Apple Inc (AAPL) — income of $44.00
- AbbVie Inc (ABBV) — income of $141.00
- Accenture plc (ACN) — income of $9.70
- Archer-Daniels-Midland Company (ADM) — income of $80.00
- Automatic Data Processing, Inc (ADP) — income of $104.00
- Aflac Incorporated (AFL) — income of $80.00
- The Allstate Corporation (ALL) — income of $56.70
- Amgen Inc (AMGN) — income of $174.60
- American Tower Corporation (AMT) — income of $13.90
- Anthem, Inc (ANTM) — income of $12.80
- Air Products and Chemicals, Inc (APD) — income of $24.00
- Atmos Energy Corporation (ATO) — income of $136.00
- Broadcom Inc (AVGO) — income of $123.00
- American States Water Company (AWR) — income of $31.03
- Franklin Resources, Inc (BEN) — income of $87.00
- BlackRock, Inc (BLK) — income of $170.80
- Bristol-Myers Squibb Company (BMY) — income of $162.00
- The Bank of Nova Scotia (BNS) — income of $118.07
- Chubb Limited (CB) — income of $80.00
- Comcast Corporation (CMCSA) — income of $75.00
- Cummins Inc (CMI) — income of $72.50
- Costco Wholesale Corporation (COST) — income of $7.90
- Cisco Systems, Inc (CSCO) — income of $88.80
- Cintas Corporation (CTAS) — income of $9.50
- CVS Health Corporation (CVS) — income of $55.00
- Chevron Corporation (CVX) — income of $213.00
- D.R. Horton, Inc (DHI) — income of $22.50
- Digital Realty Trust, Inc (DLR) — income of $107.10
- DTE Energy Company (DTE) — income of $88.50
- Enbridge Inc (ENB) — income of $202.80
- General Dynamics Corporation (GD) — income of $119.00
- Gilead Sciences, Inc (GILD) — income of $146.00
- The Home Depot, Inc (HD) — income of $133.00
- Honeywell International Inc (HON) — income of $68.60
- Hormel Foods Corporation (HRL) — income of $78.00
- International Business Machines Corporation (IBM) — income of $164.00
- Intercontinental Exchange, Inc (ICE) — income of $38.00
- Intel Corporation (INTC) — income of $73.00
- Illinois Tool Works Inc (ITW) — income of $73.20
- Johnson & Johnson (JNJ) — income of $133.56
- JPMorgan Chase & Co (JPM) — income of $110.00
- Lockheed Martin Corporation (LMT) — income of $112.00
- Lowe's Companies, Inc (LOW) — income of $80.00
- Mastercard Incorporated (MA) — income of $24.50
- McDonald's Corporation (MCD) — income of $69.00
- Mondelez International, Inc. (MDLZ) — income of $70.00
- Medtronic plc (MDT) — income of $63.00
- 3M Company (MMM) — income of $111.75
- Altria Group, Inc (MO) — income of $207.00
- Merck & Co., Inc (MRK) — income of $138.00
- Microsoft Corporation (MSFT) — income of $62.00
- NextEra Energy, Inc (NEE) — income of $42.50
- Virtus AllianzGI Equity & Convertible Income Fund (NIE) — income of $3292.50
- National Retail Properties, Inc (NNN) — income of $119.25
- Northrop Grumman Corporation (NOC) — income of $62.80
- Oracle Corporation (ORCL) — income of $48.00
- Public Service Enterprise Group Incorporated (PEG) — income of $135.00
- PepsiCo, Inc (PEP) — income of $129.00
- Pfizer Inc (PFE) — income of $80.00
- The Procter & Gamble Company (PG) — income of $86.98
- Philip Morris International Inc (PM) — income of $150.00
- Pinnacle West Capital Corporation (PNW) — income of $212.50
- Public Storage (PSA) — income of $120.00
- QUALCOMM Incorporated (QCOM) — income of $47.60
- Raytheon Technologies Corporation (RTX) — income of $51.00
- Royal Bank of Canada (RY) — income of $139.83
- Starbucks Corporation (SBUX) — income of $68.60
- Snap-on Incorporated (SNA) — income of $85.20
- Sempra Energy (SRE) — income of $55.00
- Stryker Corporation (SYK) — income of $6.95
- The Toronto-Dominion Bank (TD) — income of $139.84
- The TJX Companies, Inc (TJX) — income of $26.00
- T Rowe PriceT. Rowe Price Group, Inc (TROW) — income of $120.00
- The Travelers Companies, Inc (TRV) — income of $88.00
- Tyson Foods, Inc (TSN) — income of $69.00
- Texas Instruments Incorporated (TXN) — income of $86.25
- UnitedHealth Group Incorporated (UNH) — income of $87.00
- Union Pacific Corporation (UNP) — income of $56.64
- United Parcel Service, Inc (UPS) — income of $76.00
- Visa Inc (V) — income of $37.50
- Valero Energy Corporation (VLO) — income of $147.00
- Verizon Communications Inc (VZ) — income of $160.00
- W. P. Carey Inc (WPC) — income of $105.50
- Xcel Energy Inc (XEL) — income of $75.49
- Virtus AllianzGI Artificial Intelligence & Technology Opportunities Fund (AIO) — income of $834.94
- BlackRock Science and Technology Trust (BST) — income of $200.00
- Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund (ETO) — income of $672.00
- Eaton Vance Tax-Advantaged Dividend Income Fund (EVT) — income of $609.75
- Main Street Capital (MAIN) — income of $187.20
- Realty Income Corporation (O) — income of $110.94
Q1-2022 was another record-breaking quarter for dividend income!
Dividend Increases
Last quarter, I reported projected annual dividend income (PADI) of $39,327. This quarter PADI increased to $42,546. In 2022, I'm hoping to increase PADI to $45,000.
DivGro's average YOC is 4.17%, up from the 3.97% reported at
the end of Q4-2021.
Relative to the total capital invested, DivGro's projected annual
yield is 6.95%, up from 6.54% at the end of Q4-2021.
The following table shows the stocks that announced dividend
increases in Q1-2022 or have paid a higher dividend than before.
I've included the new annual dividend and yield on cost [YOC]:
Company | Ticker | Increase | Annual Div | New YoC |
United Parcel Service, Inc | UPS | 49.02% | 6.08 | 4.96% |
Virtus AllianzGI Equity & Convertible Income Fund | NIE | 31.58% | 2.00 | 9.16% |
Virtus AllianzGI Artificial Intelligence & Technology Opportunities Fund | AIO | 20.00% | 1.80 | 7.56% |
BlackRock, Inc | BLK | 18.16% | 19.52 | 4.93% |
The Home Depot, Inc | HD | 15.15% | 7.60 | 3.76% |
Intercontinental Exchange, Inc | ICE | 15.15% | 1.52 | 1.62% |
Anthem, Inc | ANTM | 13.27% | 5.12 | 1.78% |
T Rowe PriceT. Rowe Price Group, Inc | TROW | 11.11% | 4.80 | 6.46% |
NextEra Energy, Inc | NEE | 10.39% | 1.70 | 4.17% |
CVS Health Corporation | CVS | 10.00% | 2.20 | 4.19% |
The Toronto-Dominion Bank | TD | 9.39% | 2.7968 | 4.95% |
Royal Bank of Canada | RY | 9.38% | 3.7288 | 4.17% |
Archer-Daniels-Midland Company | ADM | 8.11% | 1.60 | 3.77% |
Air Products and Chemicals, Inc | APD | 8.00% | 6.48 | 4.10% |
Comcast Corporation | CMCSA | 8.00% | 1.08 | 2.92% |
The Bank of Nova Scotia | BNS | 7.89% | 3.1485 | 5.30% |
Xcel Energy Inc | XEL | 6.56% | 1.95 | 3.58% |
Chevron Corporation | CVX | 5.97% | 5.68 | 6.06% |
General Dynamics Corporation | GD | 5.88% | 5.04 | 4.17% |
Public Service Enterprise Group Incorporated | PEG | 5.88% | 2.16 | 3.59% |
Digital Realty Trust, Inc | DLR | 5.17% | 4.88 | 4.39% |
Intel Corporation | INTC | 5.04% | 1.46 | 6.91% |
The Allstate Corporation | ALL | 4.94% | 3.40 | 2.86% |
The Coca-Cola Company | KO | 4.76% | 1.76 | 4.26% |
Sempra Energy | SRE | 4.09% | 4.58 | 3.39% |
Enbridge Inc | ENB | 3.86% | 2.704 | 7.04% |
Gilead Sciences, Inc | GILD | 2.82% | 2.92 | 4.39% |
Cisco Systems, Inc | CSCO | 2.70% | 1.52 | 3.40% |
Main Street Capital | MAIN | 2.38% | 2.58 | 13.52% |
American Tower Corporation | AMT | 0.72% | 5.60 | 2.10% |
3M Company | MMM | 0.68% | 5.96 | 3.34% |
Realty Income Corporation | O | 0.20% | 2.964 | 5.46% |
W. P. Carey Inc | WPC | 0.19% | 4.228 | 6.27% |
I like seeing dividend increases of at least 7%. This quarter, sixteen of the
dividend increases topped 7%, while the arithmetic
average of all the increases is 9.29%. That's a rate that easily outpaces the current rate of inflation.
Dividend Growth
The arithmetic average year-over-year dividend growth rate of
dividend-paying stocks in my portfolio is 12.44%, though the
position-weighted average is somewhat lower at 10.08%.
Below is a chart of the 5-year dividend growth rates:
The arithmetic average of 5-year dividend growth rates of dividend-paying stocks in my portfolio is 9.95%, and the position-weighted average is 10.26%. The majority of DivGro's stocks have 5-year DGRs exceeding my target dividend growth rate of 7.00%! (These are colored green in the chart above.)
Transactions
- Virtus AllianzGI Artificial Intelligence & Technology Opportunities Fund (AIO) —
- added 400 shares and increased position to 800 shares
- Amgen Inc (AMGN) —
- added 25 shares and increased position to 115 shares
- American States Water Company (AWR) —
- added 100 shares and increased position to 185 shares
- BlackRock Science and Technology Trust (BST) —
- added 200 shares and increased position to 400 shares
I covered these transactions in monthly reviews and other articles
on my blog, so I won't rehash details here.
From left to right, the colors represent Borderline Safe, Safe, and Very Safe dividend safety scores. I no longer own Unsafe or Very Unsafe dividend growth stocks.
DivGro now contains 98 different positions. Of these, 82 are dividend
growth stocks, seven are dividend-paying stocks, and five are CEFs
(closed-end funds). I also own four stocks that do not pay
dividends.
Here is the distribution of DivGro's stock holdings by sector:
I now also look at the distribution of my stocks by Super Sector:
Market Value
At the end of Q1-2022, DivGro's market value represented a simple
gain of 124% on the total amount invested. Of course, this does
not take into account the timing and size of cash deposits and
withdrawals. DivGro's IRR (internal rate of return) since inception is
15.7%, which is a better measure of portfolio performance.
Portfolio Statistics
First, consider the weight of individual holdings in DivGro. In November 2021, I reworked my system for determining the target weights of positions in 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.
Here is a ranking chart of DivGro positions by current weight.
At 2.25%, my position in closed-end fund ETO is the largest, followed
by UNH and AMGN at 2.23%
and 2.16%, respectively. I like keeping 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.
If a position has an outsized contribution to PADI, a dividend cut
will have an outsized impact. While I invest in
relatively safe dividend growth stocks, I want to limit the potential
damage of unexpected dividend cuts.
I've increased my investments in two closed-end funds, ETO and NIE, which together contribute more than 10% of DivGro's PADI. While somewhat risky, I believe the higher yields more than compensate! AMGN at 2.10% is my largest single stock position by contribution to PADI.
Here is a chart showing the distribution of dividend yields of stocks
in my portfolio:
ETO, NIE, and MAIN are the top-yielding positions in
DivGro, with forward yields of 9.03%, 9.02%, and 7.08%, respectively. Ordinarily, I don't like to see forward yields that high, but I'm willing to take on a bit more risk given the recent increase in the inflation rate to 8.5%.
The arithmetic average yield of dividend-paying stocks in my
portfolio is 2.84%, while the position-weighted average yield is
2.98%. Although both of these average yields are on the low side, I'm not too concerned because DivGro's average dividend growth rate is quite high, and stocks
often appreciate nicely with dividend increases.
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 is my oldest position, with a payback of 98.6%, by far the largest
payback in my portfolio! Soon MAIN will cross the 100% level. INTC is the second highest with 48.8%.
Volatility returned to the markets as inflation surged to a 40-year high and Russia invaded Ukraine. DivGro was not spared, but I'm happy to note that my losses were smaller than those of the S&P 500!
MMM and INTC have been the best
performers over the past year, with share price appreciation of 29.4% and 29.1%, respectively. COST and ADM have performed the worst, with returns of -38.79% and -36.85%, respectively.
One way to identify potentially undervalued positions is to compare the
current forward yield to the 5-year average yield. Discounted stocks
(relative to historical yields) are colored green:
Presently, INTC, TROW, and SBUX appear to offer the best opportunities for additional investment. Based on how I determine target weights, I need to add 136 shares to my INTC position, 44 shares to my TROW position, and 58 shares to my SBUX position to turn them into full-sized positions.
Concluding Remarks
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