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Wednesday, August 3, 2022

Monthly Review Of DivGro: July 2022

Every month, I write a review of my portfolio of dividend growth stocks, DivGro. I provide a summary of transactions and dividends received in the past month. I also consider the impact on DivGro's projected annual dividend income (PADI).

In July, I executed several trades to consolidate positions, mainly to have like lots in the same accounts. DivGro is spread across five different accounts, and I wanted to hold each ticker in only one account rather than in multiple accounts. 

Eight DivGro stocks announced dividend increases in July. 

The net result of these changes is that PADI increased by about 2.3% in July. Year over year, PADI increased by 36.7%.

As for dividend income, I received dividends totaling $2,747 from 29 stocks in my portfolio, a year-over-year increase of 6%. So far in 2022, I've collected $27,013 in dividends, or about 63% of my 2022 goal of $43,200.



DivGro's PADI of $44,900, means I can expect to receive $3,742 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.


The above chart presents a rolling 12-month average of DivGro's projected monthly dividend income. I'm very close to achieving my 2022 goal of increasing PADI to $45,000:


With about 58% of the year behind us, I'm now at 63% of my 2022 Dividend Income goal. As for the other two quantifiable goals (collecting Options Income of $12,000 and writing 18 stock analysis articles), I'm behind pace towards achieving those goals. 


Dividend Income


In July, I received a total of $2,747 in dividend income from 29 different stocks:

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

  • Automatic Data Processing, Inc (ADP)income of $104.00
  • Virtus AllianzGI Artificial Intelligence & Technology Opportunities Fund (AIO)income of $120.00
  • The Allstate Corporation (ALL)income of $85.00
  • American Tower Corporation (AMT)income of $14.30
  • Franklin Resources, Inc (BEN)income of $87.00
  • The Bank of Nova Scotia (BNS)income of $119.80
  • BlackRock Science and Technology Trust (BST)income of $100.00
  • Chubb Limited (CB)income of $83.00
  • Comcast Corporation (CMCSA)income of $121.50
  • Cisco Systems, Inc (CSCO)income of $114.00
  • 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
  • FedEx Corporation (FDX)income of $57.50
  • Illinois Tool Works Inc (ITW)income of $73.20
  • The Coca-Cola Company (KO)income of $88.00
  • Main Street Capital (MAIN)income of $55.90
  • Mondelez International, Inc. (MDLZ)income of $70.00
  • Medtronic plc (MDT)income of $68.00
  • Altria Group, Inc (MO)income of $207.00
  • Merck & Co., Inc (MRK)income of $138.00
  • NIKE, Inc (NKE)income of $4.58
  • Realty Income Corporation (O)income of $37.13
  • Oracle Corporation (ORCL)income of $48.00
  • Philip Morris International Inc (PM)income of $150.00
  • Sempra (SRE)income of $91.60
  • Stryker Corporation (SYK)income of $6.95
  • W. P. Carey Inc (WPC)income of $105.90
  • Xcel Energy Inc (XEL)income of $80.44

The chart below shows DivGro's monthly dividends plotted against PMDI. Clearly, quarter-ending months are huge outliers:

This is one reason that 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 nicer if dividends were distributed more evenly, it is not something that would drive my investment decisions.


Dividend Changes


In July, the following stocks announced dividend increases or paid higher dividends (perhaps due to exchange rate fluctuations):

  • American Tower Corporation (AMT) — increase of 2.14%
  • American States Water Company (AWR) — increase of 8.90%
  • The Bank of Nova Scotia (BNS) — increase of 2.59%
  • Cummins Inc (CMI) — increase of 8.28%
  • Cintas Corporation (CTAS) — increase of 21.05%
  • FedEx Corporation (FDX) — increase of 53.33%
  • Mondelez International, Inc. (MDLZ) — increase of 10.00%
  • National Retail Properties, Inc (NNN) — increase of 3.77%

As a result of these changes, DivGro's PADI will increase by $219.

I like seeing dividend increases above 7%, and five of the eight increases this month top my expectations. The arithmetic average of this month's dividend increases is 13.8%, which easily beats inflation!


Transactions


Here is a summary of my transactions in July:

  • Sempra (SRE)new position of 80 shares
  • Sempra (SRE)sold -50 shares and closed position
  • American States Water Company (AWR)added 115 shares and increased position to 200 shares
  • Cummins Inc (CMI)added 50 shares and increased position to 100 shares
  • The Home Depot, Inc (HD)added 30 shares and increased position to 100 shares
  • Honeywell International Inc (HON)added 30 shares and increased position to 100 shares
  • Intel Corporation (INTC)added 100 shares and increased position to 200 shares
  • Illinois Tool Works Inc (ITW)added 40 shares and increased position to 100 shares
  • QUALCOMM Incorporated (QCOM)added 30 shares and increased position to 100 shares
  • Starbucks Corporation (SBUX)added 60 shares and increased position to 200 shares
  • Verizon Communications Inc (VZ)added 150 shares and increased position to 400 shares
  • American States Water Company (AWR)sold -100 shares and reduced position to 85 shares
  • Cisco Systems, Inc (CSCO)sold -100 shares and reduced position to 200 shares
  • Intel Corporation (INTC)sold -100 shares and reduced position to 100 shares
  • Johnson & Johnson (JNJ)sold -50 shares and reduced position to 76 shares
  • National Retail Properties, Inc (NNN)sold -25 shares and reduced position to 200 shares
  • Public Storage (PSA)sold -15 shares and reduced position to 45 shares
  • Tyson Foods, Inc (TSN)sold -50 shares and reduced position to 100 shares
  • UnitedHealth Group Incorporated (UNH)sold -20 shares and reduced position to 40 shares

These transactions increased DivGro's PADI by about $807.


***Transactions Commentary***


Portfolio Diversification


I'm continuing to slowly rebalance DivGro between Defensive, Sensitive, and Cyclical supersectors. Below is a chart showing the current distribution with an insert of last month's distribution.


My exposure to the Cyclical sectors (0.4%) increased slightly, but the month's reshufling transactions resulted in a decrease of the Defensive (-2.8%) and an increase of the Sensitive sectors (2.4%). 

I'd like to see an equal distribution between the Cyclical, Defensive, and Sensitive sectors. 

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:


Stocks like AAPL, JPM, VLO, and HD are significantly overweight, whereas NKE, SYK, ACN, and AMT are significantly underweight. 

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

Markets


It is worth looking at the markets to understand the environment we're investing in:

  DOW
30
S&P
500
NASDAQ
Composite
10-YR
BOND
CBOE
VIX
Jun 30, 2022 30,775.43 3,785.38 11,028.74 2.972 28.71
Jul 31, 2022 32,845.13 4,130.29 12,390.69 2.642 21.33

In July, the DOW 30 gained 6.7%, the S&P 500 gained 9.1%, and the NASDAQ gained 12.3%. The yield on the benchmark 10-year Treasury note fell to 2.642, while CBOE's measure of market volatility, the VIX decreased by 25.7% to 21.33.

Following is a chart showing how the stocks and funds in DivGro performed over the past month:


Following several months in which DivGro outperformed the S&P 500, this month turned out to be a different matter: DivGro's respectable 6.1% was easily topped by an 9.11% by the S&P 500. Note that this comparison is a price-performance comparison only and does not account for dividends. DivGro's position-weighted average yield is 3.23% whereas, in 2021, the S&P 500's yield was only 1.69% in June 2022

DivGro outperformed the S&P 500 on a trailing twelve-month basis, with positive returns of 0.79% versus negative returns of 6.16% for the S&P 500! 


I'm thrilled that DivGro has outperformed the S&P 500 over the past year and that I'm in positive territory again!

Portfolio Statistics


Based on the total capital invested and the portfolio's current market value, DivGro has delivered a simple return of about 121% since inception. In comparison, DivGro's IRR (internal rate of return) is 14.9%. (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 4.16% last month to 4.17% this month.

Percentage payback relates dividend income to the amount of capital invested. DivGro's average percentage payback is 29.2%, up from last month's 28.8%.

Finally, DivGro's projected annual yield is at 7.05%, up from last month's value of 6.90%. I calculate projected annual yield by dividing PADI ($44,900) 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 these tough market conditions! 

We'll be on vacation for the next three weeks, traveling to South Africa to visit our parents and siblings. I'm not sure how much time I'll get to write articles, but we'll see how it goes!

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


Thanks for reading and happy investing!
You can now follow me on Twitter and Facebook.

2 comments :

  1. Hi, very cool your trajectory, I just discovered your blog and I loved it.

    Congratulations on the work of keeping so many charts up to date for so many years, and even more so with 100 stocks.

    Hugs

    ReplyDelete
    Replies
    1. Thanks for commenting! Fortunately, the site grew as my portfolio grew, so while it may seem like a lot, I now have a system in place that pretty much is rinse and repeat.

      All the best with your investments!

      Delete

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