Monthly Review: July 2015

Regular readers of my blog probably have noticed a slowdown in the number of posts in August. The reason for the slowdown is that my work has required more of my time than usual. Furthermore, the little remaining free time has gone into landscaping work at our house – some hard, physical work that served as a great distraction from the mental work I do on a daily basis.

On this last day of August, I want to post my monthly review for July. It is a long overdue post, but, as they say, rather late than never!

16 Dividend Increases, August 3 To August 14, 2015

Includes: CAE • DOV • HSY • IFF • ITW • IVZ • KLAC • MAIN • MIC • MON • NDSN • PPL • RBA • RECN • SMG • WTR 

Summary

• In the last 2 weeks, 16 companies on my watch list of dividend growth stocks announced dividend increases. 
• I monitor dividend increases for stocks in my portfolio to track yield on cost and to update projected annual dividend income.
• Regular dividend increases indicate an expectation of future earnings growth. I use this process to help identify candidates for further analysis.

Recent Buy: Stag Industrial Inc

Jul 29, 2015: Bought 140 shares of STAG at $18.94 per share.

Founded on July 21, 2010 and based in Boston, Massachusetts, Stag Industrial Inc (NYSE:STAG) is a real estate investment trust focused on the acquisition and operation of single-tenant, industrial properties throughout the United States. STAG’s portfolio consists of 265 properties in 37 states with 242 tenants.

STAG is not yet a CCC stock, having only paid and raised dividends for 4 consecutive years. The company pays monthly dividends of 11.5¢ per share. At my buy price, the stock yields 7.29%.

Recent Sell: Baxter and Baxalta

Aug 4, 2015: Sold 37 shares of BAX at $40.55 per share.
Aug 4, 2015: Sold 37 shares of BXLT at $37.57 per share.  

Yesterday, I reported selling all my shares of Partnerre Ltd (NYSE:PRE) because it is being acquired by Italy's Exor SpA (OTCPK:EXOSF). I sold my shares because EXOSF does not have a track record of paying dividends. PRE performed wonderfully well for me over the 27 months I owned shares, returning 58% (or 26% annualized).

Today, I'm reporting two more sells. After receiving an unsolicited takeover offer from an Ireland based competitor, the share price of drug maker Baxalta (NYSE:BXLT) jumped nearly 20% higher in early morning trading, eventually closing 12% higher after heavy trading. Furthermore, Baxter International (NYSE:BAX) announced a quarterly dividend of only 11.5¢ per share, significantly down from the 52¢ per share the company paid before the spin-off of BXLT.

Recent Sell: PartnerRe Ltd

Aug 4, 2015: Sold 27 shares of PRE at $139.03 per share.

Yesterday I sold all my shares of Partnerre Ltd (NYSE:PRE), a company that provides reinsurance services around the world.

PRE recently agreed to be acquired by Italy's Exor SpA (OTCPK:EXOSF) in a deal worth $6.9 billion (or $140.50 per share). The agreement brings to an end the takeover drama for the Pembroke, Bermuda-based company and dashes the hopes of a merger with Axis Capital Holdings Ltd (NYSE:AXS). AXS will receive a $315 million termination fee from PRE.

6 Dividend Increases, July 27 To July 31, 2015

Includes: ARLP • BPL • CHSP • EXLP • RAI • SU 

Summary

• I track dividend increases for stocks in my watch list to identify candidates for further analysis and possible investment. 
• For dividend growth investors, regular dividend increases are important. Dividend increases that match or exceed the rate of inflation are preferred.
• Last week, 6 companies on my watch list announced dividend increases.

13 Dividend Increases, July 20 To July 24, 2015

Includes: CCLP • ENLC • ETP • GLP • HEP • K • MWE • MXIM • NGL • NGLS • RSG • SWK • TRGP

Summary

• Last week, 13 companies on my watch list of dividend growth stocks announced dividend increases. 
• Several of these companies are MLPs that raise their dividends by smaller amounts every quarter. 
• I monitor dividend increases for stocks in my portfolio to track yield on cost and to update projected annual dividend income.

Recent Buy: Qualcomm Inc

Jul 16, 2015: Bought 38 shares of QCOM at $64.43 per share.

Founded in July 1985 and headquartered in San Diego, California, Qualcomm In (NASDAQ:QCOM) designs and manufactures innovative digital wireless communications products and services based on the company's CDMA digital technology. The company also licenses many of its 5,700+ patents and intellectual property to wireless equipment manufacturers.

QCOM is a Dividend Contender with a track record of 13 consecutive years of dividend increases. It pays quarterly dividends of 48¢ per share in the months of March, June, September and December.

The company is the Information Technology sector winner and 4^th ranked stock in the July 2015 edition of my 10 Dividend Growth Stocks article series. My buy price of $64.43 results in an initial yield on cost (YoC) of 2.98%.

My 3 Loyal Sons: How A Wacky Idea Inspired My Sons To Invest In Stocks

Eighteen months ago, I gave my sons a different kind of Christmas present. I gave them seed money, provided they each open an account at Loyal3.com and commit to buying $30 in shares (of any stock that Loyal3 trades), every month, for 30 years. That's about a dollar a day and the equivalent they each spend on a data plan for their iPhones.

To my delight, my sons accepted the terms and started investing in January 2014, each choosing one stock from those offered at Loyal3.

At the end of last year, I turned the tables on my sons and asked them for a different kind of Christmas present. I asked them to e-mail me an update of their accounts and to do a little reflection on their first year as stock owners. I also wanted to nudge them into thinking about the next year and their future as investors.

6 Dividend Increases, July 13-17, 2015

Includes: CMI • COP • KMI • OHI • SJM • UNM

Summary

• I monitor dividend increases for stocks on my watch list of dividend growth stocks to identify candidates for further analysis and to make yield on cost adjustments for stocks I own.
• This week, 6 companies on my watch list announced dividend increases, including 3 holdings in my DivGro portfolio. 
• Companies that regularly increase dividends show confidence in future earnings growth potential. 

Baxter Spins-Off Baxalta

On 1 July 2015, Baxter (BAX) spun-off Baxalta (BXLT) and distributed shares of BXLT to holders of BAX shares. Shareholders of BAX on record as of the close of business on 17 June 2015 received one share of BXLT for every share of BAX held.

I bought 37 shares of BAX in December 2013 at a price of $67.71 per share. Consequently, I received 37 shares of BXLT as a result of the spin-off. With this addition, DivGro now contains 47 shares.

I've decided to hold onto these BXLT shares rather than sell them. I like the financial objectives of both companies. BAX intends to accelerate profit growth over the next 5 years through geographic expansion and new product introduction. BXLT will focus on growth, led by personalized treatments for patients with rare diseases in hematology, immunology and oncology.

6 Dividend Increases, June 29-July 10, 2015

Includes: DUK • GEL • PAA • R • WBA • WRK

Summary

• In the past 2 weeks, 6 companies on my watch list of dividend growth stocks announced dividend increases.
• I monitor dividend increases for stocks in my portfolio to track yield on cost and to update projected annual dividend income. 
• Regular dividend increases indicate an expectation of future earnings growth. I use this process to identify candidates for further analysis.

Overdue Dividend Increases

David Fish maintains one of the best resources for dividend growth investors, the so-called CCC list. The list is updated monthly and contains all U.S.-listed stocks that have increased their dividends for at least 5 consecutive years. The acronym CCC stands for the 3 categories of stocks in the list, divided based on the number of consecutive years of increases: Dividend Champions (25 or more years), Dividend Contenders (10-24 years) and Dividend Challengers (5-9 years).

In compiling the CCC list, Fish gets a chance to see which companies are approaching the anniversaries of their previous dividend increase announcements. Since many companies raise their dividends about the same time every year, he is alerted when dividend increases are not announced as expected.

10 Dividend Growth Stocks for July 2015

Includes: ADM • CNQ • CNS • GPS • JNJ • MIC • OGE • QCOM • RS • TRV • TXN • VLO • VZ

Every month I rank a selection of David Fish's CCC list to identify suitable dividend growth stocks for further analysis. The list contains all U.S.-listed stocks that have raised their dividends for at least 5 consecutive years. It is a wonderful resource worth checking out! The latest list (dated 6/30/15) contains 726 stocks.

Ranking so many stocks would be a daunting task. To simplify things, I apply a series of filters to reduce the list to a more manageable number of stocks. I assign a star-rating to each stock out of a maximum 7 stars. The rating is based on the dividend discount model and fundamental analysis.

I have an ongoing goal of balancing my DivGro portfolio across all 10 GICS (Global Industry Classification Standard) sectors, so I'm careful to retain a minimum number of stocks per sector. Later I present the 10 sector winners.

Quarterly Review, Q2-2015

Unbelievably, we're at the midway point of 2015! Its time again for a quarterly review, my 10^th since starting on this journey in January 2013. In this article, I'll give an overview of my investments and dividend income in Q2-2015 and I'll report on DivGro's recent performance.

The second quarterly review each year is important, since it represents the halfway mark of goals you've set for the year. I have some fairly challenging goals for 2015 and I'll review my progress towards achieving them.

In my previous quarterly review (Q1-2015), I mentioned reaching 200,000 page views on DivGro and 150,000 page views on Seeking Alpha. Well, I'm happy to say that those numbers are now 260,000 and 200,000, respectively. I'd like to thank all my readers for their continued support and engaging conversations... I've learned a tremendous amount from your comments and questions!

Added Real Estate Sector To My Watch List

I maintain a dynamic watch list of dividend growth stocks and update it monthly when David Fish updates the CCC stocks. My watch list contains a subset of the CCC stocks, which I obtain by applying a series of filters to the CCC stocks. Included in the watch list are all my DivGro holdings, some of which are not in the CCC list.

My watch list is organized by sector based on the GICS sector names. GICS is a 4-tiered, hierarchical classification system. It consists of 10 sectors, 24 industry groups, 67 industries, and 156 sub-industries. Each company is assigned a single GICS classification at the sub-industry level according to its principal business activity.

Monthly Review: June 2015

This is my 30^th monthly review post, which means DivGro is now 2.5 years old. What a journey it has been! Thanks to the interaction I've had with my readers (and fellow-minded bloggers), I've learned a lot about dividend growth investing – a big THANKS for that!

When I started this blog, I wrote down some overall goals in my blog's About page, along with various strategies and stock selection criteria. It is interesting to look back at what I had written then, and to compare it with what I know now...

6 Dividend Increases, June 15-26, 2015

Includes: DIS • DTE • JW.A • O • USB • WPC

Summary

• I monitor dividend increases for stocks in my portfolio to make yield on cost adjustments for stocks I own and to identify dividend growth candidates for further analysis. 
• Companies that regularly increase their dividends show confidence in future earnings growth. 
• In the past 2 weeks, 6 companies on my watch list of dividend growth stocks announced dividend increases.

Recent Sell: South32 Ltd

Jun 23, 2015: Sold 40 shares of SOUHY at $7.10 per share.

Today I sold all 40 shares of South32 Ltd ADR (OTCMKTS:SOUHY) that I received when the company spun-off from BHP Billiton plc (NYSE:BBL). The 40 shares represented a small portion (only about 11%) of my regular position size. Regular readers will know that I prefer to buy shares in lots of about $2,500, so dealing with an outlier like SOUHY would have been bothersome.

I bought 100 shares of BBL in two lots, on 4 June 2013 (43 shares at $58.39 per share) and on 20 November 2014 (57 shares at $50.20 per share). Currently, BBL is trading at about $43 per share. The company announced its demerger plans on 19 August 2014. The spin-off was completed in May, although I received my 40 spin-off shares of SOUHY on 9 June.

Harley-Davidson: Dividend Stock Analysis

Harley-Davidson Inc (NYSE:HOG) is an American manufacturer of cruiser and touring motorcycles. Founded in 1903 and headquartered in Milwaukee, Wisconsin, HOG designs, manufactures, and sells heavyweight touring, custom and performance motorcycles as well as a complete line of motorcycle parts, accessories and general merchandise.

HOG is ranked 3^rd in the June 2015 edition of my 10 Dividend Growth Stocks article series. The company has a 5-year streak of consecutive dividend increases and pays quarterly dividends of 31¢ per share in the months of March, June, September and December.

9 Dividend Increases, June 1-12, 2015

Includes: AWH • CAT • CB • CBRL • CL • FLO • GRMN • NFG • TGT

Summary

• In the past 2 weeks, 9 companies on my watch list of dividend growth stocks announced dividend increases.
• I monitor dividend increases for stocks in my portfolio to make yield on cost adjustments and to track projected annual dividend income. 
• Regular dividend increases indicate an expectation of future earnings growth. I use this process to identify candidates for further analysis.

Recent Buy: Reliance Steel & Aluminum

Jun 12, 2015: Bought 40 shares of RS at $63.98 per share.

Founded in 1939 and headquartered in Los Angeles, California, Reliance Steel & Aluminum (NYSE:RS) is one of the largest metals service center companies in the United States. The company provides metals processing services and distributes a line of approximately 100,000 metal products, including alloy, aluminum, brass, copper, carbon steel, stainless steel, titanium and specialty steel products, to customers in a broad range of industries. 

RS is the Materials sector winner and is ranked 2^nd in the June 2015 edition of my 10 Dividend Growth Stocks article series. The company has a 5-year streak of consecutive dividend increases and pays quarterly dividends of 40¢ per share in the months of March, June, September and December. What impresses me most is the company's 5-yr dividend growth rate of 28.5%!

10 Dividend Growth Stocks for June 2015

Includes: ADM • CAH • GLW • GPS • HCI • HOG • NEE • NOV • MIC • QCOM • RS • TESS • UNP • VZ

Once a month, I rank a selection of David Fish's CCC stocks to identify top candidates for further analysis. The list of CCC stocks is updated monthly and contains all U.S.-listed stocks that have paid increasing dividends for at least 5 consecutive years.

The CCC list is divided into three categories based on the number of consecutive years of increases: Dividend Champions (25 or more years), Dividend Contenders (10-24 years), and Dividend Challengers (5-9 years). The latest list (dated 5/29/15) contains 722, with 105 Champions, 251 Contenders, and 366 Challengers.

I apply a series of filters to reduce the number of stocks to a more manageable number. The filters are designed to remove unlikely candidates from consideration. They are based on things like yield, growth rate, P/E and PEG ratio, and dividend increase history. I'm careful to retain a minimum number of stocks for each of the 10 GICS (Global Industry Classification Standard) sectors.

Monthly Review: May 2015

Time again to review the past month's activities relating to DivGro, my portfolio of dividend growth stocks. With work becoming more demanding, I'm finding less time to explore new ideas with DivGro.

I've been studying REITs (real estate investment trusts) in order to develop more appropriate selection criteria – and I just haven't found the time to conclude that research. In the next few months, I'm hoping to fine-tune my selection criteria and the way I evaluate stocks. I feel this is necessary, as DivGro now contains 45 stocks and my focus will soon shift to adding more to existing holdings, rather than adding more holdings.

11 Dividend Increases, May 18-29, 2015

Includes: ACE • BG • DCI • EXR • HPQ • JPM • LOW • NOC • STAG • TIF • WMB

Summary

• I monitor dividend increases for stocks on my watch list to make yield on cost adjustments for stocks I own and to identify dividend growth candidates for further analysis.
• Companies that regularly increase their dividends show confidence in future earnings growth potential.
• In the past 2 weeks, 11 companies on my watch list announced dividend increases.