Options Update: February 2020

Welcome to another edition of Options Update, a monthly article series in which I summarize options trades and keep track of DivGro's options income.

The novel coronavirus (Covid-19) has wreaked havoc in the world and on the stock markets. Today, the Dow officially wiped out all the gains of the Trump presidency.

My DivGro portfolio has taken a beating and with soaring volatility, my open options positions are taking it on the chin, too! It seems highly unlikely that I will achieve my 2020 goal to collect at least $24,000 in options income. In fact, I think it will be hard to break even this year!

Dividend Increases: March 7-13, 2020

This article series provides a weekly summary of dividend increase announcements. I monitor dividend increase announcements for stocks in the Dividend Champions List [CCC list].

Last week, seven companies in the CCC list announced dividend increases, including one of the stocks I own.

Three stocks announced dividend increases of more than 10%.

Monthly Review Of DivGro: February 2020

Once a month, I review my portfolio of dividend growth stocks, DivGro. The goal of these reviews is to provide a summary of dividends received and to detail buy and sell transactions. I also look at how DivGro's projected annual dividend income (PADI) has changed.

In January, I closed three positions and added shares to four existing positions. Twelve 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 5.7%.

As for dividend income, in January I received dividends totaling $1,899 from 27 stocks in my portfolio, a year over year increase of 8%. So far in 2020, I've collected $1,899 in dividends or about 7% of my 2020 goal of $27,000.

Dividend Increases: February 29-March 6, 2020

This article series provides a weekly summary of dividend increase announcements. I monitor dividend increase announcements for stocks in the Dividend Champions List [CCC list].

After several weeks of a large number of dividend increase announcements, last week only six companies in the CCC list announced dividend increases.

Two stocks in my portfolio announced dividend increases, and I'm happy to see that both increases top notch 7%!

The 64 Dividend Aristocrats Ranked By Quality Score

Dividend Aristocrats are S&P 500 stocks that have increased their dividend payouts for 25 consecutive years or more. In January, S&P Dow Jones Indices announced the annual rebalancing of the Dividend Aristocrats, adding seven stocks to the index.

This article ranks the 64 Dividend Aristocrats using DVK Quality Snapshots. Devised by SA author David Van Knapp [DVK], the system employs five quality indicators and assigns 0-5 points to each quality indicator, for a maximum of 25 points. To rank stocks, I sort them by quality score and break ties by considering up to three factors, in turn.

The article presents quality indicators, key metrics, and fair value estimates.

Dividend Increases: February 22-28, 2020 (Part 2)

Last week, another 38 companies in the Dividend Champions List [CCC list] announced dividend increases.

Part 1 covered dividend increases announced by Dividend Champions (stocks with 25 or more consecutive years of higher dividend payments) and Dividend Contenders (10-24 years).

This is Part 2, in which I'm covering the Dividend Challengers (5-9 years). No fewer than ten Dividend Challengers announced double-digit percentage increases, with Popular (BPOP) topping the list with a whopping 33% increase!

Dividend Increases: February 22-28, 2020 (Part 1)

Another 38 companies in the Dividend Champions List [CCC list] announced dividend increases last week. I publish an article every week to summarize these dividend increases and include a table of ex-dividend dates for the next two weeks.

When so many companies announce dividend increases, I split my summary article into two parts. Part 1 covers the Dividend Champions and Contenders (companies with at least a 10-year streak of higher dividend payments). Part 2 will cover the Challengers (a streak of 5-9 years).

Two of the stocks in my DivGro portfolio announced dividend increases.

I Trimmed AMGN Before The Market Tanked

This year I'm looking to reposition DivGro with the view of producing annualized returns of at least 8%. To do so, I'm using the so-called Chowder Rule to select or favor stocks with favorable Chowder Numbers [CDNs].

In February, I trimmed my Procter & Gamble (PG) and Chubb (CB) positions because it looks unlikely that these stocks will produce the annualized returns I'm looking for.

I've trimmed or closed other positions in February, though I have not yet reported on these transactions. This article covers one of the sells. I'm hoping to cover the others in upcoming articles.

Expired Options (February 2020)

Options expiration day this month was 21 February. I had four open options trades that were due to expire, two of which were deep in the money. This means that if I did not act in time, the options would have been assigned.

In this article, I provide a summary of the actions I took and I present potential replacement trades for the expired options.

I write two options articles per month, one shortly after options expiration day and one to summarize my trades of the past month. I'll report February's trades in an upcoming article.

Dividend Increases: February 15-21, 2020 (Part 2)

Last week, another 41 companies in the Dividend Champions List [CCC list] announced dividend increases. Part 1 covered dividend increases announced by Dividend Champions (stocks with 25 or more consecutive years of higher dividend payments) and Dividend Contenders (10-24 years).

This is Part 2, in which I'm covering the Dividend Challengers (5-9 years). No fewer than ten Dividend Challengers announced double-digit percentage increases, with Insperity (NSP) topping the list with a whopping 33% increase!

Dividend Increases: February 15-21, 2020 (Part 1)

No fewer than 41 companies in the Dividend Champions List [CCC list] announced dividend increases last week.

Just like the past few weeks, I need to split my summary article into two parts. There are just too many dividend increases to cover in a single article. Part 1 covers the Dividend Champions and Contenders. Part 2 will cover the Challengers.

Two of the stocks in my DivGro portfolio announced dividend increases.

Exxon Mobil: This High-Yield Dividend Aristocrat Is Undervalued

By Bob Ciura of Sure Dividend

At Sure Dividend, we are big fans of investing in strong dividend stocks over the long run. In our view, buy-and-hold investors should consider the Dividend Aristocrats, a group of 64 stocks in the S&P 500 Index with at least 25 consecutive years of dividend increases.

The Dividend Aristocrats have a number of shared qualities that make them excellent long-term investments. They widely have growth potential, pay high dividend yields, and generate consistent cash flow each year. The Dividend Aristocrats even have the ability to continue raising dividends in a recession.

10 Dividend Growth Stocks For February 2020

The Dividend Champions [CCC] list contains nearly 900 dividend growth [DG] stocks trading on U.S. exchanges that have paid higher dividends for at least five consecutive calendar years. An accompanying spreadsheet provides valuable data and is updated monthly, courtesy of SA author Justin Law.

In this article, I rank a subset of the CCC stocks and present the 10 top-ranked stocks for consideration. I now use a ranking system derived from David Van Knapp's Quality Snapshot Grading System, which employs five widely used quality indicators from independent sources to assess the quality of DG stocks.

This month I decided to rank high-quality CCC stocks with qualifying Chowder Numbers [CDNs]. Last month's article used similar screens, but this month I'm considering only high-quality CCC stocks (quality scores 20-25) and I'm including stocks trading at premiums up to 10% of my fair value estimates.

I Also Trimmed CB

Earlier, I reported that I'd trimmed my Procter & Gamble (PG) position because it looks unlikely that PG will produce total returns in excess of 5%, whereas I'm looking for annualized returns of at least 8% from my DivGro holdings.

I identified another stock, Chubb (CB), with lower than expected growth prospects — at least when considering its unfavorable Chowder Number [CDN] of 5.

CB's dividend yield of 1.82% at $164.56 per share is on the low side and about 15% below its 5-year average dividend yield of 2.14%. Furthermore, CB's 5-year dividend growth rate [DGR] is quite low at 3%. To achieve annualized returns of 8%, a stock yielding less than 3% should have a CDN of at least 15, according to the Chowder Rule. For low-yielding stocks such as CB, CDN's less than 10 are unfavorable, meaning such stocks are unlikely to deliver annualized returns of 8% or more.

I decided to trim my CB position and to invest the proceeds in a higher DGR stock. This article details my CB trade.

Dividend Increases: February 8-14, 2020 (Part 2)

Last week, another 29 companies in the Dividend Champions List [CCC list] announced dividend increases. Once again, I've split my weekly Dividend Increases article into two parts.

Part 1 covered dividend increases announced by Dividend Champions (stocks with 25 or more consecutive years of higher dividend payments) and Dividend Contenders (10-24 years).

In Part 2, I'm covering the Dividend Challengers (5-9 years), five of which announced double-digit percentage increases!

Dividend Increases: February 8-14, 2020 (Part 1)

Another 29 companies in the Dividend Champions List [CCC list] announced dividend increases last week. With so many companies announcing, I split my summary article into two parts. The first covers Dividend Champions and Contenders. The second will cover the Challengers.

Four of the stocks in my DivGro portfolio announced dividend increases. Two are double-digit percentage increases, which makes me a very happy dividend growth investor!

I Trimmed PG

This year I'm looking to improve DivGro's growth prospects by favoring stocks with higher dividend growth rates [DGRs].

To identify stocks with questionable growth prospects, I consider the so-called Chowder Number [CDN], a metric that adds a stock's current yield and its 5-year DGR. For stocks yielding at least 3%, a favorable CDN is 12 or higher. Stocks that yield less than 3% require a CDN of 15 or higher. Utilities yielding more than 4% get a special dispensation: a CDN of 8 is considered favorable.

I've identified two stocks in my portfolio that have questionable growth prospects. Rather than close them outright, I decided to trim these positions. This article details the first trade.

Monthly Review Of DivGro: January 2020

Once a month, I review my portfolio of dividend growth stocks, DivGro. The goal of these reviews is to provide a summary of dividends received and to detail buy and sell transactions. I also look at how DivGro's projected annual dividend income (PADI) has changed.

In January, I closed three positions and added shares to four existing positions. Twelve 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 5.7%.

As for dividend income, in January I received dividends totaling $1,899 from 27 stocks in my portfolio, a year over year increase of 8%. So far in 2020, I've collected $1,899 in dividends or about 7% of my 2020 goal of $27,000.

Options Update: January 2020

I write monthly update articles to summarize options trades and to keep track of options income. These updates also serve as a status report on open options and the obligations I still have.

In 2016, I added options trading to my dividend growth investing arsenal. Selling options provided access to additional funds to buy dividend growth stocks, indirectly boosting DivGro's ability to generate dividend income. And for two years running (2018 and 2019), DivGro's options income has exceeded its dividend income!

My 2020 goal to collect at least $24,000 in options income. This is a modest target given 2019's total of $30,120. Still, my 2020 goal represents a 14% increase from last year's goal and I anticipate a trickier market context in 2020.

Dividend Increases: February 1-7, 2020 (Part 2)

Last week, another 32 companies in the Dividend Champions List [CCC list] announced dividend increases, so I decided to split my weekly Dividend Increases article into two parts.

Part 1 covered dividend increases announced by Dividend Champions (stocks with 25 or more consecutive years of higher dividend payments) and Dividend Contenders (10-24 years).

In Part 2, I'm covering the Dividend Challengers (5-9 years), six of which announced double-digit percentage increases!

Dividend Increases: February 1-7, 2020 (Part 1)

I monitor dividend increases for stocks in the Dividend Champions List [CCC list]. The CCC list is separated into three categories based on how long companies have maintained their streak of annually increasing dividends: Champions (25+ years), Contenders (10- 24 years), and Challengers (5-9 years).

In the past week, 32 companies in the CCC list decided to increase their dividends, including four of my DivGro holdings. In Part 1 of this article, I share dividend increases announced by Champions and Contenders. Please see Part 2 of this article for coverage of the Dividend Challengers.

More Recent Buys

Recently, I closed my position in Boeing (BA) because of the company's grim outlook following the grounding of the Boeing 737 MAX. Closing the position reduced DivGro's projected annual dividend income by $246.60.

To replace some of that dividend income, I decided to add shares to two existing DivGro positions with high Chowder Numbers [CDNs]. One stock is a high-quality but low-yielding stock. The other has a lower quality score but offers a generous yield.

This article details these buys.

Dividend Increases: January 25-31, 2020 (Part 2)

With more than 40 companies in the Dividend Champions List [CCC list] announcing dividend increases, I decided to split my weekly Dividend Increases article into two parts.

Part 1 covered dividend increases announced by Dividend Champions (stocks with 25 or more consecutive years of higher dividend payments) and Dividend Contenders (10-24 years).

In Part 2, I'm covering the Dividend Challengers (5-9 years).

Dividend Increases: January 25-31, 2020 (Part 1)

I monitor dividend increases for stocks in the Dividend Champions List [CCC list]. The CCC list is separated into three categories based on how long companies have maintained their streak of annually increasing dividends: Champions (25+ years), Contenders (10- 24 years), and Challengers (5-9 years).

In the past two weeks, 41 companies in the CCC list decided to increase their dividends, including six of my DivGro holdings. In Part 1 of this article, I share dividend increases announced by Champions and Contenders. Part 2 will cover the Challengers.

Another Recent Sell

Recently, I closed two of the weaker positions in my DivGro portfolio, Nestlé SA (NSRGY) and Stanley Black & Decker (SWK), In my view, these positions are unlikely to deliver annualized returns of at least 8% going forward.

NSRGY and SWK are both high-quality stocks, based on their quality scores of 25 and 20, respectively. But I'm looking to improve DivGro's growth prospects by favoring stocks with higher dividend growth rates [DGRs], and NSRGY and SWK just didn't make the cut anymore.

I've identified another stock with questionable growth prospects, at least in the near term. The stock has a quality score of 21 and a favorable Chowder Number [CDN], but serious headwinds will affect the stock for the foreseeable future. This article provides details.