Dividend Increases, May 17-31, 2014

Time again to report on dividend increases announced for stocks in my watch list. I compile this information to see if any of my DivGro stocks have raised their dividends so I can make yield on cost (YoC) adjustments and properly track DivGro's projected annual dividend income. Another reason is to review dividend increases for stocks I don't own.

Diversify!

One of my goals for 2014 is to increase the number of holdings in DivGro to 36 and to balance those holdings across all 10 sectors in my watch list. I reconstructed my watch list, following a similar approach to the one I use every month to identify 10 candidate stocks. In doing so, I arrived at a new target distribution for stocks by sector. This process of diversifying DivGro is going quite well.

Diversification is a way to reduce risk by adding variety to a portfolio. Assuming individual stocks are not perfectly correlated, the positive returns of some stocks should offset the negative returns of others. According to Investopedia, studies have shown that "maintaining a well-diversified portfolio of 25 to 30 stocks will yield the most cost-effective level of risk reduction". Increasing the number of holdings beyond 25 to 30 stocks will reduce risk further, but at a diminishing rate.

Dividend Increases, May 1-16, 2014

Every two weeks I report on dividend increases announced for stocks in my watch list, mainly to see if any of my DivGro stocks have raised their dividends. When that happens, I make yield on cost (YoC) adjustments and recalculate DivGro's projected annual dividend income. Another reason is to review dividend increases for stocks I don't own to see if some likely candidates present themselves.

Recent Buy: PMT

May 9, 2014: Bought 120 shares of PMT at $20.94 per share.

Founded in 2009 and based in Moorpark, California, PennyMac Mortgage Investment Trust (PMT) is a specialty finance company that invests primarily in residential mortgage loans and mortgage-related assets. Operating as a real estate investment trust (REIT), the company is not subject to federal corporate income taxes if it distributes at least 90% of its taxable income to shareholders.

PMT is a Dividend Challenger with a 5-year streak of dividend increases. It pays quarterly dividends in January, April, July and October. The current dividend is 59¢ per share, so starting yield on cost is an impressive 11.27%.

10 Dividend Growth Stocks for May, 2014

This year, in an effort to balance my portfolio holdings across all 10 sectors in my watch list, I've changed the way I look for candidates. Rather than search for the best available candidates, I search for the best available candidates by sector. My purchases since January have diversified DivGro to at least 2 holdings per sector, except for Materials, in which I have a single holding. I'll continue to bias purchases with the goal to diversify DivGro, but only if I can identify candidates with good dividend yields and strong dividend growth rates trading at a discount to fair value.

Monthly Review: April 2014

In April, I added 2 new stocks to DivGro and compiled a new watch list. The additions pushed DivGro's projected annual dividend income above $4,000! This means I'll be earning $4,000 every year in perpetuity, assuming I keep DivGro as is and dividends are not reduced.

According to Wikipedia, a perpetuity is an annuity that has no end, or a stream of cash payments that continues forever. That is exactly what DivGro is for me – a perpetuity.

Of course, I intend to continue adding stocks to DivGro, which will increase the stream of cash payments. Also, since DivGro is a portfolio of dividend growth stocks, I'm expecting the stream of cash payments to increase even if I did not add more stocks to DivGro.

Dividend Increases, April 16-30, 2014

Last month, several stocks in my watch list announced dividend increases. I own shares in no fewer than 6 of these stocks! While ETP's increase is quite small at 1.63%, the other increases vary between 4.76% (APU) and 10% (TRV). Any dividend increase above 7% is great in my mind, as that certainly beats inflation and, therefore, represents real growth.

The reason I compile this information is to monitor dividend increases for stocks I own in DivGro so I can make yield on cost (YoC) adjustments and properly track DivGro's projected annual dividend income. Another reason is to review dividend increases for stocks in my watch list that I don't own, to see if any interesting candidates present themselves.

Recent Buy: SDRL

Apr 25, 2014: Bought 72 shares of SDRL at $34.91 per share.

Established in 2005 as a Bermuda-based company, Seadrill Limited (SDRL) is an offshore deepwater drilling contractor providing worldwide services to the oil and gas industry. The company operates an extensive fleet comprising of drill ships, jack-up rigs, semi-submersible rigs and tender rigs for operations in shallow to ultra-deepwater areas and harsh and benign environments.

SDRL is a Dividend Challenger with a 5-year streak of dividend increases. It pays quarterly dividends in March, June, September, and December. Starting Yield on Cost (YoC) is an impressive 11.23%.

Recent Buy: DLR

Apr 25, 2014: Bought 48 shares of DLR at $52.73 per share.

Digital Realty (DLR) is one of the 20 largest publicly-traded U.S. Real Estate Investment Trusts (REITs) with an equity market capitalization of approximately $7 billion. The company, through its controlling interest in Digital Realty Trust, L.P. and subsidiaries of the Operating Partnership, owns, acquires, repositions and manages technology-related real estate.

DLR is a Dividend Contender with a 10-year streak of dividend increases. It pays quarterly dividends in March, June, September and December. The current dividend is 83¢ per share, so starting yield on cost is 6.30%.

My New Watch List of Dividend Growth Stocks

Of all the pages on my blog, I tinker with my Watch List page most. The list contains tickers of candidate dividend growth stocks, organized by sector. It is a subset of Dave Fish's CCC stocks (Dividend Champions, Contenders, and Challengers), plus a small selection of non-CCC dividend paying stocks.

My goal with this post is to reconstruct my watch list by using a similar approach to the one I use every month to identify 10 candidate stocks. Additionally, I want to figure out what sector-balanced really means. I don't think it means having the same number of stocks in each sector.

Dividend Increases, April 1-15, 2014

Twice a month, I compile a table recent dividend increases for stocks in my watch list. I like to keep track of dividend increases for stocks I own in DivGro so I can make Yield on Cost (YoC) adjustments. For other stocks in my watch list, dividend increases can be a trigger for looking more carefully at particular candidates.

Quarterly Review, Q1-2014

I've been rather busy this month doing various things, including the not-so-pleasant task of doing our taxes. I'm happy to be back to report on the first quarter performance of DivGro.

This quarter, I contributed capital funds in the amount of $12,500 to DivGro, including one bonus deposit of $5,000. Dividend income in Q1 totaled $580.67, down slightly from $586.74 received in Q4-2013. This is the first decrease in quarterly dividends for DivGro. I'm not concerned about that, as there is no fundamental change that caused the decrease. Some stocks (CHL, NTT, SNP) pay dividends semi-annually rather than quarterly, so total quarterly dividends wouldn't necessary increase every quarter.

I added four dividend growth stocks and removed one dividend growth stock in Q1-2014. Projected annual dividend income increased from $2,864.94 to $3,508.43, an increase of 22.45%.

10 Dividend Growth Stocks for April, 2014

This year, I've shifted focus to balancing my portfolio holdings across all 10 sectors in my watch list. My purchases in the first quarter have improved DivGro's diversification and, except for the Materials sector, I now have at least 2 holdings in each sector. I'll continue to bias purchases with the goal to improve DivGro's diversification, but only if I can identify candidates with good dividend yields and strong dividend growth rates trading at a discount to fair value.

Monthly Review: March 2014

March was another busy month for DivGro, with two buys and a sell (my first since starting DivGro in January 2013). Also, I reported on recent milestones, including 100+ posts and 40k page views. More importantly, though, March was an incredible month as far as dividend income is concerned – I earned $359 in dividend income!

Dividend Increases, March 16-31, 2014

Time again to report on dividend increases announced for stocks in my watch list during the past two weeks. I compile this information to see if any of the stocks I own in DivGro has raised dividend payments so I can make yield on cost (YoC) adjustments and properly track DivGro's projected annual dividend income. Another reason is to review dividend increases for stocks I don't own.

Goals and Milestones

In October last year, I wrote my first milestones post and reported that I had reached three of my 2013 goals. I also reported on several additional milestones, including crossing $200 in projected monthly dividend income and reaching 10,000 page views. Today, I'd like to report on several recent milestones and provide a goals update.

I wrote my first post on January 10, 2013. Since then, I've written 103 posts (including this one), so I've quietly reached the milestone of 100 posts in DivGro! In the process, I've learned a tremendous amount about blogging, dividend growth investing and how to value dividend growth stocks. My portfolio has grown substantially and, if all goes well, it should reach six figures sometime in August.

Recent Buy: MDP

Mar 14, 2014: Bought 55 shares of MDP at $45.18 per share.

Founded in 1902 and headquartered in Des Moines, Iowa, Meredith Corporation (MDP) is one of the leading media and marketing companies in the U.S. with interests in publishing, broadcasting, integrated marketing and interactive media. The company operates in two business segments: National Media and Local Media.

MDP is a Dividend Contender with a 21-year streak of dividend increases. It pays quarterly dividends in March, June, September and December. The current dividend is 43.25¢ per share, so my starting yield on cost is 3.83%.

Dividend Increases, March 1-15, 2014

I'm a little behind on my posts, as things have been heating up at work. For the most part, I'll be posting only on weekends. Even weekends will become busy, as I'll have to focus my attention to doing our taxes soon...

Twice a month, I compile a table recent dividend increases for stocks in my watch list. My main motivation is to keep track of dividend increases for stocks I own in DivGro, in order to make yield on cost adjustments. For other stocks, monitoring dividend increases is a way to track the long-term health of dividend paying companies.

Recent Buy: APU

Mar 14, 2014: Bought 120 units of APU at $42.27 per unit.

AmeriGas Partners, L.P. (APU) is a publicly traded master limited partnership (MLP) and the largest U.S. retail propane distributor. It conducts business through its principal operating subsidiary AmeriGas Propane, L.P. Revenues come from five retail markets: residential, commercial/industrial, motor fuel, transport, and agriculture. APU also earns income from wholesale customers.

I require a premium yield of at least 6.75% when purchasing units in MLPs and limited liability companies (LLCs). The reason is that ownership requires special treatment at tax time, which I'm only prepared to do if I can earn a great yield. APU certainly offers a great yield – my starting yield on cost is an impressive 7.95%!

Bonus Deposit, March 2014

On Friday, March 14, I deposited $5,000 cash into my DivGro portfolio. This bonus deposit is in addition to my regularly scheduled deposits of $2,500 per month. As I did on a previous occasion, I transferred this money from one of my other portfolios.

The main reason for this bonus deposit was to boost available cash in DivGro, particularly so I could buy units in a master limited partnership (MLP). I prefer to allocate about $5,000 when buying units in MLPs, which is double the amount I usually spend on regular stock purchases. I'll report on the MLP purchase in my next post.

Recent Sell: SJR

Mar 14, 2014: Sold 105 shares of SJR at $23.20 per share.

Today I sold all shares of Shaw Communications Inc (SJR), the first time I've sold shares since I started DivGro. I have several criteria for selling shares, none of which applied to SJR. So, why then, did I sell SJR?

SJR is a monthly dividend payer with an 11-year streak of dividend increases. When I bought SJR in December last year, starting yield on cost was 4.3%. It has a solid 5-yr dividend growth of 12.24%.

10 Dividend Growth Stocks for March, 2014

This year, one of my goals is to increase the number of holdings in DivGro to 36, balanced across all 10 sectors in my watch list. To facilitate this change, I've changed the way I look for candidate stocks. I now look for the top performers by sector based on certain selection criteria.

I start with Dave Fish's CCC list and apply a series of filters to reduce the number of candidates to 30 stocks, 3 per sector. Then I score these stocks based on my selection criteria, assigning a star rating to each candidate out of a maximum of 7 stars.

Monthly Review: February 2014

This month was an exciting one for DivGro! I had a (surprisingly) popular post that received many more page views and comments than normal, propelling the total page views of this blog above the 30,000 mark. My blog is still young, but I sense some acceleration happening now!

In February, I reworked the Performance page to show an overview of DivGro's holdings and performance in a visually pleasing way. I wrote about the inspiration for the radial charts I created – a logo my dad designed many years ago for a real estate agency. This week, my brother took a photo of a billboard containing the logo. It is great to see the business is still operational, after 38 years!

Dividend Increases, February 16-28, 2014

With February behind us, I'd like to report on dividend increases announced for stocks in my watch list the past two weeks.

My mid-month post on dividend increases reported no less than 27 increases, ten of which were above 7%! In the present low-interest environment, this is a remarkable accomplishment and one of the main reasons why I find dividend growth investing so fascinating. The fact that I don't own a single share of any of the ten biggest increasers in DivGro is a matter that needs some attention...

More Popular Dividend Growth Stocks

In my previous post, I presented a portfolio containing 31 of the most popular dividend growth stocks, based on the holdings of 20 different dividend growth portfolios.

To compile the portfolio, I simply counted the number of appearances of each stock in all portfolios and sorted them by decreasing frequency. I arbitrarily made a cutoff at 7 appearances, resulting in a portfolio of 31 stocks. Collectively, the 20 portfolios hold 205 different stocks, which means that 174 stocks were cut.

One of my readers, Passive Income Pursuit, expressed interest in seeing the rest of the stocks. At first, I wondered if there would be value in sharing such a huge list. After all, the 174 stocks are less popular than those that made it into the portfolio of 31...