Dividend Increases, September 16-30, 2014

Twice a month, I report on dividend increase announcements for stocks in my watch list, a subset of David Fish's CCC stocks (Champions, Contenders, and Challengers) and a few non-CCC holdings in DivGro. I find this to be a useful way to identify dividend growth candidates, because companies that increase their dividends regularly show confidence in future earnings growth.

Another reason for monitoring dividend increases is to track the yield on cost (YoC) of stocks I own. When dividends are increased, I make YoC adjustments and update DivGro's projected annual dividend income. 

This month, three of DivGro's holdings announced dividend increases. MSFT increased its quarterly dividend by 3¢ per share, or nearly 11%. MCD announced a more modest increase of 4.94%, while PMT is increasing its dividend by 3.39%.

Recent Sell: SNP

Sep 26, 2014: Sold 31 shares of SNP at $90.21 per share.

On Wednesday I sold my CHL shares and today I'm following that up by selling all my shares of China Petroleum & Chemical Corp (SNP). In this post, I'll explain why I'm parting ways with SNP, though the main reason for selling is the same as in the case of CHL!

As a dividend growth investor, I like to maintain and grow dividend income over time. If a stock I hold in DivGro gets a dividend cut, I'm no longer interested in keeping it. Instead, I'll sell my shares and look for a substitute. As I mentioned yesterday, I dislike selling DivGro holdings, but I dislike dividend cuts even more!

Recent Sell: CHL

Sep 24, 2014: Sold 47 shares of CHL at $61.40 per share.

Yesterday I sold all my shares of China Mobile Ltd. (CHL), a provider of mobile telecommunications services in China and Hong Kong. This is only the second time that I've sold shares since starting DivGro in January 2013. The purpose of this post is to explain why I decided to part ways with CHL.

I list several rejection criteria to consider when evaluating a stock for removal from DivGro. Some relate to stock performance and extraordinary events, such as mergers. Another relates to the dividend payment and, specifically, whether it is suspended, cut, or frozen. In the case of CHL, my reason for selling is due to CHL's recent dividend cut.

Recent Buy: MCD

Sep 22, 2014: Bought 27 shares of MCD at $93.97 per share.

Founded in 1955 by Ray Kroc and incorporated in December 1964, McDonald's Corp. (MCD) is the world's leading global foodservice retailer with over 35,000 locations in more than 100 countries. Operating primarily as a franchisor, MCD owns the land and building or secures long-term leases for both franchised and company-operated restaurant sites. More than 80% of McDonald's restaurants are owned and operated by independent business men and women. About 57% are conventional franchisees and 24% are licensed to foreign affiliates or developmental licensees.

MCD is a Dividend Champion with an impressive streak of 39 years of dividend increases. It pays quarterly dividends in March, June, September and December. The newly announced dividend of 85¢ per share makes my starting yield on cost 3.62%. With two consecutive dividend increases of only about 5%, MCD's 5-year dividend growth rate is now 9.86%.

Why I'm not selling INTC. Yet.

Intel Corp (INTC) recently declared its next quarterly dividend. I'm one of the shareholders that were holding out for the chip maker's long-awaited dividend boost. There has been no raise in 10 quarters, yet INTC could still salvage its status as a Dividend Contender. A just-in-time increase would have kept the company's streak of consecutive years of dividend increases alive.

Unfortunately, the board of directors decided to pay out 22.5¢ per share, again! That's eleven quarters without a dividend raise. Effectively, as far as dividend growth investors are concerned, INTC froze its dividend:

Dividend Increases, September 1-15, 2014

I'm pleased when stocks in my watch list of dividend growth stocks announce dividend increases, even if I don't own the stocks in question. It reaffirms that those stocks belong in my watch list. Also, it prompts me to take a good look at them. Companies that regularly increase dividends, show confidence in their ability to pay those increasing dividends.

Another reason for monitoring dividend increase announcements is to see if stocks I own will be changing their dividend payments. If so, I make Yield on Cost (YoC) adjustments and update DivGro's projected annual dividend income. This month, one of DivGro's holdings, Philip Morris International Inc (PM), announced a dividend increase of 6.38%.

My Dynamic Watch List

I maintain a watch list of dividend growth stocks that I update at least once a month, sometimes more frequently. It contains all of DivGro's holdings, as well as a subset of David Fish's CCC stocks. Currently, there are 183 stocks in the watch list. The watch list is organized by sector using GICS sector names.

I reference the watch list every month when compiling a dashboard of the best dividend growth stocks. September's dashboard has HP, XOM, and PMT in the top spots. I use the dashboard to compile a list of candidates, one per sector, for further research. Until DivGro is nicely diversified by sector, I'll continue to bias my purchases to sectors that are under-represented.

Stock Analysis: MAT

Founded in 1945 and headquartered in El Segundo, CA., Mattel Inc. (MAT) is the world's largest manufacturer of toys and games. The company makes toys under the brands Mattel, American Girl, Barbie, Batman, Dora the Explorer, Fisher Price, Hot Wheels, Matchbox, Sesame Street, View-Master, Winnie the Pooh, Yu-Gi-Oh, and many more. The company sells directly to retailers and wholesalers, and through agents and distributors in countries where it has no direct presence.

MAT is a Dividend Challenger with 5 consecutive years of dividend increases. The company's 5-year compound annual growth rate (CAGR) is 13.9%. It pays quarterly dividends of $0.38 per share in the months of March, June, September, and December. At the current price of $35.10, MAT yields an impressive 4.33%.

10 Dividend Growth Stocks for September, 2014

Every month, I use David Fish's CCC list to search for stocks trading at a discount to fair value. The CCC list is updated monthly and contains all U.S.-listed stocks that have raised their dividends for at least five consecutive years. The accompanying spreadsheet provides key statistics of all the CCC stocks and is a wonderful resource for dividend growth investors.

This month's list contains 553 stocks. I use a series of filters to reduce the number of stocks to about 200 candidates, which, along with DivGro's holdings, form my watch list. Until DivGro is nicely diversified, I'll continue to search for the best available candidates by sector and bias my purchases to sectors that are under-represented. 

Monthly Review, August 2014

At the end of every month, I review the month's actions with regards to DivGro, my portfolio of dividend growth stocks. At the same time, I update my blog's Performance page, which provides a central place for reviewing DivGro's status and performance relative to prior months and the markets.

In August, I added two new stocks, PM and DE. DivGro now has 34 different holdings, so I'm almost at my goal of 36 holdings balanced across the 10 sectors in my watch list. In the next few months, I need to add three stocks in the Consumer Discretionary sector, and one each in Consumer Staples, Financials, Industrials, Materials and Utilities.

Dividend Increases, August 16-31, 2014

After last month's nosedive on the last trading day, the S&P 500 crossed 2,000 while the Dow is back above 17,000. The markets closed on a high note despite the U.K. raising their terrorist alert level to Severe in fear of possible ISIS attacks in Britain and Russia's apparent invasion of the Ukraine. And, the Middle East remains a mess.

I wonder if these geopolitical factors eventually will take a toll on the markets. Many commentators suggest that a significant correction is imminent. The thing is, as long as everyone is calling for a significant correction, it likely won't happen. Stocks probably will continue to climb the wall of worry.

Either way, as dividend growth investors, these issues shouldn't influence our thinking too much. As I said last month, dividends are not affected by stock market volatility, at least not the kind of dividends we're after...

New Blogroll Page

I've been working on an extensive blogroll focusing on dividend growth investing (DGI) and other forms of passive income generation. There is a surprising number of blogs out there and I find it fascinating to scan them from time-to-time to see what others think about these topics. Sometimes, someone else's unique way of thinking spawns new ideas in my mind...

There is a wealth of information in such a large collection of blogs. Of course, it requires work to combine and distill the information. In February, I did such an exercise and wrote my most popular post so far. I compiled a spreadsheet containing the combined holdings of 20 publicly available portfolios, counting the number of appearances of each ticker. The 4 most popular dividend growth stocks, based on this composite view, were MCD, CVX, JNJ and KO.

Dividend Increases, August 1-15, 2014

Time again to report on dividend increases announced for stocks in my watch list. One of the stocks I own (WAG) announced a 7.14% increase. As a result, WAG's Yield on Cost (YoC) and DivGro's projected annual dividend income will be adjusted.

I monitor dividend increase announcements as a way to identify new candidates for purchase. When companies announce dividend increases, they show confidence in being able to pay increased dividends. Companies that make aggressive increases pique my interest and I usually take some time to look them over.

What is a Liebster Award?

Today, Passive Income Pursuit nominated DivGro for a Liebster Award. After feeling honored to have been nominated, I had to Google "Liebster Award" to find out what this was all about. Sopphey Says it is "kind of like a chain letter" in which one blogger nominates 5 other bloggers to answer 5 questions; and then nominates 5 more bloggers for a Liebster Award, with a new set of 5 questions to answer...

Apparently, Liebster is German for dearest, an adjective than means most loved or cherished or a noun that is an affectionate form of address to a much-loved person. Although I'd like to claim those definitions, The Free Dictionary's definitions are probably more appropriate: greatly valued; precious; highly esteemed or regarded...

Recent Buy: DE

Aug 8, 2014: Bought 30 shares of DE at $86.23 per share.

Founded in 1837, Deere & Company (DE) is engaged in the production and distribution of agricultural and forestry equipment, construction equipment and engines, worldwide. A credit subsidiary, John Deere Capital Corporation, is one of the largest equipment finance companies in the United States with more than 2.4 million accounts.

DE is a Dividend Contender with a streak of 11 years of dividend increases. It pays quarterly dividends in February, May, August and November. The current dividend is 60¢ per share, so starting yield on cost is 2.78%. DE's 5-year dividend growth rate is 13.43%.

Recent Buy: PM

Aug 5, 2014: Bought 31 shares of PM at $81.29 per share.

Headquartered in New York City, Philip Morris International Inc. (PM) is the leading international tobacco company, with seven of the world's top 15 international brands, including Marlboro, the number one cigarette brand worldwide. PM's products are sold in more than 180 markets.

PM is a Dividend Challenger with a streak of 6 years of dividend increases. It pays quarterly dividends in March, June, September and December. The current dividend is 94¢ per share, so starting yield on cost is 4.63%. PM's 5-year dividend growth rate is a solid 28.4%.

10 Dividend Growth Stocks for August, 2014

At the beginning of every month, I use Dave Fish's CCC list to search for stocks trading at a discount to fair value. This year, in an effort to balance my portfolio holdings across all 10 sectors in my watch list, I search for the best available candidates by sector. Until DivGro is nicely balanced, I'll continue to bias purchases to sectors that are under-represented, 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, July 2014

During the month of July, we visited South Africa, taking a break from our usual activities. We had a wonderful time hiking the Otter Trail and visiting two national parks, Addo Elephant National Park and Kruger National Park. Of course, the best part was that we got to experience all of these with our extended families.

I took some time during my break to work on DivGro, adding one new stock, IBM, and writing quarterly and midway review posts. I'm happy with DivGro's performance and it seems like I'm in good shape to meet my goals for 2014.

In July, DivGro set another new record for monthly dividend income, namely $396! That is a tremendous increase over last July, when I earned only $45 in dividend income. DivGro now has a market value of $105,413 and is delivering an average yield on cost of 5.06%. Projected monthly income is $372, up from $366 at the end of June.

Dividend Increases, July 16-31, 2014

On the last day of July, the markets took a significant nosedive. The Dow shed more than 300 points and the S&P 500 tumbled nearly 2%. Argentina's second default in 12 years is being blamed, along with fears that yesterday's strong GDP numbers could move the Fed to start raising interest rates.

As dividend growth investors, days like today shouldn't bother us too much. Dividends are not affected by stock market volatility. In fact, lower prices mean greater opportunities to pick up bargains!

Taking a Break

No, I'm not taking a break from DivGro. The title of this post is an encouragement to take a break; to enjoy life; to smell the roses...

We've just returned from a wonderful vacation in South Africa, where I hiked the Otter Trail with two of my sons. It was an amazing experience, despite some difficulty we experienced crossing the Bloukrans river. I took the photo to the left on the morning of the last day of our hike.

After our hike, one of my sons bungy-jumped off the Bloukrans bridge, the world's highest commercial bungy jumping site! We also had day visits to two national parks, Addo Elephant National Park and Kruger National Park. At Kruger, we were fortunate to see Africa's Big Five game animals in a single day, which is quite rare!

Dividend Increases, July 1-15, 2014

Twice monthly I report on dividend increases announced for stocks in my watch list, to see if any dividend increases have been announced for DivGro stocks. If so, I make yield on cost (YoC) and projected annual dividend income adjustments. Recently, one of the stocks I own (COP) announced a 5.8% dividend increase.

Another reason to monitor dividend increase announcements it to identify new candidates for purchase. When companies announce dividend increases, they show confidence in being able to pay increased dividends. Companies that make aggressive increases pique my interest and I usually take some time to research them.

Recent Buy: IBM

Jul 11, 2014: Bought 14 shares of IBM at $187.91 per share.

Incorporated in 1911 and headquartered in Armonk, New York, International Business Machines (IBM) is an information technology company engaged in the development and manufacturing of advanced computer systems, software, storage systems and microelectronics.

IBM is a Dividend Contender with a streak of 19 years of dividend increases. It pays quarterly dividends in March, June, September and December. The current dividend is $1.10 per share, so starting yield on cost is 2.34%. IBM's 5-year dividend growth rate is a solid 14.26%.

Midway Review of 2014 Goals

With 2014 halfway over, I want to review the goals I've set for 2014 and where I stand. Doing so not only helps to monitor progress, but allows me to make strategic adjustments if necessary.

I've set some challenging yet attainable goals for 2014. Of the four goals, three are easily measurable and my progress at the midway point can be expressed in percentage terms. As for the fourth goal, I've made good enough progress to give myself a passing grade. 

10 Dividend Growth Stocks for July, 2014

Each month, in an effort to balance my portfolio holdings across all 10 sectors in my watch list, 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 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.

Quarterly Review, Q2-2014

Its been a busy quarter! We bought a new house and moved in; we're turning our previous home into a rental property; and we traveled to South Africa to visit our families and to hike the Otter Trail.

I'm really looking forward to hiking the Otter Trail again. We did it in 2001 with our oldest son, who couldn't make it this time around. But I'm taking his two brothers, along with some of their cousins and uncles.

Before tackling the Otter Trail, I'd like to report on the second quarter performance of DivGro. This quarter, I contributed capital funds in the amount of $7,500 to DivGro. Dividend income in Q2 totaled $892, up significantly from $581 received in Q1-2014. I added four dividend growth stocks, DLR, SDRL, PMT and WMT. Projected annual dividend income increased from $3,508 to $4,390, an increase of 25.14%.