Confessions Of A Recovering Trader

I did a bad thing.

I acted on an impulse and bought shares of a stock that wouldn't pass DivGro's selection criteria. In fact, I looked at the stock chart and based on what I saw, I decided to buy shares worth more than double the amount I usually spend on buys.

Before founding DivGro in January 2013 and subscribing to the philosophy of dividend growth investing, I was an avid trader. I looked at technicals and ignored fundamentals. I studied stock charts and trends, trying to determine the best entry points and looking for patterns that would suggest future price action.

Recent Sell: Digital Realty Trust, Inc

In July I celebrated adding 3 more home runs to DivGro. One of those home runs were Digital Realty Trust, Inc (DLR), a publicly-traded U.S. real estate investment trusts (REITs) that owns, acquires, repositions and manages technology-related real estate.

DLR's performance has been spectacular. The share price more than doubled from my buy price, though lately the REIT has pulled back to a just under $100 per share. DLR now yields 3.54%, much less than my initial yield on cost (YoC) of 6.30%. While DLR has paid and increased its dividend for 12 years running, dividend growth has slowed in recent years.

It is hard to say goodbye to a winner, so I'll just say good buy and move along!

Options Update: August 2016

This article is the first in a new series of articles about my options trades in DivGro.

Some readers may not be interested in options, so they can just skip these articles. Others may be interested in learning about options or just following along. And I'm sure there are several dividend growth investors, who, like myself, are interested in boosting dividend income with options trades.

As for myself, this series will help me to track my options trades and to learn more about options. Certainly, some of the learning will come from research I do before writing articles, but I hope I'll also learn from questions and comments from those readers that share my interest in options trading.

Recent Sell: Deere & Company

I've parted ways with Deere & Company (NYSE:DE). The company has paid the same quarterly dividend of 60¢ per share for 9 straight quarters. While this does not constitute a dividend freeze, yet, I have some concerns about the company's fundamentals. Last week, DE announced Q3 earnings and the results reflect continued weakening in difficult construction and farming markets.

Last Friday, shares spiked up about 13% to over $87 per share after DE posted an earnings surprise and guiding higher for fiscal year 2016. While EPS (earnings per share) for Q3 of $1.55 beat the consensus forecast by 61¢ per share, revenue dropped 11% from the year-ago quarter. Aggressive cost cuts and share buy backs helped DE increase EPS by 2¢ from $1.53 in Q3 2015.

The market's response to DE's less bad news gives me an opportunity to exit my DE position at a slight gain. I'm happy to be out of this position – DE is now going for 22.7 times next year's earnings, a significantly inflated earnings multiple for a company with declining revenues.

Recent Buy: Cisco Systems

Cisco Systems, Inc (CSCO) designs, manufactures, and sells internet protocol-based products and services and delivers integrated solutions to develop and connect networks around the world. The company serves businesses of various sizes, public institutions, governments, and communications service providers. CSCO sells its products directly, as well as through channel partners, such as systems integrators, service providers, other resellers, and distributors. The company was founded in 1984 and is headquartered in San Jose, California.

The stock is a Dividend Challenger with a track record of 6 consecutive years of dividend increases and a 3-year dividend growth rate of 31.6%. CSCO pays quarterly dividends of 26¢ per share in the months of January, April, July and October.

9 Dividend Increases: August 15-19, 2016

 Summary

• Companies that regularly increase dividends show confidence in future earnings growth potential.
• Monitoring dividend increases for stocks on my watch list helps me identify candidates for further analysis.
• Recently, 9 companies on my watch list decided to increase their dividends.

Closing Three More Positions

Regular readers will know that I'm busy preparing DivGro for options trading. I'm hoping to boost dividend income by selling call options against stock I own. The strategy is called covered call writing – typically, you sell one contract for every 100 shares you own and collect an option premium in return.

In the past 2 months, I've been closing some DivGro positions and using the cash to round out the number of shares of other DivGro positions. The idea is to own 100 shares (or multiples of 100 shares) of stocks so I can sell call options on these stocks and boost my dividend income.

Recently, I bought additional shares of 3 stocks and increased my share count to 100 shares, making these stocks eligible for options trades.

More Round Out Buys

Last month I closed several positions so I could round out the number of shares of some DivGro positions to 100 (or multiples of 100). The reason for doing so is to prepare DivGro for options trading. Each option controls 100 shares, so I would need to own at least 100 shares of a stock before entering into an options trade.

Today I'm reporting 3 additional round out trades. I'm increasing the number of shares of 3 DivGro holdings to 100 shares, making them eligible for options trading.

With the markets trading at record highs, most of the stocks in my portfolio are trading at a premium. Its not a great time to buy, but I'm biting the bullet and buying shares even at a premium to fair value.

10 Dividend Growth Stocks For August 2016

Summary

• Every month I rank a selection of David Fish's CCC stocks to identify top candidates worthy of further analysis. 
• I trim the CCC list of more than 750 stock to a more manageable number of candidates. Using different screens every month ensures some variation. 
• I rank the remaining stocks using a multi-stage dividend discount model and fundamental analysis, and assign a 7-star rating to the top 10 ranked stocks.
• This article reveals the top 10 ranked stocks for August.

9 Dividend Increases: August 8-12, 2016

Summary

• Companies that regularly raise their dividend payments show confidence in future earnings growth potential.
• One way to identify dividend growth stocks for further analysis is to monitor dividend increases.
• In the last week, 9 companies on my watch list announced dividend increases.

13 Dividend Increases: August 1-5, 2016

Summary

• Companies that regularly raise dividends show confidence in the potential growth of future earnings.
• Monitoring dividend increases for stocks on my watch is one way to identify candidates for further analysis.
• This past week, 13 companies on my watch list declared dividend increases, including 2 of the stocks I own.

Monthly Review: July 2016

One of my goals this year is to find opportunities to boost dividend income with options. Writing or selling covered calls is a safe way to earn extra income on top of the dividend income you already receive just for owning dividend paying stocks. You can sell one contract for every 100 shares you own and collect an option premium in return.

I closed nine positions this month and reduced my position in one stock trading well above fair value. The main reason for selling so many stocks is to collect cash for round out buys. With the markets trading near all-time highs, it is a good time for selling, but not for buying!

With more sells than buys this month, DivGro's projected annual dividend income (PADI) took a little nosedive. Fortunately, I'm still ahead of schedule goal-wise. In fact, I'm quite sure that I'll reach my $12,000 target before year's end.

21 Dividend Increases: July 25-29, 2016

Includes: BBT • CBOE • CBS • CMA • COLB • CTBI • EMBT • EQM • ETP • HSY • K • PAG • PROV • RAY • RSG • SOHO • SPG • SUN • SXL • TILE • TRNO 

Summary

• Companies can only increase their dividends regularly if earnings grow sufficiently.
• I like monitoring dividend increases for stocks on my watch list of dividend growth stocks, because I consider such stocks to be candidates for further analysis.
• This past week, 21 companies on my watch list announced dividend increases, including 2 of the stocks I hold in my portfolio.

Recent Buy: Nike Inc

This article originally appeared on The DIV-Net on Wednesday, August 26, 2016.

24 June 2016: Bought 47 shares of NKE at $52.84 per share. Founded in 1964 and headquartered in Beaverton, Oregon, Nike Inc (NYSE:NKE) is engaged in the design, development, marketing and selling of athletic footwear, apparel, equipment, and accessories. The company's portfolio brands include the NIKE Brand, Jordan Brand, Hurley and Converse. NKE sells its products to retail accounts, through NIKE-owned retail stores and Internet Websites, and through a mix of independent distributors and licensees.

NKE was the top ranked stock in the June edition of my 10 Dividend Growth Stocks series. The stock is a Dividend Contender with a track record of 14 consecutive years of dividend increases and a 10-year dividend growth rate of 16%. NKE pays quarterly dividends of 16¢ per share in the months of January, April, July and October.

14 Dividend Increases: July 18-22, 2016

Includes: BHB • BMTC • HEP • LFUS • LFUS • LNN • LTXB • MBWM • MMP • NTRS • SWK • TCP • TLP • WES 

Summary

• Companies can only increase their dividends regularly if earnings grow sufficiently.
• I like monitoring dividend increases for stocks on my watch list of dividend growth stocks, because I consider such stocks to be candidates for further analysis.
• This week, 14 companies on my watch list declared dividend increases.

Three Round Out Buys

Earlier this month I reported selling several stocks, including three winners (NTT, RS, O – but only half), three more winners (TD, WPC, AVA) and four more positions (PM, CVX, STWD, MDP).

My reason for this sudden selling spree is that I want to prepare DivGro for options trading. Recall that I'm hoping to boost dividend income by selling options against some of my DivGro positions. Each option controls 100 shares. Covered call writing, the strategy I'm most interested in, requires that I own 100 shares for every call option I write.

Many of my DivGro positions consist of fewer than 100 shares, so I would have to round out the number of shares to 100 (or multiples of 100) before writing covered calls. Today's article is about buying shares to round out 3 positions and to make them eligible for options trades.

16 Dividend Increases: July 4-15, 2016

Includes: BSET • CMI • DFS • DUK • EDR • EPD • GEL • HCSG • NNN • OHI • OXY • PAYX • PNC • R • SJM • WBA 

Summary

• Companies that regularly increase dividends show confidence in future earnings growth potential.
• Monitoring dividend increases for stocks on my watch list helps me identify candidates for further analysis.
• In the past few weeks, 16 companies on my watch list declared dividend increases, including 3 of the stocks I hold in my portfolio.

Yowzah!

Yow'zah! : an exclamation indicating excitement, usually associated with the observation of an event or object that greatly exceeds the ordinary
      Urban Dictionary

After blogging for nearly 1,300 days since the start of DivGro, today I crossed the half million page view milestone! What a journey it has been! With this post, as with my previous milestone post, I'd like to celebrate a little and hopefully encourage other dividend growth investment (DGI) bloggers to keep going and help this wonderful community go from strength to strength!

The last time I wrote a milestones article, I reported reaching 200,000 page views (pv's) at a daily average of 249 pv's. That article was the 201^st one posted on DivGro. At the time, my most popular article was Popular Dividend Growth Stocks, with 2,640 pv's.  The runner-up, Tracking your DGI Portfolio, had 2,140 pv's. And, at the time of writing that article, I had four articles with at least 1,000 pv's.

Today, I'd like to give updates on these milestones and report a few more...

Recent Buy: Wells Fargo & Company

24 June 2016: Bought 54 shares of WFC at $46.51 per share. Wells Fargo & Company (NYSE:WFC) is a diversified, community-based financial services company with $1.8 trillion in assets. Founded in 1852 and headquartered in San Francisco, the company provides banking, insurance, investments, mortgage, and consumer and commercial finance through 8,800 locations, 13,000 ATMs, the internet, and mobile banking, and has offices in 36 countries to support customers who conduct business in the global economy.

WFC is a Dividend Challenger with a 6-year streak of dividend increases and a 10-year dividend growth rate of 4%. The company cut its dividend in March 2009 to preserve capital in the midst of the Great Recession, and resumed dividend increases in 2011. WFC pays quarterly dividends of 38¢ per share in the months of March, June, September and December.

With this buy, DivGro's projected annual dividend income increases by $82.08.

Closing Four More Positions

The markets are climbing higher and higher...

Today, the Dow surged to a new record high, closing at 18,347.67 – about 35 points above the previous record set on 19 May 2015. The S&P 500 built upon its record close yesterday, pushing the record high up another 15 points to 2,152.14. The Nasdaq is now in positive territory for 2016, but still 3.6% under its record close.

Amid these record-setting movements, I've been closing some of my DivGro positions. Last week I closed five positions and reduced one, reported here and here. Today I'm reporting on four more sells.

10 Dividend Growth Stocks For July 2016

Includes:  AAPL • BA • BEN • CVS • EXPD • GD • LOW • TGT • TRV • VFC 

Summary

• Every month, I rank a selection of the CCC dividend growth stocks to identify top candidates worthy of further analysis. 
• I use different screens every month to trim the CCC list of more than 750 stocks to a more manageable number of candidates.
• Using a multi-stage dividend discount model and fundamental analysis, I rank the remaining stocks and assign a 7-star rating to the top 10 ranked stocks.
• This article reveals the top 10 ranked stocks for July.

Selling Three More Winners

I sold three winners recently and today I'm reporting on selling three more.

So, why am I selling stocks that are performing well and continue to pay increasing dividends? The main reason is that I'd like to trim the number of positions in DivGro and increase the size of some of my core holdings.

As mentioned earlier, I'm hoping to boost my dividend income by selling options against some of my DivGro positions. Covered call writing is a safe way to earn extra income on stocks you own. Typically, you sell one contract for every 100 shares you own and collect an option premium in return. Currently, many of my DivGro positions involve fewer than 100 shares, so by increasing those positions, I'll have more opportunities to execute options trades.

Selling Three Winners

As a dividend growth investor, I select and buy stocks with a solid track record of paying and increasing dividends. I try to assess the likelihood that companies will continue to pay and increase their dividends, taking things like earnings growth potential, dividend safety and payout ratio into account. If I like what I see, I buy shares with the intent of holding onto them and collecting dividends.

Sometimes, a company decides to cut or eliminate its dividend. I really hate when this happens, because I prefer growing dividends over shrinking ones! Usually, when a company decides to cut or eliminate its dividend, I sell my shares. Experience has taught me that hanging on to shares after a dividend cut is foolhardy.

Dividend growth investing is a long-term strategy. You buy stocks that pay dividends, reinvest those dividends (if you can) and compound returns over time. So, why sell stocks if they perform well and continue to pay increasing dividends?

What Have You Done For Me Lately?

Every quarter, I review my portfolio of dividend growth stocks, DivGro. These reviews provide a synopsis of actions I've taking throughout the quarter and present a summary of dividend income, dividend adjustments and portfolio performance.

To evaluate the performance of individual stocks, I create charts for stocks I've owned for longer than one year. The charts present data such as annualized total returns, yield on cost, and year-over-year dividend increases. Underperforming stocks are easily identified in this way.

Lately, I've been adding to existing positions more frequently than opening new positions. I haven't eliminated positions often. My reasons for eliminating positions include dividend cuts and in some cases, mergers and acquisitions.

Three More Home Runs!

I hit my first home run with DivGro in October 2014, when General Dynamics Corporation (GD) crossed the 100% profit mark. I initiated a position in GD in March 2013 at $67.61 per share. The stock is trading around $138 per share, still placing it in home run territory. With dividends added, GD has returned 117% and on an annualized basis, a remarkable 35%!

My second home run came February this year, when Nippon Telegraph and Telephone Corp (NTT) reached the 100% milestone.  I bought shares of NTT in February 2013 at $22.43 a share. The stock is trading near $48 per share, still in home run territory! With dividends added, NTT has returned 124%, or 37% annualized – even better than GD!

Today, I'm happy to report 3 more home runs! All of these stocks have passed the 100% profit mark a while ago when taking total returns into account, but they've only recently crossed doubler status as far as the stock price is concerned.