Dividend Income June 2018 “What Happened?”

It’s that time of the month again. ☺️ This is only the second time I’m publishing my monthly dividend income and I have to say I already like these regular posts very much. The DGI community reaches out to eachother to read, learn and motivate. My blog is a success already as it gives me the opportunity to communicate with so many people around the world who are in the same boat. It’s so cool! And it motivates me even more to buy (new) dividend growth stocks to only see the snowball effect getting bigger and bigger with time. Just like we want it. Last month my dividend income grew 869% YoY. Let’s see how I did this month.

Dividend Income & Two Increases

The amount of dividend income for June was $127.26. In this month I got two raises as compared to the dividend payment three months ago. Southern Company gave me a nice raise of their dividend with 3.45%. They have a respectful streak of growing their dividends for 16 years. Exxon Mobil paid me 6.49% more than last quarter which was their 35th time increasing their annual dividend. Wow! I’m very pleased with the increase of this Big Oil company after a lower growth rate during the last couple of years. This month excluded dividend payments by the companies ConocoPhilips, IBM, Wells Fargo and Walmart as I sold these positions at the end of 2017 and at the start of 2018. ConocoPhilips paid me $2.28 back in April, whereas IBM, Wells Fargo and Walmart respectively contributed $19.50, $14.82 and $12.75 to my quarterly dividend income.

In June I bought 27 stocks of Starbucks for a price of $54.00. The stock currently trades for about $48 a share, which equals an all-time high of 3% dividend for this company. In the coming days I’ll probably buy another bunch in order to average up my yield on cost. If management sustains the 20% dividend increases a year for the coming two years, then stepping in at a price of $48 will result in a yield on cost of 4.3% in 2020. Surreal!

Selling IBM, Wells Fargo & Walmart

My positions in IBM and Wells Fargo were partially based on Warren Buffett owning large stakes in these companies. When I first bought IBM in 2015 I thought they would hit back in two or three years after finding a formula for monetizing Watson and their big patent portfolio. I was convinced IBM was a regular turnaround story so I built up a nice position in two years. Reality set in when the Oracle of Omaha sold a part of his IBM position for Berkshire Hathaway. Only then I realized that margins would stay under pressure for a longer period of time because of increased competition by more successful competitors in the cloud computing business like Amazon, Apple, Google and Microsoft. Their most recent dividend increase showed a lower growth rate than the years before. So after that announcement I sold my entire position in IBM.

The story of Wells Fargo is more or less the same; I sold my shares because of a slower dividend growth rate. I built my position during two years. It used to be a terrific company, a bit boring, but a steady deliverer. But the stock tanked when Wells Fargo announced they had discovered millions of fake bank and credit card accounts. This is a company which will do fine sooner or later, but I didn’t feel comfortable owning it any longer. In fact, the other day I read Wells Fargo announced an increase of their quarterly dividend with 10%. So they may be already on their way back.

I sold Walmart after the sales and earnings numbers of the fourth quarter of 2017 showed pressured margins and deceleration in e-commerce sales growth. The company increased their dividend with only 2%. At that period in time, Mr. Market offered better alternatives in terms of dividend yield, growth prospects and valuation.

Now, I didn’t sell these positions with a loss, but I surely missed out big wins with Apple, Boeing and JP Morgan as these were the companies I considered as an alternative back then. So my loss is actually the missed compounding of investment in those businesses. Boeing is already a triple and JP Morgan a double as compared to the price levels at which I decided not to buy these stocks but IBM, WFC and WMT. These flawed investments show how important it is to have a smart buy strategy. The oppprtunity costs can be huge.

Breakdown of Dividend Income YoY

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My passive income in the month of June last year was $110.30 so that’s an increase of more than 15%. I know that isn’t close to the YoY dividend growth of 869% for the month of May. But when building a dividend growth stock portfolio you happen to have months that grow bigger and faster than others. A dividend growth of 15% YoY is still solid considering the shake up of my portfolio. You can see the loss of the above mentioned dividend payments has nearly been compensated by the quarterly dividend of DAL, O, PEP, SO and XOM. In June I benefited nicely from my position in XOM which I’ve been building up quite consistently the last three years. The share prices of DAL, O, SO and XOM still look attractive these days.

The dividend income for the month of June leads to the next graph:

A5E37973-0B25-405D-8ECD-4AB58C8E886B.png

My dividend income in the month of March was $130.14 so that’s a decrease of 2.2%. I really don’t like a setback, but sometimes you need to step back and re-assess your portfolio. In contrary, I’m more than pleased that all months of 2018 show a steady upward dividend income in comparison with the same months last year. I really hope the QoQ growth number for September 2018 will be higher than my $127.26 for this month.

Dividend Income FY2018

We are halfway 2018 so the total dividend amount for the first six months is a good indication where I’m heading for this year. I already collected $763.35 this year whereas my total dividend income in 2017 was $827.81. It’s truly inspiring to foresee that the total YoY growth number will be amazing for 2018. The snowball is still rolling. That’s for sure.

I’m very curious how you did this month. Please share your progress and insights.

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15 thoughts on “Dividend Income June 2018 “What Happened?”

  1. Good call on selling positions you have changed your mind about, ofcourse in hindsight it’s easy to say you should’ve gone with BA or AAPL. No one can predict this upfront. Great income nevertheless keep it up!

    DI

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    • Thanks DI. It’s true we don’t know that in advance. But up to the last moment I decided to buy WFC instead of JPM for example. That could be an argument to buy smaller bunches of shares in order to be able to buy shares in different businesses.

      I’m very happy with my progress for this month. Thanks again!

      Like

  2. Great results, DC! You did amazing last month with the crazy percentage YOY increase. And $127.26 in dividend in June is a nice chunk of money! My portfolio generated $33.16 in June. It was 677% growth over June 2017. Also, I enjoy these type of blog posts too. Keep up the great work!

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    • Thanks for your reply. Last month was indeed exceptional in terms of growth. In the early years of dividend growth investing the growth in terms of percentage is very motivating.

      You did pretty well in June. Phenomenal growth! Keep saving money and invest for the long-term is all we have to do! Good luck with July 👍

      Like

  3. nice Compound!

    great post and analysis. Im still long ibm, dont throw em to the curb yet!

    keep it up and you will surpass last yrs total in a month or 2.

    cheers

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    • Thanks for your nice comment. So many stocks, so many views. I surely hope you’ll do fine owning IBM. Their dividend yield is very attractive and the dividend growth rate is still reasonable. Good luck with investing! 👍

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  4. There it is Compounder, there it is! I like the sales and purchases in your portfolio. If the companies don’t fit your metrics and what you want in your portfolio….then get them out of there!

    Bert

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    • Thanks for stopping by. I still don’t know if these moves will eventually turn out to be smart. IBM and WFC will do fine sooner or later. But, as they say I didn’t sleep well at night owning these stocks. Especially when I saw all REITs with sustainable dividends going down.

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  5. First time here DC. Congrats on the double-digit increase from last year. Although it wasn’t as high as in May, it’s still very respectable. As for me, I almost made it to a $100 in a single month in June, but haven’t quite yet crossed that threshold. Looking forward to following your progress along the way.

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  6. Hi DC, you’re very welcome to share your views and progress. Crossing that $100 threshold is a psychological win. Congratulations with reaching that magical number! 👍

    I’m hitting the $200 zone for two or three months very soon. It’s such a motivation to keep buying good businesses with attractive dividend yields and/or dividend growth rates. Also the stories and progress of other DGI investors are truly inspiring. I’ll check out your website today to see how you’re doing!

    Thanks again and good luck!

    Like

  7. Looks like you might be on pace for doubling your dividend income YoY, DC. That would be a terrific accomplishment.
    You’ve got a nice streak of $100+ months going, too… no looking back now!
    I see you own Cummins… CMI has hit my radar with its price decline since late January. I owned CMI a couple years back, but sold after a nice run up in a short period of time. It turns out there was more room to run. However, CMI has now dropped a good $10 below where I sold, so I’d be happy to get back in.

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    • ED, thanks for your message. Yes, it seems like I’m going to crush the 100% YoY increase as compared to 2017! My next goal is getting as much months as possible over the $200 line. That would be something! Just like you, I really like CMI. It’s a steady business, good managment and they managed to accomplish a significant dividend growth over the years. It the stock price dips a little lower, I might add to my still relatively small position.

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  8. Nice month. I see our portfoio’s are about the same size so we are receiving similar dividend income. It is nice seeing you make a few movies to optimize your portfolio. Looking forward to following along and seeing your numbers for the rest of the year!

    Liked by 1 person

    • Thanks for stopping by. Just as you wrote, I feel like optimizing my portfolio with lower yield, high growth stocks and get rid of low yield, low growth stocks. I may be wrong, but there have been so much better opportunities the last 12 months. I’ll check out your portfolio again asap. It’s nice to be in the same boat. 👍

      Like

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