2019, Recap & Review

As is customary around this time, it’s a good opportunity to review the year passed and the year ahead, to learn from our mistakes and to build on our successes. After my last blog post about the dividend numbers for December 2019 I decided to make a visual presentation of the year 2019. This is how this fantastic year for the stock market ended for me:

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New & Closed Positions

The most fascinating thing for me in terms of buys and sells was building my position in 3M (MMM). I was a bit early with buying severals shares just above $192 but managed it to average down towards a price of $171. If presented with the opportunity to buy more shares around $160… I’m in. Their streak of increasing their dividends with 61 years just screams quality and staying power.

I’m also glad I took advantage of buying two quality large U.S. banks at depressed Mr. Market prices. In hindsight I should have bought more shares of these businesses. I regard the lack of more money to invest with at that moment as a mistake. I always invest the total amount of money available immediately in dividend paying stocks. As a consequence of that I’m not able to buy stocks for a period of let’s say… three weeks. The next paycheck means the next buy. Sometimes I find some cash here and there which gives me an extra opportunity, but you also have to buy food to feed your kids, you know… But I’m content with initiating a position and hoping to get a rebound in 2020 to buy another bunch of JPM and WFC stocks.

I sold Celgene (CELG) with a small loss after the announcement of being acquired by Bristol-Myers Squibb Company (BMY). This was a speculative buy and once more a lesson to stick with the plan of buying dividend stocks. Another sell was Emerson Electric (EMR) after disappointing figures and several low dividend increases in a row. I sold this position with a profit around 60%. It felt unnatural to sell a dividend growth stock as I plan to never sell my shares, especially of a company with an impressive streak of increasing their dividend for 62 years. But I feel a realistic and competitive plan is missing. It wouldn’t surprise me if it turns out I was too early with my decision to sell and they’re back hitting homerun after homerun in three years. We’ll see.

Missed opportunities

2019 was also a year of some damn fine opportunities. I missed the opportunity of buying Home Depot (HD) and Lowe’s (LOW) at attractive levels of valuation. But we also had a big pullback in stock prices and valuation multiples of Goldman Sachs (GS), A.O Smith (AOS) and Broadcom (AVGO). Man, o man… I just need more money at hand. That’s probably the biggest lesson for me, folks.

Dividend Income & Portfolio Worth

How I would have loved to close 2019 with a FY dividend income above $3,000. Too bad that number isn’t in the books (yet). But closing the year with more than $1,000 or 65% extra in extra dividend income in comparison with 2018 is also something to be proud of.

The line between all numbers of FY dividend income is rising nicely. I’m very content with that and very curious how things will develop in 2020 but also beyond 2020. A nice indicator for 2020 is the forward twelve months of dividend income as of December 31st 2019. That’s already a figure of $3,621. This means an increase in dividend income of 20% already. And we’ve only just begun…

The market value of my stock portfolio was more or less $93,000 at the end of 2019. An increase of $32K means my portfolio saw an increase of almost 50% during 2019. That’s a pretty number and is partly a consequence of a steep decline in stock prices in December 2018. As you can see, I only invested $13K new capital.

Concluding Remarks

Some dividend investors write about their portfolios worth over $500,000 and their FY dividend income crushing the number of $10,000 in 2019. That seems far away in the future, while I also know that’s where I’m heading eventually if I keep focused and disciplined. What a prospect that is.

In my next post I’ll write about my goals for 2020, personally and financially. This will be the first time for me and I already notice the inspiration I get from setting some bars for myself. As they say “If you continuously compete others, you become bitter, but if you continuously compete with yourself you become better.”

Happy investing!

December, A 45% Growth YoY In Dividend Income To End 2019

With this blog post about my dividend income for December an amazing year of progress to financial independence comes to an end. It’s getting more excited each and every year. I will write a separate blog post about the year 2019 and my goals for 2020.

Income numbers December

The amount of dividend income for month 2019/12 was $191.35. Three companies paid me more than last quarter as a consequence of a raise or larger position. Here’s the breakdown:

Bank of America (BAC) – $7.02

BlackRock (BLK) – $13.20

Cummins (CMI) – $13.11

Johnson & Johnson (JNJ) – $7.60

3M (MMM) – $41.76

Norfolk Southern (NSC) – $5.64

Realty Income (O) – $3.86

Southern Company (SO) – $21.70

Stanley Black & Decker (SWK) – $8.28

Union Pacific (UNP) – $5.82

Wells Fargo (WFC) – $13.77

Exxon Mobil (XOM) – $49.59

Progress

My passive income for the month of September 2019 was $192.92 That means a decrease of 1% QoQ; The progress YoY is more meaningful; my dividend income for December last year was $131.95 so that’s an awesome increase of 45% YoY. Let’s look at the graph YTD:

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Buys In December

During this month I bought 20 shares of Simon Property Group (SPG) for a price of $145.98. You can read more about this purchase in this article. It still trades at an attractive valuation with a P/AFFO of 13.5 and a dividend yield of 5.78%.

Dividend Income FY 2019

Including this month I collected a nice FY $2,961.57. This means I closed this year with an increase of 65% YoY. WOW!

Thanks for stopping by and feel free to comment.

Happy investing!

Another Record Month Of Dividend Income, A 53% Growth YoY

The year 2019 has come to an end. This means we can draw up the balance. I think 2019 will turn out to be a year in which the snowball effect of compounding really took shape. But there are still two months of dividend income to report about on my blog: November and December. Let’s start with November. December will follow shortly.

Income numbers November

For this month my total amount of dividend income was $353.43. This is the highest amount of monthly dividend income so far. It seems we’re already heading towards a quarterly dividend of $400, after crushing the number of $300 only recently in August. We are steaming up!

Three companies paid me more than last quarter as a consequence of a raise or larger position. Here’s the breakdown:

Apple (AAPL) – $16.94

Abbvie (ABBV) – $64.20

CVS Caremark (CVS) – $17.00

Delta Air Lines (DAL) – $9.26

Realty Income (O) – $3.86

Omega Healthcare (OHI) – $67.00

Starbucks (SBUX) – $19.27

Tanger Factory Outlets (SKT) – $62.13

AT&T (T) – $85.68

Texas Instruments (TXN) – $8.10

This makes the total amount of dividend income for this month a nice $353.43. My dividend income in August 2019 was $331.12 so that’s an increase of 7% QoQ. My passive income for November 2018 was $230.73 so that’s a very welcome 53% YoY growth. This means another high double-digit growth number, I love it! You can see that four companies contribute a very large part to my dividend income. It’s clear I have to diversify more than I used to do: more companies and a more equal distribution. This will be one of my goals for 2020. Here is the graph that shows all monthly dividends YTD as compared to last year:

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Transactions during November

I didn’t buy any stocks in November, because I wanted some extra money to invest with towards the end of 2019.

Looking Forward

I earned $2,770.27 in dividend income YTD, which means I surpassed the FY 2018 dividend income of $1,793.09 with almost $1,000.

Thanks for for your time.

Happy investing!

 

The Latest Addition To My Dividend Growth Stock Portfolio

Last week I finally initiated a position in Simon Property Group (SPG). I’ve been watching this high-quality REIT closely but preferred to buy stocks of other companies during the last two years. Finally, it all came together: money burning in my pocket and pressure on SPG’s stock price which resulted in a high dividend yield and a compellingly attractive valuation. I think this is one of the only few low-risk, high-yield investment opportunities at the moment as the U.S. stock market continues to hit all-time highs.

The Business Sector

Sometimes a whole business sector faces challenges whether it’s a compliance issue, technological developments or fundamental questions about the business model. Some think this is the case with traditional retail. I don’t think a retail apocalypse is at hand and fears are overblown. Some REIT’s will just have a difficult time with struggling or bankrupt tenants and may cut their dividend because of a declining occupancy rate and their (increasing) debt load.

Why SPG Stands Out From The Rest

In their 2018 annual report we can read about their astounishing accomplishments:

“Through disciplined execution, our strategy has resulted in industry-leading results, year in and year out. Our Company has achieved growth and scale that few could have imagined possible and the following are just some of the impressive numbers to report over the last 25 years:
• Our annual funds from operations (“FFO”), an important industry measure, has grown from $150 million at the time of our IPO to more than $4.3 billion in 2018.
• We have increased the Company’s annual FFO generation by more than twenty- five times since our IPO.
• Total consolidated revenue has increased more than thirteen times from $424 million to approximately $5.7 billion.
• The gross market value of our portfolio has increased from $3.5 billion to more than $90 billion.
• From our IPO through year- end 2018, ownership of Simon Property Group (SPG) common stock provided a total return to shareholders of more than 2,750%, or a compound annual return of more than 14% compared to the S&P 500 compound annual return of 9% over the same period.”

Past results and averages are not the same as what the company will earn on the next dollar of capital it puts into the business. But it can be used as a guide especially for high-quality businesses or businesses run by high-quality management. Therefor I’m not too worried about the challenges of SPG. They’re able to gradually refinance their debt whether a recession sets in or not. And at low interest rates, because SPG is a S&P 500 A-rated company. They also have a very strong balance sheet with $7 billion in low-cost liquidity and $1.5 billion in retained cash flow. This gives SPG the ability to continuously invest in and improve their real estate portfolio, repay their debt, increase their dividend or even buyback shares. I believe the stock price has significantly come down without any real news with respect to the underlying business.

The Transaction

I bought 20 pieces of SPG at a price of $145.98. This means a P/AFFO slightly above 13. Their normal P/AFFO Ratio over 10 and 5 years is more or less 19. So I’m good on the valuation side. With purchasing SPG at this price I get a dividend yield of 5.75%. Their latest dividend raise was a small 2.4% from $2.05 to $2.10. SPG tends to increase their dividend twice a year.

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Their longer term dividend growth rate averages out to 10%. That’s very impressive! Their AFFO dividend payout ratio has only slightly increased from 67% to 72% over that same time frame. We can therefor conclude that the dividend is safely covered with funds from operations. During the Great Recession SPG lowered its dividend in 2009 and 2010 though. But over the last 10 years they’ve already managed to acquire the status of a Dividend Contender again. This shows what a quality business this is.

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There’s a fascinating text in the 2018 annual report of SPG about their dividend history. “We have paid more than $28 billion in dividends over our 25-year history as a public company, and at our current dividend rate, by the second quarter of 2019, we will have cumulatively paid more than $100.00 per share in dividends since our IPO. Especially considering that our IPO price was $22.25 per share—WOW!” That just sums it all up: WOW!

SPG is a high-quality REIT with a dividend yield of 5.75%, a payout ratio of 72% and a fortress-like balance sheet. With this buy I added $42 to my quarterly dividend income, which totals up to a FY $168. I’m very content with this new position. What’s not to like?

What did you buy lately? Please feel free to comment.

Happy investing!

 

 

October: A 72% Higher Dividend YoY!

Once again, I’m a bit behind with writing for this blog. Most of my time and energy went into my new job since October 1st. However, I’ve been watching the market closely during the last months. So with October, the last quarter sets in and we get a good idea of our annual progress in getting financial independent. It’s an exciting time to be a dividend growth investor. Valuations are through the roof and the most recent dividend growth numbers of many companies are lower than previous years. Once again, it all comes down to a thoughtful plan, sticking to it, and considering your progress towards attaining your goals. Let’s start right away!

The Numbers

My total dividend income for the month of October was $285.54. In this month I got several raises as compared to the dividend amounts in July. October included the usual small dividend increase of Realty Income (O), but also a 7% raise by Illinois Tool Works (ITW), a 12.5% higher dividend of JP Morgan (JPM), a 5% increase by Altria (MO) and a 2.6% dividend hike by Philip Morris (PM). My dividend income from my position in Altria (MO) also increased because of a larger position. This sums up to:

Bank of Nova Scotia (BNS) – $30.93

Iron Mountain (IRM) – $11.00

Illinois Tool Works (ITW) – $6.42

JP Morgan (JPM) – $5.40

Kimco Realty (KIM) – $70.00

Leggett & Platt (LEG) – $8.40

Altria (MO) – $81.48

Realty Income (O) – $3.86

Philip Morris (PM) – $31.59

Ventas (VTR) – $36.46

This makes the total amount of dividend income for October a nice $285.54. Just slightly below the $300 threshold. My dividend income for July 2019 was $275.02 so that’s an increase of a very small 4% QoQ. The total dividend for October 2018 was $166.05, so that’s an increase of 72% YoY. Just like I want to see it! Here is the graph YTD:

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Transactions during October

This month I sold my small position in Emerson Electric (EMR). This led to a 51% gain excluding a 4% annual dividend over 4 years. Let’s say, a gain of 65% in total. The dividend increases have been disappointing over this time frame. I think the company doensn’t have an unique position compared to their competitors. With this money I increased my position in Tanger Factory Outlets (SKT) with 29 stocks for $16.22 per share. I also bought an additional 14 stocks of Altria (MO) for a trading price of $46.12.

Looking Forward

My total dividend income YTD is $2,416.79. I consider this an unreal number compared to where I came from three years ago. The snowball is getting shape here. I would love to close this year passing the number of $3,000. How awesome would that be!

Please let me know which stocks you bought and whether October was a good month in terms of dividend income numbers. Thanks for reading.

Happy investing!

September Dividend Income: It Used To Be A Low-Growth Month. But Now +57% YoY!!!

The third quarter is in the books, folks. Time flies when you’re having fun. And while having fun, the compounding effect of investing and reinvesting our increasing dividends is getting bigger and bigger. That’s the real beauty of the dividend investing strategy. It will take care of itself, if and only if we select high-quality businesses. But how do we know whether a company is a high-quality business or not? Well, in 90% of the cases a 50-year streak of paying increasing dividends is a pretty good indicator to start with. It’s as simple as that. Let’s see how September worked out for me.

Income Numbers

The amount of dividend income for month 2019/09 was $153.28. In this month I got raises in dividend income from Bank of America (BAC), Cummins (CMI), Norfolk Southern (NSC), Realty Income (O), Stanley Black & Decker (SWK) and Union Pacific (UNP). That’s quite a list, don’t you think? I also got my first payment by Wells Fargo (WFC).

BAC paid me 30% more than three months ago. Wow! The payment by CMI was 15% higher in comparison with June this year. NSC gave me an extra 9.30% this month. O rewarded me with the traditional, but still very welcome small hike of 0.2%, whereas SWK increased their dividend with 4.5%. This month also included the second dividend raise by UNP, a nice 10.1% increase. A very good month, imho.

Breakdown of Dividend Income

My dividend income of $192.92 for this month was generated by:

Bank of America (BAC) – $7.02

BlackRock (BLK) – $13.20

Cummins (CMI) – $13.11

Emerson Electric (EMR) – $4.90

3M (MMM) – $37.44

Norfolk Southern (NSC) – $5.64

Realty Income (O) – $3.85

PepsiCo (PEP) – $8.60

Southern Company (SO) – $21.70

Stanley Black & Decker (SWK) – $8.28

Union Pacific (UNP) – $5.82

Wells Fargo (WFC) – $13.77

Exxon Mobil (XOM) – $49.59

Progress

My passive income for the month of June 2019 was $192.92. That means an increase of 26% QoQ; that’s pretty significant for my lowest month of every quarter. This month is now really getting somewhere. The progress YoY is even more meaningful; my dividend income for September last year was $122.98. So that’s an awesome increase of 57% YoY. ME LIKE! Let’s look at the graph YTD:

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Buys In September

During this month I bought 9 shares of Johnson & Johnson (JNJ) for a price of $128.22. You can read more about this purchase in my previous article. It still trades at an attractive valuation with a P/E of 15 and a dividend yield of 2.90%.

Dividend Income YTD 2019

Including this month I collected a nice $2,131.25 YTD. My total dividend income in 2018 was $1,793.09. It looks like I’m going to close the year with a FY dividend income just shy of $3,000. Too bad I won’t cross that mark. I really like passing those psychological meaningful round numbers. But that would still imply an increase in FY dividend income of 65% YoY. I could live with that. 😎

Thanks for stopping by and feel free to comment.

Happy investing!

Yes, I Finally Bought This Dividend King 👊🤘🏾🥂

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That’s how excited I felt when I bought shares of this fantastic business two weeks ago. It was somehow inevitable to buy shares of this dividend king and own it for a very, very long time. For three years I’ve watched the share price going up and down. But finally I laid my hands on this one. I’m talking about Johnson & Johnson (JNJ). The company with 135,000 employees who serve more than 1 billion patients each day.

I bought 9 stocks of Johnson & Johnson at a price of $128.22. At this price the stock yields 2.98%. They’re paying me $0.95 per quarter. So 9 shares equals a yearly $34.20. That’s certainly a nice yield and amount to begin with. It’s below my preferred step-in-yield of 4%, but J&J screams quality all over the place. So a lower yield is fine with me.

Their EPS (ttm) was $6.02 which means I bought the stock at a P/E (ttm) of 21.3 which seems on the high side. But J&J is also trading at approximately 15 times FY2019 earnings estimates of $8.60 per share. That’s more like a reasonable P/E.

They’ve increased their dividends for 57 in a row, which makes them a true dividend king. Another fun fact: JNJ has a streak of 35 consecutive years of adjusted operational earnings growth. Man, this is a high-quality business! In fact, the company is one of the only two companies with a AAA credit rating, the other one being Microsoft (MSFT). Their latest dividend raise was still a nice 5.6%. The 5-year yield on cost of JNJ sits around 3.85% according to GuruFocus.

The dividend payout ratio based on analysts consensus of earnings of $8.60 in 2019 and a ftm dividend of $3.80 comes down to 44%. This gives the company enough opportunities to continue increasing their dividends in the future. Over 20 years, they’ve managed to only increase their payout ratio about 10 percentage points. Talking about value creation and capital allocation! Many large and old corporations get inefficient along the way; they miss the boat, because they took things for granted for too long. But not with this giant: 25% of sales come from products launched in the past 5 years. That’s quite an achievement for such an established company.

GuruFocus states that the current return on capital (Joel Greenblatt) was 110.35%. This means the management of JNJ creates tremendous value for its shareholders. Their RoC is even ranked higher than 95% of the 1011 companies in the Drug Manufacturers industry. That is beyond comprehension, especially for such a large corporation. As a dividend growth investor I like dividend reliability and dividend growth. But, I also like to buy shares of better-than-average companies trading at below-average valuations. Buying JNJ at a forward P/E of 15, a RoC above 100% and a dividend yield of 3% means we’re into something good, folks.

In December 2018 the Board of Directors also announced they had authorized the repurchase of up to $5 billion of the company’s common stock.

I’m very excited about this purchase. It’s a new position for me and I will be watching the stock price closely to buy even more shares. The earnings streams are durable, reliable and stable because of their business diversification. Just like you want with a recession coming our way. J&J has been around for more than 130 years, so they weathered a countless number of economic and market cycles. I’m confident they will also ride this one brilliantly.

What did you buy lately and have you considered buying shares of JNJ?

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