October 2019 Buy Candidates

The Q3 reporting season will really get underway in mid-October. I’m always looking forward to this exciting time. First of all, you get an update on the business performance of the companies you own. Secondly, there’s always a good business underperforming relative to the short-term oriented market expectations which create attractive buy opportunities.

Last year, there was a fantastic opportunity to pick up a great company like Starbucks (SBUX) for a price around $50, which was equal to a P/E of 20 and a dividend yield of 2.70% at that time. Right now, it trades around $90, a P/E of 31 and a dvidend yield of 1.60%. I was able to benefit from the opportuinty in October last year, because I had some dry powder to invest in SBUX.

There’s no doubt about the strength of the U.S. economy at the moment, especially relative to the economies in Europe. But we also see some signs of a slowing economy for several quarters in a row. It’s very likely that some companies will report a large revenues and/or earning miss with current market conditions; and by that just scaring the hell out of this market. That’s why I’m considering to wait for the earnings season and buy stocks of companies that reported an unexpected miss.

Stocks which look attractive to me at this moment are Johnson & Johnson (JNJ), Altria (MO) and Simon Properties Group (SPG). Since yesterday I have a subscription to FastGraphs so I decided to post some screenshots. I’m planning to use these screenshots more frequently on my blog.

Johnson & Johnson (JNJ)

I just initiated a position in this company and am very eager to buy more shares. You can read more about this purchase right here. The price has stayed in the price range $127-132 in the last two weeks which comes down to a forward P/E of 15 and a dividend yield of 2.95%. Based on their average P/E ratio over 10 years the company is fairly valued. The average dividend growth rate over 10 years is 7%. That means a nice double of their dividend in 10 years using the 72-rule. Still, their dividend payout ratio remains attractively low at 44%. Oh yes, before I forget: J&J has increased their dividend for 56 following years which makes the company a true Dividend King.

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Altria (MO)

My position in this tobacco stock is already meaningful in comparison with my other stock positions. I currently own 97 shares for an average buy price of $53.88. It trades around $40 at the moment; that’s 25% lower and therefor an interesting buy candidate. MO has a streak of 49 years increasing their dividend, just year after year. The P/E ratio is less than 10 and a dividend yield of more than 8.3%! This means the business is historically very cheap and the market isn’t expecting anything good from this company right now.

The tobacco industry has had some negative media attention, because people have died from severe lung illnesses linked to vaping. Some questions still remain to be answered regarding these deaths though. I think the political and media pressure isn’t likely to go away any time soon. But hey, if there’s one company that knows how to deal with laws and regulations and find a workable solution for all parties (well, except for the addicted individuals maybe…) it’s Altria. Besides let’s not forget the government is reaping financial gains of the tobacco industry, whether it’s the traditional cigarretes or vaping products.

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Simon Properties Group (SPG)

This high-quality REIT is here for another turn, just like in September it’s also a potential buy in October. They offer a 5.3% dividend yield and trade at an historically low AFFO of 14.5. Their dividend growth rate over 10 years sits around 10%. During the Great Recession SPG lowered its dividend in 2009 and 2010 though. They’ve already acquired the status of a Dividend Contender again. Their AFFO dividend payout ratio has increased from 67% to 71% over 10 years. This shows what a quality business this is. I’m not worried about their debt as SPG is able to refinance their debt at even lower interest rates than right now.

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These are my ideas for October if I’m mentally not strong enough to wait for the next earnings reports ☺️. What are you thinking of? Do you plan to save any extras to take advantage of price declines in the upcoming earnings round mid-October? Do you like the screenshots of FastGraphs?

Thanks for reading and please feel free to comment.

Happy investing!

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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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Kicking Off With A 184% Increase In January 2019

Well, let’s start right away with my dividend numbers for the first month of 2019. As they say “the first blow is half the battle”. I read about other dividend investors’ tremendous progress in dividend numbers YoY and QoQ. The first month of each quarter has always been a strong month for me in terms of absolute numbers, but also percentage-wise. During the market correction in December I bought many stocks. Let’s see if these transactions added somy dollars to my dividend income in January.

The Numbers

My dividend income for 2019/01 was $216.63. In this month I got several raises as compared to the dividend payment three months ago. Walt Disney (DIS) paid me a small amount more for every share than last quarter, $0.88 which means a $0.04 raise. This is a 4.8% increase from the prior dividend. This month also included an increased dividend from Ventas (VTR) – $0.793 instead of $0.79 for every share I own. This is a 0.3% increase. January included my first dividend income from Illinois Tool Works (ITW). Also Kimco Realty (KIM) and Altria (MO) paid me more YoY and QoQ because of my additional buys during the month of December. The dividend of PepsiCo was paid in January instead of December, so that’s a bit of a cheat ☺️. This sums up to:

Bank of Nova Scotia (BNS) – $28.82

Walt Disney (DIS) – $4.40

Illinois Tool Works (ITW) – $6.00

Kimco Realty (KIM) – $70.00

Altria (MO) – $52.00

Realty Income (O) – $3.76

PepsiCo (PEP) – $8.35

Philip Morris (PM) – $6.84

Ventas (VTR) – $36.46

This makes the total amount of dividend income for this month a nice $216.63. My dividend income for the month of October 2018 was $166.05 so that’s an increase of a nice 30% QoQ. My passive income for the month of January in 2018 was $76.33 so that’s an increase of 184% YoY. Wow, that’s quite a growth rate! Here is the graph, look how beautifully the income numbers rise YoY for January:

Transactions during January

I sold my full stake in Celgene for a price of $87.05 after the acquisition offer of Bristol-Myers. With that money I bought a nice bunch of dividend stocks which were still attactively priced after the market correction in December. I added to still relatively small positions and in all cases below my average buy price. So my yield on cost got a nice boost. Here’s what I bought:

Looking Forward

Up until the last moment I hesitated between Abbvie (ABBV) and CVS Caremark (CVS). I decided to buy CVS because I let many opportunities go by in the past to buy this company at a much lower price than my first relatively small buy. My stake in the tobacco industry has risen nicely with my buys in December and January. The yields are on the high side so this promises a lot for the upcoming months in 2019. The numbers for January are staggering. It’s very cool to see this snowball effect getting bigger and bigger every month, quarter and year. What an amazing investing strategy this is.

Happy investing!

December 2018 – Again a month of growth, 12% YoY

I’m late with writing about my progress in dividend income. It’s already April 2019 and the last month I wrote about was November 2018. That seems like ages ago. My private life has been more turbulent so far than during 2018. But I do love writing about this stuff, so I’m eager to keep blogging. Anyway, today I’m writing about my progress in building up a dividend income during the month of December. It’s always nice to close a year of hard work and investing to see where we stand on our path to financial independence and early retirement. So, let’s hit it!

Income Numbers

The amount of dividend income for month 2018/12 was $131.95. In this month I got one small raise in dividend income from Realty Income (O) as compared to the dividend payment three months ago. “Slowly but surely” seems to sum this up pretty well. This was the only raise I got. So, to be honest, that’s a bit disappointing. But this month included my first dividend income by the companies Blackrock (BLK) and Stanley Black & Decker (SWK). I initiated a small position during the last months of 2018 and would love to build a bigger position. Hopefully, Mr. Market will freak out again because of growing market uncertainties like Brexit, trade wars between the USA, EU and China and signs of a coming recession. So my dividend income for the month of December was generated by:

Bank of America (BAC) – $5.85

Blackrock (BLK) – $9.39

Cummins (CMI) – $11.40

Emerson Electric (EMR) – $4.90

General Motors (GM) – $26.98

Norfolk Southern (NSC) – $4.80

Realty Income (O) – $3.75

Southern Company (SO) – $21.00

Stanley Black & Decker (SWK) – $7.92

Union Pacific (UNP) – $4.80

Exxon Mobil (XOM) – $31.16

Breakdown of Dividend Income YoY

My passive income in the month of December last year was $125.21 so that’s an increase of 5%. That’s on the low side for me, but this month has been lagging behind for a while now. The progress QoQ was a bit higher, just 7%.

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

Transactions in December

I decided to sell my full position in General Motors (GM), because the dividend hadn’t been raised for a couple of years. I believe it’s still a good value play. But when stock prices declined so rapidly in December I decided to buy other stocks with this money. Here’s what I bought:

Looking Forward

In order to raise my dividend income for this month going forward I selected the companies Boeing (BA), Home Depot (HD), Johnson & Johnson (JNJ), Lockheed Martin (LMT), 3M (MMM) and Visa (V). They’re all on my watchlist “2019” and my watchlist “buys during the next recession”. Some of these candidates would also give me exposure to new industries and increase my weighted dividend growth rate. Lovely.

Dividend Income FY2018

With the month of December I collected a nice $1,793.09 during 2018. My total dividend income in 2017 was $827.81. That’s an increase of just less than 119%. Wow! Rock solid! This is very encouraging. And we’re already on our way for 2019. The increase in terms of percentages will decline with time, but the increae in dollar amounts will get larger and larger. Just as Sam Cooke sang in 1964, “Ain’t that good news?” 👍

$$$ 136% Increase YoY In Passive Income For 2017/11 $$$

Finally, I have some time to write a blog post. Time does fly! This blog post, as the title suggests, is about my progress in dividend income for the month of November. The year 2018 has almost come to an end. Next year is going to be as excited and turbulent as 2018. At least, I hope so… Because with turbulence comes oportunities for our DGI community. But first, the numbers for the month of November.

Income numbers

The total amount of dividend income in the month of November was $230.73. This is my second monthly dividend income above the $200 threshold after the month of August. I like to see my income passing all kind of psychological numbers like $100, $200, $250, etc. It’s very encouraging, because these numbers look past the horizon when you just start with dividend growth investing. Only one company paid me more than last quarter as as consequence of a raise: good ol’ Realty Income with an increase of $0.01 ☺️. My dividend income for this month was divided by payments of 9 well-known and great companies:

Apple (AAPL) – $16.06

Abbvie (ABBV) – $9.60

CVS Caremark (CVS) – $2.00

Delta Airlines (DAL) – $8.05

Realty Income (O) – $3.75

Omega Healthcare (OHI) – $66.00

Starbucks (SBUX) – $16.92

Tanger Factory Outlets (SKT) – $38.85

AT&T (T) – $69.50

This makes the total amount of dividend income for this month a nice $230.73. My dividend income for the month of August 2018 was $209.12 so that’s an increase of 10% QoQ. Always nice to see a double-digit growth number here, although I’m more interested in the YoY growth.

YoY Growth

My passive income for November 2017 was $97.84 so that’s an increase of 136% YoY. This means a triple-digit growth number, I love it! Abbvie paid me my first dividend of $9.60 and my income from AT&T increased from $57.50 to $69.50 YoY. I’m very excited to have Abbvie and Starbucks in my basket. They’ll average up my dividend growth numbers. The dividends of OHI, SKT and T are the big ones this month. Here is the graph that shows all monthly dividends YTD as compared to last year:

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Buys In November

During November I added to my positions in Altria (MO) and AT&T (T). I bought 16 stocks of Altria at a price of $53.58 on November 28th and 29 stocks of AT&T as cheap as $30.28 on November 16th. Happily, these buys also lowered the average price of both positions. I always like that as it will increase my total return as I plan to never sell these positions.

In summary, November was a good month with solid growth numbers YoY and additions to my positions at very attractive prices. I’ll post my progress for the month of December this weekend.

Happy investing!

**Triple Digit Growth Numbers In October; A 388% Increase In DGI YoY!**

The last couple of weeks I read blogs of other members of the DGI community to see how the month of October turned out. In many cases our DGI colleagues keep pushing forward by getting nice dividend increases, buying quality companies and hitting new milestones. The snowball is getting bigger and bigger. Let’s see what results I booked in October.

The Numbers

My dividend income for October was $166.05. In this month I got several raises as compared to the dividend payment three months ago. Realty Invome (O) paid me a penny more for every share than last quarter. This month also included the increased dividend from Altria (MO) – $0.80 for every share I own. Finally, the Bank of Nova Scotia (BNS) paid me CAD 0.85 instead of CAD 0.82 per share. This sums up to:

Bank of Nova Scotia (BNS) – $29.12

Kimco Realty (KIM) – $58.50

Altria (MO) – $31.20

Realty Income (O) – $3.75

Philip Morris (PM) – $6.84

Ventas (VTR) – $36.34

This makes the total amount of dividend income for this month a nice $166.05. My dividend income for the month of July 2018 was $165.45 so that’s an increase of exactly 0% QoQ. ☺️ My passive income for the month of October in 2017 was $34.02 so that’s an increase of 388% YoY. Wow, that’s quite a growth rate! Here is the graph that shows all monthly dividends YTD as compared to last year:

EF90800A-648D-4C83-8652-3519AD4DF9DD.pngLooking Forward

Hopefully the wild swings in stock prices remain for a while; BREXIT, the trade war between USA and China, oil supply/prices and rising interest rates are big macro economic issues. There is nothing better to see the stock prices of high-quality dividend paying companies getting dragged down on days of bad news items for the stock market in general. I’ve got my eyes on BLK, ITW, MO, SWK, TXN and XOM.

Happy investing!

Wow! A 230% YoY Growth In Dividend Income For August 2018

Sorry folks, I’m late. Unusually late. I’m sorry for that. Summer holiday, my part time post-master education for becoming an IT Auditor, the first weeks of the new school year for our daughters got me away from writing a blog post. That means I have some serious blogging to do. Today I’ll start with sharing my progress in generating a nice and steadily growing dividend income for the month of August. During July I realized a substantial 342% dividend growth YoY. That was an incredible move upwards. Let’s start right away to see what numbers are in the books for month 2018/08!

Income numbers

My total amount of dividend income in the month of August was $209.12. This is my first monthly dividend income above the $200 threshold. Wow, another inspiring record for me! In this month a couple of companies paid me more (for doing nothing ☺️) than the last time: Delta Airlines paid me 14.8% more and good old Realty Income decided to pay me 0.45% more in comparison with last month. My dividend income for this month was divided by payments of 8 well-known and great companies:

Apple (AAPL) – $16.06

CVS Caremark (CVS) – $2.00

Delta Airlines (DAL) – $8.05

Realty Income (O) – $3.74

Omega Healthcare (OHI) – $66.00

Starbucks (SBUX) – $16.92

Tanger Factory Outlets (SKT) – $38.85

AT&T (T) – $57.50

This makes the total amount of dividend income for this month a nice $209.12. My dividend income for the month of April 2018 was $153.68 so that’s a serious 36% increase QoQ. I don’t pay too much attention to this number as I think the YoY growth rate shows the development over a longer term and is more relevant in this regard.

My passive income for the month of August in 2017 was $63.44 so that’s an increase of 230% YoY. Holy smoke, this is some serious business! Delta Airlines paid their dividend in August, a month earlier as compared to their quarterly payments in March and June. Also, Starbucks paid me my first dividend. I’m very excited to see their first and fast rising contribution and I’m sure many will follow. The dividends of OHI, SKT and T are the big ones this month. Right now, I really depend on these names and yields. I’ll have to diversify with other names, business sectors, dividend yields and growth rates in order to keep growing in terms of dollar amounts and relative growth numbers. Keep pushing forward! Here is the graph that shows all monthly dividends YTD as compared to last year:

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Some very interesting companies got a lot cheaper recently and especially last week. BLK, ITW, STAG, TXN, VTR are on my watchlist. Big names with attractive yields and growth rates looking back 3, 5 or 10 years. Some members of the DGI community already hit the buy button recently and added (more of) these stocks to their dividend growth portfolio. Hopefully I’m also able to benefit from these price declines by collecting a few bucks here and there and reprioritizing some expenses. We’ll see.

I’ll be posting my progress for the month of September the coming week. Stay tuned ☺️.