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!

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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!

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

08365815-8F7B-4AAD-9AA4-C84019AF6725YES!!!

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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Watchlist For September 2019

After publishing my August results in terms of dividend income and growth figures, I decided to write down my watchlist for September. Many stocks appear to be overvalued at the moment, especially when you consider their most recent growth rates of revenues and earnings. But if you look closer, then you’re always able to discover some high-quality businesses trading at attractive valuation numbers. Here’s my shortlist:

Johnson & Johnson (JNJ): this one needs no introduction in the dividend investing community. Although the P/E seems to be on the high side, the forward P/E of 15 looks very attractive. Buying this beauty for a price below $130 immediately gives you a nice dividend yield to start with: 3%. Their latest dividend increase was 5.6% and I think management is targeting for such a dividend growth rate in the near future. There’s nothing wrong with that, while cruising through the next economic recession. Besides, they’ve increased their dividends for 56 years in a row; with this company in our portfolios, we’ll sleep well at night. I’ve always considered my portfolio as incomplete without JNJ. Adding this wonderful business to my nest with eggs means some extra dividend income in “my lower income” months. That would be nice.

Simon Property Group (SPG): another REIT? Yes, but one of the best, just like Realty Income (O). I don’t think a retail apocalypse is at hand. Look where Target (T) and Walmart (WMT) are trading at the moment in comparison to, let’s say, two years ago. I’m confident SPG will continue to do just fine in this low-interest environment and during the looming recession. They have a strong balance sheet and will also be able to refinance some of their debt if interest rates stay low. The extra cash could be used to ramp up their share buyback program. SPG also has a credit rating of A or likewise from other credit rating agencies. Their most recent dividend increase was 2.5%. SPG has a streak of 9 years increasing their dividend. This quality name trades at a high 5.5% dividend yield at the moment. Initiating a position in this company increases the amount of money I receive in the months with my highest dividend income.

Other candidates would be Abbvie (ABBV), Altria (MO) and Exxon Mobil (XOM). This would mean increasing my position, which doesn’t feel like the right thing to do as I consider these positions already full positions. Especially relative to other positions in my portfolio. I’m also checking out the big Canadian banks. Talking about steady compounders.

What are you up to? Which names are you looking at? And are you planning to add to or initiate a new position?

Please let me know.

Happy investing!

Still Going Strong: A 58% YoY Growth In Dividends For August

Everything is back to normal over here; the summer vacation is over, our kids are back to school and the usual wet and windy weather has returned. Time has flown by. Meanwhile, the dividends haven’t stopped from rolling in ☺️. August was a month of several big price drops which gave us as long term investors some pretty good opportunities to buy good companies at reasonable prices. Fortunately, I had some cash at hand to take advantage of these price swings. Here’s my score of the month of August.

Income numbers

For this month my total amount of dividend income was $331.12. This is the highest amount of monthly dividend income so far and it’s also my first month above the $300 threshold. Hallelujah! This is so inspiring.

Three companies paid me more than last quarter as a consequence of a raise or larger position. The dividend payment I received from Abbvie (ABBV) has increased from $18.19 in May to a nice $56.71 in August. Realty Income (O) paid me $3.85, just a penny more than in May. Delta Air Lines (DAL) increased its quarterly dividend with 15.00% which resulted in a dividend of $9.26 for this month. Here’s the breakdown:

Apple (AAPL) – $16.94

Abbvie (ABBV) – $56.71

CVS Caremark (CVS) – $17.00

Delta Air Lines (DAL) – $9.26

Realty Income (O) – $3.85

Omega Healthcare (OHI) – $66.00

Starbucks (SBUX) – $16.92

Tanger Factory Outlets (SKT) – $51.83

AT&T (T) – $85.68

Texas Instruments (TXN) – $6.93

This makes the total amount of dividend income for this month a nice $331.12. My dividend income in May 2019 was $291.38 so that’s an increase of 14% QoQ. My passive income for August 2018 was $209.12, so that’s a very welcome 58% YoY growth. This means another high double-digit growth number, I love it! Here is the graph that shows all monthly dividends YTD as compared to last year:

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Transactions during August

I added to three positions at lower prices than my average buy price, locking a higher dividend yield than I already had. This leads to a higher yield on cost. I bought 7 stocks of Abbvie (ABBV), 3 stocks of 3M (MMM) and 10 stocks of Altria (MO). The details are as follows:

F9CE049A-441D-4EE0-9384-541EB5BC6F71I now own 60 stocks of Abbvie (ABBV), 29 shares of 3M (MMM) and 97 pieces of Altria (MO). That’s getting serious.

Looking Forward

I earned $1,938.34 in dividend income YTD, which means I surpassed the FY 2018 dividend income of $1,793.09.

Some companies in my portfolio are still trading for low or reasonable valuations. at the moment. In addition to the three bunsiness above, I can think of CVS Caremark (CVS), AT&T (T), Exxon Mobil (XOM) and Wells Fargo (WFC). I’ve also had my eyes on Bank of Montreal (BMO), Johnson & Johnson (JNJ), Simon Property Group (SPG) and the Toronto-Dominion Bank (TD).

Altria (MO) and Philip Morris (PM) confirmed their talks about a potential all-stock “merger of equals.” A combined company could be worth more than $200 billion. I’m curious how this one will play out.

Did you buy a number of companies during the price swings in August? Please let me know.

Thanks for for your time.

Happy investing!

Come What May… A 90% Increase & A Record High 🥂

The month of May. Well, it wasn’t exactly the month of Theresa May. To say the least… But May was certainly a good month for me. Last month I wrote that a monthly dividend income higher than $200 seemed to be the new normal. In fact, I hope to touch the amount of $300 any time soon. That would be a huge milestone for me; just steamrolling forward 💪

Income numbers

For this month my total amount of dividend income was $291.38. As I wrote a record high and the fourth month in 2019 above the $200 threshold. Crossing the $300 barrier is well within reach, hopefully in August. I already notice the snowball effect taking place; every month I have more money to invest, because of the increasing number of stocks and higher dividend amounts per share.

Three companies paid me more than last quarter as a consequence of a raise. Apple (AAPL) increased its quarterly dividend from $0.73/share to $0.77/share, representing a 5.5% annual dividend increase. May included the first payment of $0.77/share. Good ol’ Realty Income (O) paid me $3.84, just a penny more than in February. Tanger Factory Outlets (SKT) paid me $0.355/share, which comes down to a 1.4% increase from prior dividend of $0.35. Delta Airlines (DAL) switched their month of pay date so that’s a bit of a cheat. They paid me $8.05 for this quarter.

The only business paying me more than a quarter ago because of a bigger position was CVS Caremark (CVS) which paid $17.00 (instead of $6.00). Here’s the breakdown:

Apple (AAPL) – $16.94

Abbvie (ABBV) – $18.19

CVS Caremark (CVS) – $17.00

Delta Airlines (DAL) – $8.05

Realty Income (O) – $3.84

Omega Healthcare (OHI) – $66.00

Starbucks (SBUX) – $16.92

Tanger Factory Outlets (SKT) – $51.83

AT&T (T) – $85.68

Texas Instruments (TXN) – $6.93

This makes the total amount of dividend income for this month a nice $291.38. My dividend income in February 2019 was $270.71 so that’s a small increase of 8% QoQ. My passive income for May 2018 was $153.68 so that’s an increase of 90% YoY. This means another high double-digit growth number, I love it! Here is the graph that shows all monthly dividends YTD as compared to last year:

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Transactions during May

I bought 22 stocks of 3M (MMM) in only two weeks. I like this company very much; they have a streak of 61 years increasing their dividends. Including this transaction I now own 26 stocks for an average price of $172.44. My first stocks were bought at a price slightly above $192. I added to my small position in four different chunks:

9F141247-4E21-4C3A-8D08-892667F1DFA4Looking Forward

This is my fourth month with a dividend income above $200. And I’m already on my way to realize the target of getting my first dividend income of $300+ in 2019.

My stake in the tobacco industry has come under pressure again after Nielsen tracking data indicated that cigarette industry volume fell 11.2% in the 4-week period ending on May 18 to mark a deceleration from the -9.5% 12-week pace, according to Wells Fargo. Not a good sign, but I’m sure MO and PM will prosper eventually. MO looks very attractive again at these price levels.

I earned $1,178.93 in dividend income YTD. That’s a big number, imho. I collected this income number three months earlier than in 2018.

Please let me know which stocks you bought. Did you buy 3M (MMM)? Was May a good month in terms of dividend income numbers?

Thanks for reading.

The Snowball Keeps Rolling – April 2019 Dividend Growth of 92% YoY $$$

63C38821-0343-4305-A892-C5A2455C4134We’ve closed the first quarter of 2019. I’ve managed to update my blog the last weeks so I’m happy to write about the income numbers for April. The first quarter was very encouraging as growth rates went through the roof. I’m very curious for my progress in dividend numbers YoY and QoQ in April. The first month of each quarter has always been a strong month for me in terms of absolute numbers, but also percentage-wise. I’m very excited about several new positions so let’s find out whether these new stakes contributed to my dividend income in April.

The Numbers

My dividend income for 2019/04 was $258.53. In this month I got several raises as compared to the dividend payment three months ago. This month included another small dividend increase from Realty Income (O). April included my first dividend income from my new position in JP Morgan (JPM), $4.80 to be exactly. Also Leggett & Platt (LEG) contributed a very welcome $7.98. I bought “alotta” shares of Altria (MO) and Philip Morris (PM) during the end of 2018 which resulted in a dividend of $69.60 and $30.78 respectively. This sums up to:

Bank of Nova Scotia (BNS) – $29.07

Illinois Tool Works (ITW) – $6.00

JP Morgan (JPM) – $4.80

Kimco Realty (KIM) – $70.00

Leggett & Platt (LEG) – $7.98

Altria (MO) – $69.60

Realty Income (O) – $3.84

Philip Morris (PM) – $30.78

Ventas (VTR) – $36.46

This makes the total amount of dividend income for this month a nice $258.53. My dividend income for January 2019 was $216.63 so that’s an increase of a nice 19% QoQ. My passive income for the month of April in 2018 was $134.50 so that’s an increase of 92% YoY. That’s quite a growth rate! Here is the graph YTD:

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Transactions during April

I bought 12 stocks of Abbvie (ABBV) for a price of $78.94. I like this stock for a market price below $80. Including this transaction I now own 29 stocks for an average price of $83.37. My first stocks were bought at a price around $92. That’s a nice 10% decrease by averaging down. I also bought my first 4 stocks of 3M (MMM) for a price of $192.14 after the big drop in price following its earnings report. At this price I still bought it at a P/E of 20 which is on the high side. Hopefully the price keeps swinging up and down the coming months so I can add to this position at an even more attractive valuation number.

Looking Forward

Another month above the $200 is in the books. I love this new normal. The focus on diversification seems to pay off. I’m less dependent of a small number of companies, especially REIT’s and the average dividend growth rate is increasing step by step.

CVS Caremark (CVS) was up 5% after their earnings report this week. The company is doing fine and the integration of Aetna seems to go smoothly. I increased my position in this company like many other members of the dividend investing community. Keeping a long-term focus is so important.

My stake in the tobacco industry has risen nicely with my buys in December and January. The FDA recently authorized the sale of the IQOS heated tobacco system in the U.S. market so that’s very beneficial for Altria (MO).

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

Happy investing!