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!

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 Property 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!