May 2021 Dividend Stock Purchases

As I'm writing this blog post, the official start of summer is just over one week away, but that hasn't stopped the temperatures from reaching into highs within the upper 80s to low 90s Fahrenheit in Central Wisconsin over the past few days!

Aside from that update, I will be discussing my capital deployment during the month of May 2021.

Starting off with my retirement account, I deployed $252.00 in capital when factoring in both my 7% contribution and my employer's 3% contribution.

When adjusting for the 3.5% sales charge on both my contributions and my employer's, I put $243.18 to work in May 2021.

The capital contributions made during May 2021 helped my Capital Income Builder (CAIBX) position grow by 3.535 shares from 163.409 shares at the beginning of May to 166.944 shares heading into June.

Using $2.13 in net annual forward dividends/share, my net annual forward dividends advanced $7.53, which works out to a 3.10% net yield.

Moving to my taxable accounts, I started 2 new positions and added to a number of positions during May, including all 3 of the stocks on my May 2021 Dividend Stock Watch List, as well as 1 of the stocks on my April 2021 Dividend Stock Watch List.

I initiated a 6 share position of Abbott Laboratories (ABT) in May 2021 at an average cost of $117.13/share, which was due to the reasons outlined in my May 2021 Dividend Stock Watch List (i.e. a solid balance sheet, favorable earnings outlook, and reasonable valuation).

The $10.80 in net annual forward dividends that I added as a result of this purchase equates to a 1.54% net yield.

Next, I initiated a 3 share position in Microsoft (MSFT) at an average cost of $247.84/share due to Microsoft's flawless credit rating matched only by Johnson & Johnson (JNJ), Microsoft's numerous growth avenues, and reasonable current valuation for long-term investors such as myself.

MSFT's $6.72 in net annual forward dividends that were added due to the purchase work out to a 0.90% net yield.

The final dividend stock on my watch list for May 2021 that I added to was 1 share of L3Harris Technologies (LHX) at a cost of $216.48 due to the company's recent 20% dividend increase, strong outlook for 2021, and attractive mid-teens non-GAAP P/E ratio for the current year.

The $4.08 in net annual dividends added as a result of the purchase equate to a 1.88% net yield.

I also added 2 shares to my position in American Tower (AMT) at a cost of $247.78/share due to the company's reasonable payout ratios, favorable long-term outlook, and commitment to returning value to shareholders primarily via dividends that grow on a quarterly basis.

AMT's $9.92 in net annual dividends (at the time of the dividend stock purchase as AMT raised its quarterly dividend 2.4% from $1.24/share to $1.27/share shortly after my purchase) work out to a 1.99% net yield.

I added 1 share to my position in CVS Health (CVS) at a cost of $84.50, which equated to a 2.37% net yield when factoring in the $2.00 in net annual forward dividends that were added due to the purchase.

I also added 4 shares to my position in Realty Income (O) at an average cost of $65.10/share, which worked out to a 4.33% net yield when considering the $11.28 in net annual forward dividends that were added as a result of the purchase.

I added 1 share to my position in Viatris (VTRS) at a cost of $16.00, which equated to a 2.75% net yield when factoring in the $0.44 in net annual forward dividends that were added due to the purchase.

I also added 1 share to my position in STORE Capital (STOR) at a cost of $33.59, which was due to my reasons outlined in my June 2021 Dividend Stock Watch List. 

The $1.44 in net annual forward dividends that were added as a result of my purchase work out to a 4.29% net yield.

Since I was impressed by Lowe's (LOW) recent 33.3% increase to its quarterly dividend from $0.60/share to $0.80/share, I added 1 share to my position the day after the dividend increase at a cost of $195.98.

LOW's $3.20 in net annual forward dividends that were added due to my purchase equate to a 1.63% net yield.

I also added 1 share to my Philip Morris International (PM) position at a cost of $97.08 due to reasons discussed in my June 2021 Dividend Stock Watch List.

The $4.80 in net annual forward dividends that were added as a result of my purchase work out to a 4.94% net yield.

Finally, I added 1 share to my General Dynamics (GD) position at a cost of $191.00, which equated to a 2.49% net yield when factoring in the $4.76 in net annual forward dividends that were added due to my purchase.

Concluding Thoughts:

When factoring in the $3,280.08 in net capital that I deployed during May 2021 and the $66.97 in net annual forward dividends that were added as a result of my capital deployment, I deployed capital at an average weighted net yield of 2.04%.

Since June is positioned to be a 2 paycheck month without any additional stimulus anticipated, I am forecasting that June 2021 will be a month in terms of capital deployment within my typical $1,500-$2,000 range.

The $4.20 in dividend increases received during May in combination with the $66.97 in net annual forward dividends added due to my purchase activity, work out to a $71.17 boost in my net annual forward dividends from just over $1,650 at the beginning of May to just over $1,720 heading into June.

Discussion:

How was your May in terms of capital deployment?

Did you add any positions to your portfolio during May as I did with ABT and MSFT?

As always, thank you for reading and I look forward to your comments in the comment section below!

May 2021 Dividend Income

Things are really heating up here in Central Wisconsin! This past Friday (June 4), we reached a high temp in the 90s Fahrenheit. The heat also appears poised to continue into the weekend and the next week when this blog post is set to be published.

With that aside, I will be detailing my dividend income during May 2021, which was (spoiler alert incoming) yet another record month for me for the middle month of a quarter.

Analysis:

During the month of May 2021, I collected $116.98 in net dividends compared to the $98.44 in net dividends received during February 2021, which equates to an 18.8% quarterly growth rate.

What's more striking, however, is that the $116.98 in net dividends collected during May 2021 represent a 35.0% YoY growth rate against the $86.62 in net dividends received in May 2020.

Going into detail by account, I received $104.76 in net dividends from 18 companies in my Robinhood portfolio, $11.89 in net dividends from 3 companies in my Webull portfolio, and $0.33 from 15 companies in my M1 Finance account.

My net dividends received from February 2021 to May 2021 increased by $18.54 due to the following activity within my portfolio:

I received an extra $0.54 in net dividends from Williams Sonoma (WSM) within my Robinhood account as a result of WSM's recent dividend increase.

My net dividends collected from British American Tobacco (BTI) were $3.53 higher in my Robinhood and Webull accounts due to BTI's dividend increase and my recent purchases of additional shares of the stock in December 2020 and February 2021.

I received an additional $0.01 from Realty Income (O) within my Robinhood account as a result of O's recent dividend increase.

My net dividends collected from AbbVie (ABBV) in my Robinhood account advanced $1.30 due to my recent purchase of another share of the stock.

I received a $0.27 boost in my net dividends received from General Dynamics (GD) within my Robinhood account as a result of the stock's recent dividend increase.

My net dividends collected from Verizon (VZ) in my Robinhood account surged $8.79 due to my initiation of a whole share position.

I received $4.00 less in net dividends from The GEO Group (GEO) within my Robinhood and Webull accounts as a result of the stock's recent dividend suspension, which I now realize I forgot to include in the Actual Dividend Announcements for April 2021 section of my Expected Dividend Increases for May 2021 post.

My net dividends benefited from an $8.07 reduction in my Robinhood Gold ($5.00)/margin expenses ($3.07) due to my discontinuation of my Robinhood Gold subscription. 

Finally, I collected $0.03 in additional net dividends within my M1 Finance account due to the timing of Fastenal's (FAST) and Norfolk Southern's (NSC) dividend payments.

Concluding Thoughts:

As a result of dividend increases and steady capital deployment, my net dividends advanced 18.8% on a quarterly basis and an astonishing 35.0% over last May's total.

This was the first of what I anticipate will be many middle of the quarter months in the triple digits, which is encouraging considering all of the distribution cuts (i.e. ET and EQM, which later became ETRN) and dividend cuts/suspensions (i.e. SKT and GEO) that the portfolio has endured over the past year.

As painful as these cuts and GEO's suspension have been, I'm grateful that they occurred now when I'm not dependent on the income rather than years down the line when I am on more of a fixed income. 

It was a lesson that I foolishly ignored in my earlier days of investing, but the lesson to not chase yield is one I am beginning to take to heart, especially with my capital deployment in higher growth dividend stocks in recent months. The common denominator in most, if not all of the dividend cuts and suspensions I have went through over the years was eye-popping (unsustainable) yield, especially in the high-single digits to low-double digits.

Having finally learned this lesson, I look forward to seeing how long the portfolio can go before its next dividend cut (not counting T's upcoming dividend cut next year).

Discussion:

How was your May in terms of dividend income?

Did you receive any first time dividends during the month as I did from the whole shares of VZ in my Robinhood account?

I appreciate your readership and welcome your comments in the comment section below!

Expected Dividend Increases for June 2021

As I'm writing this blog post, Memorial Day is a couple days away and June is fast approaching. It's hard to believe that half of 2021 is just weeks away from being in the books!

With that aside, I will be discussing the dividend increases that I received in May and looking ahead to the dividend increases that I am expecting in June.

Actual May Dividend Increases

Dividend Increase #1: American Tower (AMT)

American Tower announced a 2.4% increase in its quarterly dividend, taking it from $1.24/share to $1.27/share, which was slightly above my expectation of a 1.6% increase in the quarterly dividend as outlined in my previous post of this series.

For those that aren't familiar with AMT, the stock has increased its dividend each quarter without fail since its REIT conversion in 2012.

Overall, I'm very pleased with the first dividend increase that I received from AMT since I initiated my position in the stock back in April.

Across my 3 shares of the stock, my net annual forward dividends increased $0.36 as a result of AMT's dividend increase.

Dividend Increase #2: Lowe's (LOW)

Given Lowe's impressive operating results to start off the year (25.9% consolidated comparable sales growth and 81.4% YoY diluted EPS growth), LOW's management team and Board of Directors felt comfortable hiking its quarterly dividend by a staggering 33.3% from $0.60/share to $0.80/share.

Since this raise was just over triple what I was anticipating and LOW can easily afford the dividend increase, I'm glad to see LOW rewarding shareholders with a very generous dividend increase.

My net annual forward dividends surged $3.20 across my 4 shares of LOW's at the time of the stock's dividend increase.

Dividend Increase #3: Leggett & Platt (LEG)

Shortly after I wrote my previous post of this series, Leggett & Platt announced a 5.0% increase in its quarterly dividend, taking the quarterly dividend from $0.40/share to $0.42/share just as I expected.

Across my 8 shares of the stock, my net annual forward dividends advanced $0.64 due to LEG's dividend increase.

Expected Dividend Increases for June

Expected Dividend Increase #1: Realty Income (O)

Starting off June's expected dividend increases, is none other than The Monthly Dividend Company itself, Realty Income. 

Since O has a track record of quarterly dividend increases at the end of each quarter and typically a larger raise at the beginning of the year, I am anticipating that O will announce a 0.2% increase to its monthly dividend, taking it from the previous $0.235/share to $0.2355/share.

Should this dividend increase manifest itself as I expect, my net annual forward dividends would increase $0.078 across my 13 shares of the stock.

Expected Dividend Increase #2: W.P. Carey (WPC)

Another sturdy dividend payer with a track record of delivering dividend increases each quarter is W.P. Carey.

Similar to O, I am anticipating a 0.2% increase in WPC's quarterly dividend, from the old quarterly dividend of $1.048/share to $1.050/share.

Across my 7 shares of the stock, my net annual forward dividends would be boosted by $0.056 should this dividend increase play out.

Expected Dividend Increase #3: UnitedHealth Group (UNH)

The final dividend increase that I am expecting is from none other than the healthcare behemoth, UnitedHealth Group.

Since UNH is poised to continue with strong double-digit earnings growth in 2021, I am predicting that UNH will announce a solid 14.4% increase in its quarterly dividend, from $1.25/share to $1.43/share.

My net annual forward dividends would advance by $0.56 across my single share of UNH in the event that this dividend increase occurs.

Concluding Thoughts:

Overall, May was a very strong month in terms of dividend increases despite the fact that there were only 3 this month. 

I received $4.20 in dividend increases during May, which would be equivalent to adding $105.00 in fresh capital at a 4% yield.

While I am expecting another 3 raises in June, I don't believe June's impact of dividend increases will come anywhere near May's due to my limited allocation to the one true growth stock that will be announcing a dividend increase in June, which is UNH.

Even so, my net annual forward dividends are just over $1,720 heading into June, which is really beyond what I could have imagined by this point in my life. I still have a long way to go on the road to attaining financial freedom, but the progress to date since I began investing nearly 4 years ago has been very encouraging.

Discussion:

Were May's dividend announcements better than your expectations as was the case with myself?

Did you receive any first time dividend increases as I did with AMT?

Thanks for your readership and I look forward to your comments in the comment section below!

June 2021 Dividend Stock Watch List

As I'm writing this blog post, Memorial Day, the unofficial start of summer, is just 8 days away. We have been fortunate enough here in Central Wisconsin to receive meaningful precipitation over the past week, which was more than welcomed by yours truly, especially considering my rant last week about it looking more like a desert where I live by the day.

With that aside, I will be going over a few of my dividend stock picks heading into June.

Massive spoiler alert: This list marks arguably my first of the series that tilts more toward value and yield-oriented picks than growth-oriented picks.

                                                          Image Source: Pexels

Dividend Stock #1: Philip Morris International (PM)

What would be more fitting to start off an income-oriented dividend stock watch list than Philip Morris International (hereafter referred to by its ticker, PM)?

To be fair, I actually believe that PM is more of an income and growth hybrid pick given its reputation as the ultimate ESG pick of its industry.

Since I last covered PM in March on Seeking Alpha, PM produced strong operating results in the first quarter, with the company posting 2.9% YoY net revenue growth and a 590 basis point expansion in adjusted operating income margins, which helped the company to generate an all-time high adjusted diluted EPS figure of $1.57, marking a 21.5% YoY growth rate (data sourced from PM's 2021 First-Quarter Results Presentation).

PM continued to make tremendous progress on its stated mission of building a smoke-free future, with its smoke-free product revenues growing from 21.7% of total revenues in Q1 2020 to an astounding 28.0% in Q1 2021.

Simply put, PM is transitioning to not only a less harmful product line in the future, but the product line is more profitable than the legacy business, which explains why adjusted OI margins expanded significantly. 

To that point, Yahoo Finance analysts are forecasting 12.8% annual earnings growth over the next 5 years, while PM is trading at merely 16 times this year's forecasted earnings.

At the current share price of $97.42 (as of May 23, 2021), I believe that PM offers a clear path to 10%+ annual total returns over the next decade with its 4.9% yield, conservative mid-single digits annual earnings growth, and slight multiple expansion over the long-term.

Dividend Stock #2: STORE Capital (STOR)

The next stock on my list is STORE Capital (hereafter referred to by its ticker, STOR), which despite the slightly disappointing operating results in the first quarter, is a solid pick IMO.

First, STOR is trading at about 17 times this year's AFFO/share guidance of $1.90-$1.96 (based on the $33.65 share price as of May 23, 2021).

Despite the fact that STOR's AFFO/share of $0.47 was below last year's figure of $0.49 (per STOR's Q1 2021 earnings call), it's worth noting that the bulk of Q1 2020 was without COVID-19's significant impact, whereas all of Q1 2021 was subject to some COVID disruptions.

Cash collections continued to improve from 93% in Q1 2021 to 95% at the start of Q2 2021 in April, which is an encouraging trend that I will continue following.

After a 2019 that saw AFFO/share of $1.99, STOR is looking to recover from the impact of COVID, which I estimate the company will rebound from to deliver AFFO/share growth over 2019 levels next year.

Despite the challenges of the past year, STOR remains a company that I believe has the potential to deliver annual mid-single digit AFFO/share growth on a consistent basis.

STOR's 4.3% yield, annual mid-single digit AFFO/share growth potential, and roughly static valuation multiple would allow for the stock to meet my 10% annual total return target over the next decade from the current share price.

Dividend Stock #3: American Electric Power (AEP)

Wrapping up my dividend stock watch list, is American Power (hereafter referred to by its ticker, AEP).

AEP delivered solid operating results to start off 2021, with operating EPS surging 12.7% from $1.02 in Q1 2020 to $1.15 in Q1 2021 (data sourced from AEP's 1st Quarter 2021 Earnings Release Presentation).

AEP reaffirmed its guidance of $4.55-$4.75 in operating EPS, which would fall just outside AEP's 5-7% long-term growth target at the midpoint.

Using AEP's midpoint operating EPS figure of $4.65 and comparing it to the current share price of $86.65 (as of May 23, 2021), AEP is trading at just under 19 times this year's earnings, which I believe is reasonable for a utility growing firmly in the mid-single digits annually.

I believe that AEP's 3.4% yield, mid-single digit annual earnings growth potential, and slight multiple expansion should translate into the stock meeting my 10% annual total return requirement over the next decade.

Concluding Thoughts:

While the past few months of capital deployment have been heavily concentrated into growthier dividend stocks, I anticipate that I will be returning to more of a value and income-oriented approach for June.

That's not to say that I won't also be adding to more growth-oriented dividend stocks in June, but it certainly won't be to the extent of the past few months.

Discussion:

Are any of PM, STOR, or AEP on your watch list heading into June 2021?

If not, what dividend stocks are on your watch list?

As always, thank you for your readership and I look forward to your comments in the comment section below!