Tuesday, September 14, 2021

August 2021 Dividend Income

As I'm writing this blog post, Labor Day has now passed and the official start of fall is only two weeks away. Having only received 1 of my 10 expected dividend increases for this month to date, the last 3 weeks of September are going to be jam packed with dividend increases.

Now let's delve into the intent of this blog post, which is to outline the record amount (for the middle month of a quarter) of dividends that I received in August 2021.




Analysis:

During August 2021, I collected $132.66 in net dividends. This represents a 13.4% quarterly growth rate compared to the $116.98 in net dividends that I received in May 2021.

Furthermore, August 2021's dividend income is a 45.5% year-over-year growth rate against the $91.19 in net dividends that I collected in August 2020.

Digging into dividend income by account, I received $120.63 in net dividends from 21 companies in my Robinhood account, $11.66 in net dividends from 3 companies in my Webull account, and $0.37 from 16 companies in my M1 Finance account.

The net dividends that I collected from May 2021 to August 2021 increased by $15.68 as a result of the following activity within my portfolio:

I received an additional $1.07 in net dividends from British American Tobacco (BTI) within my Robinhood and Webull accounts, which is the result of my purchase of two extra shares of the stock within my Robinhood account in June.

My net dividends collected from National Retail Properties (NNN) were $0.11 higher in my Robinhood account due to the recent dividend increase.

I received $2.70 in net dividends from Abbott Laboratories (ABT) for the first time within my Robinhood account, which was because I opened a position in the stock back in May.

My net dividends collected from Clorox (CLX) were $2.32 higher in my Robinhood account from starting a position in July.

I also received an additional $0.94 in net dividends from Realty Income (O) within my Robinhood account due to the stock's recent dividend increase and my decision to add to my position in May.

My net dividends collected from General Dynamics (GD) increased by $1.19 in my Robinhood account, which was the result of my decision to add to my position in May.

I received an extra $1.60 in net dividends from Lowe's (LOW) within my Robinhood account, which was a combination of adding a share in May and the dividend increase that was announced in May.

My net dividends collected from JPMorgan Chase (JPM) were $2.70 higher in my Robinhood account, which was due to my decision to initiate a position in July.

I also received an extra $0.50 in net dividends from CVS Health (CVS) within my Robinhood account, which was also the result of my decision to add to my position in May.

My net dividends collected from Verizon (VZ) were $2.51 higher in my Robinhood account, which was due to my purchase of four additional shares in June.

I received an extra $0.04 in net dividends from my M1 Finance account, which was due to the aforementioned dividend increase from LOW (a $0.01 boost to dividends), Norfolk Southern's (NSC) dividend increase (another $0.01 increase to dividends), and the timing of JPM's dividend payment ($0.02 in additional dividends).

Concluding Thoughts:

I'm pleased with my capital deployment to my portfolio and dividend increases over these past few months, which led to the healthy quarterly growth rate in my net dividend income from May to August.

Based on my capital deployment, I believe that November 2021 will see a net dividend income right around $150 and that by next August, my net annual dividends will be close to $200.

Discussion:

How was your August for dividend income?

Did you receive any dividends for the first time as I did from whole shares of ABT, CLX, and JPM?

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

Wednesday, September 8, 2021

August 2021 Dividend Stock Purchases

As I'm writing this blog post, there are just four months remaining in this year. This gives me four months to advance my net annual forward dividends from around $1,950 heading into September to $2,200 by the end of this year.

With that aside, I'll take a look at my capital deployment for August 2021 and what stocks I decided to purchase during the month.

As I noted in my previous post of this series, July 2021 marked the last month that there would be any meaningful activity in my retirement account (aside from dividend reinvestment in March, June, September, and December). This is because I recently completed my transition from my day job at my previous employer to being self-employed as a writer for Motley Fool and Seeking Alpha.

That's why I'll be exclusively focusing on the activity within my taxable accounts (and specifically within my Robinhood account).

I started August off by initiating a new position in Medtronic (MDT), which is because I essentially believe that Medtronic is fairly valued and the company has a variety of growth catalysts in the future as I noted in my most recent Motley Fool article on the stock.

I opened a five share position in MDT at an average cost of $127.93, which equates to an average net yield of 1.97% based on the $12.60 in net annual forward dividends added from my purchase.

Next, I added 18 shares of Viatris (VTRS) to my position at an average cost of $14.23 a share, which is an average net yield of 3.09% when considering the $7.92 that was added to my net annual forward dividends due to the purchase.

As I explained in a recent Motley Fool article on VTRS, the company is cheaply valued despite a fundamentally healthy business with tons of room to grow its dividend. These were the key factors that prompted me to add to my position.

The second stock that I initiated a position in during August was Merck (MRK), which is because its blockbuster oncology drug Keytruda secured an FDA approval for advanced renal cell carcinoma. As I detailed in a recent Motley Fool article on MRK, the stock has multiple vehicles for growth in the years ahead (i.e., Keytruda, HPV vaccine Gardasil, and its animal health business) and trades at a cheap valuation considering its growth prospects.

This led me to initiate a seven share position in MRK at an average cost of $78.79 a share, which works out to a 3.3% net yield when factoring in the $18.20 in net annual forward dividends that these purchases added to my portfolio.

I also purchased an additional share of J.M. Smucker (SJM) in August at a cost of $132.74, which is a 2.98% net yield given the $3.96 in net annual forward dividends that were added from my purchase.

SJM's recent 10% dividend increase and reasonable valuation were the two main reasons why I opted to add to my position.

I added one share of Amgen (AMGN) during August at a cost of $225.49, which was due to the stock's recent pullback and decent operating results as I outlined in a recent Motley Fool article.

This works out to a 3.12% net yield when considering the $7.04 in net annual forward dividends that were added as a result of my purchase.

I also added a share to my position in National Retail Properties (NNN) at a cost of $46.80. I noted in a recent Motley Fool article that I like the stock because of its focus on single-tenant triple net lease REITS, diversified portfolio, and fair valuation.

Considering the $2.12 in net annual forward dividends that this purchase added to my portfolio, my net yield was 4.53%.

I also decided to add a couple shares to my position in KeyCorp (KEY) at an average cost of $19.65 a share. This works out to a net yield of 3.77% given the $1.48 in net annual forward dividends that were added to my portfolio from the purchase.

Finally, I added two shares of Dominion Energy (D) to my portfolio at an average cost of $79.77 a share. I was impressed by D's strong start to this year and sensible valuation as I noted in a recent Seeking Alpha article.

This equates to a net yield of 3.16% when considering the $5.04 in net annual forward dividends that this purchase added to my dividend portfolio.

Concluding Thoughts:

I invested $2,051.12 in August and added $58.36 to my portfolio's net annual forward dividends, which works out to a net yield of 2.85%.

When also considering the $10.954 in net annual forward dividends that were added from dividend increases in August, my portfolio's net annual forward dividends surged from just under $1,880 at the start of August to about $1,950 heading into September.

Discussion:

How was your August in terms of capital deployment?

Did you add any new positions during the month as I did with my purchases of MDT and MRK?

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

Tuesday, August 31, 2021

Expected Dividend Increases for September 2021

As I'm writing this blog post, Labor Day or the unofficial end of summer is less than two weeks away. 

Even though the summer heat will soon disappear, the dividend increases in my portfolio are just starting to heat up. In this post, I'll discuss the five dividend increases that I received in August and look ahead to the 10 (yes, 10!) dividend increases that I am expecting in September.

Actual August 2021 Dividend Increases

Dividend Increase #1: British Petroleum (BP)

The first dividend increase that I received in August was from British Petroleum. 

While the cut to the quarterly dividend last year as a result of COVID still stings a bit, BP's 4% dividend increase from a quarterly dividend of $0.315/share to $0.3276/share is a start in restoring the dividend to its pre-cut level of $0.625/share.

With WTI crude's year-to-date average of $64/barrel up 62% from last year's average just below $40, BP's dividend is much better covered now than it was leading up to the dividend cut.

Across my 11 shares of the stock, my net annual forward dividends increased $0.554 as a result of the dividend increase.

Dividend Increase #2: Simon Property Group (SPG)

After slashing its quarterly dividend 38.1% from $2.10/share to $1.30/share in June 2020 to preserve liquidity in the first few months of the COVID pandemic, Simon Property Group announced a 7.7% increase to $1.40 just this June.

As a result of Americans getting vaccinated and more foot traffic to its malls, SPG increased its dividend for the second time this year in August by 7.1% from $1.40/share to $1.50/share. I'm very pleased that SPG is taking steps to restore its dividend to its pre-COVID state.

My net annual forward dividends surged $2.40 across my six shares due to the dividend increase.

Dividend Increase #3: Main Street Capital (MAIN)

The third company to increase its dividend during August was Main Street Capital. 

Improving operating fundamentals led MAIN to increase its monthly dividend 2.4% from $0.205/share to $0.21/share.

Across my 16 shares of the stock, my net annual forward dividends rose by $0.96 from its dividend increase.

Dividend Increase #4: Williams-Sonoma (WSM)

The fourth dividend increase of August was one that completely took me by surprise, which was Williams-Sonoma's massive 20.3% increase in its quarterly dividend from $0.59/share to $0.71/share. The stock already increased its quarterly dividend 11.3% from $0.53/share to $0.59/share this March.

Buoyed by three major tailwinds in the foreseeable future, Williams-Sonoma crushed analysts' revenue and earnings estimates.

As my largest winner (up about 340% as of August 26, 2021 before dividends), I am thrilled by the massive capital appreciation and 82% increase to its quarterly dividend since I purchased shares. 

This company is the very essence of dividend growth investing and I'm fortunate that it is one of the largest positions in my portfolio.

My net annual forward dividends soared by $4.32 across my nine shares of the stock as a result of the dividend increase.

Dividend Increase #5: Altria Group (MO)

The fifth dividend increase that I received in August was from Altria Group. 

MO announced a 4.7% increase in its quarterly dividend from $0.86/share to $0.90/share, which was in line with my prediction that I outlined in my previous post of this series.

Across my 17 shares of MO, my net annual forward dividends advanced by $2.72 due to the dividend increase.

Expected Dividend Increases for September 2021

Dividend Increase #1: Realty Income (O)

The first dividend increase that I'm expecting for September is from one of the steadiest companies in my portfolio, which is Dividend Aristocrat Realty Income.

I believe that O will announce a 0.2% increase in its monthly dividend from $0.2355/share to $0.2360/share. While this may sound small, it's worth mentioning that O increases its monthly dividend by small increments in March, June, September, and December, and a larger increment (typically 2-3%) every January.

Across the 13 shares of O that I own, my net annual forward dividends would be $0.078 higher if the stock increases its dividend as much as I expect.

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

The next dividend increase that I anticipate will be announced in September is from none other than W.P. Carey, which is not far away from joining O as a Dividend Aristocrat.

Similar to O, WPC increases its dividend each quarter and I expect that September will be no different.

I'm forecasting that WPC will announce a 0.2% advance in its quarterly dividend from $1.05/share to $1.052/share.

Should my prediction prove correct, my net annual forward dividends would increase $0.056 across my seven shares of WPC.

Dividend Increase #3: General Mills (GIS)

The third dividend increase that I'm expecting for September is General Mills.

I anticipate that GIS will boost its quarterly dividend 3.9% from $0.51/share to $0.53/share.

If this dividend increase plays out, my net annual dividends would increase $0.32 across my four shares of GIS.

Dividend Increase #4: Philip Morris International (PM)

The next dividend increase that I'm forecasting for September is Philip Morris International.

Given that Yahoo Finance analysts are forecasting 18% year-over-year growth in adjusted diluted EPS for PM from $5.17 in 2020 to $6.10 this year, I believe that PM will announce a 4.2% increase in its quarterly dividend from $1.20/share to $1.25/share.

Across my 13 shares of PM, my net annual forward dividends would be boosted $2.60 if my prediction is correct.

Dividend Increase #5: Lockheed Martin (LMT)

The fifth dividend increase that I am expecting for September is Lockheed Martin.

Given LMT's guidance of $26.70-$27 in diluted EPS for this fiscal year (versus $24.58 in diluted EPS during 2020), I believe that LMT will announce a 7.7% increase in its quarterly dividend from $2.60/share to $2.80/share.

My net annual forward dividends would increase by $2.40 across my three shares of the stock if my forecast is proven right.

Dividend Increase #6: Visa (V)

The next dividend increase that I believe will be announced in September is from Visa.

In light of the fact that V's EPS is expected to jump 15.5% from $5.04 last fiscal year to $5.82 this fiscal year, I think that V will get back on track as far as dividend growth is concerned after last year's modest 6.7% increase in the quarterly dividend from $0.30/share to $0.32/share.

That's why I am confident that V will announce a 12.5% increase to take its quarterly dividend to $0.36/share.

Across my two shares of the stock, my net annual forward dividends would be boosted by $0.32 from the dividend increase.

Dividend Increase #7: STORE Capital (STOR)

The seventh dividend increase that I'm forecasting for September is STORE Capital.

Since STOR's AFFO/share is expected to mostly recover to pre-pandemic levels this year and I expect the REIT will exceed pre-pandemic levels next year, I expect a greater increase than last year's token $0.01 increase in the quarterly dividend from $0.35/share to $0.36/share.

I'm anticipating a 5.6% increase in the quarterly dividend to $0.38/share, which would advance my net annual forward dividends by $1.52 across my 19 shares of the stock.

Dividend Increase #8: Verizon (VZ)

The next dividend increase that I'm expecting to be announced in September is from Verizon.

As VZ continues to build out its 5G infrastructure, the company has some room to boost its dividend.

This is precisely why I believe that VZ will increase its quarterly dividend 2.8% from $0.6275/share to $0.645/share.

Across my 18 shares of the stock, my net annual forward dividends would increase $1.26 if my prediction proves to be correct.

Dividend Increase #9: American Tower (AMT) 

The ninth dividend increase that I'm anticipating for September will come from American Tower.

For those unfamiliar, AMT raises its quarterly dividend each quarter.

Since the third quarter dividend increase is typically the second smallest behind the second quarter dividend increase, I am expecting that AMT will announce a 2.4% increase in its quarterly dividend from $1.27/share to $1.30/share.

My net annual forward dividends would advance by $0.36 across my three shares of the stock if my forecast is proven right.

Dividend Increase #10: Microsoft (MSFT)

The final dividend increase that I'm anticipating for September is from Microsoft.

With MSFT's EPS expected to advance 9% this fiscal year over the last to $8.76 and a low dividend payout ratio, I believe that MSFT can easily afford to hike its quarterly dividend 10.7% from $0.56/share to $0.62/share.

Across my three shares of the stock, my net annual forward dividends would be $0.72 higher from such a dividend increase.

Concluding Thoughts:

My net annual forward dividends skyrocketed $10.954 in August as a result of the five dividend increases that I received during the month.

This would take $312.97 in fresh capital invested at an average yield of 3.5% to replicate, which is by far my best month in my four year investing career to this point. Heading into September, my net annual forward dividends are just below $1,950.

Based on my predictions for next month's dividend increases, my net annual forward dividends would increase by $9.634 or nearly as much as August. With the overall quality of the names I'm expecting increases from next month, I wouldn't be surprised if I secured my second straight month of $10+ in additional net annual forward dividends from dividend increases alone.

I've spent the last four years laying the foundation of my portfolio and I'm so excited that things seem to meaningfully be trending in the right direction. Compounding dividends truly are the eighth wonder of the world!

Discussion:

How was your August for dividend increases?

Are you expecting any first-time dividend increases from new holdings as I am with VZ and MSFT?

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

Tuesday, August 24, 2021

September 2021 Dividend Stock Watch List

After hitting yet another all-time high of 4,480.26 on August 16, the S&P 500 pulled back a bit to close the week just above 4,440. Delta variant concerns and signaling of reduced asset purchases ahead from the recently released minutes of the Federal Reserve's July 27-28 meeting led the S&P 500 nearly a half percent lower to close out the week.

With most of my capital deployment in the books for August 2021, I'll now turn my attention to a few dividend stocks on my watch list for September 2021.

                                           

Image Source: Pexels

Dividend Stock #1: Lockheed Martin (LMT)

The first dividend stock on my watch list for September is Lockheed Martin. 

LMT has gotten off to a great start in the first half of this year, which is evidenced by its 4.4% growth in year-to-date revenue from $31.9 billion in H1 2020 to $33.3 billion in H1 2021, per LMT's Q2 2021 earnings press release (the source for all accompanying data, unless otherwise specified).

As a result of also repurchasing $1.5 billion or 4.2 million shares in the first half of the year according to its recent 10-Q, LMT's diluted EPS advanced 10.2% from $11.87 in H1 2020 to $13.08 in H1 2021.

LMT's backlog also remained healthy at the end of the second quarter, with backlog declining slightly from $147.1 billion at the start of the year to $141.7 billion to end the quarter. For context, this is the equivalent of over two years of revenue for LMT based on its guidance of $67.3-$68.7 billion for this year.

LMT's interest coverage ratio improved from 13.4 in the first half of 2020 to 15.5 in H1 2021, which suggests that the company has no issues in covering its interest expense with earnings before interest and taxes.

A payout ratio of just under 40% in the first half of this year means that the dividend is well covered ahead of its upcoming dividend increase. And a forward P/E ratio of less than 13 based on Yahoo Finance's average analyst estimate of $28.02 and the current price of $357.17 a share (as of August 20, 2021) indicates that the stock is quite cheap.

Dividend Stock #2: Merck (MRK)

The next dividend stock on my watch list for September is Merck.

MRK caught my attention after I recently covered the company's U.S. Food and Drug Administration (FDA) approval to treat advanced renal cell carcinoma (RCC) in combination with Lenmiva, which prompted me to start a position in the stock.

The FDA's approval of the drug combo is the second indication in as many months following the approval in July to treat advanced endometrial carcinoma, which is positioning Keytruda to overtake AbbVie's (ABBV) Humira in a couple years as the top-selling drug in the world. The drug also won't face any loss of exclusivity concerns until 2028 per FiercePharma, so MRK has plenty of time to diversify away from Keytruda.

MRK's interest coverage ratio of 12 (according to data sourced from MRK's Q2 2021 earnings press release, unless indicated otherwise) indicates the company's balance sheet is in decent shape.

Based on MRK's guidance for $5.47-$5.57 in non-GAAP EPS this year and a dividend per share obligation of $2.60, MRK's dividend payout ratio should clock in at a sustainable sub-50% level this year.

MRK's current price of $78.68 a share implies a current PE ratio of about 14, which is a good value for the 12.8% annual earnings growth that analysts are expecting over the next five years.

Dividend Stock #3: Visa (V)

The final dividend stock on my watch list for September is Visa (V).

Visa has benefited from the reopening global economy, which becomes clear by examining the company's results through the first nine months of its current fiscal year.

V has increased its YTD revenue by 4.8% year-over-year from $16.7 billion in 2020 to $17.5 billion in 2021 (all data sourced from V's Q3 2021 earnings press release, unless otherwise noted).

While V hasn't been able to give non-GAAP EPS guidance for this fiscal year due to the uncertainty surrounding COVID, analysts are anticipating 15.5% year-over-year growth from $5.04 in 2020 to $5.82 this year.

Compared to the $1.28 in dividends per share that will be paid out for this fiscal year, that would be a non-GAAP EPS payout ratio of just 22%. This leaves V's payout plenty of room to grow ahead of the 19.7% annual earnings growth that is expected over the next five years.

Additionally, V's interest coverage ratio improved from an already robust 28.9 in the nine months ended 2020 to 30.3 in the nine months ended this year.

While V at its share price of $231.36 isn't cheap at nearly 40 times this year's earnings forecast, its excellent growth prospects, low payout ratio, and great balance sheet are arguably worth the premium.

Concluding Thoughts:

My net annual forward dividends are likely to be around $1,945 heading into September. I'm anticipating that I will deploy somewhere in the range of $1,500-$2,000 in capital for next month and a number of dividend increases will be announced at that time, which should get me slightly beyond the $2,000 net annual forward dividend milestone.

Discussion:

Are any of LMT, MRK, and/or V on your watch list for September 2021?

If not, what stocks are you watching for the month?

As always, thanks for your readership and please feel free to leave your comments in the comment section below!