My Single Biggest Takeaway After 3 Years of Dividend Investing

It was just a few weeks ago that I reached a massive milestone on my dividend growth investing journey, which was the 3 year mark of when I began investing and it was almost exactly 3 years ago that I received my very first dividend ($1.35 courtesy of GPC).

It has been such an amazing journey over the past 3 years, which aside from beginning my investing career, also led to the very birth of this blog, as well as my work on Seeking Alpha.

In this blog post, I'll be discussing my biggest takeaway after 3 years of dividend investing. If you haven't read my previous two posts of this series, be sure to check out my lessons learned after one year as a dividend investor and my lessons learned after two years as a dividend investor.

If you had told me just 9 months ago that 2020 would be a year in which my portfolio sustained 8 dividend cuts and 1 dividend suspension, I sure wouldn't have believed you!

Yet that is exactly what has transpired since the dividend cuts began to trickle in this spring and into the summer as a result of the unprecedented government response with the goal of curbing the spread of COVID-19.

To date, my portfolio's net annual forward dividends have declined by $73.858 this year as a result of dividend announcements that have been increases, cuts, and suspensions. 

When considering that the weighted monthly average of my annual forward dividends is around $1,135 year to date, this works out to a 6.5% decline in my annual forward dividend income as a result of dividend announcements.

While this news would have been deflating to the me of 9 months ago had you left out the details of the extent to which the world has been locked down since early this spring, I find it absolutely amazing that even in the midst of a global pandemic and the resulting aggressive government response to combat the virus, my portfolio's net annual forward dividends declined by merely 6.5%!

Despite all of the twists and turns that this year has taken along the lines of COVID-19 and unexpected expenses on my end that somewhat limited my ability to deploy capital at the rate I intended at the beginning of this year, my net annual forward dividend income of $1,282 at the time of writing this post is an all-time high.

I would argue that out of my numerous takeaways on dividend investing the past few years, this is my most powerful yet. My portfolio experienced its worst year of dividend announcements this year and I encountered a few thousand dollars of unexpected expenses during the year, but my portfolio's net annual forward dividends is the highest it has ever been.

This really goes to show that dividend investing in the form of fresh capital investments (even when capital is somewhat limited), dividend announcements (which in any "normal" year would lead to mid-single digit growth in annual net forward dividends for my portfolio), and reinvestment can overcome even the most challenging years.

Concluding Thoughts: 

I hope that this blog post was a ringing endorsement of the effectiveness of dividend investing in an average person's ability to actively work toward achieving financial independence.

2020 has been one hell of a year to be an investor in terms of volatility, but if there is a single investing strategy that has allowed me to sleep well at night even in the midst of a global pandemic and an election year, it has been dividend investing.

Even in a year of chaos, dividend investing has been one of the few constants in my life, which is why I firmly believe dividend investing is by far the most powerful investing strategy for most regular Joes and Janes.

Discussion:

What's your biggest takeaway from 2020 as a dividend investor?

How has your dividend income fared this year from a dividend announcement standpoint?

As always, I greatly appreciate this audience's readership and welcome any comments that you may have in the comment section below.

September 2020 Dividend Stock Purchases

 As I'm taking the time to write this post, it's nearly the middle of October!

We just experienced our first overnight freeze here in Central Wisconsin a few nights ago, which means that fall is in full effect and our first snowfall is likely just a few weeks ago.

With that side note out of the way, I will be delving into the intent of this post, which is to discuss my dividend stock purchases during September.

Starting with the activity in my retirement account, I deployed $317.43 in capital between my 7% contribution, my employer's 3% contribution, and the $63.66 in dividends during the month that were reinvested.

Net of the $11.44 in sales charges, I deployed $305.99 in capital to my Capital Income Builder (CAIBX) position, which boosted my share count from 125.273 heading into September to 130.445 going into October.

This increased my annual forward dividends by $11.07, which equates to a net yield of 3.62%.

Moving to my Robinhood account, my margin fell from $1,683.91 at the beginning of September to $1,619.88 at the end of September as a result of the net dividends of $64.03 that I received in my Robinhood account during the month.

This reduction in my margin helped to pad my annual forward dividends by $3.20 when factoring in the 5% interest rate on Robinhood margin over the first $1,000.

Concluding Thoughts:

I deployed $370.02 in capital (including dividend reinvestment) during September and added $14.27 in annual forward dividend income as a result of my capital deployment, which works out to an average weighted yield of 3.86%.

When also including the dividend announcements during the month of September for my portfolio, my annual forward dividend income was up just over $17 and I came into October just over 1% away from my all-time high annual forward dividend income of $1,252.

I am continuing to make significant progress in deleveraging my Robinhood margin and anticipate that I will have all margin repaid by the end of October (aside from the $1,000 of interest free margin). My credit card debt was less than $2,000 heading into October (most of which is interest free until next March), which means that I will be able to resume my $1,500/month capital deployment schedule starting in November.

Discussion:

How was your September in terms of capital deployment?

Were you fortunate enough to not have endured a dividend cut in your portfolio's dividend announcements during September?

I appreciate your readership and look forward to replying to your comments in the comment section below!

September 2020 Dividend Income

Summer ended nearly 2 weeks ago and it has become abundantly clear as we just experienced our first overnight freeze here in Central Wisconsin.

In just a few more weeks, we'll likely be experiencing our first snowfall, which will usher in 5 months of unpredictable winter weather!

With that aside, I'll be delving into the intent of this blog post, which is to examine the dividends that I collected during the month of September.

Analysis:

During the month of September, I received $139.46 in net dividends against the $136.28 in dividends that I collected in June 2020, which represents a 2.3% quarterly growth rate.

Even more impressive, is the fact that the $139.46 in net dividends received during the month represents a 99.2% YoY growth rate compared to the $70.00 in dividends collected in September 2019.

Delving into more detail, I received $64.03 in dividends from 20 companies within my Robinhood portfolio net of the $5.00 in Robinhood Gold fees and $2.75 in Robinhood Gold margin costs. I collected $11.30 in dividends from 6 companies within my Webull portfolio. I also collected $63.66 in dividends from my CAIBX mutual fund holding within my employer-sponsored retirement account. Finally, I received $0.47 in dividends from 24 companies within my M1 Finance portfolio.

The additional $3.18 in net dividend income from June 2020 to September came as a result of the following activity within my portfolios:

The dividends that I received from my position in BP Plc (BP) declined $3.46 as a result of BP's recent dividend cut.

I also received an additional $0.04 in dividends from my position in J.M. Smucker (SJM) due to its recent dividend increase.

I received $3.28 less in dividends from my position in Wells Fargo (WFC) as a result of its recent dividend cut.

I received $6.98 in additional dividends as a result of continued contributions to my CAIBX mutual fund holding within my retirement account.

I benefited from $2.91 less in Robinhood margin costs as a result of my commitment to reducing my Robinhood margin used down to $1,000 (as the first $1,000 of margin used is interest free).

My M1 Finance dividend income fell $0.01, which was as a result of BP's dividend cut.

Concluding Thoughts:

September marked yet another record month in terms of dividend income, which is really what the harnessing of DGI in the pursuit of financial independence is all about!

Despite the challenges that COVID-19 have posed for me from a dividend standpoint and the fact that dividend announcements this year have resulted in roughly a 7% decline in my annual forward dividends, my annual forward dividends are currently at a record $1,270 at the time that I am writing this post.

This just goes to show how powerful the DGI strategy is when the three aspects of it are utilized (i.e. fresh capital investment, dividend growth, and dividend reinvestment) even in the middle of the most challenging business environment arguably in most of our lives.

I am looking forward to soon once again resuming my ~$1,500/month capital deployment schedule beginning next month, which I am confident will really begin to advance my annual forward dividends in the most meaningful way since I began investing in September 2017.

Discussion: 

How was your September in terms of dividend income?

Did your portfolio's dividend cuts show themselves for the first time in September as was the case for mine with BP and WFC?

I'm grateful for your readership and welcome your comments in the comment section below!

Expected Dividend Increases for October 2020

At the time of my writing this blog post, the third quarter of 2020 is fast approaching its end, which leaves us with only one quarter to work toward crushing our goals for this year. The speed with which this year is passing us by never ceases to amaze me!

With that aside, I'll be discussing the dividend increases that I received during the month of September (spoiler: I was fortunate enough not to endure any dividend cuts during the month of September), and I'll be looking ahead to expected dividend increases for the month of October.

Actual Dividend Increases for September:

Dividend Increase #1: Realty Income (O)

Starting off with arguably the most consistent dividend payer in my portfolio, Realty Income (O) once again met my expectation of a 0.2% increase in its monthly dividend as I outlined in my previous post of this series, with O increasing its monthly dividend from $0.2335/share to $0.2340/share.

O's dividend announcement resulted in a $0.042 increase in my annual forward dividends across my 7 shares of the stock.

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

Moving to yet another incredibly consistent REIT within my portfolio, W.P. Carey (WPC) announced a 0.2% increase in its quarterly dividend $1.042/share to $1.044/share, which was once again in line with my expectations.

This one-two punch of O and WPC has never failed to impress me with steady dividend increases since I initiated my positions in early 2018.

WPC's dividend announcement helped to pad my annual forward dividends by $0.04 across my 5 shares of the stock.

Dividend Increase #3: STORE Capital (STOR)

Staying on the theme of high-quality REITs, STORE Capital (STOR) is my newest holding of the three REITs highlighted in this section of the post, with my position dating back to March of this year when I went on my buying spree as the financial markets were tanking.

Because I haven't owned STOR for much longer than 6 months, I blanked on the dividend increase that was scheduled for September.

In light of the significant disruptions of COVID-19 to just about every sector of the economy, I was very pleased with STOR's 2.9% increase in its quarterly dividend from $0.35/share to $0.36/share.

Across my 17 shares of STOR, my annual forward dividends were boosted by $0.68.

Dividend Increase #4: Philip Morris International (PM)

Moving to the tobacco industry, Philip Morris International (PM) also managed to meet my expectations, raising its quarterly dividend 2.6% from $1.17/share to $1.20/share.

Across my 9 shares of PM, my annual forward dividends surged $1.08 as a result of PM's dividend increase.

Dividend Increase #5: Lockheed Martin (LMT)

Still sticking with the theme of consistency, Lockheed Martin (LMT) managed to meet my expectations with its announcement that it was increasing its quarterly dividend 8.3% from $2.40/share to $2.60/share.

LMT's dividend announcement resulted in a $0.80 boost to my annual forward dividends across my single share of the stock.

Dividend Increase #6: General Mills (GIS)

After not having raised its dividend since June 2017 following its $8 billion acquisition of Blue Buffalo, General Mills (GIS) recently reported 9% YoY growth in its revenue and $1.00/share in adjusted earnings versus $0.87/share analyst expectations for its first quarter, which prompted the company to announce a 4.1% increase to its quarterly dividend from $0.49/share to $0.51/share.

I had gotten so used to GIS not raising its dividend, that I had failed to consider that the company would eventually be increasing its dividend, so I was pleasantly surprised by the news last week.

Across my 4 shares of the stock, my annual forward dividends were boosted by $0.32.

Expected Dividend Increases for October:

Expected Dividend Increase #1: Visa (V)

As a result of owning shares of Visa (V) less than a year, I mistakenly assumed that V would be announcing its dividend increase in September, but a few weeks ago, I realized that V has historically announced dividend increases in late October.

I would reiterate the following that I outlined in my previous post of this series as it pertains to V:

"Despite a difficult year for Visa (V) amid reduced consumer spending due to travel restrictions and the closure of many across the world, I remain confident that V will deliver a dividend in the weeks ahead.

While I don't envision a teens or twenty percent plus dividend increase being announced as I believe V's management team and Board of Directors will be conservative in their dividend announcement, I am forecasting a 10.0% increase in the quarterly dividend from $0.30/share to $0.33/share.

Across my 2 shares of V, I am forecasting a $0.24 boost in my annual forward dividends."

Expected Dividend Increase #2: Iron Mountain (IRM)

Given that Iron Mountain (IRM) is focused on reducing its AFFO payout ratio from its current mid-70% range to the high-60% range to bring the AFFO payout ratio in line with its data center REIT peers, I expect that dividend growth will significantly lag AFFO growth over the next 2-3 years.

As a result, I am forecasting that IRM will announce a 1.1% increase in its quarterly dividend from $0.6185/share to $0.6250/share.

If my prediction proves to be correct, IRM's dividend increase would result in a $0.208 padding to my annual forward dividends across my 8 shares of the stock.

Concluding Thoughts:

Across the board, this month was the strongest month in terms of dividend increases since earlier this year in February, when dividend announcements during the month boosted my annual forward dividends by $3.00.

My annual forward dividends managed to increase $2.962 as a result of the dividend announcements in September, which would require an investment of $74.05 to replicate, assuming a 4% yield.

This development suggests that the worst is behind my portfolio and I fully expect my annual forward dividends to grow each and every month to close out this year, especially as I am less than 6 weeks away from being able to fully shift my focus from paying off debt back to dividend growth investing.

Discussion:

How was your month along the lines of dividend announcements?

Did you benefit from any first time dividend increases as I did with STOR and LMT this month?

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