Tuesday, May 17, 2022

June 2022 Dividend Stock Watch List

As I'm writing this blog post, the temperature is 75 degrees Fahrenheit here in Central Wisconsin. This is a major cool off from the highs that reached into the low-90 degrees Fahrenheit range over the last couple of days. And with highs in the low to mid-60 degrees Fahrenheit for the next few days, it will be an especially great time to get outside. 

But without further ado, let's dive into a few dividend stocks that are on my watch list for June 2022 since almost half of May is already in the books.

Image Source: Pexels

Dividend Stock #1: Kinder Morgan (KMI)

Kinder Morgan (KMI) owns and/or operates approximately 83,000 miles of pipelines that predominantly transport natural gas, as well as gasoline, crude oil, and carbon dioxide. The company's network is used to transport 40% of U.S. natural gas consumption and exports, which points to an especially bright future (details sourced from slide 3 of Kinder Morgan May 2022 Investor Presentation).

That's because the International Energy Agency anticipates that total global energy demand for natural gas and oil products will steadily increase from 2020 to 2040 (slide 11 of Kinder Morgan May 2022 Investor Presentation). KMI's long-term contracts are mostly for volumes and prices that are contractually fixed or for fixed prices and variable volumes (69% and 25% of contracts, respectively, per slide 5 of Kinder Morgan May 2022 Investor Presentation). 

Overall, this is why I believe KMI will generate low-single-digit annual distributable cash flow growth going forward. This will comfortably cover the stock's market-crushing 5.9% dividend yield (as of May 14, 2022).

And at a forward price to DCF ratio of 9 ($42.5 billion market cap from Google Finance divided by $4.7 billion 2022 DCF forecast from slide 8 of Kinder Morgan May 2022 Investor Presentation), KMI looks like a solid buy at $19 a share (as of May 14, 2022) - - even with the 15% year-to-date rally in its share price.

Dividend Stock #2: Medical Properties Trust (MPW)

With a $22 billion-plus real estate portfolio, Medical Properties Trust (MPW) is one of the biggest owners of hospitals in the world. The reasons that initially drew me to purchase MPW are just as strong now as they were in January and February of this year. Interested readers can get a more detailed explanation of why I like MPW in a Motley Fool article published a few months ago.

But at its core, the factors are that MPW is a steadily growing REIT with tons of room for future growth and a well-covered dividend (a whopping 6.4% yield as well at the current $18 share price) at a modest valuation.

Dividend Stock #3: GlaxoSmithKline (GSK)

GlaxoSmithKline is one of the largest pharmaceutical companies in the world. Unsurprisingly, the company has plenty of blockbusters like respiratory drugs Trelegy and Nucala, as well as HIV drugs Tivicay and Triumeq (page 47 of GlaxoSmithKline Q4 2021 earnings press release). 

And with dozens of other projects in clinical development in its pipeline, analysts are forecasting 8.2% annual earnings growth over the next five years. The stock also offers investors a market-trouncing 4.6% dividend yield. And the cherry on top is that GSK's forward P/E ratio of 13.4 at the current $43 share price doesn't appear to be too steep for its quality.

Concluding Thoughts:

Since my master list of stocks that I don't yet own and want to own is now down to barely a dozen, I will mostly be adding to existing positions going forward. Unless the valuations for KMI, MPW, and GSK drastically change, I will likely be adding to my positions in those stocks next month, as well as a few others.

Discussion:

Are any of KMI, MPW, or GSK on your watch list for June 2022?

If not, what stocks are you thinking about buying next month?

Thanks for your readership and feel free to leave a comment below!

Tuesday, May 10, 2022

April 2022 Dividend Stock Purchases

As I'm writing this blog post, it's currently 55 degrees Fahrenheit here in Central Wisconsin. Next week is going to reach highs in the low-80s Fahrenheit, so summer is unofficially just days away and we barely had a spring!

With that aside, I'll turn to the dividend stock purchases (and the one non-dividend stock purchase) that I made in April 2022.



I started April by purchasing five shares of Innovative Industrial Properties (IIPR) at an average cost of $166.59 a share. My reasoning for purchasing the stock was that its AFFO per share is growing like a weed (pun intended), the stock is cheap for its growth prospects, and the starting dividend yield is market-crushing. Given the $35.00 in net annual forward dividends that I added from this purchase, my weighted average net yield fittingly was 4.20% on 4/20.

I followed up my purchase of IIPR by adding a share to my position in Home Depot (HD) at a cost of $316.01. For those interested in my buying rationale, I recently wrote a Motley Fool article on the stock. Since the stock boosted my net annual forward dividends by $7.60, my net dividend yield was 2.40%.

My first non-dividend paying stock purchase was the online retail, cloud computing, streaming, and advertising giant Amazon (AMZN). Where do I start with the beaten-down tech stock? AMZN is the undisputed leader in online retail and cloud computing. 

With global e-commerce sales set to surge from $4.9 trillion in 2021 to $7.4 trillion by 2025, Amazon is best positioned to cash in on this fast-growing market. Not to mention that the global cloud computing market is forecasted to compound at a 17.9% annual rate from $250 billion in 2021 to $791.5 billion in 2028. 

This is why analysts anticipate that AMZN will deliver 40% annual earnings growth over the next five years, despite its massive size. And at my average cost basis of $2,891.05 for my 0.21 shares of AMZN, I paid a 2025 P/E ratio of 20.9. This is a reasonably attractive valuation to pay for a stock that still has plenty of growth left in its tank, even with the recent challenges when it reported first-quarter earnings recently.

That's also why I plan on investing $50 to $100 into AMZN each month going forward. But make no mistake, 95%-plus of my capital will still be dedicated to dividend-paying stocks over growth stocks. And as AMZN's growth decelerates, I believe it will begin paying a dividend to shareholders near the end of this decade.

My next dividend stock purchase was 17 shares of Comcast (CMCSA) at an average cost of $42.06 a share. Readers that are interested in my reasons for buying the stock can visit my April 2022 Dividend Stock Watch List post that's linked above where I discuss IIPR. The $18.36 in net annual forward dividends that I added due to this purchase works out to a 2.57% weighted average net yield.

I also added 12 shares of A.O. Smith (AOS) to my portfolio at an average cost of $60.28 a share. Readers again can get my reasons for this purchase by checking out my April 2022 Dividend Stock Watch List post. Since my dividend stock purchase added $13.44 in net annual forward dividends, my net dividend yield was 1.86%.

My position in Williams-Sonoma (WSM) was increased by one share at a cost of $137.44. My reasons are outlined in a recent Motley Fool article on the stock. This added $3.12 in net annual forward dividends to the portfolio, which is equivalent to a 2.27% weighted average net yield. 

I also added two shares of NextEra Energy (NEE) at an average cost of $73.65 a share. My net annual forward dividends increased by $3.40 due to my purchase, which works out to a 2.31% net dividend yield.

The next dividend stock purchase that I made was when I increased my Starbucks (SBUX) position by two shares at an average cost of $76.78 a share. Interested readers can read my recent Motley Fool article for my buying rationale. The $3.92 in net annual forward dividends that were added to my portfolio from this transaction equate to a 2.55% weighted average net yield. 

I also added one share to my position in BlackRock (BLK) at a cost of $652.26. For my reasoning, check out my recent Motley Fool article on the stock. Given the $19.52 in net annual forward dividends that this purchase added, this works out to a 2.99% net dividend yield.

My last purchase of the month came when I added two more units to my position in Energy Transfer (ET) at an average cost of $11.39 a unit. This boosted my net annual forward distributions by $1.60, which is equivalent to a 7.02% weighted average net yield.

My one stock sale during the month was when I closed my five share position in Warner Bros. Discovery (WBD) that I received when AT&T (T) spun its media assets off. I received $91.86 in capital proceeds.

Concluding Thoughts:

Factoring out the capital proceeds from my sale of WBD, I deployed $4,215.99 in capital for April 2022. The purchases made with this capital added $105.96 to my net annual forward dividend income, which is a 2.51% weighted average net yield.

And I also received $10.49 in dividend increases from my dividend stocks during the month. This helped to propel my net annual forward dividends from just less than $2,580 at the start of the month to over $2,690 heading into May.

Discussion:

How was your April 2022 for capital deployment and dividend stock purchases?

Did you open any new positions like I did with AMZN, AOS, CMCSA, and IIPR during the month?

Thank you for reading. Please feel free to comment below!

Tuesday, May 3, 2022

April 2022 Dividend Income

As I'm writing this blog post, it's early-May. It's expected to be cloudy and highs will only reach into the low-50 degrees Fahrenheit range over the next couple of days here in Central Wisconsin. The good news is that high temperatures will reach into the low-70 degrees Fahrenheit in the days that follow. 

With April officially in the books, I'll be looking back at the dividend income that my portfolio generated for me during the month.




Analysis:

I collected $139.19 in net dividends during April 2022. This works out to an 8.1% quarterly growth rate over the $128.80 in net dividends that my portfolio produced in January 2022.

What's more, my net dividends surged 56.3% higher year-over-year compared to the $89.03 in net dividends that I collected from my portfolio in April 2021.

Digging in deeper, I received $128.55 in net dividends from 23 stocks within my Robinhood account. I also collected $10.48 in net dividends from five stocks in my Webull portfolio. Finally, I received $0.16 in net dividends from six stocks within my M1 Finance account.

My net dividend income increased by $10.39 from January 2022 to April 2022, which was the result of the following activity in my portfolio:

I collected an extra $0.03 in net dividends from American Tower (AMT) within my Robinhood account. This was due to the 0.7% increase in the stock's quarterly dividend that was declared in March. 

My net dividends received from Cisco System (CSCO) were $0.11 higher in my Robinhood portfolio. This is because the stock raised its payout to shareholders by 2.7% in February.

I collected an additional $0.01 in net dividends from Realty Income (O) within my Robinhood account. This was due to the 0.2% increase in the stock's monthly dividend that was declared in March.

My net dividends received from Leggett & Platt (LEG) were boosted by $1.68 in my Robinhood portfolio, which was the result of my decision to purchase four more shares of the stock last December.

I collected first-time net dividends of $5.98 from U.S. Bancorp (USB) within my Robinhood account. This was because I bought 13 shares of the stock back in March. 

My net dividends received from STORE Capital (STOR) were $1.15 higher in my Robinhood and Webull portfolio, which was due to my purchase of three additional shares of the stock in February.

I collected an extra $0.01 in net dividends from W.P. Carey (WPC) within my Robinhood account, which was because of the stock's 0.2% increase in its quarterly dividend in March.

My net dividends received from Medical Properties Trust (MPW) in my Robinhood portfolio were $7.25 higher. This was due to my purchase of 25 shares of the stock in January and February.

I collected an additional $0.78 in net dividends from GlaxoSmithKline (GSK) within my Robinhood account, which was because of the stock's varying dividend payment amounts.

My net dividends received from VICI Properties (VICI) were $1.44 higher in my Robinhood portfolio. This was due to my purchase of four extra shares of the stock back in March.

I collected an extra $0.08 in net dividends from Kimberly Clark (KMB) within my Robinhood account, which was because of the stock's 1.8% dividend increase in January.

My net dividends received from Coca-Cola (KO) were $4.40 higher in my Robinhood portfolio. This was due to my decision to purchase 10 shares of the stock in February.

I collected $4.25 in net dividends from Allstate (ALL) within my Robinhood account, which was the result of my purchase of five shares of stock in January and the 4.8% dividend raise in February.

My net dividends received from Genuine Parts Company (GPC) were $0.48 higher in my Robinhood portfolio. This was due to the stock's 9.8% payout hike in February.

I collected an extra $0.03 in net dividends from Albemarle (ALB) within my Robinhood and Webull accounts, which was the result of the stock's 1.3% increase in its quarterly dividend in February.

My net dividends received from Ventas (VTR) were $3.15 less in my Robinhood portfolio. This was due to my decision to sell off my stake in the stock in January. 

I collected $3.32 less in net dividends from PPL Corp (PPL) within my Robinhood account, which also stemmed from my choice to sell off my stake in the stock in January.

My net dividends received from Digital Realty Trust (DLR) were $3.48 less in my Robinhood portfolio. This was due to the timing of the stock's dividend payment.

I collected $3.23 less in net dividends from PepsiCo (PEP) within my Robinhood account, which was the result of PEP's dividend payment timing.

My net dividends received from JPMorgan Chase (JPM) were $4.00 less in my Robinhood portfolio. This was due to the timing of the stock's dividend payment.

I collected $0.11 less in net dividends within my M1 Finance account, which was the result of closing my VTR, PPL, and CAH positions, as well as the timing of PEP and JPM's dividends.

Concluding Thoughts:

My portfolio's net dividends are steadily growing with each passing quarter. And with my consistent capital deployment in the neighborhood of $3,000 each month, this should be my last month below $150 in net dividends.

Discussion:

How was your dividend income in April 2022?

Did you receive any first-time dividends as I did with ALL, KO, MPW, and USB?

As always, I appreciate your readership and look forward to your comments below!

Tuesday, April 26, 2022

Expected Dividend Increases for May 2022

As I'm writing this blog post, the temperature is going to soar from a high of 41 degrees Fahrenheit today to 55 degrees Fahrenheit by Friday. One month after the calendar officially turned to spring, it appears that the weather is finally reflecting the change of seasons here in Central Wisconsin.

With that aside, I'll be turning my attention to the dividend increases that I have received in April and looking ahead to the payout raises that I am expecting in May.

Actual Dividend Increases for April 2022

Dividend Increase #1: Johnson & Johnson (JNJ)

Johnson & Johnson declared a 6.6% increase in its quarterly dividend per share from $1.06 to $1.13. This came in just below my expectation of a 7.5% hike in the quarterly dividend. But it marked the 60th straight year that the stock raised its dividend. JNJ is undoubtedly one of the best businesses in the world and I'm thrilled to be a shareholder.

Across my five shares of JNJ, my net annual forward dividends surged $1.40 higher due to the stock's dividend boost.

Dividend Increase #2: Southern Company (SO)

Southern Company announced a 3% raise in its quarterly dividend per share from $0.66 to $0.68. True to form as a consistent utility, this was in line with my prediction. SO is a quality utility with 21 consecutive years of payout increases under its belt. That's why I'm glad to hold the stock in my portfolio.

My net annual forward dividends edged $0.40 higher across my five shares of SO as a result of the dividend increase.

Dividend Increase #3: Tanger Factory Outlet Centers (SKT)

Tanger Factory Outlet Centers declared a 9.6% increase in its quarterly dividend per share from $0.1825 to $0.20. This is still well below the $0.3575 peak in the early days of the COVID-19 pandemic. But it's nice to see that SKT is working toward restoring its dividend. And its fundamentals have improved to the point where I believe the dividend will be fully restored by the end of 2023. SKT will then emerge a much stronger company with loads of liquidity and a low payout ratio.

Across my 11 shares of SKT, my net annual forward dividends increased by $0.77 due to the payout raise.

Dividend Increase #4: Raytheon Technologies (RTX)

Raytheon Technologies announced a 7.8% raise in its quarterly dividend per share from $0.51 to $0.55. This came in a bit below my prediction of a 9.8% raise in the quarterly dividend per share to $0.56. But a high-single-digit dividend raise is still pretty decent.

My net annual forward dividends advanced higher by $1.12 across my seven shares of RTX as a result of the dividend increase.

Dividend Increase #5: International Business Machines (IBM)

Just as expected, International Business Machines announced a token 0.6% bump in the quarterly dividend per share from $1.64 to $1.65. It looks like Big Blue is starting to turn its business around and I wouldn't be surprised to see a resumption of larger dividend increases in a couple of years.

Across my four shares of IBM, my net annual forward dividends edged $0.16 higher due to the payout increase.

Dividend Increase #6: American Water Works (AWK)

American Water Works declared an 8.7% increase in its quarterly dividend per share from $0.6025 to $0.655. This came in a bit below my expectation of a 10% raise to $0.6625. But I'll gladly take that inflation-beating raise from AWK.

My net annual forward dividends were boosted by $0.84 across my four shares of AWK as a result of the dividend hike.

Dividend Increase #7: Energy Transfer (ET)

Energy Transfer announced a massive 14.3% hike in its quarterly distribution per unit from $0.175 to $0.20. ET has recently hinted at its ambition to restore its quarterly distribution to the previous $0.305 amount in the quarters ahead. And since ET has significantly reduced its leverage and has a very high distribution coverage ratio, the company can certainly afford to make good on this promise.

Across my 58 units of ET, my net annual forward distributions soared $5.80 higher due to the distribution raise.

Dividend Freeze: Exxon Mobil (XOM)

Exxon Mobil declared a quarterly dividend per share of $0.88, which was in line with its previous dividend. With WTI crude so high and XOM pumping out huge profits, I was surprised that they didn't increase the dividend in April. That's because they had consistently done so until the COVID-19 pandemic had them announce a dividend increase last October to keep their Dividend Aristocrat status alive.

Perhaps October will be the new April for dividend increases for XOM.

Expected Dividend Increases for May 2022

Expected Dividend Increase #1: American Tower (AMT)

The first dividend increase that I'm anticipating in May will come from American Tower. My prediction is that AMT will announce a 2.9% increase in its quarterly dividend per share from $1.40 to $1.44. What makes AMT an especially great REIT is that it raises its dividend four times a year. Low-to-mid single-digit dividend increases every quarter really add up.

Across my three shares of AMT, my net annual forward dividends would inch $0.48 higher, if my estimate is proven correct.

Expected Dividend Increase #2: Lowe's (LOW)

The next dividend increase that I expect next month is from Lowe's. LOW boasts a low (pun intended) dividend payout ratio and analysts are expecting adjusted diluted EPS to rise 11.6% to $13.44 in 2022. This is why I believe LOW will declare a 13.8% increase in its quarterly dividend per share from $0.80 to $0.91.

If my forecast is correct, my net annual forward dividends would soar $2.20 higher across my five shares of LOW.

Expected Dividend Increase #3: Leggett & Platt (LEG)

The third dividend increase that I foresee for May will come from Leggett & Platt. With 50 straight years of dividend increases under its belt, LEG is an unofficial Dividend King. And I believe the stock will extend its dividend growth streak with a 4.8% raise in the quarterly dividend per share from $0.42 to $0.44.

Across my 12 shares of LEG, my net annual forward dividends would increase by $0.96, if my prediction pans out.

Expected Dividend Increase #4: Clorox (CLX)

The next dividend increase that I'm expecting for next month is from Clorox. Since the business is currently experiencing some challenges, I'm expecting a token dividend increase to keep its decades-long dividend growth streak alive. This is why I believe CLX will announce a 0.9% increase in its quarterly dividend per share from $1.16 to $1.17. 

My net annual forward dividends would edge $0.08 higher across my two shares of CLX, if my estimate is right.

Expected Dividend Increase #5: Medtronic (MDT)

The fifth payout raise that I'm anticipating in May will come from Medtronic. I believe that MDT will declare a 7.9% increase in its quarterly dividend per share from $0.63 to $0.68.

Across my five shares of MDT, my net annual forward dividends would increase by $1.00, if my forecast is proven correct.

Expected Wild Card Dividend Increase: Omnicom (OMC)

The final dividend increase that I'm expecting next month is from Omnicom. Since OMC kept its dividend the same in February, I believe the stock will have a 7.1% raise in store for shareholders in May. This would bring the quarterly dividend per share up to $0.75 from the current amount of $0.70.

My net annual forward dividends would surge $1.40 higher across my seven shares of OMC, if my prediction pans out.

Concluding Thoughts:

The seven raises that I received in April led my net annual forward dividends higher by $10.49. This is equivalent to investing $299.71 in capital at a 3.5% weighted average dividend yield.

Looking ahead to next month, my net annual forward dividends would increase by $6.12 if all of my estimates come to fruition. This would have the same effect as investing $174.86 at a weighted average yield of 3.5%.

Discussion:

How was your April 2022 in terms of payout increases?

Are you expecting any first-time dividend increases in May 2022 like I am with CLX and MDT?

Thanks for your readership. Feel free to leave a comment below!