Tuesday, December 28, 2021

Expected Dividend Increases for January 2022

As I'm writing this blog post, only about a week remains in the year. Despite the calendar officially turning to winter here in Central Wisconsin, the weather still isn't too bad with highs in the upper 30s Fahrenheit. At this rate, we may be getting snow in May or June to make up for the fact we haven't had consistent snow cover yet this season!

With that aside, let's delve into what turned out to be my strongest month of dividend increases to date by far in my four-plus years of investing!



Actual Dividend Increases for December 2021

Dividend Increase #1: WEC Energy Group (WEC)

The first dividend increase that was announced in December was from WEC Energy Group, which was the first I have received from the stock. WEC announced a 7.4% increase in its quarterly dividend from $0.6775 to $0.7275 per share. This was slightly above my expectations of a 6.3% increase in the quarterly dividend to $0.72 per share. I believe this will be the first of many more strong dividend increases in the future from this wonderful utility based in my home state.

Across my seven shares, my net annual forward dividends surged $1.40 higher due to WEC's dividend hike.

Dividend Increase #2: Eastman Chemical (EMN)

The next dividend increase declared in December came from Eastman Chemical. EMN upped its quarterly dividend by 10.1% from $0.69 to $0.76 per share. This was well above my projection for a 7.2% increase in the quarterly dividend to $0.74 per share, which I'll gladly take from this excellent stock.

My net annual forward dividends were boosted $1.12 across my four shares of EMN as a result of its dividend raise.

Dividend Increase #3: Amgen (AMGN)

The third dividend boost announced in December was from Amgen. AMGN declared a 10.2% increase in its quarterly dividend from $1.76 to $1.94 per share. Once again, this came in ahead of my forecast for an 8% bump in the quarterly dividend to $1.90 per share. This is why it literally pays to be a dividend growth investor, especially with the raises this year. These kinds of raises will easily combat the four decade high in inflation.

Across my four shares, my net annual forward dividends skyrocketed $2.88 higher due to AMGN's dividend hike.

Dividend Increase #4: W.P. Carey (WPC)

The next dividend increase that I received in December came from W.P. Carey. WPC announced a 0.3% increase in its quarterly dividend from $1.052 to $1.055 per share. This was more than the 0.2% bump in its quarterly dividend that I was expecting to $1.054 per share.

My net annual forward dividends inched $0.084 upward as a result of WPC's dividend increase across my seven shares of the stock.

Dividend Increase #5: CVS Health (CVS)

The fifth dividend increase of December from CVS Health came as a bit of a surprise. I was anticipating that the company wouldn't increase its dividend until the end of next year. But based on CVS's tremendous deleveraging progress to this point, it could afford the 10% hike in its quarterly dividend from $0.50 to $0.55 per share.

Interestingly, this is actually the first dividend increase that I have received since I purchased the stock. That's because CVS Health has been focusing for years on repaying the debt related to its acquisition of the health insurer Aetna.

Across my seven shares, my net annual forward dividends were boosted by $1.40 due to the dividend increase from CVS.

Dividend Increase #6: Broadcom (AVGO)

Another dividend increase that I received in December came from Broadcom. AVGO declared a 13.9% hike in its quarterly dividend from $3.60 to $4.10 per share. This was once again moderately higher than the 11.1% increase to $4 per share that I was anticipating. I'm very glad that I built up my position in AVGO during the COVID crash in March.

My net annual forward dividends soared $6 higher across my three shares of the stock as a result of AVGO's dividend hike.

Dividend Increase #7: Pfizer (PFE)

The seventh dividend increase in my portfolio that was announced in December was from Pfizer. PFE announced a 2.6% increase in its quarterly dividend from $0.39 to $0.40 per share. While this came up well short of the 10.3% raise that I was expecting from the stock, I don't blame them for being conservative. But I would have liked to see more from PFE in light of its leading position in the COVID-19 vaccine industry. At least the dividend is extremely safe with its payout being so low, which leaves room for bigger raises in the future.

Across my 17 shares, my net annual forward dividends inched up $0.68 due to PFE's dividend raise.

Dividend Increase #8: Abbott Laboratories (ABT)

The next dividend increase that was declared in December came from Abbott Laboratories. ABT increased its quarterly dividend 4.4% from $0.45 to $0.47 per share, which came in below my forecast of an 8.9% increase in the dividend. But like the raise from PFE, I can't fault a company for being cautious with dividend increases. This is especially the case after ABT's 25% raise last year before I became a shareholder. Being diligent with the payout ratio is exactly what will allow ABT to become a newly minted Dividend King by the end of next year.

My net annual forward dividends edged $0.48 higher across my six shares as a result of ABT's dividend increase.

Dividend Increase #9: Bristol Myers Squibb (BMY)

The ninth dividend hike that I received in December was from Bristol Myers Squibb. BMY announced a 10.2% hike to its quarterly dividend from $0.49 to $0.54 per share. This was a bit higher than the 8.2% increase that I predicted, which the stock can easily afford with its low payout ratio.

Across my 10 shares, my net annual forward dividends shot up $2 due to BMY's dividend raise.

Dividend Increase #10: Dominion Energy (D)

The next dividend increase that was announced in December came from Dominion Energy. D declared a 6% increase in its quarterly dividend from $0.63 to $0.6675 per share, which was just a bit below the 6.3% increase that I was expecting.

My net annual forward dividends were boosted by $0.90 across my six shares as a result of D's dividend raise.

Dividend Increase #11: Realty Income (O)

The eleventh payout increase that was announced in December was from Realty Income. O declared a 0.2% increase in its monthly dividend from $0.2460 to $0.2465 per share. This was exactly what I projected, which is what I love about this Dividend Aristocrat!

Across my 13 shares, my net annual forward dividends inched up by $0.078 due to O's dividend increase.

Dividend Increase #12: American Tower (AMT)

The final dividend increase declared in December came from American Tower. AMT announced a 6.1% hike in its quarterly dividend from $1.31 to $1.39 a share. This easily beat my expectation of $1.37 per share. A 6% increase in a year would be pretty solid itself. But what makes AMT really impressive is that it raises its dividend each quarter. Talk about dividend growth!

My net annual forward dividends were boosted by $0.96 across my three shares as a result of AMT's dividend increase.

Expected Dividend Increases for January 2022

Expected Dividend Increase #1: Realty Income (O)

O is really making the appearances in this series lately with its whopping 4.2% increase in its dividend in November and the slight increase last month. And with another 0.2% increase in its monthly dividend to $0.2470 per share likely to be announced next month, the stock will have raised its dividend for three straight months if it announces an increase in January.

Across my 13 shares of the stock, this would be a $0.078 increase in my net annual forward dividends.

Expected Dividend Increase #2: BlackRock (BLK)

The next stock that I anticipate will up its quarterly dividend next month is BlackRock. Given that analysts are expecting BLK's earnings per share to increase 8.9% to $42.22 next year, I am projecting that BLK will announce a 9.9% raise in its quarterly dividend from $4.13 to $4.54 per share.

If this announcement were to occur, my net annual forward dividends would be lifted by $1.64 across my single share of the stock.

Expected Dividend Increase #3: Kimberly Clark (KMB)

The third stock that I believe will declare a dividend increase next month is Kimberly Clark. Because KMB's EPS is forecasted to grow 9.6% next year to $6.75, I believe that the stock will announce a decent increase to its quarterly dividend. I'm expecting that KMB will raise its quarterly dividend by 5.3% from $1.14 to $1.20 per share.

Across my four shares of the stock, this would boost my net annual forward dividends by $0.96.

Expected Dividend Increase #4: Alliant Energy (LNT)

The final stock that should raise its dividend next month is Alliant Energy. Since LNT is targeting paying out $1.71 in dividends for next year, this won't count as a prediction on my part. This implies that LNT will raise its quarterly dividend by 6.2% from $0.4025 to $0.4275 per share. The company's Board of Directors has already approved the raise, so it's now just a matter of waiting for the actual announcement date.

This will be a $1.30 gain in my net annual forward dividends across my 13 shares of the stock.

Concluding Thoughts:

December was a great way to cap off a year of robust dividend increases. For the month, I received $17.982 in dividend raises. This would require $513.77 in capital investment at a 3.5% yield to replicate!

On the base of dividends that I was receiving from the 12 stocks that went on to raise their dividends this month, the weighted average raise was a solid 6.6%. Given that WPC, O, and AMT raise their dividends each quarter, the annualized raise from these dozen stocks would be even higher taking that fact into consideration. Even in a very inflationary period like the one we're seeing now, my portfolio is managing to stay ahead of inflation.

While I'm only expecting four raises next month, my net annual forward dividends would grow by $3.978 if these dividend announcements play out as expected. 

Overall, my dividend growth portfolio is starting to pick up steam as it rolls down the hill of compounding. I'm very much looking forward to the next year to see just how high my dividends will go!

Discussion:

How was your December 2021 for dividend increases?

Did you receive any first-time dividend increases like I did with WEC, CVS, ABT, and BMY?

Thanks for reading and please feel free to leave your thoughts in the comment section!

Tuesday, December 21, 2021

My Financial & Personal Goals for 2022

Since there are only two weeks left in this year at the time of writing, there's no better time than now to look ahead to the next year and set goals.

Without further ado, here are my financial and personal goals for 2022.


                      Image Source: Pexels

My Financial Goals for 2022

1. Receive at least $2,700 in net dividends

My first financial goal for 2022 is to collect at least $2,700 in net dividends next year, which I believe is realistic. That's because I am on track to receive close to $1,800 in net dividends this year. My net dividends would only need to grow just under $900 to reach this figure, which works out to investing approximately $27,000 at an average weighted yield of 3.25%, not considering dividend increases.

2. End the year with net annual forward dividends of at least $3,200

The second financial goal that I have is to end next year with net annual forward dividends of at least $3,200. Given that I'll be heading into next year with $2,300 in net annual forward dividends, this would again require roughly $28,000 in investments at a 3.25% yield. This strikes a good balance between being both a lofty and a doable goal.

3. Surpass $100,000 in investments and a net worth of at least $110,000

The final financial goal that I have for 2022 is to end the year with over $100,000 in investments and a net worth of at least $110,000. Since my investments are currently worth $68,000 and I anticipate that I will invest nearly $30,000 next year (including selective dividend reinvestment), my holdings would only need to appreciate about 4% in the next 12 months. This seems pretty reasonable in my opinion. And because I generally have $1,500 in savings and checking and a vehicle worth around $11,000, getting to $100,000 in investments would give me a clear path to $110,000 in net worth by the end of next year.

My Personal Goals for 2022

1. Publish at least 300 articles for Motley Fool

The first personal goal that I have for next year is to publish at least 300 articles over at The Motley Fool. This builds in the equivalent of two weeks of vacation each year as long as I get at least 6 articles a week published the other 50 weeks of the year, which I have been doing for months now.

My reasoning for aiming to publish this many articles over at The Motley Fool is two fold. Financially, it should allow me to hit my goals for next year and helps me to make considerable progress in achieving financial independence by age 35, which is a long-term goal of mine. Secondly, it's a nice balance between work and relaxation. That's because this workload at TMF, along with doing 1 Seeking Alpha article and 1 blog post each week, equates to approximately 35 hours a week of work.

2. Publish 1 Seeking Alpha article each week

Consistent with my sentiment above, I am going to stick with publishing 1 Seeking Alpha article a week. I believe this overall workload gets me to financial independence reasonably fast, while also giving me enough free time each week to recharge.

3. Publish 1 blog post every week

Finally, my third goal is to continue publishing 1 blog post a week for the same reasons I outlined above.

Concluding Thoughts:

While 2021 isn't quite over yet, I'm projecting that I will likely have achieved at least four out of my six goals for the year. Stay tuned for my blog post next week where I will detail my goals that I achieved and failed for this year.

Next year will be yet another exciting year in that it will be my first full year with TMF since I didn't quit my day job until this past July. Thus far, my earnings have been moderately higher at TMF than they would have been at my day job, while I'm also working less and avoiding a couple of hours each week that would have been spent commuting to and from work. 

Financially, I stand a good chance of reaching the milestone of $100,000 in investments next year. As Berkshire Hathaway's Vice Chairman Charlie Munger put it: "The first $100,000 is a bitch." With the passage of time, my dividend stock portfolio is growing bigger and beginning to produce meaningful results. It's my hope that in 10-15 years, my portfolio will be working nearly as hard as I have been in securing the capital to build it over the years. Next year will be yet another chance to take another step closer toward making that dream a reality. 

I'm so glad that I live in one of the few countries in the history of the world with the conditions that have allowed me to achieve what I have thus far financially. God bless the U.S.A.

Discussion:

What are your goals for next year?

Out of all of your goals, do you anticipate any will be more difficult than your others to attain?

I appreciate your readership and encourage you to leave comments in the section below. Also, I wish you the best of luck in reaching your goals next year!

Tuesday, December 14, 2021

January 2022 Dividend Stock Watch List

As I'm writing this blog post, it's already mid-December. Surprisingly, we're in for a beautiful couple of days with temperatures topping out in the upper-50s Fahrenheit here in Central Wisconsin.

With that aside, I'm going to dive into three of the top stocks on my watch list heading into the New Year.


Image Source: Pexels

Dividend Stock #1: 3M (MMM)

The first stock that I'm watching for next month is the Dividend King 3M. While I own 3M indirectly through my Capital Income Builder (CAIBX) mutual fund and a fractional share through M1 Finance, I don't yet actually own whole shares of the stock. There are a few reasons why I'm watching this stock for next month.

The first reason is because 3M is a diversified industrial. Since the company is balanced across a variety of healthcare industries like healthcare, electronics, and manufacturing, it should do well no matter what's going on in the world. 

This is why analysts are expecting 3M to deliver 8% annual earnings growth over the next five years. Such growth should allow for mid-single-digit dividend growth over the foreseeable future given that the stock's payout ratio for this year will be around 60%.

It also doesn't hurt that the company's interest coverage ratio through the first nine months of this year was 17.3. This suggests 3M is on solid financial footing, which will undoubtedly help me sleep at night owning the stock.

3M's overall quality with a 3.4% dividend yield at just 17 times next year's average analyst sets long-term investors up for success in my opinion, which is why I like the stock at its current $175 share price (as of December 13, 2021).

Dividend Stock #2: Union Pacific (UNP)

The next dividend stock that I'll likely be buying in January 2022 is the railroad titan Union Pacific.

Ever wonder just how what you buy actually ends up getting to a store near you? Well, after semi trucks, railroads are the next biggest means of transportation. This logistical option recently accounted for 28% of total U.S. freight movement by ton miles. In other words, railroads play a major role in the 57 tons of goods per American that are delivered each year!

What makes Union Pacific such a great railroad play?

The stock's more than 30,000 miles of track cover the western two-thirds of the United States, which makes it the major player in most parts of the country alongside Berkshire Hathaway (BRK.B) owned BNSF Railway.

The continued need for railroads to play a major role in the U.S. economy explains why analysts are forecasting that Union Pacific will grow its adjusted diluted EPS by 16.5% annually over the next five years.

That's likely why Union Pacific announced its second dividend increase of the year, which was 10.3% to boot. Looking ahead to next year, the stock's dividend payout ratio will only be 41.5% (assuming that total dividends paid next year are raised 10% to $4.72 divided by $11.36 adjusted diluted EPS average analyst estimate). This leaves plenty of room for Union Pacific's dividend to keep growing.

And given that Union Pacific's yield is currently 1.9% at its share price of $246 (as of December 13, 2021), the stock offers a market-beating yield that should grow at a double-digit clip for years to come.

Finally, the stock is trading at just under 22 times next year's earnings. This is a reasonable price to pay for Union Pacific's quality in my book.

Dividend Stock #3: Allstate (ALL)

The final dividend stock on my watch list for next month is the property and casualty insurer Allstate, which was the fifth largest P&C insurer last year as measured by direct premiums written. The company wrote a whopping $34.3 billion in premiums last year.

In a modern society such as ours, it's important for individuals to protect possessions like homes, cars, and rental properties. Allstate's business is to take on that risk for individuals at a price that adequately rewards the company for doing so. 

Because its industry is likely to steadily grow in the years ahead due to the essential nature, Allstate stands to benefit quite a bit. Even without considering the strong likelihood of interest rate hikes next year (which would raise Allstate's investment income on its $61.8 billion investment portfolio per page 5 of Allstate's Q3 2021 earnings press release), the company should do well in the years ahead.

The stock also boasts a 3% yield that is well-covered (yield based on $107 share price as of December 13, 2021). Since Allstate trades at just 10 times next year's average analyst EPS estimate, I believe the stock is a solid buy at this time.

Concluding Thoughts:

I'm expecting that I should once again have a bit more than $2,000 of capital at my disposal next month, which will allow me to put more money to work in some of the best businesses in the world.

Throughout much of this year, there has been an interesting development in my portfolio. That development is that I am focusing less on yield and more on quality stocks that grow their dividends at rather high rates. As my dividend income has grown over the years, I have come to appreciate less spectacular yields with incredible dividend growth rates. UNP and ALL perfectly fit into that category of strong dividend growth, while MMM's dividend growth has decelerated in recent years (though I don't believe that will be the case for much longer).

Discussion:

Are any of MMM, UNP, or ALL on your watch list for the month?

If not, what stocks are you watching for January 2022?

Thanks for reading and I look forward to your comments below!

Tuesday, December 7, 2021

November 2021 Dividend Stock Purchases

As I'm writing this blog post, it's early December. It's hard to believe that less than four weeks are left to this year. But despite the official start of winter being just a couple of weeks away, it has been quite nice here in Central Wisconsin with high temperatures in the mid-30s Fahrenheit.

At any rate, the beginning of a new month is a time for me to look back at the previous month of dividend stock purchases that I executed for my dividend growth portfolio. Let's dig in!





I started off the month by adding two shares to my position in Raytheon Technologies (RTX), which was executed at an average price of $88.55 a share. I added to this holding in my portfolio for the same reasons that the stock was on my watch list in October, which was due to its fair balance sheet, recovering aerospace business, and low payout ratio. These transactions added $4.08 in net annual forward dividends to my portfolio, which works out to a 2.30% dividend yield.

The next stock that I increased my position in during November was WEC Energy Group (WEC), which I purchased a single share of at a cost of $88.80. That's because the stock is one of the smartest stocks investors can buy in light of the company's reasonable payout ratio, mid-single-digit annual earnings growth, and fair valuation. This buy added $2.71 in net annual forward dividends to my portfolio, which equates to a 3.05% yield.

The third stock that I upped my stake in last month was the Dividend King Johnson & Johnson (JNJ), which was a lone share at a price of $165.03. Johnson & Johnson recently raised its earnings guidance for this year, it's the only company alongside Microsoft (MSFT) to possess an unblemished credit rating, and despite these characteristics, the stock trades at a P/E ratio in the mid-teens. Considering that this purchase boosted my net annual forward dividends by $4.24, I was able to secure a 2.57% starting yield on this share of stock.

I also added four shares to my position in the business development company Main Street Capital (MAIN) at an average cost of $45.69 a share. The basic reasoning for this was that MAIN is arguably the best run business in its industry, which is supported by its diversified investment portfolio, its investment-grade credit rating, and solid net asset value per share growth. These transactions advanced my net annual forward dividends by $10.32, which works out to a 5.65% yield.

I increased my stake in Omnicom (OMC) by two shares at an average price of $68.78 per share. My rationale for doing so remains unchanged from when OMC appeared on my watch list for October, which is that the company is rebounding from COVID, the balance sheet is decent, and the stock is attractively valued. These buys added $5.60 to my net annual forward dividends, which equates to a 4.07% yield.

The first stock that I opened a position in during the month was the semiconductor Texas Instruments (TXN), which was really because I wanted another semiconductor in my portfolio alongside Broadcom (AVGO). TXN is a solid dividend growth stock with a great track record, which is why I purchased three shares of the stock at an average cost per share of $189.19. These transactions boosted my net annual forward dividends by $13.80, which is a 2.43% net yield.

The second stock that I began a stake in last month was the communications infrastructure REIT Crown Castle (CCI), which is because I wanted a high-quality company to play the megatrend of growing data consumption. CCI isn't cheap, but it also isn't unreasonably expensive. That's why I added three shares of the stock to my portfolio at an average price per share of $182.57. These purchases increased my net annual forward dividends by $17.64, which works out to a 3.22% yield. 

The final stock that I opened a position in during the month was American Water Works (AWK). I outlined the reasons for why I want to own the stock in my December 2021 dividend stock watch list post, which include the incredibly low payout ratio for a water utility, above-average growth prospects, and a firmly investment-grade credit rating. I bought three shares of the stock at an average cost of $172.23 a share and plan to add more in the near future. These buys added $7.23 to my portfolio's net annual forward dividends, which equates to a 1.40% yield.

I added a share to my position in Cummins (CMI) at a cost of $219.20. I would advise those interested in my rationale to check out my recent Seeking Alpha article on the stock. This transaction boosted my net annual forward dividends by $5.80, which works out to a 2.65% yield.

For the first time in nearly three years, I made the decision to sell a stock I had purchased a couple of years prior. That stock was the private prison operator GEO Group (GEO), which slashed its dividend a couple of times before ultimately suspending its dividend earlier this year. This was a classic case of a dividend yield that was too good to be true, which was in the low-double digits when I made my initial purchases in August 2019. It was a transaction I should have never executed in hindsight, but live and learn.

This transaction is what allowed me to add two shares of British American Tobacco (BTI) to my Webull portfolio at an average price per share of $34.07. Given the $5.94 in net annual forward dividends added to my portfolio, this works out to an 8.72% yield.

Concluding Thoughts:

I deployed $2,670.53 in capital last month (including the $132.68 in funds raised from the sale of GEO within my Robinhood and Webull accounts). This is the fifth straight month that I deployed over $2,000 in capital. Considering the $77.36 in net annual forward dividends that I added to my portfolio during the month via purchases, this equates to a 2.90% net yield.

When also adding in the $11.92 increase in net annual forward dividends via dividend increases, my net annual forward dividends have advanced from over $2,115 at the start of November to more than $2,205 heading into December.

Discussion:

How was your November 2021 for capital deployment?

Did you open any new positions in your portfolio like I did with AWK, CCI, and TXN?

As always, thanks for reading and I look forward to reading your comments below!

Tuesday, November 30, 2021

November 2021 Dividend Income

As I'm writing this blog post, the American holiday known as Thanksgiving has come and gone. We're due for relatively warm temperatures here in Central Wisconsin over the next week with high temperatures reaching into the mid 40s Fahrenheit, which will be happily received by yours truly.

With that aside, let's take a look at my dividend income for the month of November 2021 and how it stacked up to August 2021 and November 2020!




Analysis:

During November 2021, I received $143.66 in net dividends. This works out to an 8.3% quarterly growth rate against the $132.66 in net dividends that my portfolio generated in August 2021

The amount of dividends that I collected in November 2021 also represents a 66.8% year over year growth rate compared to November 2020, when I received $86.15 in net dividends. 

A closer look at my dividend income reveals that I collected $131.76 in net dividends from 22 companies in my Robinhood account, $11.53 in net dividends from three companies in my Webull portfolio, and $0.37 from 16 companies in my M1 Finance account.

The net dividends that I received from my overall portfolio from August 2021 to November 2021 was $11.00 higher due to the following activity in my stocks:

I collected an extra $1.08 in net dividends from Williams Sonoma (WSM) within my Robinhood account, which was the result of the stock's previous 20.3% dividend increase that was announced in August.

My net dividends received from British American Tobacco (BTI) were $0.24 lower across the shares that I own in my Robinhood and Webull portfolios, which was due to fluctuations in the currency exchange rate between the U.S. Dollar and British Pound.

I collected an additional $0.01 from Realty Income (O) within my Robinhood account, which was the result of the stock's 0.2% increase in its monthly dividend in September

My net dividends received from National Retail Properties (NNN) in my Robinhood portfolio were $0.53 higher, which was due to my purchase of an additional share of the stock in August.

I collected an extra $0.08 from Main Street Capital (MAIN) within my Robinhood account, which was the result of the stock's 2.4% increase in its monthly dividend in August.

My net dividends received from Tanger Factory Outlet Centers (SKT) increased by $0.06 in my Robinhood portfolio, which was due to a 2.8% increase in its quarterly dividend that I recorded in my spreadsheet but appear to have forgot to add to my dividend increases post.

I collected an additional $0.90 from Enterprise Products Partners (EPD) within my Robinhood and Webull accounts, which was the result of my decision to purchase a couple of units of the stock in October.

My net dividends received from Magellan Midstream Partners (MMP) were boosted by $2.16 in my Robinhood portfolio, which was due to both a 1% increase in the quarterly distribution and my choice to add two more units in October.

I collected an extra $1.30 from JPMorgan Chase (JPM) within my Robinhood account, which was the result of my purchase of another share of the stock and the 11.1% increase in the quarterly dividend that was declared a few months back.

My net dividends received from Bristol Myers Squibb (BMY) were $4.90 higher in my Robinhood portfolio, which was due to a first-time dividend payment from the stock since I opened a position in September.

I collected an additional $0.22 from Verizon (VZ) within my Robinhood account, which was the result of the 2% increase in the quarterly dividend announced in September.

Concluding Thoughts:

My net dividends continue to steadily climb higher with each passing quarter. Given that I expect to continue investing around $2,000 a month going forward and I'm anticipating a variety of dividend increases next month, I believe this will be my last middle of the quarter month under $150 in net dividends.

I'm pleased with the direction of the portfolio and I am looking forward to seeing how high I can get those net dividends next November!

Discussion:

How was your November 2021 for dividend income?

Did you receive any first-time dividends during the month as I did with BMY?

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

Tuesday, November 23, 2021

Expected Dividend Increases for December 2021

As I'm writing this blog post, Thanksgiving Day is right around the corner. The wind chill is in the mid-20s and it's snowing as I'm writing. So much for no snow cover on Thanksgiving like we had a few years ago here in Central Wisconsin.

With that aside, I will discuss the dividend increases that I have received to date. Of note, I'm still expecting a dividend increase from MRK any day now. Thus, I'll be updating this blog post whenever that raise is announced. I'll also be looking ahead to the multitude of dividend increases that I'm expecting next month, which will be the busiest month of this year for raises!

 

Actual Dividend Increases for November 2021

Dividend Increase #1: Simon Property Group (SPG)

The mall, outlet center, and lifestyle center REIT Simon Property Group announced a 10% increase in its quarterly dividend from $1.50 per share to $1.65 per share. SPG's strong recovery from COVID-related headwinds this year is what prompted the stock to raise its dividend for the third time this year. And at the rate the stock is going with its dividend increases, my prediction is that the quarterly dividend could be restored to its pre-COVID level of $2.10 per share potentially by the end of next year.

Across my six shares of SPG, my net annual forward dividends shot $3.60 higher due to the recent dividend increase.

Dividend Increase #2: Main Street Capital (MAIN)

Business development company Main Street Capital declared a 2.4% increase in its monthly dividend from $0.21 per share to $0.215 per share. Like SPG, MAIN has done well operationally due to the economic recovery over the past year-plus. Since MAIN already raised its dividend by 2.4% in August, this is the second raise of the year for shareholders. On top of the increase in the regular dividend, MAIN announced a $0.10 per share supplemental dividend for shareholders to be paid in December of this year.

This announcement boosted my net annual forward dividends by $0.96 across my 16 shares (at the time of the raise as I purchased more a couple of weeks after the dividend increase).

Dividend Increase #3: Pinnacle West Capital (PNW)

Despite the recent decision from the Arizona Corporation Commission (ACC) to cut Pinnacle West Capital's return on equity from 10% to the lowest in the nation among mid to large sized utilities in the U.S. at 8.7%, PNW opted to increase its quarterly dividend by 2.4% from $0.83 per share to $0.85 per share. 

This came in a bit below my revised estimate of a 3.6% increase in the quarterly dividend per share to $0.86, but I'll gladly take this raise from PNW considering the circumstances. 

Across my seven shares of PNW, my net annual forward dividends increased by $0.56 due to the dividend increase.

Dividend Increase #4: Aflac (AFL)

Supplemental insurer Aflac announced a 21.2% increase in its quarterly dividend from $0.33 per share to $0.40 per share. In light of AFL's solid fundamentals and low payout ratio, I'm pleased with the board of directors' decision to hand out a massive dividend hike to shareholders.

This dividend raise boosted my net annual forward dividends by $3.08 across my 11 shares of the stock.

Dividend Increase #5: Realty Income (O)

The single-tenant triple net lease REIT Realty Income declared a 4.2% increase in its monthly dividend from $0.236 per share to $0.246 per share, which like many of the other dividend increases was one that came by surprise in November. But since O's acquisition of VEREIT that recently closed is expected to be more than 10% accretive to its AFFO per share, O is easily able to afford such a dividend increase.

Across my 13 shares of the stock, my net annual forward dividends rose by $1.56 as a result of the dividend bump.

Dividend Increase #6: KeyCorp (KEY)

The Ohio-based regional bank KeyCorp raised its quarterly dividend by 5.4% from $0.185 per share to $0.195 per share, which came in below my expectations considering that this was the first raise from KEY since the onset of COVID. I was expecting a 10.8% increase in the quarterly dividend to $0.205 per share.

But at any rate, I'll gladly take a 5.4% increase from KEY. I'd rather a company be conservative with its dividend increases than overextend itself and eventually have to cut the dividend.

The dividend increase from KEY resulted in an $0.88 climb in my net annual forward dividends across my 22 shares of the stock.

Dividend Increase #7: Merck (MRK)

The one dividend increase that I am still expecting this month that I haven't yet received is from none other than the Big Pharma stock Merck. I'm still anticipating that MRK will announce a 9.2% increase in its quarterly dividend from $0.65 per share to $0.71 per share.

If this dividend increase plays out as I expect, my net annual forward dividends would surge $1.92 across my eight shares of MRK stock.

Update: MRK announced a 6.2% increase in its quarterly dividend from $0.65 to $0.69 per share, which came in a bit below my expectations. But given the uncertainty as to how much of an impact the Omicron variant will have on its business, I understand why MRK opted for a more conservative dividend increase.

Across my eight shares of the stock, my net annual forward dividends surged by $1.28 due to the dividend announcement.

Expected Dividend Increases for December 2021

Expected Dividend Increase #1: Realty Income (O)

Another dividend increase from O may seem like it's out of the question since it just upped its dividend by quite a bit. But since the increase that us shareholders recently received was the big one for the year and the stock raises its dividend four times a year by smaller amounts, there is still a potential December increase left before the calendar turns to 2022.

Therefore, I'm expecting that O will inch its monthly dividend 0.2% higher from $0.246 per share to $0.2465 per share next month.

Across my 13 shares of O stock, my net annual forward dividends would edge $0.078 higher as a result of such dividend increase.

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

Like O, W.P. Carey is a diversified REIT that raises its dividend in smaller amounts quarter in and quarter out. As the stock gradually divests itself of its investment management business and becomes a pure play REIT, this should help dividend increases to accelerate.

But in the meantime, I'm forecasting that WPC will announce a 0.2% increase in its quarterly dividend from $1.052 per share to $1.054 per share next month.

My net annual forward dividends would grow by $0.056 across my seven shares of the stock if this dividend raise occurs.

Expected Dividend Increase #3: Amgen (AMGN)

The first Big Pharma stock that I'm expecting a dividend increase from in December is Amgen. Because analysts are projecting that AMGN will grow its EPS 7.4% next year to $18.13, I believe that a high-single-digit increase in the quarterly dividend is realistic. That's why I believe AMGN will announce an 8% increase in the quarterly dividend from $1.76 per share to $1.90 per share.

Across my four shares of AMGN stock, this would boost my net annual forward dividends by $2.24 if my prediction is correct.

Dividend Increase #4: Eastman Chemical (EMN)

Advanced materials and specialty additives company Eastman Chemical is next on my list for December dividend increases. Since analysts are forecasting the stock will produce 6.9% growth in its EPS to $9.55 next year, I believe a strong dividend increase is inevitable. Ergo, I'm expecting that EMN will raise its quarterly dividend by 7.2% from $0.69 per share to $0.74 per share.

If my projection is right, my net annual forward dividends would advance by $0.80 across my four shares of the stock.

Dividend Increase #5: Broadcom (AVGO)

The semiconductor company Broadcom is the fifth stock that I'm expecting to announce a dividend hike next month. As a result of analysts' average forecast of 11.2% growth to $31.08 in EPS for next year, I believe that another double-digit dividend increase is in order. That's why I'm forecasting AVGO will raise its quarterly dividend 11.1% from $3.60 per share to $4.00 per share.

Across my three shares of the stock, this would help my net annual forward dividends to surge by $4.80 if my prediction is proven to be accurate.

Dividend Increase #6: Pfizer (PFE)

Yet another Big Pharma stock that I'm anticipating a strong dividend increase from in December is Pfizer. After notching the top-selling COVID vaccine spot for its portfolio, PFE appears to be in line to also be the leader in oral COVID-19 pill treatment space after posting impressive Phase 3 clinical trial results.

This is precisely why I'm expecting the biggest dividend increase from PFE in years. My best guess is that PFE will declare a 10.3% increase in its quarterly dividend from $0.39 per share to $0.43 per share.

If this dividend increase plays out as I expect, my net annual forward dividends will be boosted by $2.72 across my 17 shares of the stock.

Dividend Increase #7: Dominion Energy (D)

The first utility that I'm forecasting will increase its dividend in December is Dominion Energy. Given that analysts are projecting that D's EPS will grow 6.4% next year to $4.13, I believe that a 6.3% increase in the quarterly dividend from $0.63 per share to $0.67 per share will be announced.

My net annual forward dividends would advance by $0.96 across my six shares of the stock if this projection is correct.

Dividend Increase #8: WEC Energy Group (WEC)

The other utility that I believe will raise its dividend next month is WEC Energy Group. Since analysts are forecasting that WEC's EPS will increase by 5.7% next year to $4.30, I believe a similar raise is due. That's why I am expecting WEC will declare a 6.3% increase in its quarterly dividend from $0.6775 per share to $0.72 per share.

Across my seven shares of the stock, my net annual forward dividends would grow by $1.19 if this dividend increase occurs.

Dividend Increase #9: American Tower (AMT)

The wireless communications infrastructure REIT American Tower is another stock that I expect to raise its dividend in December. For those who don't know, AMT raises its dividend each quarter in smaller (if you can really say smaller given AMT's amazing growth prospects) increments. And since the dividend increases announced in December are often the largest of the year, I'm expecting big things from this REIT.

That's why I believe AMT will declare a 4.6% increase in its quarterly dividend from $1.31 to $1.37 per share.

My net annual forward dividends would be boosted by $0.72 across my three shares of the stock if this exact raise is announced by AMT.

Dividend Increase #10: Abbott Laboratories (ABT)

Another dividend increase that I'm anticipating next month is from the diversified healthcare stock Abbott Laboratories. What's especially worth noting is that this next dividend hike from ABT will represent the 50th consecutive annual dividend increase, which will make the stock a revered Dividend King.

I believe that ABT will declare an 8.9% increase in its quarterly dividend from $0.45 to $0.49 per share.

Across my six shares of ABT, this would bring in an extra $0.96 in net annual forward dividends for my portfolio if this prediction is correct.

Dividend Increase #11: Bristol Myers Squibb (BMY)

The last dividend increase that I'm forecasting for December is from Bristol Myers Squibb. 

I believe that BMY will announce an 8.2% increase in its quarterly dividend from $0.49 to $0.53 per share.

My net annual forward dividends would be boosted by $1.60 across my 10 shares of the stock if this dividend increase occurs.

Concluding Thoughts:

My net annual forward dividends soared $11.92 higher due to the dividend increases that I received in November 2021. This would require $340.57 in capital to invest at a 3.5% yield to replicate!

November 2021 was my greatest month in terms of dollar impact of dividend increases in the four-plus years that I have been investing.

And even if my expectations for dividend increases in December 2021 prove to be moderately optimistic, my dividend increases received for the month should set yet another record to close out this year.

Discussion:

How was your November 2021 for dividend increases?

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

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

Tuesday, November 16, 2021

December 2021 Dividend Stock Watch List

As I'm writing this blog post in mid-November, we just received our first snowfall of the 2021-2022 fall/winter season here in Central Wisconsin. While that does mean I'll be spending less time outdoors as compared to the past six months, the good news is that temperatures have still been tolerable with highs in the upper-30s Fahrenheit. 

With that update aside, I'll delve into the intent of this post by outlining three dividend stocks that I'm strongly considering for next month.

Image Source: Pexels

Dividend Stock #1: Alliant Energy (LNT)

The first dividend stock on my watch list for December is Alliant Energy, which I wrote an updated article on for Seeking Alpha earlier this month for those interested in a more in-depth discussion of why I will be starting a position in the stock.

The first characteristic that drew me to Alliant Energy was its track record of 18 straight years of dividend increases (19 once its 6.2% dividend increase for next year is made formal in January). Alliant Energy's yield of just under 3% isn't particularly eye-popping to income investors, especially considering that its yield is about 15% below the electric utility industry. But with its low payout ratio by utility standards, Alliant Energy will almost certainly become a Dividend Aristocrat in 2028 while delivering annual dividend growth around 7%.

Second, Alliant Energy's financial positioning is relatively strong as well given that its interest coverage ratio in the first nine months of this year is 3.5.

Third, I estimate that Alliant Energy is trading at a reasonable valuation. This is the case even outside of the valuation models that I used in my Seeking Alpha article that demonstrated a slight discount, which are the dividend discount model and the discounted cash flows model.

Based on Alliant Energy's current $55.32 share price (as of November 14, 2021) and its $1.71 dividend payout per share planned for next year, its current 3.1% yield is essentially in line with its 13-year median yield of 3.2%.

Overall, Alliant Energy is a well-run electric and natural gas utility with a great balance sheet priced at a valuation that's a nice fit within my dividend growth stock portfolio.

Dividend Stock #2: Hershey (HSY)

Another stock of interest to me in the weeks ahead that I examined recently on Seeking Alpha is Hershey.

Why am I sold on Hershey?

I would encourage interested readers to check out my article on Seeking Alpha for a more detailed case for Hershey, but it boils down to the following three reasons:

Hershey is a Dividend Contender with 12 years of dividend increases under its belt. And with a dividend payout ratio expected to be in the upper-40 to low-50% range for this year, this leaves plenty of room for future dividend growth. This is further supported by analyst forecasts of 9%+ annual earnings growth over the next five years.

Secondly, similar to Alliant Energy, Hershey boasts a solid financial footing. This is evidenced by an interest coverage ratio that has improved from 10 through the first nine months of last year to nearly 15 year-to-date. In other words, profitability would need to plummet an unprecedented 90%+ or Hershey's interest expenses would need to soar many times over before the company would be at risk of insolvency.

And since I covered Hershey a few weeks ago, a marginally discounted stock has become even cheaper. That's because Hershey's stock has dipped over 2% since my article was published late last month. At $178.49 a share (as of November 14, 2021), the stock is priced at under 24 times next year's forecasted EPS, which isn't unreasonable given its growth potential. 

Hershey is worth every bit of $185 a share in my humble opinion, which opens the door for me to strongly contemplate buying the stock next month.

Dividend Stock #3: American Water Works (AWK)

The final stock on my radar is American Water Works, which I referred to in a Seeking Alpha article earlier this month as an exciting stock in a boring industry.

The key reasons why I am fascinated with AWK are as follows:

First, AWK's estimated dividend payout ratio for this year is the lowest that I've seen in the water utility industry in the mid-50% area. With impressive (for a utility and most industries for that matter) high-single-digit annual earnings growth potential, AWK should easily be able to build on its status as a Dividend Contender with 12 years of dividend raises.

Unsurprisingly, AWK's balance sheet is in an enviable position as well. The utility enjoys an A credit rating from S&P and also produced an interest coverage ratio of 3.5 through the first three quarters of this year.

At $171 a share (as of November 14, 2021), AWK isn't cheap at nearly 38 times next year's average EPS estimate, but a rapidly growing and steady water utility will never be as cheap as the value investor in me would like it to be. After years of overlooking this fact, I have come to accept that while AWK often looks expensive, it's best to dollar cost average into such a wonderful wealth compounder of a stock.

Concluding Thoughts:

As I'm building out my dividend growth stock portfolio, I'm leaning more on the names that I had ignored in favor of more value-oriented stocks through the early years of my investing career. This is demonstrated by the fact that none of the three stocks on my watch list for December are particularly enticing to a value investor.

But on the other hand, all three of the stocks I briefly discussed are of such high quality that they shouldn't rationally be trading at cheap valuations outside of extraordinary circumstances that would probably make other stocks cheaper in comparison anyways.

Discussion:

Are LNT, HSY, and/or AWK on your watch list for next month?

If not, what stocks will you be paying attention to in December 2021?

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

Tuesday, November 9, 2021

October 2021 Dividend Income

As I'm writing this blog post, it's Daylight Savings Time here in Wisconsin. That means it will be dark around 5PM and the first snowfall can't be too far off. 

With that aside, I'll delve into the intent of this post. Without further ado, here is my dividend income for October 2021.




Analysis:

During October 2021, I collected $110.57 in net dividends. This works out to a 2.1% quarterly growth rate compared to the $108.30 in net dividends that I received in July 2021. Factoring out the $12.00 in special dividends that I received from T. Rowe Price Group (TROW) in July, my quarterly growth rate would be even higher at 14.8%. And my year-over-year growth rate comes out at 46.1% against the $75.70 in net dividends that I collected in October 2020.

Going into more detail, I received $100.25 in net dividends within my Robinhood portfolio from 20 companies. I collected net dividends of $10.09 from 5 companies in my Webull account. Finally, I received $0.23 in net dividends within my Webull portfolio from 10 companies.

The following activity within my taxable accounts is what led to the $2.27 increase in net dividends from July 2021 to October 2021:

I collected $0.48 in additional dividends from STORE Capital (STOR) across my Robinhood and Webull accounts, which was the result of its recent 6.9% increase in its quarterly dividend.

My net dividends received from Philip Morris International (PM) between my Robinhood and Webull portfolios were $0.65 higher, which was due to its 4.2% dividend increase.

I collected an extra $1.58 in net dividends from Altria Group (MO) across my Robinhood and Webull accounts, which was driven by both my recent addition of a share to my Robinhood portfolio and the 4.7% dividend increase in August.

My net dividends received from Realty Income (O) within my Robinhood portfolio were $0.01 higher due to the stock's recent 0.2% increase in its monthly dividend.

I collected an additional $0.01 in net dividends from W.P. Carey (WPC) in my Robinhood account, which was also due to a recent 0.2% increase in its quarterly dividend.

My net dividends within my Robinhood portfolio from Main Street Capital (MAIN) were $0.08 higher, which was the result of a recent 2.4% increase in its monthly dividend.

I collected an extra $0.12 in net dividends from American Tower (AMT) in my Robinhood account, which was due to a 3.1% increase in the quarterly dividend.

My net dividends within my Robinhood portfolio were boosted by $3.15 from my first dividend received from Medtronic (MDT) in this account, which dates back to when I started a position in the stock in August.

I received $0.08 less in net dividends from GlaxoSmithKline (GSK) in my Robinhood account, which is due to the varying payouts throughout each quarter of the year.

My net dividends within my Robinhood portfolio were boosted by $4.55 due to my first dividend payment from Merck (MRK), which I opened a position in back in August.

I received a $7.56 boost in net dividends from first-time dividend payer VICI Properties (VICI) in my Robinhood account, which was due to my decision to start a position in the stock in September.

My net dividends within my Robinhood portfolio were boosted $4.56 by my first dividend payment received from Kimberly Clark (KMB), which is because I purchased shares of the stock in July.

As I noted earlier, my net dividends were $12.00 lower this month compared to July 2021 due to the special dividend that was paid by TROW in my Robinhood account in July and not paid again in October.

My net dividends received from Simon Property Group (SPG) within my Robinhood portfolio were also $8.40 less in October due to SPG's dividend being paid at the end of September.

Concluding Thoughts:

My net dividends are steadily heading higher, which is an encouraging sign of progress for my portfolio. With more dividend increases down the line and capital to be deployed/reinvested into dividend stocks, I expect that the next four years of the portfolio's progress will more closely resemble a deluge of dividends than a steady stream. This is especially the case now that I'm generating higher net income from my Motley Fool and Seeking Alpha gigs than I was from my day job. 

Discussion:

How was your October 2021 for dividend income?

Did you receive any first-time dividends as I did with MDT, MRK, VICI, and KMB?

As always, I thank you for your readership and welcome your comments below!

Tuesday, November 2, 2021

October 2021 Dividend Stock Purchases

As I'm writing this blog post, it's the day before Halloween. The typical reader of this blog is pretty mindful of spending. But for any newcomers to the blog or to the concept of financial independence retire early (FIRE), I want to remind everyone of this mind-boggling fact: Saving an extra 2% of your income could potentially shave years off of the time it takes you to achieve financial independence. 

Why do I make this point? Because the average American household allocates over 2% of its budget to holiday spending each year and Halloween is one of the bigger spending holidays. It isn't that you should refrain from spending, but I believe we all can be more mindful of our spending to understand the impact that our spending decisions have on our financial lives.

With that rambling aside, I'd like to turn my attention to the dividend stock purchases that I made during the month of October 2021.



I started off October by opening a position in McDonald's (MCD), which was the result of McDonald's strong balance sheet and reasonable valuation based on my October 2021 dividend stock watch list post. 

I purchased three shares of McDonald's at an average cost of $244.32 a share. This works out to a 2.26% net yield when considering the $16.56 in net annual forward dividends that these transactions added to my portfolio.

I also opened a three share position in Cummins (CMI) last month at a cost of $235.16 a share. Against the $17.40 boost in net annual forward dividends due to these purchases, this equates to a 2.47% net yield.

I added two units of Enterprise Products Partners (EPD) to my portfolio as well at an average cost of $21.67 a unit. This transaction added $3.60 to my net annual forward dividends, which is a net yield of 8.31%.

The other midstream purchase that I made in October was two units of Magellan Midstream Partners (MMP) at an average cost of $45.60 a unit. Based on the $8.22 in net annual forward dividends that were added to my portfolio (prior to the 1% dividend increase in mid-October), this works out to a 9.01% net yield.

I opened a five share position in Omnicom (OMC) in October at an average cost of $72.97 a share, which I also outlined the rationale for in my October 2021 dividend stock watch list post linked above. These purchases added $14.00 to my portfolio in net annual forward dividends, which equates to a 3.84% net yield.

I also added two shares to my stake in American Electric Power (AEP) at an average cost of $84.11 a share. For an explanation of why I added to my position in AEP, I would refer interested readers to my recent Motley Fool article discussing 3 dividend-paying Nasdaq 100 stocks including AEP, Amgen (AMGN), and PepsiCo (PEP). Considering the $5.92 in net annual forward dividends that were added to my portfolio (before the 5.4% dividend increase), this works out to a 3.52% net yield.

I increased my position in Verizon (VZ) by two shares in October at an average cost of $52.03 a share. I explained my logic in a recent Motley Fool article on why Verizon is a buy for readers who are interested. Based on the $5.12 in net annual forward dividends that were added to my portfolio, this is a 4.92% net yield.

Finally, I opened a five share position in Raytheon Technologies (RTX) at an average cost of $89.03 a share. I discussed my reasoning in my October 2021 dividend stock watch list for curious readers. The $10.20 in net annual forward dividends that were added due to my purchase works out to a 2.29% net yield.

Concluding Thoughts:

October 2021 was the fourth straight month in which I put at least $2,000 in capital to work by purchasing some of the greatest businesses in the world. I invested $2,655.24 in capital during the month, which equates to a 3.05% net yield given the $81.02 in net annual forward dividends that these purchases added to my portfolio.

Add in the $6.38 boost to net annual forward dividends through dividend increases received in October 2021 and my net annual forward dividends grew nearly $90 from approximately $2,030 at the start of October to over $2,115 heading into November.

Discussion:

How was your October 2021 for capital deployment?

Did you start any new positions during the month as I did with MCD, CMI, OMC, and RTX?

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

Tuesday, October 26, 2021

Expected Dividend Increases for November 2021

As I'm writing this blog post, it is the last week of October and only two months remain in the year. In a couple of weeks, Daylight Saving Time will be hitting Wisconsin. This basically means goodbye to daylight and hello to darkness by 5 PM!

Moving past complaining about the looming winter and to the focus of this blog post, I will be discussing the dividend increases that I received in October and what I'm expecting for November 2021. 

Actual Dividend Increases for October 2021

Dividend Increase #1: American Electric Power (AEP)

As I predicted in the previous post of this series, American Electric Power announced a 5.4% increase in its quarterly dividend from $0.74 per share to $0.78 per share. This is a sensible dividend increase since analysts are expecting AEP's EPS to also grow by 5.4% to $4.68 this year.

Across my 11 shares of the stock at the time of the announcement, my net annual forward dividends advanced $1.76 due to AEP's dividend increase.

Dividend Increase #2: Visa (V)

While Visa hasn't announced a dividend increase yet, I anticipate that will happen by October 29th. I am reiterating my previous expectation of a 12.5% increase in the quarterly dividend from $0.32 per share to $0.36 per share. This is because Visa's mid-teen earnings growth that is expected for this year supports such a dividend increase.

If this dividend increase plays out as I anticipate, my net annual forward dividends will grow by $0.48 as a result across my three shares of the stock.

Update: Visa crushed my expectations with its announcement that it was raising its quarterly dividend by 17.2% from $0.32 per share to $0.375 per share! Given that Visa was conservative with its dividend increase last year, it makes sense that the company would want to make it up to investors this year.

Visa's dividend increase helped to boost my net annual forward dividends by $0.66 across my three shares of the stock.

Dividend Increase #3: Exxon Mobil (XOM)

Exxon Mobil was able to extend its dividend increase streak to 38 consecutive years and maintain its status as a Dividend Aristocrat. XOM announced a 1.1% increase in its quarterly dividend from $0.87 per share to $0.88 per share. 

Across my 11 shares of the stock, this dividend increase led my net annual forward dividends $0.44 higher.

Dividend Increase #4: Magellan Midstream Partners (MMP)

Magellan Midstream Partners announced a 1% increase in its quarterly distribution from $1.0275 per unit to $1.0375 per unit, which was a welcomed increase.

This increase helped my net annual forward dividends to rise $0.44 across my 11 units of the stock.

Dividend Increase #5: AbbVie (ABBV)

Since I found out that AbbVie is reporting its third quarter earnings the final Friday of October rather than November, I am expecting a dividend increase in October rather than November.

Because analysts are anticipating that ABBV's EPS will surge 19.3% to $12.60 this year, I am confident that ABBV will announce a 10% increase in its quarterly dividend from $1.30 per share to $1.43 per share.

Across my seven shares of ABBV, my net annual forward dividends would soar by $3.64 if this dividend increase were to occur.

Update: ABBV announced an 8.5% increase in its quarterly dividend from $1.30 per share to $1.41 per share. Even though this was slightly beneath my expectations of a 10% raise, it's incredible that a company of ABBV's size is still handing out high-single-digit dividend increases. The only reason my expectations were so high is because of ABBV's beautiful execution throughout its corporate history.

Across my seven shares of ABBV, my net annual forward dividends surged by $3.08 as a result of the announcement.

Expected Dividend Increases for November 2021

Expected Dividend Increase #1: KeyCorp (KEY)

Because KeyCorp's management team indicated that they would be considering a dividend increase in the fourth quarter on their Q2 2021 earnings call, I believe it is reasonable to expect a 10.8% increase in the quarterly dividend to $0.205 per share from $0.185 per share. This is especially the case since KeyCorp hasn't announced a dividend increase since July 2019, so a bigger increase than usual could be in the works.

If this dividend increase plays out as expected, my net annual forward dividends would advance $1.76 across my 22 shares of the stock.

Expected Dividend Increase #2: Merck (MRK)

The second dividend increase that I'm expecting for November is from Merck.

Since analysts are forecasting 27.2% growth in MRK's EPS this year, I believe that MRK will deliver a solid dividend increase in a few weeks.

That's why I'm expecting MRK will announce a 9.2% increase in its quarterly dividend from $0.65 per share to $0.71 per share.

Across my eight shares of MRK, this would raise my net annual forward dividends by $1.92 if the dividend increase works out how I expect.

Expected Dividend Increase #3: Pinnacle West Capital (PNW)

Pinnacle West Capital didn't announce its dividend increase in October, but I expect that it will do so in early November when it reports its earnings. And despite the regulatory headwinds that the company has faced this year, I am still expecting a dividend increase. I am moderating my expectations a bit, so I am lowering my dividend increase from 4.8% to 3.6%.

With my seven shares of PNW stock, my net annual forward dividends would be boosted by $0.84 as a result of such dividend announcement.

Concluding Thoughts:

I received $6.38 in dividend increases from AEP, V, XOM, MMP, and ABBV in October. A $6.38 increase in net annual forward dividends at a 3.5% yield would require a $182.29 investment to replicate.

November 2021 is looking like it will only include three dividend increases, but I will receive $4.52 in dividend increases during the month if all announcements play out the way I expect. This would take $129.14 in capital to match at a 3.5% dividend yield. 

Discussion: 

How was your October 2021 for dividend increases?

Did you receive any first-time dividend increases as I did from AEP in October?

Thanks for reading and I look forward to your comments!

Tuesday, October 19, 2021

November 2021 Dividend Stock Watch List

As I'm writing this blog post, only two weeks remain in October. This means that it's time to start thinking about putting several stocks on my watch list for the next month.

Without further ado, here are three stocks that I'm considering adding to in November 2021.

Image Source: Pexels

Dividend Stock #1: Johnson & Johnson (JNJ)

The first dividend stock on my watch list for November 2021 is one that I haven't added to since this past April, which is Johnson & Johnson.

As I discussed in a Motley Fool article earlier this month on Johnson & Johnson, the stock is diversified with its three different segments of pharmaceuticals, medical devices, and consumer health. 

At $161 a share, Johnson & Johnson also offers a reasonably attractive mix of growth and value. That's because Johnson & Johnson expects to generate $9.60 to $9.70 in adjusted diluted EPS this year (page 2 of Johnson & Johnson's Q2 2021 earnings press release), which is a P/E ratio of less than 17 times this year's earnings.

Since analysts are forecasting 9% annual earnings growth for Johnson & Johnson in the next five years, this is a price to earnings growth or PEG ratio of less than 2.

And considering that Johnson & Johnson's adjusted diluted EPS payout ratio will be in the low-40% range for this year (based on $4.19 in dividends per share that will be paid and $9.60 to $9.70 in adjusted diluted EPS), Johnson & Johnson's dividend is in line to grow in the mid to upper-single-digits annually for the foreseeable future.

Pairing that kind of growth potential with a 2.6% yield from a Dividend King is an attractive proposition.

Dividend Stock #2: WEC Energy Group (WEC)

The next dividend stock for my watch list next month is one that I haven't added to since February, which is WEC Energy Group.

I elaborated in a recent Motley Fool article why I believe that WEC Energy Group is one of the smartest stocks that an investor can buy with $200.

The first reason is that WEC Energy Group is a utility with size and scale, serving 4.6 million customers across my home state of Wisconsin, Illinois, Michigan, and Minnesota (according to slide 2 of WEC Energy Group's September 2021 Investor Presentation). This would be very difficult to replicate, which results in a moat for the company.

Secondly, WEC Energy Group's EPS has grown at a 7% rate annually over the past five years and based on the company's capital spending plans over the next five years, that appears as though it will likely continue.

This is precisely what will allow WEC Energy Group to continue to grow its dividend around 7% annually for the foreseeable future.

When you combine WEC Energy Group's fairly valued 3% yield with 7% annual growth, there's a lot to like about annual total returns around 10%.

Dividend Stock #3: Main Street Capital (MAIN)

The third dividend stock on my watch list for November 2021 is Main Street Capital, which I haven't added to since I opened a position during the COVID crash of March 2020.

Main Street Capital is a business development company or BDC. This means that Main Street Capital invests in the under-served lower middle market (LMM) of businesses with annual revenue between $10 million and $150 million (all info sourced from Main Street Capital's Second Quarter 2021 Investor Presentation, unless otherwise specified). 

Main Street Capital invests in both debt and equity within the LMM. Main Street Capital also has only 7% exposure to its top industry of construction and engineering in its portfolio, which is a great deal of diversification. This is what helped Main Street Capital to nearly double its dividend from $0.33 per share paid in Q4 2007 (the date of its initial public offering or IPO) to $0.63 per share that will be paid in Q4 2021.

Main Street Capital's investment-grade BBB- credit rating from S&P on a stable outlook also differentiates it most other BDCs.

Throw in that Main Street Capital has been able to grow its net asset value per share (the basis on which the quality of a BDC is judged) 4.5% annually from 2007 to June 2021 and this is why Main Street Capital is the only BDC I ever plan on owning.

Main Street Capital's trailing twelve months' yield of 5.8% is only about 8% below its 13 year median yield of 6.3% per Gurufocus, which suggests the stock is only slightly overvalued.

While adding to Main Street Capital at $42 a share will bump up my average cost basis of $31 a share and I'm slightly overpaying, the stock makes up for this in my opinion with its quality. If Main Street Capital pulls back to $40 or less, I will be adding to my portfolio more aggressively. Otherwise, I'll nibble on the stock in the low $40s.

Concluding Thoughts:

Heading into November, I anticipate that my net annual forward dividends will be approximately $2,110.

I'm expecting that I will have right around $2,000 to invest in November 2021 including my selectively reinvested dividends, which could get me over the $2,175 mark in net annual forward dividends but not quite to $2,200 for the month.

Discussion:

Are any of JNJ, MAIN, or WEC on your watch list for next month?

If not, what stocks are you watching for November 2021?

As always, thanks for reading and I welcome your comments in the section below!