Tuesday, May 4, 2021

Expected Dividend Increases for May 2021

As I'm writing this blog post, we have went from ideal high temperatures in the 60s Fahrenheit here in Central Wisconsin just a few days ago to muggy highs in the low 80s. It's safe to say that although summer is officially 7 weeks away, summer has unofficially began here in Central Wisconsin.

With that aside, I'll be discussing my portfolio's dividend announcements during the month of April and looking ahead to dividend announcements that I'm expecting in May.

Actual Dividend Announcements for April 2021

Dividend Freeze #1: Exxon Mobil (XOM)

While I was anticipating that Exxon Mobil would have announced a dividend increase in April as was customary pre-COVID for more than 3 decades, XOM opted to keep its quarterly dividend in line with the previous of $0.87/share.

Although a bit disappointing, I can understand why XOM opted to freeze its dividend. It will be interesting to see whether the company will raise its dividend by the end of the year in order to maintain its status as a Dividend Aristocrat.

Distribution Freeze #1: Enterprise Products Partners (EPD)

When Enterprise Products Partners announced that it was keeping its distribution in line with the previous of $0.45/unit, it was somewhat surprising. 

Given that EPD had just resumed distribution increases with a nice 1.1% raise in January, WTI crude has since stabilized to an average price of $59.06/barrel through April of this year, and that natural gas has settled at an average price of $3.30/MMBtu, I was anticipating a 0.6% increase in the quarterly distribution to $0.4525/unit.

At any rate, EPD's distribution is well-covered and since the company is a high-yielding component of my portfolio, I don't need distribution increases every quarter to be pleased with the strong income that it throws off for my portfolio.

Dividend Increase #1: Johnson & Johnson (JNJ)

Johnson & Johnson announced a 5.0% increase in its quarterly dividend from $1.01/share to $1.06/share, which was slightly below my expectation of a 6.9% increase in the quarterly dividend to $1.08/share.

Regardless, JNJ's dividend increase once again easily beat inflation, and the only year of the 59 consecutive years of dividend increases that JNJ failed to beat inflation was in 1980 when inflation was a staggering 13.5%.

Across my 4 shares of the stock, my net annual forward dividends increased by $0.80 as a result of JNJ's dividend announcement.

Dividend Increase #2: Southern (SO) 

Southern announced a 3.1% increase in its quarterly dividend from $0.64/share to $0.66/share, which was precisely what I predicted.

My net annual forward dividends advanced by $0.40 across my 5 shares of the stock due to SO's dividend announcement.

Dividend Increase #3: International Business Machines (IBM)

Wrapping up April's dividend announcements with a disappointing dividend increase from International Business Machines, IBM did the bare minimum to extend its consecutive dividend increase streak to 26 years, announcing a 0.6% increase to the quarterly dividend from $1.63/share to $1.64/share.

Despite this disappointing dividend increase, IBM remains a cash flow machine poised to throw off $11-$12 billion in FCF in 2021 (against a dividend obligation of roughly $6 billion), which bodes well for the repayment of the company's ~$56 billion in debt in the years ahead.

Across my 4 shares of the stock, my net annual forward dividends increased by $0.16 as a result of IBM's dividend announcement.

Expected Dividend Increases for May 2021

Expected Dividend Increase #1: Lowe's (LOW)

It will be interesting to see whether Lowe's resumes its pre-COVID dividend increase schedule of late May or early June since the company just raised its dividend last August.

In light of the favorable operating environment for LOW, Yahoo Finance is forecasting that the company will grow its earnings 14.2% annually over the next 5 years. 

With this in mind, I am anticipating that whether LOW's dividend increase is in late May/early June or August again, LOW will announce a 10.0% increase in its quarterly dividend from $0.60/share to $0.66/share.

Should this dividend increase manifest itself, my net annual forward dividends would be boosted by $0.96 across my 4 shares of the stock.

Expected Dividend Increase #2: Leggett & Platt (LEG)

Since Leggett & Platt hasn't announced a dividend increase since May 2019, it will be interesting to see whether LEG makes up with a decent dividend increase this time around.

I'm anticipating that LEG will announce a 5.0% increase in its quarterly dividend from $0.40/share to $0.42/share, which takes into consideration that LEG is recovering from the impact of COVID-19.

If this dividend increase plays out as I expect, my net annual forward dividends would advance by $0.64 across my 8 shares of the stock.

Expected Dividend Increase #3: American Tower (AMT)

Rounding out my list of dividend increases that I'm forecasting for May is the hyper-dividend growth stock, American Tower.

What makes AMT interesting, is that aside from its commitment to growing its dividend by around 15% for 2021, AMT regularly increases its dividend each quarter.

Since AMT's dividend increases announced in May are typically the smallest, I am anticipating that AMT will announce a 1.6% increase in its quarterly dividend from $1.24/share to $1.26/share.

Should this dividend increase play out, my net annual forward dividends would be boosted by $0.24 across my 3 shares of the stock (since I will be purchasing another 2 shares of the stock the first week of May ahead of the dividend increase).

Concluding Thoughts:

Since XOM and EPD didn't increase their dividend/distribution, my net annual forward dividends only advanced by $1.36 during April. Regardless, this would require a $34.00 capital investment at a 4% yield to replicate.

Looking ahead to May, I am anticipating that I will receive $1.84 in dividend increases during the month, which would require $46.00 in fresh capital invested at a 4% yield to match.

Discussion:

Did you experience disappointing dividend announcements as I did with IBM's paltry dividend increase?

Are you expecting any first time dividend increases as I am with AMT?

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

Tuesday, April 27, 2021

May 2021 Dividend Stock Watch List

Hot off the month of April, which likely will see nearly $3,000 in capital deployed during the month, I am anticipating that May will mark yet another month of capital deployment around $3,000.

May will turn out to be a better month of capital deployment than expected due to the fact that I ended up overestimating what my income would be for 2020 when applying for Marketplace health insurance coverage, so I received a decent tax refund.

Lately, I have been emphasizing growthier dividend stocks because as my dividend income continues to grow, I am shifting to the mindset that I will need just as many true dividend growth stocks as I will need higher yielding, less growthy dividend stocks to combat inflation.

It's for this reason that I will be highlighting several growth-oriented dividend stocks in my May 2021 watch list.

100 US Dollar Banknotes

Image Source: Pexels

Dividend Stock #1: Abbott Laboratories (ABT)

Abbott Labs, the parent company from which AbbVie (ABBV) was spun off, is a solid dividend growth stock that I have wanted to own for years.

Since I was more of a yield-hungry investor in the first few years of my investing journey, I snubbed the stock, always thinking that the yield was never enough.

What I failed to realize back then, is that Abbott Labs is a high-quality business that very rarely trades at an enticing valuation or yield.

I realize now that Abbott Labs' interest coverage ratio is reasonably strong at 10 for last fiscal year, the company is forecasting 37.0% adjusted diluted EPS growth this fiscal year, and the stock is trading at only 24 times this year's adjusted diluted EPS forecast (data sourced from Abbott Labs' Q4 2020 earnings press release and Yahoo Finance).

When I take those factors into consideration, as well as the fact that Abbott Labs' adjusted diluted EPS payout ratio is likely going to be in the mid-30% range for 2021, I'm fine with the company's ~1.5% yield because I know high-single digit to low-double digit annual growth over the medium-term will occur.

Overall, I like Abbott Labs' total return potential at the current price of $123.31 a share (as of April 25, 2021) as the 1.5% yield, high-single digit annual earnings growth potential, and a static valuation multiple, make it likely that Abbott Labs' will meet my 10% annual total return requirement over the next decade.

Dividend Stock #2: L3Harris Technologies (LHX)

Moving to the next dividend growth stock on my watch list for May 2021, I am looking to add to my position in L3Harris Technologies for the same reasons that I recently discussed in an article on Seeking Alpha.

L3Harris' non-GAAP EPS and FCF payout ratios around 30% during 2020 leave plenty of room for expansion in the payout ratio over the long-term, the company initiated guidance calling for mid-single digit revenue growth in 2021 paired with high-single digit to low-double digit non-GAAP EPS growth for the year, L3Harris' balance sheet is among the best in its industry, and the stock is trading at just over 16 times the midpoint of its non-GAAP EPS guidance for the year, which I estimate is a 15% discount to the stock's fair value (based on the stock's current price of $211.02 a share as of April 25, 2021).

Coming off the recent 20% dividend increase, shares of L3Harris yield 1.9% and offer the strong likelihood of 8.0-9.0% annual earnings growth with valuation multiple expansion on top of it, which makes it likely that shares will easily meet my 10% annual total return requirement over the next decade.

Dividend Stock #3: Microsoft (MSFT)

The third and final dividend growth stock that will be on my watch list heading into May 2021 is Microsoft.

Similar to Abbott Labs, Microsoft has been a stock I wanted to own from the very beginning of my investing journey, but for the same reasons, I never ended up pulling the buy trigger to this point.

Absent a massive runup in the stock price in the next couple weeks, I'm looking to make that change in May because while Microsoft trades at 35 times this year's average earnings forecast via Yahoo Finance (at the share price of $261.96 as of April 25, 2021), analysts are expecting Microsoft's diluted EPS to grow at an 18.2% clip annually over the next 5 years, which works out to a PEG ratio below 2.

When considering that Microsoft is the only other publicly traded U.S. company with a triple A credit rating from the ratings agencies aside from Johnson & Johnson (JNJ), and that the company has a variety of growth catalysts, including its Azure cloud platform (second only to Amazon's Web Services business in market share), Office 365, and the recent $22 billion HoloLens deal over the next decade with the U.S. Army, Microsoft's valuation isn't as steep as it initially appears.

Microsoft's diluted EPS payout ratio is positioned to be in neighborhood of 31% during 2021 (factoring in a 10.7% increase in the quarterly dividend that I expect will be announced in September), which along with the earnings growth, will allow Microsoft to be generous with its dividend increases and share repurchases going forward.

Even factoring in a reversion to Microsoft's diluted PE ratio to 30 in the years ahead (as Microsoft's massive revenue base works against its growth potential) and conservative 15% annual earnings growth from 2022 to 2025, I estimate that through 2025, Microsoft is set to deliver annual total returns well in excess of 10%.

Concluding Thoughts:

Unless there are huge runups specifically in ABT and MSFT over the next few weeks, I plan to add both, in addition to LHX during the month of May.

While equally weighted positions in these three stocks would average a starting yield in the 1.4% range, it's important to note, especially to my younger self, that these three stocks will undoubtedly offer high-single digit to low-double digit annual dividend growth over the medium-term, which will boost that yield on cost considerably.

Discussion:

Are you considering purchases of ABT, LHX, or MSFT in May 2021?

If not, what dividend stocks are on your watch list heading into May 2021?

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

Tuesday, April 20, 2021

The Importance Of Limiting Discretionary Spending In Building Wealth

While contemplating the financial progress that I have made over the past several years and writing my previous blog post outlining the potent combo of dividend growth investing and frugality, it occurred to me that what has really allowed my investment portfolio to make it to this point in a relatively short period of time is my natural tendency to limit my discretionary spending.

Fortunately, I have been able to live on just over $100-$125/month in discretionary spending for virtually all of my adult life. 

This is a stark contrast to the nearly $1,500/month that the average American adult spends on non-discretionary items (i.e. drinks, takeout delivery, gym memberships). That's damn near enough to fully max a 401(k) each year, which is why I believe it is incredibly important to make sure your discretionary spending is providing you with enough value to justify it. 


Image Source: Pexels (nothing against Starbucks, but this was the best free stock photo discretionary spending item I could find)

Total Monthly Discretionary Spending: $107-$122/month

Quick Serve Restaurant purchases: $50-$60/month

For the past several years, my parents and I have had an agreement that we would rotate every other week paying for the cost of eating out each Friday night.

Given that we typically spend around $25 each visit at businesses, such as McDonald's, Burger King, Culver's, and so on, and there are typically two visits each month that I am responsible for covering, my typical month of spending is $50-$60.

Since my family and I generally eat home made meals the other 6 days a week, I believe this spending item can be justified as it provides a nice respite from meal prep and something to look forward to at the end of each week.

Cricket smartphone service: $20/month

While a smartphone is practically an extra appendage for most these days (including yours truly), countless generations lived without smartphones in the past, so I must confess that this is a discretionary spending item.

Fortunately, my family is on a 5 line plan with Cricket Wireless for $20 a line/month (which is owned by AT&T, so I see a small kickback on my costs every month). Given that I receive 5 GB of data and unlimited talk and text for just $20/month, I am entirely comfortable keeping this as a recurring expense.

Clash of Clans Gold Pass/Other Purchases: $10-15/month

I'm not too much of a gamer, with the exception of the freemium mobile strategy smash hit game Clash of Clans. If there has ever been any game that revolutionized the mobile gaming world as much as Clash of Clans, I have yet to hear about it. 

Clash of Clans developer Supercell has arguably been the most community friendly developer in the industry as Chief Pat noted in a recent video, where he ranked Clash of Clans as his favorite Supercell game.

The Gold Pass offers a great value at just $5/month as it helps to dramatically lower the cost of troops to attack enemy bases, lower the cost of troop upgrades in the laboratory, lower wall/building upgrades, as well as hero upgrades. 

On a near monthly basis, Clash of Clans also offers solid values, such as Book of Building/Book of Everything items (which instantly finish upgrades and can save over two weeks of time), and so forth.

Since I began playing CoC in late 2013, I have played it much more on than off, quitting on two occasions for roughly 2 and a half years combined (primarily d/t school and work obligations). The gameplay rarely gets stale and I envision myself playing this game several hours a week for many more years.

GoDaddy Shared webhosting: $10/month (annual subscription)

The annual expense of hosting this blog works out to roughly a $10/month average, which isn't too steep of a price to pay for a hobby that consumes a couple hours of my time each week.

Patreon: $8/month

I use this service to subscribe to Jason Fieber's exclusive content, in which he details the activity in his portfolio, and updates his portfolio accordingly at the beginning of each month. I have followed Jason since probably around 2015. He and I think quite a bit alike in terms of our investing strategy, so I think $8/month to get his insights into what sectors and stocks are undervalued to the point that he is investing his own money in said sectors and stocks is worth every penny.

Peacock Streaming: $5/month

In the age of streaming, Peacock offers a decent value at $5/month when considering that tons of WWE Network content and live PPVs come with the service, which is great considering that I have followed the WWE since I was a kid in the early 2000s.

Avast SecureLine VPN/Avast Driver Updater: $4/month (annual subscription)

Let's face it, in a world that is as dependent on technology as it is, Avast's SecureLine VPN and Driver Updater programs for $2/month each on an annual subscription are lifesavers. I can go about my business in public checking my accounts without worry that a hacker is going to potentially have access to my sensitive information. The Driver Updater program helps my laptop to stay up to date and run as smoothly as possible, which is of the utmost importance for a device that I use upwards of 10 hours a week.

Concluding Thoughts:

I am fortunate to live with my parents as my discretionary spending would be probably double or triple if I were required to pay for my own internet and cook my own meals each night (I'd admittedly probably eat out more frequently than I am now if that were the case, which is why I should really learn the valuable skill of cooking in the next few years to be honest). 

Overall, I'm very satisfied with my discretionary spending in the ballpark of $100-$125/month, as I feel it strikes a nice balance between "treating myself" in the present and saving for my future.

This minimal discretionary spending has allowed me to achieve a savings rate in excess of 60%, and as a result, I anticipate I will hit $100k in investments probably in the next 2 years, assuming a relatively flat market.

Discussion:

Are there any discretionary spending items in your budget that you are considering dropping? Or do you feel fairly justified in each item as I do?

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

Tuesday, April 13, 2021

A Reflection On The Power Of Dividend Growth Investing & Frugality

Over the past couple days, I have been thinking about just how far I have come since I began my investing journey in September 2017. As I'm just a couple years away from approaching the milestone of my net annual forward dividends matching the income that I earned at my first job as a part-time cashier at Shopko in my first two years of undergrad, I thought it was an apt time to examine the power of dividend growth investing and frugality in real time.

Image Source: Pexels

As I alluded to in a post a couple years ago comparing my income writing for Seeking Alpha and working as a cashier at Shopko, I made an average of around $4-5k annually over my two years at Shopko.

At the present moment, my net annual forward dividend income is $1,602, which is despite the fact that my portfolio has sustained numerous dividend cuts over the past year, and that I didn't start investing meaningful capital of more than a few hundred dollars a month until I completed my Bachelor's degree in August 2019 as I noted in my post of lessons that I learned after two years of investing.

Assuming that I invest $15k from May to December of this year, and that I invest $20k in 2022 and another $20k in 2023 at a 4.0% net yield (which I believe will ultimately prove conservative as it factors in no increase in earnings over the next couple years), my net annual forward dividends will be within my range of average annual earnings while I was a part-time cashier in college.

If you had told me just 6 years ago when I began my first job in college that in less than a decade, my net annual forward dividends would match that of my earnings at my first job, I really wouldn't have believed you.

It's breathtaking to think that in the span of just 6 years since my first job, I have paid nearly $40k in tuition/books and accumulated a dividend portfolio worth nearly $50k while never even cracking $40k in annual earnings.

A 60%+ savings rate combined with the power of dividend growth investing is capable of almost literally moving mountains and parting the Red Sea in financial terms, which is what makes me so damn excited for the next 6 years of this journey!

Concluding Thoughts:

I hope that my short story outlined in this post. the story of a guy that has been extraordinarily ordinary in virtually every respect of his life, serves as motivation to those that are in the very beginning stages of their journey, and as a reminder to those that are further along, that dividend growth and frugality are arguably the most potent one-two punch to the financial promised land.

If I'm capable of making such tremendous progress in a relatively short amount of time adhering to the principles of dividend growth investing and frugality, I truly believe everyone is capable of doing so!

Discussion:

Are there any milestones within your DG portfolio that you have thought about lately?

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

Tuesday, April 6, 2021

March 2021 Dividend Income

As I'm writing this blog post, it's early April in Central Wisconsin and 99.9% of the snow/ice has melted away. The next couple weeks are forecasted to bring highs in the 50s to 60s and lows in the 40s to 50s Fahrenheit, which is a bit above average for the area.

After being largely forced to exercise indoors in January and February, I'm looking forward to really enjoying the outdoors, especially over the next couple months before temperatures start to really heat up.

With that aside, I'll delve into the crux of this post, which is to discuss my dividend income for March 2021.







Analysis:

During the month of March 2021, I received $165.45 in net dividends against the $165.60 in net dividends that were received in December 2020, which represents a 0.1% quarterly decline.

On a year over year basis, the $165.45 in net dividends received in March 2021 equates to an 83.2% growth rate compared to the $90.31 in net dividends received in March 2020.

Digging deeper into the net dividends that I received in March 2021, I collected $90.83 in net dividends from 24 companies in my Robinhood account, $12.04 in net dividends from 6 companies in my Webull account, $62.07 in net dividends from the Capital Income Builder (CAIBX) holding in my retirement account, and $0.51 in net dividends from 25 companies in my M1 Finance account.

The $0.15 decline in my net dividends received from December 2020 to March 2021 was a result of the following activity within my portfolios:

Due to CAIBX's cut to its quarterly dividend in the first quarter from $0.50/share to $0.40/share and the special dividend that was paid in December 2020, but not in March 2021, my net dividends received from my CAIBX holdings declined $27.60 on a quarterly basis.

Another headwind to my portfolio during March 2021, was the $2.53 in Robinhood margin expenses that I didn't have in December due to my recent reuse of Robinhood margin, which lowered my net dividends by as much in March.

My net dividends advanced $3.48 in my Robinhood account as a result of the timing of Digital Realty Trust's (DLR) dividend payment and recent dividend increase.

The net dividends collected from PepsiCo (PEP) within my Robinhood and M1 Finance accounts were boosted by $3.09 due to my recent addition of 1 share to my portfolio, as well as the timing of the dividend payment.

My net dividends received from L3Harris Technologies (LHX) in my Robinhood account were $1.36 higher as a result of LHX's dividend increase and my recent purchase of another share of the stock.

The net dividends collected from Lockheed Martin (LMT) within my Robinhood account were boosted by $2.60 due to my recent purchase of an additional share of the stock.

My net dividends received from Home Depot (HD) in my Robinhood account were $0.30 higher as a result of HD's recent dividend increase.

The net dividends collected from Realty Income (O) within my Robinhood account were boosted by $0.47 due to my recent purchase of an additional 2 shares of the stock.

My net dividends received from Prudential Financial (PRU) in my Robinhood and Webull accounts were $0.45 higher as a result of PRU's recent dividend increase.

The net dividends collected from American Electric Power (AEP) within my Robinhood account were boosted by $5.18 due to my recent addition of AEP to my portfolio.

My net dividends received from United Parcel Service (UPS) in my Robinhood account were $0.04 higher as a result of UPS's recent dividend increase.

The net dividends collected from Johnson & Johnson (JNJ) within my Robinhood account were boosted by $1.01 due to my recent purchase of an additional share of the stock.

My net dividends received from Amgen (AMGN) in my Robinhood account were $3.68 higher as a result of my purchase of an additional 2 shares and AMGN's dividend increase last December.

The net dividends collected from Pfizer (PFE) within my Robinhood account were boosted by $1.29 due to my purchase of additional shares of the stock, as well as PFE's dividend increase last December.

My net dividends received from WEC Energy Group (WEC) in my Robinhood account were $3.39 higher due to my purchases of the stock over the past few months.

Finally, the net dividends collected from Aflac (AFL) within my Robinhood and M1 Finance accounts were boosted by $3.64 as a result of AFL's recent dividend increase and my purchase of whole shares.

Concluding Thoughts:

While my dividend income was essentially flat from December 2020, this was due to the annual special dividend in December within my CAIBX mutual fund and a 20% cut to the quarterly regular dividend from $0.50/share to $0.40/share.

Backing out the CAIBX special dividends in December 2020, my non-special net dividends would have increased 12.5% from $147.10 in December 2020 to $165.45 in March 2021.

When taking into consideration the elimination of my $5/monthly Robinhood Gold fee, the reduction of margin expenses to zero, anticipated capital deployment, and dividend increases, I am confident that June's dividend income will be within $10 of the $200 mark.

Discussion:

How was your March in terms of dividend income? 

Did you receive any first time dividends from stocks as I did with AEP and WEC?

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


Tuesday, March 30, 2021

March 2021 Dividend Stock Purchases

As I'm writing this blog post, we're just a few days away from April, which could either mean that we are out of the woods here in Central Wisconsin as it relates to snowfall or it could also mean that we're just days away from one or two major snowfalls.

Given that there have been major snowfalls in two of the past three Aprils where I live, it will be interesting to see how April plays out.

With that aside, I will be discussing my capital deployment during March 2021.


Beginning with my retirement account, I deployed $315.65 in capital between my 7% contribution to my Capital Income Builder (CAIBX) position, my employer's 3% contribution, and the $62.07 in dividends that were received from my position during the month.

Adjusting for the 3.5% sales charge on the contributions of myself and my employer, I deployed $306.76 in capital during March 2021.

The capital contributions and dividend reinvestment made during March helped my CAIBX position to grow from 153.282 shares entering March to 157.983 shares heading into April.

Factoring in $2.13 in net annual dividends/share (which was the net annual dividends/share paid out by CAIBX last year), my net annual forward dividends were boosted by $10.01 as a result of my capital deployment.

Moving to my taxable accounts, I reduced my Robinhood margin from $2,627.50 at the beginning of the month to $686.87 at the end of the month as a result of $1,850 in fresh capital contributions and $90.83 in dividends received in my account that were allocated to margin reduction.

Due to my commitment to reducing my Robinhood margin to zero in an effort to initiate the transfer of my brokerage account to Fidelity, the only purchasing activity during March was the CAIBX mutual fund in my retirement account.

The elimination of my interest bearing margin helped to increase my net annual forward dividends by $40.69.

Concluding Thoughts:

While March was a strong capital deployment month with $2,247.59 being deployed between retirement contributions, dividend reinvestment, and brokerage account contributions, this was largely because of the $1,400 stimulus payment that I received during the month. 

Due to the $2,247.59 that I deployed during March, my net annual forward dividends surged $50.70, which works out to a 2.26% net yield. 

My net annual forward dividends also increased $3.35 as a result of the 4 dividend increases that I received in March.

This activity helped my net annual forward dividends to surge from just under $1,500 heading into March to just over $1,550 heading into April.

Looking ahead to April and May, I am anticipating that I will deploy close to $3,000 and $1,700, respectively, which is primarily due to a 3 paycheck April (as well as a small tax refund).

I am therefore anticipating that my net annual forward dividends will spike from just over $1,550 at the end of March to $1,725 at the end of May (which will be helped by not only capital deployment into quality dividend stocks, but by the elimination of my $5 monthly Robinhood Gold fee by early April).

Discussion:

How was your March in terms of capital deployment?

What are you forecasting your April and May to look like on the capital deployment front?

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


Tuesday, March 23, 2021

Expected Dividend Increases for April 2021

As I'm writing this blog post, we have officially entered spring in Central Wisconsin and the weather is really starting to reflect this development. We've reached the upper 50s Fahrenheit and the vast majority of the snow cover has once again melted just days after our previous (and hopefully final snowfall). 

With that aside, I will be discussing the dividend increases that I received in March, as well as the dividend increases that I am anticipating in April.


March Dividend Increases

Dividend Increase #1: W.P. Carey (WPC)

As a testament to the quality of W.P. Carey (WPC) as a business, WPC once again delivered a dividend increase that was in line with my expectations of 0.2%, outlined in my previous blog post of this series. WPC increased its quarterly dividend 0.2%, from $1.046/share to $1.048/share. 

Across my 7 shares of WPC, my net annual forward dividends increased $0.056 as a result of WPC's recent dividend increase.

Dividend Increase #2: Realty Income (O)

Another high-quality REIT that delivered a dividend increase in line with my expectations was Realty Income (O). O announced a 0.2% increase in its monthly dividend, from $0.2345/share to $0.2350/share.

My net annual forward dividends increased $0.054 due to O's dividend increase across my 9 shares.

Dividend Increase #3: General Dynamics (GD)

Moving to yet another Dividend Aristocrat, General Dynamics (GD) announced an 8.2% increase to its quarterly dividend, taking it from $1.10/share to $1.19/share. This was slightly ahead of my expectation of a 7.3% increase in its quarterly dividend to $1.18/share, which was a pleasant surprise.

Across my 3 shares of GD, my net annual forward dividends were boosted by $1.08 as a result of GD's dividend increase.

Dividend Increase #4: Williams Sonoma (WSM)

Last but certainly not least, Williams Sonoma (WSM) announced a whopping 11.3% increase to its quarterly dividend, from $0.53/share to $0.59/share.

Because WSM announced a delayed dividend increase in 2020, I didn't expect that the company would resume its pre-COVID dividend increase schedule of March. Of course, I was thrilled when I saw the news that WSM delivered a huge dividend increase for its shareholders and initiated a $1 billion share repurchase program.

My net annual forward dividends surged $2.16 across my 9 shares of WSM due to its dividend increase.

April Dividend Increases

Expected Increase #1: Johnson & Johnson (JNJ)

As was recently pointed out by SD Growth in the comment section of Bert of Dividend Diplomat's recent post on why he and his wife are going to be purchasing Johnson & Johnson (JNJ) each week this year, JNJ has a history of not only raising its dividend each year dating back to the Kennedy administration, but the only year they didn't raise their dividend in excess of inflation during that time was when inflation was 13.5% in 1980!

Since the inflation rate is primed to remain in the 2-3% range this year and I am expecting JNJ to announce a 6.9% increase in its quarterly dividend next month, from $1.01/share to $1.08/share, JNJ is positioned to deliver yet another year of inflation beating dividend growth.

Should this dividend increase play out as I expect, my net annual forward dividends would be boosted by $0.84 across my 3 shares of JNJ.

Expected Increase #2: Southern (SO)

Yet another business that I believe will deliver a dividend increase in excess of inflation this year, is Southern (SO).

I am forecasting a 3.1% increase in SO's quarterly dividend, from $0.64/share to $0.66/share.

Across my 5 shares of SO, my net annual forward dividends would increase $0.40 if SO delivers the dividend increase that I am expecting.

Expected Increase #3: International Business Machines (IBM)

I'm also expecting a dividend increase from the Dividend Aristocrat, International Business Machines (IBM) in April. 

I believe that IBM will be announcing a 3.7% increase in its quarterly dividend, from $1.63/share to $1.69/share.

This dividend increase, should it materialize, would result in a $0.96 boost to my net annual forward dividends across my 4 shares.

Expected Increase #4: Exxon Mobil (XOM)

Since WTI crude's $58 YTD average in 2021 is on pace to average its best year in terms of average closing price since 2018's $65 average and Exxon Mobil (XOM) is required to raise its dividend this year to maintain its status as a Dividend Aristocrat, I believe it is highly likely that XOM will deliver a dividend increase for its shareholders.

It's hard to really know how large of a dividend increase XOM will announce, but I am forecasting that it will be a conservative increase such as a 3.4% increase to its quarterly dividend, from $0.87/share to $0.90/share to conserve capital for investment.

Should this dividend increase materialize, my net annual forward dividends would be boosted by $1.32 due to the 11 shares of XOM that I own.

Expected Increase #5: Enterprise Products Partners (EPD)

The final distribution increase that I am expecting in April is from Enterprise Products Partners (EPD).

In light of the stabilizing commodity environment and EPD's further improving operating fundamentals as a result, I am anticipating that EPD will resume its prior practice of raising its distribution on a quarterly basis just as it did for 62 consecutive quarters prior to COVID-19 being classified as a pandemic.

Therefore, I predict that EPD will announce a 0.6% increase in its quarterly distribution from $0.45/unit to $0.4525/unit.

Across my 33 units of EPD, this distribution increase would result in a $0.33 increase in my net annual forward distributions.

Concluding Thoughts:

While not as strong as the $4.78 in net annual forward dividend increases that I received from 7 stocks in February, March was still a solid month, with 5 stocks announcing a total of $3.35 in net annual forward dividend increases.

At a 4% yield, it would take $83.75 in capital deployment to replicate the increase in net annual forward dividends during March.

Should April's dividend announcements play out as I expect, I would receive $3.85 in net annual dividend increases from 5 stocks, which would be equivalent to investing $96.25 at a 4% yield.

Discussion:

How was your March in terms of dividend increases?

Did your portfolio benefit from any solid dividend increases as mine did in the case of GD and WSM?

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

Tuesday, March 16, 2021

April 2021 Dividend Stock Watch List

With Mizuho Securities expecting about 10% of the $380 billion in third round stimulus payments to be allocated to stocks and Bitcoin, it's safe to say that there will be quite a bit of money from individual investors pouring into the market over the next few weeks.

Depending upon when I receive my $1,400 stimulus direct deposit, I plan on either paying off what remains of my Robinhood margin or purchasing additional dividend stocks. If I receive my stimulus payment prior to the beginning of April, I will deleverage the last bit of Robinhood margin. 

On the other hand, if I receive my stimulus payment early April or later, I intend to purchase dividend stocks. Regardless of when I receive my stimulus payment, I am forecasting that I will be deploying over $3,000 in capital in April, with the vast majority of that capital going into dividend stocks.

Below are 3 dividend stocks that I am considering initiating positions in come April.

100 US Dollar Banknotes

                               Image Source: Pexels

Dividend Stock #1: American Tower (AMT)

The first stock on my watch list is the tower REIT, American Tower (AMT), which put up a very strong 2020, delivering nearly 8% AFFO growth during the year. 

Since AMT operates in a rapidly growing industry and is the leader of that industry, it's expecting yet another year of high-single digit AFFO growth in 2021, 8.5% at the midpoint.

Based on AMT's $4.53 in dividends/share paid out in 2020 and AMT's $8.49 in AFFO/share generated during that time, AMT maintained a comfortable AFFO payout ratio of 53.4% during the year.

AMT's FCF payout ratio of 67.7% further suggests that its dividend remains well covered heading into 2021 (as per data sourced from page F-9 of AMT's recent 10-K).

Based on AMT's ~$4.1 billion in forecasted AFFO at its midpoint for 2021 and the current market cap of $97.1 billion (as of March 15, 2021), AMT is trading at just under 24 times this year's AFFO forecast.

Taking AMT's strong fundamentals, safe (and fast growing) dividend, and its reasonable valuation (relative to its growth potential) into consideration, I believe that AMT is worth a look at its current share price of $218 and change.

Dividend Stock #2: BlackRock (BLK)

The second stock on my watch list is asset manager, BlackRock (BLK).

As I outlined in my recent Seeking Alpha article on BLK, the stock's dividend is quite safe (with a 42.9% adjusted diluted EPS payout ratio in 2020 and a 63.7% FCF payout ratio during that time), BLK's outlook for 2021 includes high-single digit adjusted diluted EPS growth, BLK maintained an interest coverage ratio in excess of 30 in 2020, and the stock is trading at about 19 times this year's earnings.

Taking all of that into account, I am quite bullish on BLK around $720/share.

Dividend Stock #3: T. Rowe Price Group (TROW)

Rounding out my watch list, is yet another asset manager, T. Rowe Price Group (TROW).

As I discussed in my recent Seeking Alpha article on TROW, the stock's dividend is rather safe (with a 37.6% adjusted diluted EPS payout ratio and a 37.4% FCF payout ratio in 2020), TROW is set to produce yet another year of high-teen percent growth in adjusted diluted EPS, the stock boasts no long-term debt and a strong cash position, and trades at less than 15 times this year's earnings.

The preceding points have led me to strongly consider opening a position in TROW, especially at the current share price of $173 and change.

Concluding Thoughts:

When considering that I'm anticipating over $3k in capital deployment in the month of April (which also just happens to be my birth month as I was born on the 15th, coinciding with Tax Day), I am really stoked to repay some of my remaining Robinhood margin in March and go on a dividend stock shopping spree in April!

In light of the capital deployment that I have planned for April, I am anticipating that my net annual forward dividends will surge from around $1,530 heading into April to about $1,675 at the end of April.

Discussion:

Are AMT, BLK, or TROW on your watch list heading into April? If not, what names are on your watch list?

Thanks for reading and I welcome your comments in the comment section below!

Tuesday, March 9, 2021

February 2021 Dividend Stock Purchases

As I'm writing this blog post a few days into March, spring is in the air! Here in Central Wisconsin about half of the snow on the ground has already melted. Only time will tell whether Mother Nature is trying to lull is into a false sense of security before dumping a foot of snow on us in April as it has the past few years or if this time will be different.

With that aside, I will be delving into the intent of this post, which is to discuss my capital deployment during the month of February 2021.

                                  




Starting with my retirement account, I deployed $252.00 in gross capital when factoring in my 7% contribution to my Capital Income Builder (CAIBX) position within my retirement account, as well as my employer's 3% matching contribution.

Adjusting for the 3.5% sales charge that CAIBX charged to my account in February, I deployed $243.18 in capital during February 2021.

My capital contributions helped my CAIBX position to increase from 149.514 shares entering February 2021 to 153.282 shares entering March 2021.

Assuming $2.14 in net annual dividends/share, my net annual forward dividends increased by $8.06, which works out to a 3.31% net yield on the deployed capital.

My first dividend stock purchase during the month of February was 14 shares of Verizon (VZ) at a total cost of $776.83. 

Going into February, one of the companies near the top of my watchlist (as well as Lanny's of Dividend Diplomats) was VZ as I had always wanted to build a position in the stock and the mid-$50s offered a nice entry point to start a position in my view.

The $35.14 in net annual forward dividends that were added as a result of this purchase equate to a 4.52% net yield.

I also added 2 shares to my position in Pfizer (PFE) at a total cost of $68.95, which was because I felt the stock was a solid value in the mid-$30 range.

When weighing the $3.12 in net annual forward dividends added to my portfolio, this works out to a 4.53% net yield.

I added a share of W.P. Carey (WPC) at a cost of $68.00 due to the company's fair operating results in 2020 and relative underperformance relative to the S&P 500 since my previous Seeking Alpha article on the stock, which equates to a yield of 6.15% when considering the $4.18 in net annual forward dividends added due to the purchase.

I purchased another share of AbbVie (ABBV) at a cost of $105.19, which was due to the reasons outlined in my recent Seeking Alpha article on the stock.

When considering the $5.20 in net annual forward dividends that were added to my portfolio due to my purchase, this equates to a 4.94% net yield.

I also added another share of Philip Morris International (PM) at a cost of $86.33, with most of the reasons outlined in my previous Seeking Alpha article on the stock.

The $4.80 in net annual forward dividends that were added to my portfolio as a result of my purchase equate to a 5.56% net yield.

I purchased another share of Prudential (PRU) at a cost of $83.98, which I discussed in a Seeking Alpha article last month.

When considering the $4.60 in net annual forward dividends added to my portfolio due to my purchase, my net yield equates to 5.48%.

I also added 2 shares of British American Tobacco (BTI) to my portfolio at a total cost of $72.73 due to their appealing valuation and strong operating results during 2020.

When weighing the $5.94 in net annual forward dividends added to my portfolio, my net yield works out to 8.17%.

I purchased an additional share of L3Harris Technologies (LHX) at a cost of $188.28, which was largely for the reasons outlined in my Seeking Alpha article from January on the stock.

The $4.08 in net annual forward dividends that were added to my portfolio equate to a net yield of 2.17%.

Since WEC Energy Group's (WEC) stock fell considerably from the time I last covered the stock on Seeking Alpha and the stock announced a 7.1% increase to its quarterly dividend, I decided to add another share of the stock at a cost of $83.30.

When considering the $2.71 in net annual forward dividends added to my portfolio, my capital deployed worked out to a 3.25% net yield.

Finally, on the dividend stock purchase front, I made my first purchase of Viatris (VTRS) since I received a share from the spinoff that was completed last November from PFE ahead of what I anticipated would be a quarterly dividend announcement of around $0.22/share.

Unfortunately, VTRS's announced quarterly dividend of $0.11/share was well below my expectations, but even so, my purchase of 9 shares at a total cost of $163.85 added $3.96 to my net annual forward dividends.

When weighing the $3.96 in net annual dividends added as a result of my purchase, my net yield equated to 2.42%.

The one other bit of activity within my portfolio during February was that I reduced my Robinhood margin by $246.33, which helped to boost my net annual forward dividends by $6.16 at an annualized margin rate of 2.5%.

Concluding Thoughts:

February was a strong month in terms of capital deployment and dividend increases (and early March was nice too as General Dynamics' dividend increase beat my expectations), which helped boost my net annual forward dividends from just under $1,400 to just under $1,500 (as of March 3, 2021).

I added $87.95 in net annual forward dividends as a result of the $2,186.95 in capital deployed during the month, which equates to a net dividend yield of 4.02%.

I also added just over $10 in net annual forward dividends as a result of the 7 dividend increases that I discussed in my previous post, as well as PepsiCo (PEP) and BTI dividend increases.

Since I'm forecasting another status quo month of around $1,500 in capital deployment during March, I believe I will be able to continue to build on my portfolio's progress once again.

Discussion:

How was your February on the capital deployment front?

Did you add any new positions to your portfolio during February as I did with my purchase of VZ?

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

Tuesday, March 2, 2021

February 2021 Dividend Income

 As I'm writing this blog post, February is already just a day away from being over! This also means that the winter season is just weeks away from finally ending here in Central Wisconsin. This is already reflected in the fact that we reached 50 degrees Fahrenheit for the first time in several months!

Another implication of February ending tomorrow is that it is once again time for me to discuss the dividend income that my portfolio provided to me in February 2021, so buckle up for another edition of the dividend income report series!





Analysis:

During the month of February, I received $98.44 in net dividends against the $86.15 in net dividends that were collected in November 2020, which represents a 14.3% quarterly growth rate.

In a rare turn of events, my 13.6% YoY growth rate from the $86.62 in dividends that I received in February 2020 is less than my quarterly growth rate. This is because of the numerous dividend cuts from companies that paid dividends during the month over the past number of months, including Simon Property Group (SPG), The GEO Group (GEO), and Energy Transfer (ET).

Breaking my net dividends received down further by account, I collected $84.65 in net dividends from 18 companies in my Robinhood account, $13.49 in net dividends from 4 companies in my Webull account, and $0.30 from 13 companies in my M1 Finance account.

My net dividends received from November 2020 to February 2021 increased by $12.29 as a result of the following activity within my portfolio:

I received an additional $0.36 in net dividends across my Robinhood and Webull accounts from British American Tobacco (BTI).

My net dividends received from AbbVie (ABBV) surged by $0.72 within my Robinhood account due to ABBV's recent dividend hike.

I received an extra $5.72 in net dividends in my Robinhood account due to my recent purchase of National Retail Properties' shares (NNN).

My net dividends received from Realty Income (O) also increased by $0.47 in my Robinhood account as a result of my recent purchase of an additional 2 shares of the stock and O's recent dividend increase.

I received an additional $1.95 in dividends from Tanger Factory Outlet Centers (SKT) in my Robinhood account as a result of the stock's recent reinstatement of its quarterly dividend at about half of its rate prior to the suspension of its quarterly dividend.

My net dividends received from Enterprise Products Partners (EPD) increased $0.16 across my Robinhood and Webull accounts due to EPD's recent distribution increase.

I also received $4.00 in net dividends from GEO due to the timing of its dividend payment across my Robinhood and Webull accounts.

My net dividends received from CVS Health (CVS) within my Robinhood account increased by $1.50, which is the result of my recent addition of shares of CVS.

I also received an additional $0.52 in net dividends from AT&T (T) as a result of my recent purchase of an additional share of the stock.

My net dividends were $0.04 less from my M1 Finance account due to the timing of Starbucks' (SBUX) and Fastenal's (FAST) dividend payments.

Finally, my Robinhood margin expenses increased $3.07 from November 2020 to February 2021 due to my purchasing activity in December 2020, which resulted in additional margin being utilized.

Concluding Thoughts:

My net dividends collected advanced nicely from November 2020 to February 2021, which is the result of dividend increases/SKT's dividend reinstatement, as well as my deployment of additional capital each month.

Since I'm very close to reaching the $100 mark for the middle month of each quarter and I have made recent purchases that will boost my dividend income in the next quarter (i.e. ABBV, VZ, and BTI), I am confident that my next income report in May 2021 will record over $110 in net dividends during the month.

Discussion:

How was your dividend income in February?

Did you receive any first time dividends or reinstated dividends in February as I did with NNN and SKT?

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

Tuesday, February 23, 2021

Expected Dividend Increases for March 2021

After over a week of sub-zero temperatures here in Central Wisconsin, we have returned to relatively pleasant temperatures just below freezing.

With that aside, I will be discussing the dividend announcements in February and previewing expected dividend announcements for March.


Dividend Increase #1: Genuine Parts Company (GPC)

Genuine Parts Company's (GPC) dividend increase came in just below my expectation of 3.8% or $0.82/share, with the company announcing a 3.2% increase in its quarterly dividend from $0.79/share to $0.815/share.

Across my 6 shares of GPC, this dividend announcement increased my net annual forward dividends by $0.60.

Dividend Increase #2: Prudential Financial (PRU)

Prudential Financial's (PRU) dividend increase also came in just below my expectation of 6.4%, with PRU announcing a 4.5% increase in its quarterly dividend from $1.10/share to $1.15/share.

My net annual forward dividends were boosted by $1.80 across my 9 shares of PRU at the time of the dividend announcement.

Dividend Increase #3: United Parcel Service (UPS)

United Parcel Service's 1.0% increase in its quarterly dividend (from $1.01/share to $1.02/share) came in well below my expectations of a 6.9% dividend increase.

Given the blowout 2020 that UPS delivered to shareholders, I was surprised by UPS's dividend tiny dividend increase.

At any rate, UPS's dividend increase resulted in a $0.16 boost to my net annual forward dividends across my 4 shares of the stock.

Dividend Increase #4: Cisco (CSCO)

Cisco's 2.8% increase in its quarterly dividend (from $0.36/share to $0.37/share) came in below my expectations of a 5.6% increase to $0.38/share.

Across my 11 shares of the stock at the time of CSCO's dividend announcement, my net annual forward dividends increased $0.44.

Increase #5: Home Depot (HD)

As I expected Home Depot (HD) delivered a 10% increase to it shareholders, raising its quarterly dividend from $1.50/share to $1.65/share.

Across my 2 shares of the stock, my net annual forward dividends were boosted by $1.20.

Increase #6: Digital Realty Trust (DLR)

Digital Realty Trust (DLR) announced a 3.4% increase in its quarterly dividend from $1.12/share to $1.16/share just as I expected.

Across my 3 shares of the stock, my net annual forward dividends increased $0.48.

Increase #7: Albemarle (ALB)

Albemarle (ALB) announced a 1.3% increase in its quarterly dividend from $0.385/share to $0.39/share, which was well below my expectations of a 5.2% increase in the quarterly dividend.

Regardless, my net annual forward dividends increased by $0.10 as a result of ALB's dividend announcement across my 5 shares of the stock.

Dividend Freeze #1: PPL Corp (PPL)

PPL Corp (PPL) announced a dividend in line with its previous, which was less than the 0.6% increase in the quarterly dividend that I was expecting (from $0.415/share to $0.4175/share).

Given PPL's shift to a pureplay U.S. utility strategy with the sale of its U.K. utility business, I understand why PPL's management team and Board of Directors opted to simply maintain the dividend at this time.

Expected Dividend Increases for March 2021

Expected Increase #1: W.P. Carey (WPC)

W.P. Carey (WPC) is one of the most consistent dividend payers in my portfolio, which is why I am expecting the company to announce yet another 0.2% increase in its quarterly dividend from $1.046/share to $1.048/share.

Across my 7 shares of the stock, I am forecasting a $0.056 increase in my net annual forward dividends.

Expected Increase #2: Realty Income (O)

Another consistent dividend payer in my portfolio is Realty Income (O), which is why I am forecasting a 0.2% increase in its quarterly dividend from $0.2345/share to $0.2350/share.

This would boost my net annual forward dividends by $0.054 across my 9 shares of the stock.

Expected Increase #3: General Dynamics (GD)

The final dividend increase that I am expecting for March is General Dynamics (GD).

Due to GD's relatively sustainable payout ratios and high-single digit annual earnings growth expected for 2021, I believe that GD will announce a 7.3% increase in its quarterly dividend from $1.10/share to $1.18/share.

Across my 3 shares of the stock, my net annual forward dividends would be boosted by $0.96.

Concluding Thoughts:

I received $4.78 of dividend increases in February, which would require an investment of $119.50 at a 4% yield to replicate.

Furthermore, I am expecting $1.07 in dividend increases in March, which would take $26.75 to replicate at a 4% yield.

Discussion:

How was your February in terms of dividend announcements?

Did you receive any first-time dividend increases during the month as I did with UPS and CSCO?

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

Tuesday, February 16, 2021

Recounting My Blessings

As I'm writing this post, it's already mid-February. Most importantly, the bone-chilling temperatures of Central Wisconsin will once again be a thing of the past in just a couple months!

Even though we're well past Thanksgiving, I believe that every day presents us with numerous blessings that are worthy of acknowledging to live a fulfilling life, which is why I'll be outlining a few blessings that I greatly appreciate.

Thank You Signage

Image Source: Pexels

The First: Being Born In The Wealthiest Country In Existence

Despite the fact that no country will ever be a perfect place to live due to the inherent flaws of human nature, I truly believe that the United States, and more broadly, the economic system of Western civilization has done more to advance the human condition than any other civilization in history.

When we consider that the vast majority of even the bottom quintile of Americans by income have electricity and the ability to access an abundance of information via the Internet, it's quite clear that I am blessed to have been born to a lower middle class family in the United States.

This has made it possible for average citizens such as myself to take control of my financial future and start a brokerage account with Robinhood.

While winning the geographic lottery was undoubtedly vital in my ability to recently reach a net worth of $50,000, none of this would have happened without my family, which leads me to my next point.

The Second: A Supportive Family

I have been blessed with a supportive immediate family, which has been instrumental in allowing me to graduate college with a low five-figure net worth. 

The financial support of my grandparents and parents for birthdays and Christmas were useful in helping me to pay my way through college without incurring student loan debt

What's more, the fact that my parents allowed me to live rent free with them while I was in college saved me tens of thousands of dollars over the span of 4 years.

The Third: Writing For Seeking Alpha

When I wrote what would eventually be my first article to be published to Seeking Alpha, my sole reason at the time was to generate more exposure for the blog.

It wasn't long after I submitted my article to SA for non-exclusive publication that I was advised by an editor from SA that I should consider submitting my article for exclusive publication, which would thereafter turn into a side hustle that has allowed me to earn a solid side income over the past 2 years and accumulate over 5,000 followers.

It's incredible to think that had I never thought of writing for Seeking Alpha as a way of cross marketing my blog, I never would have had the chance to engage with the Seeking Alpha community by writing articles and earn a side income while doing so, which is why I feel fortunate that this opportunity came my way.

Concluding Thoughts:

Having recently reached a net worth of $50,000, I have been reflecting on the blessings in my life over the past couple days.

Words cannot even begin to express just how blessed I have been to have been born in a wealthy country to supportive lower middle class parents, not to mention being fortunate enough to find a side hustle that I enjoy.

Discussion:

What are the things for which you are most grateful?

Thanks for reading and I welcome your comments in the comment section below!

Tuesday, February 9, 2021

Why I Will Be Switching From Robinhood To Fidelity

The decision of major brokers such as Robinhood to limit the trading of meme stocks (up to last week when Robinhood lifted all limitations on the trading of meme stocks) led to many p'ed off customers, with many leaving bad reviews on Google Play, and some even switching to other brokerage firms as a rebellion against Robinhood.

It was this development that prompted me to come to the decision to switch my investment holdings from Robinhood to Fidelity.

While I lean toward the side of these disgruntled customers, I personally don't share their risk tolerance and renting rather than ownership mentality toward stocks.

As I'll discuss below, my reasons to switch from Robinhood to Fidelity lie in the fact that Fidelity offers a much stronger platform for investment research (and it's free), Fidelity's margin rates basically discourage the use of margin (which is a plus in this case as I have really wanted to shore up my personal balance sheet even more than ever before despite the fact that I have leveraged Robinhood's 2.5% margin rate to boost my net annual dividend income and acquire high-quality dividend growth stocks), and Fidelity is a more sustainable platform in the long-term as compared to Robinhood.

Image result for fidelity logo Image Source: 1000logos

The First Reason: A Robust Research Platform

While I have enjoyed access to Morningstar's research reports via my Robinhood Gold membership for $5/month, the primary reason that I intend on switching to Fidelity is the fact that the broker offers free access to stock research from nearly two dozen third-party providers, including Thomson Reuters and Zacks.

Aside from Robinhood's Morningstar research reports for the $5/month fee that comes with Robinhood Gold, the platform lacks any meaningful research reports, which is a major downside IMO.

Fidelity will provide me with a great deal of information that I can refer to while conducting my own research all at a savings of my $5/month Robinhood Gold membership.

The Second Reason: The Switch Will Prompt Drastic Improvement In My Personal Balance Sheet

While my personal balance sheet only consists of roughly $2,700 in margin debt and $200 in credit card debt at the time of my writing this blog post against roughly $51,000 in assets, I have reverted to my previous view of margin in that I would rather own the entirety of my portfolio.

Since I will need to entirely pay down my margin to initiate my account transfer from Robinhood to Fidelity, this would serve the purpose of shoring up my personal balance sheet and transforming it from solid to rock solid.

Although it is unlikely that Robinhood will raise its margin rates from 2.5% in the foreseeable future due to the Federal Reserve's commitment to keeping rates near zero through 2023, it's just an added risk to my personal finances that rates could eventually rise or in a severe bear market, I could be issued a margin call (it would take a roughly 75% downturn in my portfolio at this time to activate a margin call, but crazier things have happened in the past).

Because Fidelity's margin rates are relatively high, a switch to Fidelity as my broker would essentially eliminate the temptation of the use of margin in my portfolio, which would also eliminate the risk of being a forced seller in a severe bear market.

Given that I'm doing relatively well from a financial standpoint for my age, I view it as foolish to risk my financial well-being for minimal financial gain.

The Third Reason: I Believe Fidelity Is More Sustainable Over The Long-Term

Going back to my introduction that alluded to the fallout from Robinhood's decision to briefly eliminate the trading of meme stocks, my final reason to switch to Fidelity ultimately comes down to the fact that Robinhood has received several hundred thousand 1 star reviews on Google Play from disgruntled customers.

While I don't believe that Robinhood will go bankrupt in the near future as a result of the backlash of its meme stock decisions (though the damage to its reputation will be significant in at least the near future IMO), I feel more comfortable with Fidelity's track record since its founding in 1946 than I do with Robinhood's track record since its founding in 2013.

Concluding Thoughts: 

While I will always be grateful to Robinhood for being my first broker, the company's limited research platform, tempting margin rates, and near-term damage to its reputation led to my decision to switch to Fidelity in a couple months.

I believe that my switch to Fidelity once I fully deleverage my Robinhood margin debt will allow me access to a much stronger research platform, disincentivize the future use of margin, and provide me with more peace of mind with the sustainability of my broker.

Discussion:

Have you ever switched brokers in your investing career? If so, how many times have you switched brokers and are you pleased with your current broker or are you considering a switch?

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

Tuesday, February 2, 2021

January 2021 Dividend Income

Another month has passed us by and the weather here in Central Wisconsin remains well above average for this time of year. The next few days are expected to reach the 20s Fahrenheit, which sure beats the sub-zero temperatures that typically manifests itself this time of year where I live!

With that aside, I will be delving into the intent of this post, which is to outline my dividend income received in January 2021.






During the month of January 2021, I received $80.26 in net dividends.

Against the $75.70 in net dividends that were received in October 2020, this equates to a 6.0% quarterly growth rate.

Additionally, the net dividends collected in January 2021 represent 75.2% YoY growth compared to the $45.81 in net dividends received in January 2020.

Breaking this down by account, I received $70.24 in net dividends from 18 companies in my Robinhood portfolio, $9.78 in net dividends from 5 companies in my Webull portfolio, and $0.24 in net dividends from 11 companies in my M1 Finance portfolio.

The following activity within my portfolios resulted in a $4.56 increase in my net dividends from October 2020 to January 2021:

Due to the timing of The GEO Group's (GEO) dividend, my net dividends received declined $5.44 across my Robinhood and Webull portfolios.

Due to GlaxoSmithKline's (GSK) dividend payment schedule, my net dividends received increased $0.17 in my Robinhood portfolio.

As a result of my purchase of an additional share of Philip Morris International (PM), my dividends received were boosted by $1.20 in my Robinhood portfolio.

My dividends received from Eastman Chemical Company (EMN) increased $0.12 as a result of its recent dividend increase in my Robinhood portfolio.

As a result of the timing of PepsiCo's (PEP) dividend, my dividends were $2.07 higher across my Robinhood and M1 Finance portfolios.

I also received my first dividend from Cisco (CSCO) in my Robinhood portfolio since my purchase last November, which boosted my dividend income by $3.96.

My dividends received from Realty Income (O) increased by $0.47 in my Robinhood portfolio, which was due to my recent purchase of another 2 shares.

I also received an additional $1.06 in dividends from W.P. Carey (WPC) in my Robinhood portfolio as a result of its recent dividend increase and my recent purchase of an additional share.

As a result of the timing of Digital Realty's (DLR) dividend in my Robinhood portfolio, my net dividends were boosted $3.36.

Finally, my net dividends decreased $2.41 as a result of an increase in my Robinhood margin used.

Concluding Thoughts:

My net dividends continue to steadily progress as I set yet another record in terms of dividend income for the first month of a quarter.

Since I am returning to my usual capital deployment schedule of $1,500-$2,000/month for the foreseeable future, I am anticipating that my net dividends in April will be pushing $90, bringing me that much closer to every month being over $100 beginning this summer.

Discussion:

How was your month in terms of dividend income?

Did you receive any first time dividends as I did with CSCO?

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