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!