Tuesday, October 12, 2021

September 2021 Dividend Income

As I'm writing this blog post, the seasonally warm temperatures have continued into October here in Central Wisconsin. The next week of forecasts will see high temperatures range in the low to mid-70s Fahrenheit.

Since it's early October, it's time for me to go over my dividend income for September 2021. Because I received dividends a day early from Visa (V) and Wells Fargo (WFC) in my Webull account, those will appear to be in August despite official pay dates in September. Also of note, I had several dividends from Sept. 30 in my Robinhood account that I didn't receive until Oct. 1.






Analysis:

During the month of September 2021, I collected a record $229.54 in net dividends against the $197.54 in net dividends that were received in June 2021. This works out to a 16.2% quarterly growth rate.

The dividends that I collected in September 2021 also equate to a 64.6% year over year growth rate compared to the $139.46 in net dividends received in September 2020.

Delving deeper into the details, I collected $146.33 in net dividends from 33 companies in my Robinhood account during the month (as a result of the timing of Simon Property Group's dividend, as well as first-time dividends from KeyCorp, Pinnacle West Capital, and Essential Utilities). What's more, I received $70.00 in net dividends from the Capital Income Builder mutual fund (CAIBX) in my retirement account. I also collected $12.74 in net dividends from six companies in my Webull account. Finally, I received $0.47 in net dividends from 23 companies in my M1 Finance account.

The $32.00 increase in net dividends collected from June 2021 to September 2021 was the result of the following activity within my portfolios:

Starting within my retirement account, my net annual dividends received from CAIBX were $2.52 higher due to an increased share balance from my last few paycheck contributions at my day job before I started to write for Motley Fool and Seeking Alpha essentially full-time.

I also collected an additional $0.80 from WFC within my Robinhood and Webull accounts, which was due to the recent doubling of the stock's quarterly dividend.

My net dividends received from Simon Property Group (SPG) were $9.00 higher in my Robinhood account than in June because SPG's previous dividend was paid in July. SPG also increased its quarterly dividend recently.

I collected an extra $0.13 in net dividends from British Petroleum (BP) within my Robinhood account as a result of its dividend increase in August.

I also collected an additional $1.26 in net dividends from Dominion Energy (D) during the month within my Robinhood account, which was the result of my August 2021 dividend stock purchases.

My net dividends received from Royal Dutch Shell (RDS.B) in my Robinhood account were $1.20 higher, which was due to its 38.3% hike in its quarterly dividend.

I collected an extra $2.86 in net dividends from Viatris (VTRS) within my Robinhood account, which was the result of my July 2021 dividend stock purchases and August 2021 dividend stock purchases.

My net dividends received from KeyCorp (KEY) were $4.07 higher in my Robinhood account because it was the first dividend payment received from the stock, which was due to my July 2021 and August 2021 dividend stock purchases.

I collected an additional $1.48 in net dividends from American Electric Power (AEP) within my Robinhood account, which was the result of my June 2021 dividend stock purchases.

My net dividends received from Essential Utilities (WTRG) were $2.68 higher than in June because this was the first dividend from them in my Robinhood account, which was due to my July 2021 dividend stock purchases. 

I collected an extra $0.18 from J.M. Smucker (SJM) within my Robinhood account, which was the result of a 10% dividend increase in July.

My net dividends received from Pinnacle West Capital (PNW) were $5.81 higher than June because this was the first dividend from them in my Robinhood account, which was due to my July 2021 dividend stock purchases.

I collected an additional $0.01 from RDS.B within my M1 Finance account, which was due to the aforementioned dividend hike.

Concluding Thoughts:

I have collected over $1,218.20 in net dividends through September. And based on the fact that I'm expecting more than $500 in net dividends in the final three months of this year, I appear to be on track to meet my goal of collecting $1,800 in net dividends for 2021. With nearly $2,030 in net annual forward dividends heading into October, I also am on track to end this year with well over my goal of $2,200 in net annual forward dividends to start 2022.

With my capital contributions, dividend increases, and dividend reinvestment, I wouldn't be surprised if my net dividends were to surpass $250 in December of this year.

Discussion:

How was your dividend income in September?

Did you receive any first-time dividends during the month like I did from KEY, PNW, and WTRG?

As always, I'm grateful for your readership and look forward to your comments!

Tuesday, October 5, 2021

September 2021 Dividend Stock Purchases

As I'm writing this blog post, it's the last day of September. It's hard to believe, but there are only three months left in the year! Fall is here in Central Wisconsin, but you wouldn't know it based on the temperatures in the high-70s Fahrenheit today.

At any rate, it's time for me to discuss my capital deployment activity in September 2021 and the dividend stocks that I purchased for the month.


As I explained in my previous post of this series, it will be rare going forward that I discuss capital deployment within my employer-sponsored retirement account. That's because I stopped working there nearly three months ago to pursue writing on a near full-time basis with The Motley Fool and Seeking Alpha.

The only time I will be deploying capital in the account will be when dividends are paid and automatically reinvested to purchase more shares of the Capital Income Builder (CAIBX) mutual fund, which is what happened in September 2021.

The $70.00 in net dividends that I received during the month was reinvested into 1.018 shares of CAIBX, which should produce $2.17 in net annual forward dividends. This works out to a 3.10% net yield.

I started off September by first adding a share to my position in Altria Group (MO) at a cost of $50.91, which was just days after I wrote an article on the stock on Seeking Alpha discussing the recent 4.7% dividend increase.

MO isn't the flashiest stock, but its 7%+ dividend yield is supported by a sub-80% payout ratio and healthy fundamentals. That's why I added a share to my portfolio at a net yield of 7.07%, boosting my net annual forward dividends by $3.60 in the process.

The next stock that I purchased in September was VICI Properties (VICI), which was a new addition to my portfolio.

As I explained in a recent Motley Fool article on Realty Income (O) and VICI, there are a number of things that I like about the latter, such as its industry-leading weighted average lease term, 100% occupancy rate, and robust AFFO per share growth to support a safe and growing dividend.

That's why I added 21 shares of the stock to my portfolio at an average cost of $31.36 a share. Compared to the $30.24 in net annual forward dividends added from the purchase, this equates to a 4.59% net yield.

The other stock that I added to my portfolio in September was Bristol Myers Squibb (BMY), which is because outside of its top three drugs (Revlimid, Eliquis, and Opdivo) whose patents will all be expiring this decade, the company has a number of promising drugs in various stages of development.

The 10 shares of BMY that I added was at an average cost of $60.98 a share, which works out to a 3.21% net yield factoring in the $19.60 in net annual forward dividends that the purchases put in the portfolio.

I also added a share to my position in Lockheed Martin (LMT) at a cost of $339.82, which was just days before the stock announced a 7.7% increase in its quarterly dividend per share to $2.80.

As I explained in my dividend stock watch list post for September 2021, I planned on adding to my position in LMT because it is off to a great start this year, the balance sheet is strong, and the dividend is well covered.

Since I purchased before the dividend increase, my starting net yield was 3.06%. And with the dividend increase, my yield on cost is now 3.30%.

Since first opening a position in Visa (V) nearly two years ago, I added another share of the stock at a cost of $220.55.

With the global economic reopening playing out, V's low payout ratio, and top-notch balance sheet, I wanted to add to my position.

Compared to the $1.28 in net annual dividends that this purchase added to my portfolio, my net yield on this purchase was 0.58%.

Finally, I added a share to my position in Merck (MRK) at a cost of $71.85 a share.

The reason for adding to my position in MRK is that while its oncology segment led by Keytruda is important to the company, MRK is so much more than just oncology with its vaccines and animal health segments as I explained in a recent Motley Fool article.

Weighed against the $2.60 in net annual forward dividends that my purchase added to my portfolio, my net yield on the purchase was 3.62%.

Concluding Thoughts:

September 2021 was the third straight month in which I deployed over $2,000 in capital (when including the dividends received that I always selectively reinvest), which is having a remarkable impact on the growth of the portfolio's net annual forward dividends.

I invested $2,021.41 in September 2021, which added $69.89 in net annual forward dividends across the seven positions that I added to or initiated during the month. This works out to a respectable average weighted net yield of 3.46%, which is right around the 3.5% range that I want to be near going forward.

When also considering that dividend increases received during the month added $9.93 to my net annual forward dividends, my net annual forward dividends surged from approximately $1,950 to enter the month to nearly $2,030 heading into October.

And since I'm expecting that I'll deploy $2,700 in capital (including reinvested dividends) in October 2021, I should end up around $2,125 in net annual forward dividends by the end of the month.

Discussion:

How was your September for capital deployment?

Did you add any new positions to your portfolio during the month as I did with VICI and BMY?

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

Tuesday, September 28, 2021

Expected Dividend Increases for October 2021

As I'm writing this blog post, fall just started a couple days ago and September will be over in less than a week. It won't be long before we'll need to set our clocks back an hour here in Central Wisconsin and it'll be dark by 5 PM.

That means it's time to talk about the eight dividend increases that I received in September. I accidentally lumped in Visa (V) with expected September dividend increases despite the company routinely announcing its dividend increases in October (not sure how that happened!).

Even though I'm only expecting three dividend increases for October, the month should still be a nice boost to my portfolio.

Actual Dividend Increases in September

Dividend Increase #1: Realty Income (O)

The only monthly paying Dividend Aristocrat, Realty Income delivered with a 0.2% increase in its monthly dividend from $0.2355 per share to $0.2360 per share. This was once again perfectly in line with my prediction from last month in the previous post of this series.

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

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

Another real estate investment trust in my portfolio that managed to meet my expectations was W.P. Carey. The REIT upped its quarterly dividend 0.2% from $1.05 per share to $1.052 per share.

My net annual forward dividends edged up $0.056 across my seven shares of WPC as a result of its dividend increase.

Dividend Increase #3: Philip Morris International (PM)

Philip Morris International was the third dividend increase in my portfolio to meet my expectations, with the tobacco giant boosting its quarterly dividend 4.2% from $1.20 per share to $1.25 per share.

Across my 13 shares of PM, my net annual forward dividends were boosted by $2.60 due to the payout increase.

Dividend Increase #4: Lockheed Martin (LMT)

Lockheed Martin was the fourth dividend increase of September, which also met my expectations. LMT raised its quarterly dividend 7.7% from $2.60 per share to $2.80 per share. 

Since I added a share of LMT to my portfolio days before the dividend increase, my net annual forward dividends spiked by $3.20 across my four shares of the stock as a result of the dividend increase.

Dividend Increase #5: STORE Capital (STOR)

STORE Capital is the fifth dividend increase of September, but unlike the previous four, the stock exceeded my expectations with its dividend increase.

Whereas I was expecting a 5.6% increase in the quarterly dividend, STOR actually announced a 6.9% increase in its quarterly dividend from $0.36 per share to $0.385 per share.

Across my 19 shares of STOR, my net annual forward dividends increased by $1.90 due to the dividend increase.

Dividend Increase #6: Verizon (VZ)

Verizon was the only stock in my portfolio during the month that fell a bit short of my expectations, announcing a 2% increase in its quarterly dividend from $0.6275 per share to $0.64 per share. This was a tad less than the $0.645 per share quarterly dividend that I was expecting, but I can't complain that much as VZ continues to bring 5G to customers across the U.S. 

My net annual forward dividends advanced by $0.90 across my 18 shares of VZ as a result of the dividend increase.

Dividend Increase #7: American Tower (AMT)

The second dividend stock in my portfolio to beat my expectations was American Tower. 

While I anticipated a 2.4% increase in the quarterly dividend, AMT announced a 3.1% increase in its quarterly dividend from $1.27 per share to $1.31 per share.

This dividend increase helped my net annual forward dividends to move $0.48 higher across my three shares of AMT.

Dividend Increase #8: Microsoft (MSFT)

Microsoft was the fifth dividend stock to meet my expectations with its September dividend increase.

MSFT announced a 10.7% increase in its quarterly dividend from $0.56 per share to $0.62 per share.

Across my three shares of MSFT, this dividend increase boosted my net annual forward dividends by $0.72.

Dividend Freeze: General Mills (GIS)

General Mills announced its fifth straight quarterly dividend of $0.51 per share.

This is a bit disappointing considering that I was expecting a near 4% raise. But perhaps General Mills will make up for this at some point in the near future with a surprise dividend increase.

Expected Dividend Increases for October

Dividend Increase #1: Visa (V)

As I pointed out in my previous post of this series, I believe that Visa will be announcing a 12.5% increase in its quarterly dividend from $0.32 per share to $0.36 per share.

That's because analysts are forecasting that V's EPS will surge 15.7% to $5.83 this year.

After purchasing another share of V earlier this month, my net annual forward dividends would inch $0.48 higher across my three shares if my prediction is correct.

Dividend Increase #2: American Electric Power (AEP)

The second dividend increase that I'm expecting in October would actually be my first raise from the utility American Electric Power since opening a position earlier this year in January.

Based on the fact that analysts expect AEP's EPS will advance 5.4% to $4.68 this year, I'm expecting an identical percentage increase in the quarterly dividend from $0.74 per share to $0.78 per share.

Across my nine shares of AEP, my net annual forward dividends would be boosted by $1.44 from this dividend increase.

Dividend Increase #3: Pinnacle West Capital (PNW)

The third and final raise that I'm anticipating for October is once again from a utility, but this time from Pinnacle West Capital. Like AEP, this will be my first dividend increase from PNW since I started a position in the stock in July.

I'm expecting a 4.8% increase in PNW's quarterly dividend from $0.83 per share to $0.87 per share.

This would work out to a $1.12 increase in my net annual forward dividends across my 7 shares of the stock.

Concluding Thoughts:

My net annual forward dividends surged $9.934 as a result of the eight dividend increases that I received in September.

At a 3.5% average weighted yield, I would need to invest $283.83 to replicate this additional dividend income with fresh capital. 

And with the three dividend increases that I'm forecasting for October expected to bump up my net annual forward dividends by $3.04, this would require $86.86 in fresh capital at a 3.5% yield to replicate.

Since I also expect that I will be contributing around $2,700 between my fresh capital contributions and the dividends that I'll be reinvesting, I believe that my net annual forward dividends should advance from just under $2,030 to begin October to over $2,100 heading into November.

Discussion:

How was your September in terms of dividend increases?

Are you expecting any first-time dividend increases from new holdings next month as I am with AEP and PNW?

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

Tuesday, September 21, 2021

October 2021 Dividend Stock Watch List

As I'm writing this blog post, the start date of fall is just one week away. Even more importantly, October is a couple weeks away.

Why is October so significant?

Because I will be receiving three paychecks during the month as opposed to the usual two, so I will have even more funds than normal to invest. Let's take a look at three dividend stocks not already in my portfolio that I am keeping my eyes on for October.

Image Source: Pexels

Dividend Stock #1: Omnicom (OMC)

The first stock on my watch list for October is the large-cap advertising and marketing conglomerate, Omnicom.

Omnicom's diluted EPS declined nearly 28% from $6.06 in 2019 to $4.37 last year.

While Omnicom was predictably hit somewhat hard in 2020 with COVID-19 emerging as a pandemic and the resulting drag on the economy, the company is set to rebound this year and beyond.

Omnicom's diluted EPS is set to advance slightly higher than 2019's figure of $6.06 to $6.09 this year as the economy picks back up and advertising spending recovers based on the average analyst estimate. Better yet, analysts expect that Omnicom will resume mid-single-digit earnings growth, when diluted EPS is anticipated to increase 4.4% from $6.09 this year to $6.36 next year.

Through the first six months of this year, Omnicom also maintained an interest coverage ratio just under 8 ($1.05 billion in earnings before interest and taxes/$134 million in interest costs). This implies that the balance sheet is relatively healthy and that interest expenses can easily be covered by EBIT.

Despite this news, Omnicom is trading at less than 12 times this year's forecasted diluted EPS. This is moderately lower than the company's historical P/E ratio around 15 to 16, which makes Omnicom a good value play.

With $2.75 in dividends per share scheduled to be paid out this year, Omnicom's diluted EPS payout ratio will be in the mid-40% range. I believe that this makes Omnicom's current 3.91% dividend yield (based on the current share price of $71.67 as of September 12, 2021) safe.

Dividend Stock #2: McDonald's (MCD)

The second dividend stock on my watch list for October is the massive fast-food chain McDonald's.

Similar to Omnicom, McDonald's was adversely impacted by the onset of COVID-19 last year. This resulted in McDonald's adjusted diluted EPS declining 22.8% from $7.84 in 2019 to $6.05 in 2020.

However, McDonald's is on track to fully recover and then some this year, with analysts expecting adjusted diluted EPS to surge 50.1% from $6.05 last year to $9.08 this year.

McDonald's also was able to generate an interest coverage ratio of slightly over 8 through the first half of this year ($4.93 billion in EBIT/$597 million in interest expense), which like Omnicom, indicates that McDonald's can handily service its debt.

While McDonald's isn't a bargain at 26 times this year's earnings and 24 times next year's earnings, it also isn't too expensive considering the quality of the business. I have wanted to own McDonald's for years and have never purchased it because I was always waiting for the perfect price, but I've come to learn over the years that a fair price is good enough for a world-class business. McDonald's can do the rest in the wealth creating process.

McDonald's will likely pay out $5.25 in dividends per share (assuming a 7% increase in the quarterly dividend in September to $1.38) against $9.08 in EPS this year, which would be a dividend payout ratio in the high-50% range.

McDonald's 2.16% yield at $239.18 a share (and soon to be around 2.3% yield with the upcoming dividend increase) appears to be safe based on a quick analysis of the balance sheet and dividend obligation, which are two of the main reasons I want to own the stock.

Dividend Stock #3: Raytheon Technologies (RTX)

The final stock that is on my watch list for October is the behemoth aerospace and defense contractor Raytheon Technologies.

RTX was hit hard by the COVID-19 pandemic due to the decreased revenues in its Collins Aerospace segment and aerospace engine segment known as Pratt & Whitney, which is what led its adjusted diluted EPS to plummet 44.8% from $4.95 in 2019 to $2.73 in 2020.

With commercial aviation recovering amid increasing global vaccination rates, analysts expect RTX's adjusted diluted EPS to rebound to $4.07 this year and to return to growth next year with adjusted diluted EPS of $5.04.

With an interest coverage ratio of just under 4 through the first half of this year, it may appear as though RTX's balance sheet is weak. However, this is negatively skewed only because the company's earnings power hasn't yet fully recovered to pre-pandemic levels.

When that recovery occurs next year, RTX's interest coverage ratio will be much healthier.

RTX's dividend also appears fairly secure considering that even with adjusted diluted EPS estimates of $4.07 for this year (still well below pre-pandemic levels), RTX's payout ratio will be a tad under 50%. Next year, RTX's payout ratio should be well below 50%. This is what leads me to believe that the current 2.46% yield is safe (based on the current share price of $83.00).

At 20 times this year's expected earnings and a price of $83.00 a share, RTX may not seem cheap. But again, that's only because the company is still recovering from COVID. RTX is trading at just 16 times next year's earnings, which makes it a good recovery play.

Concluding Thoughts:

My net annual forward dividends will end this month at around $2,025, which is another all-time high for my portfolio. And since I'm expecting around $2,500 available to invest for October between my capital contributions and dividends, October will be one of my heaviest months of capital deployment for this year.

I'm very much looking forward to seeing if I can reach the $2,100 mark or so for the month with my capital deployment and the dividend increases that I'm expecting for October.

Discussion:

Are any of OMC, MCD, or RTX on your watch list for October 2021?

If not, what stocks do you have your eye on for next month?

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

Tuesday, September 14, 2021

August 2021 Dividend Income

As I'm writing this blog post, Labor Day has now passed and the official start of fall is only two weeks away. Having only received 1 of my 10 expected dividend increases for this month to date, the last 3 weeks of September are going to be jam packed with dividend increases.

Now let's delve into the intent of this blog post, which is to outline the record amount (for the middle month of a quarter) of dividends that I received in August 2021.




Analysis:

During August 2021, I collected $132.66 in net dividends. This represents a 13.4% quarterly growth rate compared to the $116.98 in net dividends that I received in May 2021.

Furthermore, August 2021's dividend income is a 45.5% year-over-year growth rate against the $91.19 in net dividends that I collected in August 2020.

Digging into dividend income by account, I received $120.63 in net dividends from 21 companies in my Robinhood account, $11.66 in net dividends from 3 companies in my Webull account, and $0.37 from 16 companies in my M1 Finance account.

The net dividends that I collected from May 2021 to August 2021 increased by $15.68 as a result of the following activity within my portfolio:

I received an additional $1.07 in net dividends from British American Tobacco (BTI) within my Robinhood and Webull accounts, which is the result of my purchase of two extra shares of the stock within my Robinhood account in June.

My net dividends collected from National Retail Properties (NNN) were $0.11 higher in my Robinhood account due to the recent dividend increase.

I received $2.70 in net dividends from Abbott Laboratories (ABT) for the first time within my Robinhood account, which was because I opened a position in the stock back in May.

My net dividends collected from Clorox (CLX) were $2.32 higher in my Robinhood account from starting a position in July.

I also received an additional $0.94 in net dividends from Realty Income (O) within my Robinhood account due to the stock's recent dividend increase and my decision to add to my position in May.

My net dividends collected from General Dynamics (GD) increased by $1.19 in my Robinhood account, which was the result of my decision to add to my position in May.

I received an extra $1.60 in net dividends from Lowe's (LOW) within my Robinhood account, which was a combination of adding a share in May and the dividend increase that was announced in May.

My net dividends collected from JPMorgan Chase (JPM) were $2.70 higher in my Robinhood account, which was due to my decision to initiate a position in July.

I also received an extra $0.50 in net dividends from CVS Health (CVS) within my Robinhood account, which was also the result of my decision to add to my position in May.

My net dividends collected from Verizon (VZ) were $2.51 higher in my Robinhood account, which was due to my purchase of four additional shares in June.

I received an extra $0.04 in net dividends from my M1 Finance account, which was due to the aforementioned dividend increase from LOW (a $0.01 boost to dividends), Norfolk Southern's (NSC) dividend increase (another $0.01 increase to dividends), and the timing of JPM's dividend payment ($0.02 in additional dividends).

Concluding Thoughts:

I'm pleased with my capital deployment to my portfolio and dividend increases over these past few months, which led to the healthy quarterly growth rate in my net dividend income from May to August.

Based on my capital deployment, I believe that November 2021 will see a net dividend income right around $150 and that by next August, my net annual dividends will be close to $200.

Discussion:

How was your August for dividend income?

Did you receive any dividends for the first time as I did from whole shares of ABT, CLX, and JPM?

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

Wednesday, September 8, 2021

August 2021 Dividend Stock Purchases

As I'm writing this blog post, there are just four months remaining in this year. This gives me four months to advance my net annual forward dividends from around $1,950 heading into September to $2,200 by the end of this year.

With that aside, I'll take a look at my capital deployment for August 2021 and what stocks I decided to purchase during the month.

As I noted in my previous post of this series, July 2021 marked the last month that there would be any meaningful activity in my retirement account (aside from dividend reinvestment in March, June, September, and December). This is because I recently completed my transition from my day job at my previous employer to being self-employed as a writer for Motley Fool and Seeking Alpha.

That's why I'll be exclusively focusing on the activity within my taxable accounts (and specifically within my Robinhood account).

I started August off by initiating a new position in Medtronic (MDT), which is because I essentially believe that Medtronic is fairly valued and the company has a variety of growth catalysts in the future as I noted in my most recent Motley Fool article on the stock.

I opened a five share position in MDT at an average cost of $127.93, which equates to an average net yield of 1.97% based on the $12.60 in net annual forward dividends added from my purchase.

Next, I added 18 shares of Viatris (VTRS) to my position at an average cost of $14.23 a share, which is an average net yield of 3.09% when considering the $7.92 that was added to my net annual forward dividends due to the purchase.

As I explained in a recent Motley Fool article on VTRS, the company is cheaply valued despite a fundamentally healthy business with tons of room to grow its dividend. These were the key factors that prompted me to add to my position.

The second stock that I initiated a position in during August was Merck (MRK), which is because its blockbuster oncology drug Keytruda secured an FDA approval for advanced renal cell carcinoma. As I detailed in a recent Motley Fool article on MRK, the stock has multiple vehicles for growth in the years ahead (i.e., Keytruda, HPV vaccine Gardasil, and its animal health business) and trades at a cheap valuation considering its growth prospects.

This led me to initiate a seven share position in MRK at an average cost of $78.79 a share, which works out to a 3.3% net yield when factoring in the $18.20 in net annual forward dividends that these purchases added to my portfolio.

I also purchased an additional share of J.M. Smucker (SJM) in August at a cost of $132.74, which is a 2.98% net yield given the $3.96 in net annual forward dividends that were added from my purchase.

SJM's recent 10% dividend increase and reasonable valuation were the two main reasons why I opted to add to my position.

I added one share of Amgen (AMGN) during August at a cost of $225.49, which was due to the stock's recent pullback and decent operating results as I outlined in a recent Motley Fool article.

This works out to a 3.12% net yield when considering the $7.04 in net annual forward dividends that were added as a result of my purchase.

I also added a share to my position in National Retail Properties (NNN) at a cost of $46.80. I noted in a recent Motley Fool article that I like the stock because of its focus on single-tenant triple net lease REITS, diversified portfolio, and fair valuation.

Considering the $2.12 in net annual forward dividends that this purchase added to my portfolio, my net yield was 4.53%.

I also decided to add a couple shares to my position in KeyCorp (KEY) at an average cost of $19.65 a share. This works out to a net yield of 3.77% given the $1.48 in net annual forward dividends that were added to my portfolio from the purchase.

Finally, I added two shares of Dominion Energy (D) to my portfolio at an average cost of $79.77 a share. I was impressed by D's strong start to this year and sensible valuation as I noted in a recent Seeking Alpha article.

This equates to a net yield of 3.16% when considering the $5.04 in net annual forward dividends that this purchase added to my dividend portfolio.

Concluding Thoughts:

I invested $2,051.12 in August and added $58.36 to my portfolio's net annual forward dividends, which works out to a net yield of 2.85%.

When also considering the $10.954 in net annual forward dividends that were added from dividend increases in August, my portfolio's net annual forward dividends surged from just under $1,880 at the start of August to about $1,950 heading into September.

Discussion:

How was your August in terms of capital deployment?

Did you add any new positions during the month as I did with my purchases of MDT and MRK?

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

Tuesday, August 31, 2021

Expected Dividend Increases for September 2021

As I'm writing this blog post, Labor Day or the unofficial end of summer is less than two weeks away. 

Even though the summer heat will soon disappear, the dividend increases in my portfolio are just starting to heat up. In this post, I'll discuss the five dividend increases that I received in August and look ahead to the 10 (yes, 10!) dividend increases that I am expecting in September.

Actual August 2021 Dividend Increases

Dividend Increase #1: British Petroleum (BP)

The first dividend increase that I received in August was from British Petroleum. 

While the cut to the quarterly dividend last year as a result of COVID still stings a bit, BP's 4% dividend increase from a quarterly dividend of $0.315/share to $0.3276/share is a start in restoring the dividend to its pre-cut level of $0.625/share.

With WTI crude's year-to-date average of $64/barrel up 62% from last year's average just below $40, BP's dividend is much better covered now than it was leading up to the dividend cut.

Across my 11 shares of the stock, my net annual forward dividends increased $0.554 as a result of the dividend increase.

Dividend Increase #2: Simon Property Group (SPG)

After slashing its quarterly dividend 38.1% from $2.10/share to $1.30/share in June 2020 to preserve liquidity in the first few months of the COVID pandemic, Simon Property Group announced a 7.7% increase to $1.40 just this June.

As a result of Americans getting vaccinated and more foot traffic to its malls, SPG increased its dividend for the second time this year in August by 7.1% from $1.40/share to $1.50/share. I'm very pleased that SPG is taking steps to restore its dividend to its pre-COVID state.

My net annual forward dividends surged $2.40 across my six shares due to the dividend increase.

Dividend Increase #3: Main Street Capital (MAIN)

The third company to increase its dividend during August was Main Street Capital. 

Improving operating fundamentals led MAIN to increase its monthly dividend 2.4% from $0.205/share to $0.21/share.

Across my 16 shares of the stock, my net annual forward dividends rose by $0.96 from its dividend increase.

Dividend Increase #4: Williams-Sonoma (WSM)

The fourth dividend increase of August was one that completely took me by surprise, which was Williams-Sonoma's massive 20.3% increase in its quarterly dividend from $0.59/share to $0.71/share. The stock already increased its quarterly dividend 11.3% from $0.53/share to $0.59/share this March.

Buoyed by three major tailwinds in the foreseeable future, Williams-Sonoma crushed analysts' revenue and earnings estimates.

As my largest winner (up about 340% as of August 26, 2021 before dividends), I am thrilled by the massive capital appreciation and 82% increase to its quarterly dividend since I purchased shares. 

This company is the very essence of dividend growth investing and I'm fortunate that it is one of the largest positions in my portfolio.

My net annual forward dividends soared by $4.32 across my nine shares of the stock as a result of the dividend increase.

Dividend Increase #5: Altria Group (MO)

The fifth dividend increase that I received in August was from Altria Group. 

MO announced a 4.7% increase in its quarterly dividend from $0.86/share to $0.90/share, which was in line with my prediction that I outlined in my previous post of this series.

Across my 17 shares of MO, my net annual forward dividends advanced by $2.72 due to the dividend increase.

Expected Dividend Increases for September 2021

Dividend Increase #1: Realty Income (O)

The first dividend increase that I'm expecting for September is from one of the steadiest companies in my portfolio, which is Dividend Aristocrat Realty Income.

I believe that O will announce a 0.2% increase in its monthly dividend from $0.2355/share to $0.2360/share. While this may sound small, it's worth mentioning that O increases its monthly dividend by small increments in March, June, September, and December, and a larger increment (typically 2-3%) every January.

Across the 13 shares of O that I own, my net annual forward dividends would be $0.078 higher if the stock increases its dividend as much as I expect.

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

The next dividend increase that I anticipate will be announced in September is from none other than W.P. Carey, which is not far away from joining O as a Dividend Aristocrat.

Similar to O, WPC increases its dividend each quarter and I expect that September will be no different.

I'm forecasting that WPC will announce a 0.2% advance in its quarterly dividend from $1.05/share to $1.052/share.

Should my prediction prove correct, my net annual forward dividends would increase $0.056 across my seven shares of WPC.

Dividend Increase #3: General Mills (GIS)

The third dividend increase that I'm expecting for September is General Mills.

I anticipate that GIS will boost its quarterly dividend 3.9% from $0.51/share to $0.53/share.

If this dividend increase plays out, my net annual dividends would increase $0.32 across my four shares of GIS.

Dividend Increase #4: Philip Morris International (PM)

The next dividend increase that I'm forecasting for September is Philip Morris International.

Given that Yahoo Finance analysts are forecasting 18% year-over-year growth in adjusted diluted EPS for PM from $5.17 in 2020 to $6.10 this year, I believe that PM will announce a 4.2% increase in its quarterly dividend from $1.20/share to $1.25/share.

Across my 13 shares of PM, my net annual forward dividends would be boosted $2.60 if my prediction is correct.

Dividend Increase #5: Lockheed Martin (LMT)

The fifth dividend increase that I am expecting for September is Lockheed Martin.

Given LMT's guidance of $26.70-$27 in diluted EPS for this fiscal year (versus $24.58 in diluted EPS during 2020), I believe that LMT will announce a 7.7% increase in its quarterly dividend from $2.60/share to $2.80/share.

My net annual forward dividends would increase by $2.40 across my three shares of the stock if my forecast is proven right.

Dividend Increase #6: Visa (V)

The next dividend increase that I believe will be announced in September is from Visa.

In light of the fact that V's EPS is expected to jump 15.5% from $5.04 last fiscal year to $5.82 this fiscal year, I think that V will get back on track as far as dividend growth is concerned after last year's modest 6.7% increase in the quarterly dividend from $0.30/share to $0.32/share.

That's why I am confident that V will announce a 12.5% increase to take its quarterly dividend to $0.36/share.

Across my two shares of the stock, my net annual forward dividends would be boosted by $0.32 from the dividend increase.

Dividend Increase #7: STORE Capital (STOR)

The seventh dividend increase that I'm forecasting for September is STORE Capital.

Since STOR's AFFO/share is expected to mostly recover to pre-pandemic levels this year and I expect the REIT will exceed pre-pandemic levels next year, I expect a greater increase than last year's token $0.01 increase in the quarterly dividend from $0.35/share to $0.36/share.

I'm anticipating a 5.6% increase in the quarterly dividend to $0.38/share, which would advance my net annual forward dividends by $1.52 across my 19 shares of the stock.

Dividend Increase #8: Verizon (VZ)

The next dividend increase that I'm expecting to be announced in September is from Verizon.

As VZ continues to build out its 5G infrastructure, the company has some room to boost its dividend.

This is precisely why I believe that VZ will increase its quarterly dividend 2.8% from $0.6275/share to $0.645/share.

Across my 18 shares of the stock, my net annual forward dividends would increase $1.26 if my prediction proves to be correct.

Dividend Increase #9: American Tower (AMT) 

The ninth dividend increase that I'm anticipating for September will come from American Tower.

For those unfamiliar, AMT raises its quarterly dividend each quarter.

Since the third quarter dividend increase is typically the second smallest behind the second quarter dividend increase, I am expecting that AMT will announce a 2.4% increase in its quarterly dividend from $1.27/share to $1.30/share.

My net annual forward dividends would advance by $0.36 across my three shares of the stock if my forecast is proven right.

Dividend Increase #10: Microsoft (MSFT)

The final dividend increase that I'm anticipating for September is from Microsoft.

With MSFT's EPS expected to advance 9% this fiscal year over the last to $8.76 and a low dividend payout ratio, I believe that MSFT can easily afford to hike its quarterly dividend 10.7% from $0.56/share to $0.62/share.

Across my three shares of the stock, my net annual forward dividends would be $0.72 higher from such a dividend increase.

Concluding Thoughts:

My net annual forward dividends skyrocketed $10.954 in August as a result of the five dividend increases that I received during the month.

This would take $312.97 in fresh capital invested at an average yield of 3.5% to replicate, which is by far my best month in my four year investing career to this point. Heading into September, my net annual forward dividends are just below $1,950.

Based on my predictions for next month's dividend increases, my net annual forward dividends would increase by $9.634 or nearly as much as August. With the overall quality of the names I'm expecting increases from next month, I wouldn't be surprised if I secured my second straight month of $10+ in additional net annual forward dividends from dividend increases alone.

I've spent the last four years laying the foundation of my portfolio and I'm so excited that things seem to meaningfully be trending in the right direction. Compounding dividends truly are the eighth wonder of the world!

Discussion:

How was your August for dividend increases?

Are you expecting any first-time dividend increases from new holdings as I am with VZ and MSFT?

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

Tuesday, August 24, 2021

September 2021 Dividend Stock Watch List

After hitting yet another all-time high of 4,480.26 on August 16, the S&P 500 pulled back a bit to close the week just above 4,440. Delta variant concerns and signaling of reduced asset purchases ahead from the recently released minutes of the Federal Reserve's July 27-28 meeting led the S&P 500 nearly a half percent lower to close out the week.

With most of my capital deployment in the books for August 2021, I'll now turn my attention to a few dividend stocks on my watch list for September 2021.

                                           

Image Source: Pexels

Dividend Stock #1: Lockheed Martin (LMT)

The first dividend stock on my watch list for September is Lockheed Martin. 

LMT has gotten off to a great start in the first half of this year, which is evidenced by its 4.4% growth in year-to-date revenue from $31.9 billion in H1 2020 to $33.3 billion in H1 2021, per LMT's Q2 2021 earnings press release (the source for all accompanying data, unless otherwise specified).

As a result of also repurchasing $1.5 billion or 4.2 million shares in the first half of the year according to its recent 10-Q, LMT's diluted EPS advanced 10.2% from $11.87 in H1 2020 to $13.08 in H1 2021.

LMT's backlog also remained healthy at the end of the second quarter, with backlog declining slightly from $147.1 billion at the start of the year to $141.7 billion to end the quarter. For context, this is the equivalent of over two years of revenue for LMT based on its guidance of $67.3-$68.7 billion for this year.

LMT's interest coverage ratio improved from 13.4 in the first half of 2020 to 15.5 in H1 2021, which suggests that the company has no issues in covering its interest expense with earnings before interest and taxes.

A payout ratio of just under 40% in the first half of this year means that the dividend is well covered ahead of its upcoming dividend increase. And a forward P/E ratio of less than 13 based on Yahoo Finance's average analyst estimate of $28.02 and the current price of $357.17 a share (as of August 20, 2021) indicates that the stock is quite cheap.

Dividend Stock #2: Merck (MRK)

The next dividend stock on my watch list for September is Merck.

MRK caught my attention after I recently covered the company's U.S. Food and Drug Administration (FDA) approval to treat advanced renal cell carcinoma (RCC) in combination with Lenmiva, which prompted me to start a position in the stock.

The FDA's approval of the drug combo is the second indication in as many months following the approval in July to treat advanced endometrial carcinoma, which is positioning Keytruda to overtake AbbVie's (ABBV) Humira in a couple years as the top-selling drug in the world. The drug also won't face any loss of exclusivity concerns until 2028 per FiercePharma, so MRK has plenty of time to diversify away from Keytruda.

MRK's interest coverage ratio of 12 (according to data sourced from MRK's Q2 2021 earnings press release, unless indicated otherwise) indicates the company's balance sheet is in decent shape.

Based on MRK's guidance for $5.47-$5.57 in non-GAAP EPS this year and a dividend per share obligation of $2.60, MRK's dividend payout ratio should clock in at a sustainable sub-50% level this year.

MRK's current price of $78.68 a share implies a current PE ratio of about 14, which is a good value for the 12.8% annual earnings growth that analysts are expecting over the next five years.

Dividend Stock #3: Visa (V)

The final dividend stock on my watch list for September is Visa (V).

Visa has benefited from the reopening global economy, which becomes clear by examining the company's results through the first nine months of its current fiscal year.

V has increased its YTD revenue by 4.8% year-over-year from $16.7 billion in 2020 to $17.5 billion in 2021 (all data sourced from V's Q3 2021 earnings press release, unless otherwise noted).

While V hasn't been able to give non-GAAP EPS guidance for this fiscal year due to the uncertainty surrounding COVID, analysts are anticipating 15.5% year-over-year growth from $5.04 in 2020 to $5.82 this year.

Compared to the $1.28 in dividends per share that will be paid out for this fiscal year, that would be a non-GAAP EPS payout ratio of just 22%. This leaves V's payout plenty of room to grow ahead of the 19.7% annual earnings growth that is expected over the next five years.

Additionally, V's interest coverage ratio improved from an already robust 28.9 in the nine months ended 2020 to 30.3 in the nine months ended this year.

While V at its share price of $231.36 isn't cheap at nearly 40 times this year's earnings forecast, its excellent growth prospects, low payout ratio, and great balance sheet are arguably worth the premium.

Concluding Thoughts:

My net annual forward dividends are likely to be around $1,945 heading into September. I'm anticipating that I will deploy somewhere in the range of $1,500-$2,000 in capital for next month and a number of dividend increases will be announced at that time, which should get me slightly beyond the $2,000 net annual forward dividend milestone.

Discussion:

Are any of LMT, MRK, and/or V on your watch list for September 2021?

If not, what stocks are you watching for the month?

As always, thanks for your readership and please feel free to leave your comments in the comment section below!

Tuesday, August 17, 2021

July 2021 Dividend Stock Purchases

The past few days have been very hot and humid in Central Wisconsin. The high temperature for today is 80 and it feels like 90 degrees Fahrenheit. Fortunately, temperatures are going to cool down to the 70s starting tomorrow for the foreseeable future.

With that aside, I'll turn my attention to the dividend stock purchases that I made in July 2021.




Starting with my retirement account, I deployed $253.18 in capital to my Capital Income Builder (CAIBX) mutual fund between my 7% contribution and my employer's 3% matching contribution.

Factoring in the 3.5% sales charge for contributions, I put $244.34 in net capital to work during July 2021 within my retirement account. This helped my CAIBX share balance increase by 3.563 shares from 171.434 to begin the month to 174.997 heading into August.

Based on $2.13 in net annual forward dividends/share, my net annual forward dividends were boosted by $7.59. This works out to a 3.11% net yield based on the capital I invested during the month. It's worth noting that this will be the last regular activity in my retirement account aside from dividend reinvestment, which is due to the fact that I started writing for Motley Fool and Seeking Alpha full-time recently.

Moving to my taxable account, I started new positions in five companies during July.

I started July by initiating a 10 share position in Essential Utilities (WTRG) at an average cost of $47.41 a share. The purchase added $10.73 to my net annual forward dividends, which equates to a 2.26% net yield for my cost basis.

For those who are interested in my decision to open a position in WTRG, I would refer them to my recent Seeking Alpha article for more details. I'll just summarize by indicating that WTRG is a stock I have wanted to own for years, but I have always waited for a "better price" that never ultimately materialized.

I was willing to pay a slight premium for shares of WTRG just to get a position started and I intend to aggressively add on even the slightest of pullbacks going forward.

I followed up my purchase of WTRG with yet another utility, which was a seven share position in Pinnacle West Capital (PNW) at an average cost of $84.39 a share. This works out to a 3.93% net yield based on my cost basis and the $23.24 in net annual forward dividends that were added to my portfolio.

PNW was on my July 2021 dividend stock watch list, so it made sense to add it to my portfolio.

I also rationalized my purchase of PNW in a recent Seeking Alpha article, but the long and short of it was that I liked PNW's exposure to Arizona's steadily growing population, nice balance sheet, and safe 4% yield.

Another stock on my watch list for last month that I added to was consumer staple Kimberly Clark (KMB). 

I view KMB as a safe income play with mid-single digit dividend growth potential, which is what prompted me to purchase four shares of the stock at an average cost of $134.33 a share. This equates to a net yield of 3.39% based on the $18.24 in net annual forward dividends that the purchases added to my portfolio.

I also added another share of JPMorgan Chase (JPM) to my portfolio last month at a cost of $151.80, which added $4.00 to my net annual forward dividends. This works out to a 2.64% net yield on my purchase.

Sticking with the financial sector, I initiated a 20 share position in KeyCorp (KEY) at an average cost of $19.17 a share. Considering the $14.80 in net annual forward dividends that were added from my purchase, this equates to a 3.86% net yield.

I covered KEY in a Motley Fool article last month, which was what ultimately led me to start a position in the regional bank. 

I essentially liked the company's solid increase in noninterest income, the improving balance sheet, and huge $1.5 billion share repurchase program at a time when the bank appears to be somewhat undervalued.

The fifth and final stock that I initiated a position in during July was the consumer staple Clorox (CLX), which was also on my watch list for the month.

While I added a bit prematurely given that the stock would tank following its softened outlook in its Aug. 3 earnings press release, I like the company's above-average dividend yield with mid-single-digit dividend growth potential.

This prompted me to start a two share position in the stock at an average cost of $181.13 a share, which is a 2.56% net yield based on the $9.28 in net annual forward dividends added.

Finally, I added to my position in Viatris (VTRS). I purchased 8 shares at an average cost of $13.85 a share, which works out to a net yield of 3.18% when considering the $3.52 in net annual forward dividends added by my purchase.

As I explained in my August 2021 dividend stock watch list post, VTRS is taking the right steps to reduce its debt by $6.5 billion by 2023. The company is trading at just four times this year's forecasted EPS of $3.53, which is mind boggling.

The company is also making nice progress in getting new products approved (and eventually on the market), which is evidenced by the recent approval of Viatris and Biocon's interchangeable biosimilar for Sanofi's insulin drug Lantus that I discussed in a recent Motley Fool article.

Concluding Thoughts:

Overall, I deployed $2,854.61 in net capital during July. Compared to the $91.40 in net annual forward dividends that were added last month, this works out to a 3.20% net yield.

I also added $4.36 in net annual forward dividends due to dividend increases last month, which along with my capital deployment, led to my net annual forward dividends surging from $1,780 entering July to nearly $1,880 heading into August.

Discussion:

How was your July in regards to capital deployment?

Did you add any new positions during the month like I did with my purchases of WTRG, PNW, KMB, KEY, and CLX?

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

Tuesday, August 10, 2021

July 2021 Dividend Income

The financial markets worked their way to fresh all-time highs late last week after a jobs report that handily beat expectations, sending the unemployment rate tumbling to 5.4%. Impressive earnings beats from most companies that reported earnings also helped the markets to advance.

My net dividend income in July 2021 also hit a record, which really drives home the point that dividend growth investing is a strategy that can work just about no matter what the financial markets are doing.




Analysis:

During July 2021, I received $108.30 in net dividends.

This represents a 21.6% quarterly growth rate against the $89.03 in net dividends collected in April 2021. Even factoring out the $12.00 in special dividends received from T. Rowe Price Group (TROW) during the month, my quarterly growth rate was still a healthy 8.2%.

Moreover, this represents a 46.8% year-over-year growth rate compared to the $73.79 in net dividends collected in July 2020. Backing out the special dividends from TROW, this still works out to a 30.5% year-over-year growth rate.

Delving into more detail, I received $98.28 in net dividends within my Robinhood portfolio from 18 companies, $9.79 from 5 companies in my Webull portfolio, and $0.23 from 10 companies in my M1 Finance portfolio.

The following activity within my taxable accounts is what led to the $19.27 increase in net dividends from April 2021 to July 2021:

I collected an extra $0.60 in dividends from Simon Property Group (SPG) during July in my Robinhood account, which was due to the company's recent dividend increase.

My net dividends received from from Leggett & Platt (LEG) increased $0.16 within my Robinhood account, which was the result of the company's dividend increase earlier this year.

I collected an extra $0.01 in my Robinhood account from W.P. Carey (WPC) due to the company's dividend increase in June.

My net dividends received from Realty Income (O) were $0.94 higher within my Robinhood account, which was the result of both a dividend increase in June and my recent purchase of an additional 4 shares of stock.

I collected an additional $0.36 from STORE Capital (STOR) in my Robinhood account, which was due to my decision to add a share of the stock recently.

My net dividends received from Philip Morris International (PM) increased $2.40 within my Robinhood account, which was the result of picking up a couple more shares of the stock in recent months.

I collected my first dividend from American Tower (AMT) in my Robinhood account since I initiated a position in the stock back in April, which helped my net dividends to increase by $3.81.

My net dividends received from GlaxoSmithKline (GSK) within my Robinhood account were $0.99 lower due to the fact that the third quarter dividend is historically lower than the second quarter dividend.

As I alluded to earlier, I collected an additional $12.00 from TROW in my Robinhood account due to the payment of its $3.00/share special dividend in July.

Finally, my net dividends received within my M1 Finance account were $0.02 lower, which was the result of JPMorgan Chase's (JPM) dividend payment timing.

Concluding Thoughts:

Several dividend increases and recent capital deployment helped me to surpass the triple-digit mark in the first month of a quarter for the first time ever! Better yet -- I anticipate that new capital deployment and more dividend increases in the near future will allow me to regularly pass the $100 threshold, even without TROW's special dividend boost going forward.

Discussion:

How was your July 2021 in terms of dividend income?

Did you receive any first time dividends during the month as I did with AMT? How about TROW's amazing special dividend?

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

Tuesday, August 3, 2021

August 2021 Dividend Stock Watch List

 It's hard to believe that as I'm writing this blog post, July is in the books and only five months remain in 2021. That should just motivate us to give that much more effort to achieve our goals in the time that remains this year!

With that aside, I will discussing a few dividend stocks on my watch list for August 2021.


Image Source: Pexels

Dividend Stock #1: Viatris (VTRS)

The first stock on my watch list for August is Viatris.

Since Upjohn spun-off from Pfizer with Mylan to form Viatris, I had been mostly watching from the sidelines with my initial shares received from the spin-off last November.

In recent months, I have added to my Viatris position because the company is obscenely undervalued due to the novelty of the recently formed company.

Viatris recognizes the need to pay down its $24 billion long-term debt load (data sourced from Viatris' Q1 2021 earnings press release), which is why the company is committed to paying down $6.5 billion by 2023. At around $18 billion in long-term debt by the end of 2023 and $6.5+ billion in adjusted EBIDA, the company's net debt to EBITDA ratio will be much more manageable in the not so distant future at less than 3.

The management of Viatris is taking the necessary steps possible to pay down a significant portion of its debt between now and 2023, which is reflected by the company's annualized dividend/share being $0.44 compared to analyst estimates for this year of $3.53 in EPS -- a payout ratio of just 12%!

Once the company is able to complete its deleveraging goal in a couple years, it's not unreasonable to expect healthy dividend hikes for years to come.

At less than four times this year's forecasted EPS, Viatris offers a very safe 3.1% yield with plenty of room to grow. This is a stock that I believe can realistically get to a high-single-digit yield on cost by the end of the decade for those who buy at the current price of $14.22 a share (as of August 1, 2021).

Dividend Stock #2: Pfizer (PFE)

The second stock on my watch list for August is one that I had already alluded to in the section above, which is Pfizer.

For those looking for a more in-depth explanation of why I will be adding to my Pfizer position, I would refer interested readers to my recent article on The Motley Fool on Pfizer, as well as AbbVie (ABBV).

It really comes down to the fact that even without its COVID-19 vaccine, Pfizer crushed it in the second-quarter. The company grew its non-COVID-19 vaccine revenue by double-digits year-over-year in Q2 2021.

Based on the midpoint of Pfizer's updated adjusted diluted EPS guidance of $3.95-$4.05 for 2021 and the current share price of $42.81, the company is trading at less than 11 times this year's earnings!

The market is pegging this company at a valuation that suggests there is no growth in its future, but Pfizer's year-to-date operating results beg to differ.

A 3.6% yield, mid-single digit annual earnings growth potential in the long-term, and moderate valuation expansion make it likely that Pfizer will meet my 10% annual total return requirement over the next decade.

Dividend Stock #3: J.M. Smucker (SJM)

The third stock on my watch list for August is J.M. Smucker.

After a couple weaker dividend increases in 2019 and 2020, the stock crushed my dividend announcement expectations last month, raising its quarterly dividend 10% from $0.90/share to $0.99/share.

J.M. Smucker's annualized dividend/share of $3.96 is quite secure considering that analysts forecast the company will generate $8.84 in EPS this year, which works out to a mid-40% payout ratio for the year.

Based on J.M. Smucker's current $131.11 share price, the stock is trading at just under 15 times this year's predicted earnings and offers a 3% yield.

J.M. Smucker isn't going to be my biggest winner in terms of share price appreciation or dividend growth, but it's a steady company that offers a safe yield with mid-single-digit annual earnings growth at a reasonable valuation.

Concluding Thoughts:

Even though August will mark my first full month since I left my day job to focus more on writing at The Motley Fool and Seeking Alpha, I anticipate that I will be sticking in the $1,500-$2,000/month range for capital deployment.

With my net annual forward dividends at just under $1,880 heading into August, I'm positioned to pass the $1,900 mark during the month.

Discussion:

Are any of VTRS, PFE, or SJM on your watch list for the month?

If not, what dividend stocks are on your watch list for August?

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

Tuesday, July 27, 2021

Expected Dividend Increases for August 2021

As I'm writing this blog post, the heat and humidity has made its way back to Central Wisconsin with high temperatures reaching into the upper 80s Fahrenheit.

Playing basketball in the driveway will be a bit less comfortable with the heat, but that's not enough to stop me from getting exercise doing something I enjoy as long as I stay hydrated!

Without further ado, I'll be discussing the dividend increases that I received during July 2021 and looking ahead to the dividend increase that I am expecting for August 2021.

Actual July 2021 Dividend Increases 

Dividend Increase #1: Wells Fargo (WFC)

While Wells Fargo fell short of my expectation of a 150% increase in the quarterly dividend from $0.10/share to $0.25/share, it still increased its dividend 100% to $0.20/share, which is a step in the right direction for the company to restore its dividend to the pre-COVID level of $0.51/share in a few more years.

I'd rather a company gradually increase its dividend back to pre-COVID levels to build a cushion and prevent another dividend cut in the future than to have it rush to restore its dividend prematurely.

Across my 8 shares of WFC, my net annual forward dividends soared $3.20 due to the company's dividend increase.

Dividend Increase #2: J.M. Smucker (SJM)

One company that really delivered beyond my wildest dreams in July was J.M. Smucker, which announced a robust 10% dividend increase in the quarterly dividend from $0.90/share to $0.99/share.

The previous two dividend increases leading up to this dividend increase were pretty anemic, so it's nice to see SJM getting back to solid dividend growth.

My net annual forward dividends advanced by $0.72 across my 2 shares as a result of the company's dividend increase.

Dividend Increase #3: National Retail Properties (NNN)

Wrapping up the dividend increases that I received for July 2021, National Retail Properties announced a dividend increase that came in below my expectations. Rather than the 3.8% increase in the quarterly dividend from $0.52/share to $0.54/share that I was predicting, NNN increased a 1.9% increase in the quarterly dividend to $0.53/share.

I was somewhat surprised by the announcement given the recovery in NNN's AFFO/share that I cited in my previous post of this series, but I'll take whatever dividend increases I can get. Perhaps NNN will make up for it with a stronger dividend increase next year.

Across my 11 shares of NNN, my net annual forward dividends increased by $0.44 due to the company's dividend increase.

Expected Dividend Announcement(s) for August 2021

Dividend Increase #1: Altria Group (MO)

The only dividend increase that I am anticipating for August is from the 3rd largest holding in my portfolio in terms of annual dividend income, which is Altria Group (MO).

Most readers are probably aware, but for those that aren't, MO recently announced that it was selling its Ste. Michelle Wine Estates business for $1.2 billion to a private equity firm to focus more on its core business.

In addition, the company expects to use its proceeds to repurchase shares at what look to be an attractive valuation, which will also reduce the company's total dividend obligation, and create a bit more leeway for the next dividend increase.

As a result, I am expecting that MO will announce a 4.7% increase in the quarterly dividend from $0.86/share to $0.90/share.

Should this dividend increase play out as expected, my net annual forward dividends would increase by $2.72 across my 17 shares as a result of the company's dividend increase.

Concluding Thoughts:

My net annual forward dividends increased by $4.36 due to dividend increases received in July 2021, which is equivalent to investing $109 in fresh capital at a 4% average yield.

Looking ahead to next month, I am expecting that MO's dividend increase will help my net annual forward dividends to increase by $2.72, which would be like investing $68 in one's own capital at a 4% average yield.

Discussion:

How was your July as it relates to dividend increases?

What companies are you anticipating you will receive dividend increases from in August?

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