Dividend Income July 2020

Another month has gone by and it is time to review my dividend income. This month has been special as I hit a new target by surpassing the $500 mark. What a great feeling! I received exactly $542.09 in dividends.

I started about two years ago and received my first dividends during the month of July of 2018. After that I hit a few bumps and cuts because I was chasing the dividend yield. The Covid-19 still is omnipresent but has helped me to become laser focused on my dividend strategy and risk measures.

When I look back I can see that the first half year of my dividend growth investing was still very much centered around diversification. At the end of 2018 I made a big leap and started investing into US stocks. An this 2020 is all about building a solid foundation of high quality dividend stocks which I target to purchase at great value for money. I cannot stress enough how th dividend growth investing community has helped me. The daily noise of the stock market and the news are irrelevant to the long term investor who needs to focus on the fundamentals and long-term tendencies.

I am so grateful that finally I have hit the nail on the head and can immerse myself into an investment strategy which allows you to see the progress in your monthly reports – not only the unrealized returns from the stocks I invest in but also the dividend payments which than are being deployed in more dividend paying stocks. The compounding should kick in soon at a noticeable level.

Dividend Income July

Last month I received dividends from 15 different companies. All but one are US stocks which pay either monthly or quarterly. The European stock only pays every 6 months.

During the month of June I received $542.09 in dividends from 15 different companies:

Advanced Data Processing (ADP) – income of $9.10
Comcast (CMCSA) – income of $6.90
Cisco Systems (CSCO) – income of $10.80
Endesa (ELE) – income of $46.89
Gladstone Investment Corp (GAIN) – income of $7.00
Gladstone Commercial Corp (GOOD) – income of $12.51
Iron Mountain (IRM) – income of $30.92
Ladder Capital (LADR) – income of $160.00
Medtronic (MDT) – income of $8.69
Altria (MO) – income of $151.20
Merck (MRK) – income of $4.27
MSC Industrial (MSM) – income of $37.50
Realty (O) – income of $14.01
Oracle (ORCL) – income of $7.20
Phillip Morris (PM) – income of $35.10

A great month surpassing the $500 mark. First time contributors to my dividend income are Merck (MRK), Phillip Morris (PM), Ladder Capital (LADR) and Advanced Data Processing (ADP). This is my new way of looking to diversify into more high quality stock in my dividend growth portfolio. The exception is only Ladder Capital which offered a great opportunity with a very high yield.

The following chart shows my monthly dividend income over time. In July 2020 I received $542.09 compared to July 2019 with $248.69 of income. This is a staggering increase of $293.40 or 118%. On a year-to-date basis, from January to June I increased my dividend income from $1,518.64 in 2019 to $3,012.79 in 2020, an increase of $1,494.15 or 98%. This significant increase is mostly due to my contributions this year.

Dividend Changes

In July the following stocks in my portfolio announced dividend changes around their dividend policy:

Walgreens Boots Alliance (WBA) – increase from $0.4575 to $0.4675 (2.2%) – I hold 130 shares so that my PADI increases by $5.20

Altria (MO) – increase from $0.84 to $0.86 (2.4%) – I hold 180 shares so that my PADI increases by $14.40

I fully understand that some of my holdings tend to delay their dividend increase until they can better assess the Covid-19 impact. Last year Discovery Financial Services (DFS) and MSC Industrial (MSM) increased their dividend in July but already announced that this would not be the case this year. In the same way, Unum Group (UNM) has decided not to increase the dividend in July this year.

No further increases in July. The good thing is there have also been no further dividend cuts on any of the holdings in my dividend growth portfolio. As a result of this change, my PADI increases by $19.60. At a yield of 3.0%, to recover this dividend income I would have to deploy $653.

I like to see dividend increases above 7%, and the criteria has not been met.

Expected Dividend Increases for August

The following companies in my dividend growth portfolio have raised their dividend last year:

Altria (MO) – a 5% raise expected, they already announced their new increase in July and it has fallen short: only $0.02 to $0.86 which represents 2.4%

Projected Annual Dividend Income (PADI)

I am not sticking to my plan to deleverage enough. I had the plan to invest only about 50% of my fresh contributions. However, with some great opportunities coming up I added more shares of Advanced Data Processing (ADP), Intel Corp. (INTL), Prudential (PRU) and Walgreens Boots Alliance (WBA).  Again, this led to a further significant increase of my PADI. It stands now at $5,934 compared to $5,659 at the end of June. This is a rise of $275 or 4.9%.

I now consider that I need to just pour in money to pay off the negative cash position on margin on which I am building this PADI. I still have a few put options on stocks which I would be willing to buy if the share price falls below the strike price at maturity. However, there are very few candidates and it is very unlikely. Hence, for the rest of the year there should be no more additions. You can check out my Dividend Growth Journey Portfolio ate any time.

The investment yield for my dividend growth portfolio is 5.2%, down 0.1%. For this I compare the current dividend income with the purchase price of the underlying shares. My yield on cost (YoC) is lower at 4.6%, down 0.2%, because of losses taken from options which also required additional funding without adding new dividend income. The current yield of the shares in my portfolio is 5.2%, down 0.4% as I invested this months into lower yielding stocks.

Conclusion

The dividend income for June was $542.09 from 15 different companies. Four companies paid me dividends for the first time – my diversification into high quality dividend growth stock continues. There were dividend increases from Walgreen Boots Alliance (WBA) and Altria (MO) – both below my 7% average target – and no further dividend cuts. My PADI stands at $5,934 which marks a new record and well above my 2020 target of $5,000 which I hit already in June.

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Disclosure: At time of writing long on all above mentioned

Disclaimer: I am not a professional investment or financial advisor. The information presented on this site represents my personal dividend growth journey and it is for informational purposes only. Opinions expressed are my own and should NOT be relied on or taken as investing advice. I have no knowledge about your personal situation and before you make any investment decision you should exercise due diligence and must do your own research. Always consider seeking advice from a professional financial and tax advisor.