Welcome to the monthly review of DivGro, my portfolio of dividend growth stocks. The goal of these monthly reviews is to share updates I’ve made to my portfolio and to provide a summary of dividends collected. I also look at how DivGro’s projected annual dividend income (PADI) has changed.
In July, I added shares to one existing position. Four DivGro stocks announced dividend increases in July and one stock announced a dividend cut. The net result of these changes is that PADI decreased by about 1.6% in July. Year over year, PADI increased by 21.5%.
As for dividend income, in July I received dividends totaling $1,779 from 24 stocks in my portfolio, a year-over-year increase of 14%. So far in 2020, I’ve collected $15,891 in dividends or about 59% of my 2020 goal of $27,000.
Given DivGro’s PADI of $30,264, I can expect to receive $2,522 in dividend income per month, on average, in perpetuity, assuming the status quo is maintained. But DivGro’s PADI should increase over time because I invest in dividend growth stocks. Furthermore, I plan to reinvest dividends until I retire, so DivGro’s PADI should continue to grow through dividend growth and through compounding.
Source: Author’s blog (DivGro)
In July, I received a total of $1,779 in dividend income from 24 different stocks:
Here is a list of the dividends I collected in July:
- Automatic Data Processing, Inc. (NASDAQ:ADP) — income of $54.60
- The Bank of Nova Scotia (NYSE:BNS) — income of $151.52
- Chubb Limited (NYSE:CB) — income of $18.72
- Comcast Corporation (NASDAQ:CMCSA) — income of $46.00
- Cisco Systems, Inc. (NASDAQ:CSCO) — income of $72.00
- FedEx Corporation (NYSE:FDX) — income of $48.75
- Illinois Tool Works Inc. (NYSE:ITW) — income of $64.20
- JPMorgan Chase & Co. (NYSE:JPM) — income of $90.00
- The Coca-Cola Company (NYSE:KO) — income of $82.00
- Main Street Capital Corporation (NYSE:MAIN) — income of $71.75
- Medtronic plc (NYSE:MDT) — income of $58.00
- Altria Group, Inc. (NYSE:MO) — income of $168.00
- Merck & Co, Inc. (NYSE:MRK) — income of $67.10
- Nike, Inc. (NYSE:NKE) — income of $3.68
- Realty Income Corporation (NYSE:O) — income of $23.35
- Oracle Corporation (NYSE:ORCL) — income of $42.00
- Philip Morris International Inc. (NYSE:PM) — income of $140.40
- Simon Property Group, Inc. (NYSE:SPG) — income of $104.00
- Stryker Corporation (NYSE:SYK) — income of $5.75
- The Toronto-Dominion Bank (NYSE:TD) — income of $117.78
- Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) — income of $127.16
- W. P. Carey Inc. (NYSE:WPC) — income of $52.10
- Xcel Energy Inc. (NASDAQ:XEL) — income of $27.95
- Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund (NYSE:ETO) — income of $142.50
The chart below shows DivGro’s monthly dividends plotted against PMDI. Clearly, quarter-ending months are huge outliers:
To smooth things out a bit, I create a rolling 12-month average of dividends received (the orange bars) plotted against a rolling 12-month average of PMDI (the blue, staggered line):
While it would be great if dividends were distributed more evenly, I don’t want to change my investment decisions based on the timing or frequency of dividend payments.
In July, the following stocks announced dividend increases:
- The Bank of Nova Scotia — increase of 4.74%
- Altria Group, Inc. — increase of 2.38%
- The Toronto-Dominion Bank — increase of 3.83%
- Walgreens Boots Alliance, Inc. (NASDAQ:WBA) — increase of 2.19%
Additionally, Wells Fargo & Company cut its dividend by 80%.
As a result of these changes, DivGro’s PADI will decrease by $583.
Here is a summary of my transactions in July:
- Simon Property Group, Inc. — added 20 shares and increased position to 100 shares
This transaction increased DivGro’s PADI by about $104.
I added 20 shares to SPG in order to sell a covered call on SPG in an effort to replace lost dividend income due to dividend cuts and suspensions. I collected $231 in options income for selling the call, an annualized amount of $478. This more than enough makes up for the loss of $256 in dividend income I suffered due to SPG’s dividend cut.
It is worth looking at the markets to understand the environment we’re investing in, even though I no longer compare DivGro’s performance to those of the markets:
In July, the DOW 30 gained 1.8%, the S&P 500 gained 5.3%, and the NASDAQ gained 8.7%. The yield on the benchmark 10-year Treasury note fell to 0.536, while CBOE’s measure of market volatility, the VIX, decreased by 19.6% to 24.46.
Based on the total capital invested and the portfolio’s current market value, DivGro has delivered a simple return of about 54% since inception. In comparison, DivGro’s IRR (internal rate of return) is 12.6%. (IRR takes into account the timing and size of deposits since inception, so it is a better measure of portfolio performance).
I track the yield on cost (YoC) for individual stocks, as well as an average YoC for my portfolio. DivGro’s average YoC decreased from 3.70% last month to 3.64% this month.
Another interesting statistic is percentage payback, which relates dividend income to the amount of capital invested. DivGro’s average percentage payback is 16.7%, up from last month’s 16.5%.
Finally, DivGro’s projected annual yield is at 4.72%, down from last month’s value of 4.81%. I calculate projected annual yield by dividing PADI ($30,264) by the total amount invested.
The following chart shows DivGro’s market value breakdown. Dividends are plotted at the base of the chart so we can see them grow over time:
I’m not really looking hard for buying opportunities at this time. Rather, I’d like to build my cash reserves a little in the hope that we get a chance to buy stocks at better valuations. We’ll see how it goes. Meanwhile, I’ll look for more options selling opportunities.
Please see my Performance page for various visuals summarizing DivGro’s performance.
Thanks for reading and take care, everybody!
Disclosure: I am/we are long AAPL, ABBV, ACN, ADM, ADP, AFL, AMGN, AMZN, ANTM, APD, AVGO, BLK, BMY, BNS, CB, CMCSA, CMI, CNI, COST, CRM, CSCO, CVS, CVX, D, DIS, DLR, ETO, FDX, GD, GILD, GOOG, HD, HON, HRL, IBM, ICE, INTC, ITW, JNJ, JPM, KO, LMT, LOW, MA, MAIN, MCD, MDT, MMM, MO, MRK, MSFT, NEE, NFLX, NIE, NKE, NNN, NOC, O, ORCL, PEP, PFE, PG, PM, PNW, PSA, PSX, QCOM, ROST, RTX, RY, SBUX, SNA, SPG, SYK, T, TD, TJX, TROW, TRV, TSM, TXN, UNH, UNP, UPS, V, VLO, VZ, WBA, WFC, WPC, XEL, XOM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.