Expected Dividend Increases for May 2019

Can you believe it? It's the end of April and the year is officially one third of the way over. The Milwaukee Bucks are continuing to make their push toward their first ECF appearance in 18 years and I believe they'll do us loyal Bucks fans proud this season despite that nasty blowout loss in Game 1 against the Celtics. With that said, it's time for us to analyze our dividend increases from April. Buckle in because this was quite the month!

April Dividend Increases:

Increase #1: Exxon Mobil (XOM)

Exxon Mobil (XOM) announced a 6.1% increase in their quarterly dividend from $0.82 to $0.87/share. This was actually slightly higher than the raise that I was expecting from them. This increased my annual forward dividends by $1.20 across my 6 shares.

Increase #2: Johnson & Johnson (JNJ)

Johnson & Johnson (JNJ) announced a 5.6% increase in their quarterly dividend from $0.90 to $0.95/share. This community has always said JNJ is as steady as they come and having received my first raise from them, I certainly back that statement! This increased my annual forward dividends by $0.40 across my 2 shares.

Increase #3: Enterprise Products Partners (EPD)

Enterprise Products Partners (EPD) announced a 0.6% increase in their quarterly dividend from $0.435 to $0.4375/share. This was another increase that was exactly as expected and it increased my annual forward dividends by $0.10 across my 10 shares.

Increase #4: Southern Company (SO)

Southern Company (SO) announced a 3.3% increase in their quarterly dividend from $0.60 to $0.62/share. This was yet another increase that was exactly as I expected it to be, and I couldn't be happier with it. My annual forward dividends increased by $0.40 across my 5 shares as a result of this increase.

Increase #5: EQM Midstream Partners (EQM)

EQM Midstream Partners (EQM) announced a 1.3% increase in its quarterly dividend from $1.13 to $1.145, which was slightly below my expectation. This increased my annual forward dividends by $0.24 across my 4 shares.


Expected Dividend Increases for May:

Expected Dividend Increase #1: International Business Machines (IBM)

It appears as though IBM is breaking from its usual pattern of announcing dividend increases in April, so I'd expect IBM to announce a raise in May. Given the Red Hat acquisition last year, I'd assume management will deliver a raise to the tune of around 4%, increasing the quarterly dividend from $1.57 to $1.64/share. This would increase my annual forward dividends by $0.84 across my 3 shares.


Expected Dividend Increase #2: Lowe's Companies (LOW)

LOW is a wild card and could also be announced in June. Nonetheless, I would expect that LOW will continue its trend of strong dividend increases, with a 15% dividend increase. This would mean the quarterly dividend would increase from $0.48/share to $0.55/share. If this does happen, my annual forward annual dividends will increase by $0.56 across my 2 shares.

Expected Dividend Increase #3: Leggett & Platt Incorporated (LEG)

I expect that LEG will continue its recent trend of increasing its quarterly dividend by $0.02 per share. This would equate to a 5.3% increase in the quarterly dividend, from $0.38/share to $0.40/share. If this does occur, my annual forward dividends would increase by $0.40 across my 5 shares.

Summary:

April provided me with $2.34 in increases, which would take $58.50 in fresh capital deployed at a 4% yield to match. This is really the power of DGI on a small scale at work here! Overall, I'm expecting $1.80 in dividend increases for May due to IBM likely delaying their dividend increase from April to May. This would take $45.00 of fresh capital to match, assuming a 4% yield.

Discussion:

How many dividend increases are you expecting in May? Do you have any stocks that aren't mentioned on this list?

My Recent Financial Epiphany Involving Seeking Alpha And My First Job

The past couple of years have been a renaissance of sorts in financial terms for me. It was just the other day that I stumbled upon a financial epiphany. I have essentially worked my way up from a two year degree in accounting to a four year degree in accounting. I went from a cashier job at the soon to be closed retail chain Shopko that barely paid above minimum wage to my current position that pays over 60% more than that. I'll even soon be achieving one of my goals for 2019 as this June I will be moving into an entry level finance/accounting position at my current employer, with a new wage that will be over double what I was making preceding July 2017.

As great as all of that news is, the point of this article is to discuss my experience with Seeking Alpha and how it compares to my experience at my former cashiering job with Shopko.

Since I began writing for Seeking Alpha in December 2018, I've been incredibly blessed to build up the following that I have thus far. The 20 articles that I have wrote to date have allowed me to build a base of nearly 1,000 followers. While this is still a small number of followers compared to the more popular writers on Seeking Alpha, the significance is not lost on me in a few ways.

First, that many followers is actually more followers than people that live in smaller towns. Secondly, I've only been writing for Seeking Alpha for 4 months and the momentum is starting to snowball much in the same way a dividend portfolio snowballs with each passing month and year.

Aside from the benefits which include making me a better writer, researcher, and investor, writing for Seeking Alpha has proven to be somewhat financially rewarding. How rewarding, you ask?

In Q1 2019 alone, I earned over $1,200 gross income on the 16 articles I wrote while spending around 100 hours writing, editing, and replying to comments on those articles. While earning $12/hr on side hustles isn't exactly going to make me a millionaire in my 20s, it's important to note that even after the roughly $300 in self-employment, federal, and state taxes, I'm earning $9/hr.

The significance of that is that it's still more than the $7.51/hr I earned dealing with disgruntled customers at my former workplace as a cashier. While a lot of people wouldn't feel comfortable giving this much information, the reason I do this is as a sort of time capsule for me to look back on some day and more importantly, to inspire others.

Writing for Seeking Alpha was something I thought about doing for over a year (credit to my friends and family for encouraging me to do it btw), but I kept putting it off with the excuse that I wasn't qualified and didn't know what I was doing.

It's important for us all to remember or to have someone remind us that dreams are worth pursuing for the reasons I outlined in this post.

Takeaways:

The lesson in this are 1) the master at anything was once just a beginner like you, so great things take time and dedication 2) once you find your hobby or your passion, it becomes pretty manageable to monetize it in the Information Age we live in 3) Side hustles like Seeking Alpha are a great way to not only earn more income, but to invest more, become a better investor, and ultimately be able to possibly become financially independent much faster and 4) Side hustles also could evolve into lucrative enough work for you to ditch your day job and focus on your side hustle with your investments to back you up, if you please.

Discussion:

Do you earn more from your side hustles or hobbies than you earned from your first job? How does that make you feel? As always, thanks for reading and I look forward to replying to your comments.

Portfolio Update: The Reason I Closed A Position

As a dividend growth investor, I like to think that my strategy tends to provide more guidance to me than those that simply trade stocks. While this is likely to be the case, it doesn't mean that I don't make mistakes and end up having to close a position for one reason or another. I recently completed the sale of my entire remaining position in Omega Healthcare Investors (OHI), and redeployed the proceeds from the sale into a couple other companies already in my Robinhood portfolio.

A Brief History:

When I initiated my position in OHI back on November 28, 2017, I was focused on the income that it would provide to me and the long-term thesis that OHI would do well in an environment with an aging population that will use more healthcare in the years ahead.

I ended up selling 7 of my 16 shares on February 23, 2018. I held on to my remaining 9 shares until earlier this year. I then ended up selling another 4 shares and redeploying the proceeds into other companies within the portfolio this year. Finally, on March 26 of this year, I sold my remaining 5 shares.

The Rationale:

While it isn't always fun to discuss the closing of a position within barely a year of initiating the position, I believe mistakes are life's greatest teacher.

Overall, the position produced a 27% gain for me with dividends included, so it wasn't as if it was a mistake in that regard. However, I have the goal of holding my positions for decades, unless an issue arises that makes that not feasible.

Image Source: Simply Safe Dividends

The first issue that I had with continuing to hold OHI was that the dividend safety score is currently ranked as 43, per the reputable research firm, Simply Safe Dividends. A score of 41-60 indicates that the dividend is average and at a borderline risk of being cut in the years ahead. When we add to the fact that the industry in which OHI operates is facing very anemic growth in the short to medium-term, OHI doesn't fit the objective of my portfolio, which is to create as safe of dividend income as possible while also growing, on average, at a clip of 6% per year (with higher yielding companies like OHI in the lower single digits and lower yielding companies such as Lowe's and Home Depot making up for those lower increases).

Ideally, I'd like to have nearly 90% of my dividend income originate from companies with a dividend safety score of greater than 60. This allows a portfolio to grow its dividends and distributions, regardless of economic or political conditions.

It was this very reason that led me to reinvest my proceeds into companies such as Dominion Energy, AbbVie, and Magellan Midstream Partners. All three companies have dividend safety scores greater than 60 and while none quite offer the yield of OHI, the safety and growth profiles of the dividends more than make up for that, in my opinion.

The other reason that led me to close my position in OHI was the fact it was also trading well above its 5 year average in terms of price to adjusted funds from operations or price to AFFO. The price to AFFO at the time of my final sale of shares was around 13.6 compared to the 5 year average of 11.6. This type of overvaluation on a company with a dividend that is by no means a safe bet was a great time for me to take a profit and get out of a company that I view as less certain than the three I redeployed my capital into this year and Southern Company that I deployed proceeds from last year's sale to.

Summary:

While the 16 shares I initially owned of OHI provided annualized dividends of $42.24, I simply wasn't comfortable having such a large amount of my overall dividends rely on one company that doesn't possess at least a safe dividend safety score from Simply Safe Dividends. I am pleased to own 4 other companies all with dividend safety scores over 60, that still produce annual dividends of $29.52 and that grow their dividends in the mid single digits like Southern and Magellan Midstream Partners, high single digits like Dominion, and low double digits like AbbVie.

Discussion:

Have you ever closed a position? Was there a perfect storm brewing leading to the closure of that position like in my case? Did you learn your lessons from it? As always, thanks for reading and I look forward to replying to your comments.

March 2019 Dividend Income

April is upon us and I'm set to turn 22 on the 15th (I know, what a coincidence that I was born on the day that is typically Tax Day in the US and that I enjoy personal finance). The NBA Playoffs are set to begin in just a few days, with my Milwaukee Bucks looking like a legitimate contender in the East. With that said, it's time to examine our dividend income for March.

Analysis:

We received a total of $57.53 between our Robinhood account, our retirement account, and our M1 Finance account. This represents a total YOY growth of 192.5% compared to the $19.67 collected in March 2018. We also had a QOQ growth of 6.9% compared to the $53.84 in dividends collected in December 2018, although as we'll discuss later this growth is a bit inflated because of an additional payer in March.

The $57.53 received in March represents yet another personal best in dividends collected to date.

Of the $57.53, a total of $33.51 originated from our Robinhood account, with 13 companies paying me during the month of March. This is compared to the $29.85 collected in December from 12 companies. We'll discuss the math behind the $3.66 increase from December 2018 to March.

I received $1.86 in dividends from Pepsico (PEP) in March compared to no dividend in December (due to it being paid in January).

I benefited from a dividend raise from Dominion Energy (D) and was paid dividends for an additional share of D as I reduced a position in my portfolio to add to D and AbbVie (ABBV), which is a subject I'll discuss in a few weeks. This resulted in a $1.16 increase in dividends collected from D.

I also benefited from another dividend raise from Realty Income (O) to the tune of $0.02.

While on the subject of dividend increases, I also received a massive dividend raise from The Home Depot (HD), which helped increase my dividends from HD by $0.33.

Yet another dividend increase that increased dividend income was the raise from Amgen (AMGN) which increased dividends by $0.13.

The last activity pertaining to the Robinhood account was the raise from Pfizer (PFE) that increased my dividends collected by $0.16.

Moving on to the retirement account through my employer, I received $23.54 in dividends from my mutual fund holding CAIBX compared to the $23.55 in dividends from December, when including the $5.15 special dividend.

Finally, the M1 Finance account provided $0.48 in dividends compared to the $0.44 in December.

Summary: 

March was yet another record month in dividends collected for me. I continue to inch closer to the $100 month mark, although that likely won't happen until early next year. Even when we factor out the Pepsi dividend and the additional share of Dominion that resulted in higher income for March and will result in lower income in May for the position I partially sold a few weeks back, we still arrive at close to $55 in dividends.

Although this is very little growth, any growth is welcomed while I finish out the last 4 months of undergrad and continue to focus on paying tuition, in addition to paying for a car in cash later this year, as per my 2019 goals.

Discussion: 

What was your dividend income for March? What was your YOY and QOQ growth? As always, thanks for reading and I look forward to replying to your comments.

The Two Profiles In Finance And Life

As a dividend growth investor in the accumulation phase of my journey to achieve financial independence, I have realized over time, that there are two types of profiles in finance and life. For one that is seeking financial independence, they should lean more towards one of these profiles rather than the other. The two profiles in finance and life that I am referring to include the producer/provider/investor and the consumer.

Although it's impossible to purely fit the characteristics and preferences of either one of these profiles, I do believe that there is a balancing act that must go into ensuring that either one of these preferences don't become too powerful in one's life. 

With that said, let's first delve into each of the profiles in finance and life by first defining what each profile is and what the characteristics of each encompasses.

Profile #1: The Producer/Provider/Investor

The producer can take on many different forms, but for the intents and purposes of this post, I will define the producer as follows:

Producer: Anyone that provides value to society through various channels.

The first channel that a producer provides valuable goods and/or services through is their labor at their employer or through self-employment. I refer to this as a direct channel, with the rationale that they are directly producing the valuable goods and/or services for society. This is how most of us are able to pay our bills and survive in our society that uses "money" as a trading mechanism. Rather than produce everything ourselves, we purchase goods and services from others because it would be incredibly difficult to hand produce all of the things that we take for granted these days. 

Without the society we currently have, we would all have to grow our own food, produce our own clothes, produce our own entertainment/leisure, and in the process of fulfilling such arduous tasks, we would lose the free time that many of us also take for granted. We value the goods/services that someone provides to us by the price we pay to attain those goods/services. 

The second channel of providing valuable goods and/or services to society is on a more passive basis, primarily through investments that produce dividends, interest, and rent.

As a dividend investor, you're an owner in some of the most vital businesses to our everyday functioning in our modern economy. As an owner of Exxon Mobil, you're providing the world with the fuel necessary to allow hundreds of millions of consumers around the world to commute to work via their own vehicle or public transit. As an owner of Johnson & Johnson, you're providing the world with valuable consumer staples, such as Band-Aids, Neutrogena, and Listerine. You're also providing patients with medical devices that drastically improve their health, and ultimately, their quality of life. As a lender, you are extending credit to a consumer or a business to purchase their first home or to expand their business, possibly providing more value to others. Finally, as a landlord, you are providing a tenant with a safe, comfortable place to live. 

It's the combination of the direct channel of production and the financial benefit provided to you, in combination with the utilization of the indirect channel of production that can allow you to rapidly amass wealth, and passive income as a result. 

Suffice to say, the more value you provide to society, the more you will economically benefit. This will allow you to eventually become financially independent, indirectly providing value to those around you in a passive manner. This isn't to say you should stop your efforts to provide value in an active manner, but it extends more freedom to you to be able to choose how you want to provide that value to society. In my case, I have found that I enjoy writing and inspiring others to take action toward living their best life, as well as providing viable investment ideas over at Seeking Alpha to allow readers to eventually unlock financial freedom.

Profile #2: The Consumer

As we've discussed already discussed above, the producer is actively providing value to others through the provision of goods and/or services.

As you can imagine, the consumer is the one on the other end of the spectrum that is benefiting from the goods and/or services they are obtaining from the producer. 

The consumer would be the customer that is benefiting from the Exxon-Mobil branded gasoline they purchase from an Exxon-Mobil gas station, the Band-Aids, Neutrogena, or Listerine they are indirectly purchasing from Johnson & Johnson, and the house or apartment they are renting from their landlord, or the mortgage payments they are paying to their lender. 

Although there is nothing wrong with being a consumer and it's a necessary part of life (unless you'd like to be completely self-sufficient, living in the mountains or something), one must be careful to balance being a consumer and a producer.

This is to say that if you are consuming more than you are producing (i.e. spending more than you earn), you will go into debt. It is this debt that will require you to actively produce more (primarily work at your day job). 

The takeaway is that if you are unable to produce more than you consume, you will never have the luxury of attaining financial independence. This would mean that you're never able to live your life the way you would like, which is on your terms. Of course, if you enjoy your life the way it currently is with whatever job you currently hold, the reason for producing more than you consume would be in the event that you are eventually laid off from the job you love or are unable to perform the job anymore, you would still have the financial means to be able to consume the vital goods and/or services that are necessary to one's basic survival. 

On the other hand, this isn't to say that you should blindly produce tremendous value for society while depriving yourself of the necessary goods and/or services in life. 

As with everything in life, I believe one must strike a balance between producing and providing for their future needs while also meeting their current needs. After all, investing is worthless if you are depriving yourself of what you need today for what you need tomorrow.

Discussion:

What are your thoughts on the balance between being a producer and a consumer? Are you balancing your production and consumption adequately, in your opinion? As always, thanks for reading my thoughts and I look forward to reading yours in the comment section below.