Expected Dividend Increases for August 2019

The MLB's regular season is just starting to heat up and the start of the NBA season is still almost 3 months away. With that said, it's late July and time for us to recap our dividend increases for the month. We'll also look ahead to the dividend increases I'm expecting for August.

July Dividend Increases

Increase #1: Enterprise Products Partners (EPD)

Enterprise Products Partners announced a 0.6% increase in its quarterly distribution, from $0.4375/unit to $0.4400/unit. EPD is the largest position in my portfolio and the level of consistency with which it raises its distribution, along with the strong operating results and aligned interests of ownership with other unit holders are major reasons I am so bullish on this stock. Prior to the dividend increase, I added 7 shares of EPD to my new Webull brokerage account. I also added a share following the distribution announcement. For a more in depth analysis of EPD, I will provide the link to my recent article here. Across my 17 shares prior to the announcement, this increased my annual forward dividends/distributions by $0.17.

Increase #2: EQM Midstream Partners (EQM)

EQM Midstream Partners announced a 1.3% increase in its quarterly distribution, from $1.145/unit to $1.16/unit. This increase was also precisely what I was predicting in my previous expected dividend increases post. Across my 4 shares, this distribution announcement increased my annual forward dividend/distribution income by $0.24.

Increase #3: JM Smucker (SJM)

JM Smucker announced a 3.5% increase in its quarterly dividend, from $0.85/share to $0.88/share. This was the one and only dividend increase that I was sure would play out which didn't turn out as I expected. Unfortunately, SJM increased its dividend at barely half of what I was otherwise expecting. Regardless, my annual forward dividends increased by $0.24 as a result of this announcement. While I would have liked to see a raise of 6-7%, I trust that SJM knows what it is doing and look forward to hopefully a bit larger dividend increase next year.

Increase #4: Magellan Midstream Partners (MMP)

As of July 30th, I just noticed that Magellan Midstream Partners announced a distribution increase last week and I somehow missed it! MMP announced a 0.7% increase in its quarterly distribution, from $1.005/unit to $1.0125/unit. While 0.7% doesn't seem like much on the surface, MMP increases its distribution every quarter just like EPD and EQM. Across my 3 units, this increased my annual forward dividends/distributions by $0.09. It isn't much, but it's $0.09 a year more than I thought I had when I woke up today.

Update:

BP elected to announce a quarterly dividend in line with the previous of $0.615. While I was hoping for a small increase, I'm confident BP will reward shareholders with a nice increase in the next couple years. 

Expected Dividend Increase for August

Expected Dividend Increase #1: Altria Group (MO)

While Altria announced two dividend increases last year, that certainly won't be the case this year. Following the acquisitions of both a 35% stake in JUUL for $12.8 billion and a 45% stake in Cronos Group (with the option of increasing that stake to 55%), the company's balance sheet has notably become more leveraged. Although it isn't leveraged to the point of danger, deleveraging will be an emphasis for the company over the next few years. With a target payout ratio of around 80% and the company reaffirming its 2019 adjusted diluted EPS of $4.15-4.27, it seems reasonable to infer that the company's quarterly dividend will be raised 5%, from $0.80/share to $0.84/share. Across my 7 shares, this would increase my annual forward dividends by $1.12.

Conclusion:

My annual forward dividends/distributions increased by $0.74 in the month of July. At a 4% yield, this would take an investment of $18.50 in fresh capital to replicate. This month was largely what I predicted it would be aside from the disappointing announcement from SJM, but I can't really complain about getting increases in income from simply holding my shares and units in these great businesses.

Discussion:

How many dividend/distribution increases did you receive in July? Did you experience any pleasant surprises or disappointments in terms of increases? As always, thanks for reading and I look forward to reading any comments you may have.

Why Every Day Is A "Lucky" Day To Be A Dividend Growth Investor

I find it quite interesting how happenstance seems to be the inspiration for a great number of my articles not involving my dividend income summaries or dividend increase series. It was just the other day that I happened to stumble upon a Canadian penny in my yard. I'm not sure how it got there, but it did remind me that even though I found that penny, there was still the effort of picking it up in order for me to claim it. It got me thinking just how incredible it is to be a dividend growth investor for a couple of reasons.


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The First Reason: Beyond A Bit Of Portfolio Monitoring, DGI Is Almost Purely Passive

While I had to pick up that penny to earn it and you would have to pick up that $10 bill to earn it, the incredible thing about DGI is that all you have to do is expend the initial effort through earning the money to finance your investment purchases, whether that is through a side hustle, your day job, or other means of generating an income.

Once you have generated the ~$78 to purchase that share of Exxon Mobil (XOM), the share is yours until you sell it. It will generate $3.48 in dividend income for you in the first year of holding it, ~$3.68 in the second year of holding it, and so on. This is the equivalent to basically finding a penny every single day, and the income will continually increase so long as a company continues to do well over time. The great part is all you need to do is hold your share of XOM and make sure that the company's fundamentals are relatively intact and financial results are continuing to steadily improve over time. Outside of that limited monitoring, the income you earn from that share of XOM is passive. It is deposited straight into your brokerage account. You don't even have to walk to your mailbox to collect your dividend check anymore.

And you can scale that up to whatever amount you'd like to earn every day in average dividends. If you'd like to earn $100 a day without having to reach down to pick up a Benjamin Franklin, you'd need to amass roughly 10,000 shares of XOM (although you'd obviously diversify into at least a couple dozen companies besides XOM).

The Second Reason: Dividend Growth Investing Also Isn't Based Upon One-Time Lucky Events

While it does take a bit of luck to be able to generate an income large enough for one to comfortably cover their expenses and invest the excess into dividend paying companies, it really isn't that difficult to become a dividend growth investor nowadays.

Although I got started with a bit over $2,000 when I was 20, you could start even start with considerably less than that. Robinhood has been incredible in my experience and although I haven't yet received any dividend paying companies in free stock from Robinhood, one could receive enough free stock (up to $500 if they refer enough friends and family) to buy actual blue-chip dividend stocks like Johnson & Johnson (JNJ), Lowe's (LOW), and Altria Group (MO).

And let's be honest, how often have you ever encountered a quarter in a parking lot let alone a $50 or $100 bill? While I'm not a mathematician, I'd venture to say that the odds of finding real money laying somewhere for the taking are very slim. Outside of finding a $50 bill in a parking lot once, I only have really encountered dimes or less.

Fortunately, dividend growth investing is based on your selection of companies, how much time you have to invest, and how much capital you have available to invest. These three variables are all at least somewhat in your control, which means that you can sort of create your own luck and routinely make money without having to even pick it up.

Conclusion:

Dividend growth investing is incredible not just for the reasons we've discussed in the past, but also for the fact that unlike one-time type events such as finding a $50 bill, dividends continue to funnel into your brokerage account as long as your companies continue to retain the ability to earn enough to comfortably be able to pay those dividends. And not only do you continue to receive those dividends if you have invested in high-quality companies (which isn't that hard to do when there are so many out there), you also have the fortune of receiving dividend increases as your companies become more profitable. You're not only collecting your own steady source of easy income, but you're collecting a growing source of income as the years pass.

Discussion:

Do you agree that every day is a lucky day to be a dividend growth investor? Can you think of any other reasons why it's a lucky day to be a dividend growth investor? What's the most "free" money you've ever found? As always, thanks for reading and I look forward to replying to any comments you may have.

Perspiration, Persistence, & Patience: The Three Traits Key to Success

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Often attributed to a quote by American self-help author Napoleon Hill, I believe that perspiration, persistence, and patience are three traits an individual can develop over time that when properly harnessed can lead to unbelievable success. I'll discuss each of these traits in more detail and describe why each is as important as the other.

The Willingness to Perspire Is the First Step to Greatness

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The first step to greatness is the willingness to put in the work. As the saying goes, "every master was once a beginner. Every pro was once an amateur." Whatever you decide is worthy of mastering, you're going to have to put in a tremendous amount of work. Michael Jordan put in tens of thousands of hours into his game, which led to his eventual succession into the GOAT discussion. 

How often have we been told by infomercials and people trying to sell us stuff that you can lose 10 pounds in a month without watching your diet or exercising, or that you can earn more money working from home than you can at your day job and put in 10% of the effort? Not surprisingly, the foundation of America has been built upon convenience. If I told you that you could achieve all you ever want in life with very little work, you'd probably be skeptical but you'd still watch my infomercial and maybe even buy my product. 

The inconvenient universal truth in life is that in order to be the best, you need to work unlike anyone else is willing to work. If it was easy to be great, don't you think everyone would do it? There is only one Michael Jordan because he was willing to dedicate tens of thousands of hours of his life to his craft. The same goes with Warren Buffett and any other wildly successful person you name.

The Ability to Persist Separates the Best from the Rest

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While hard work is absolutely necessary to building success, it is only the starting point. Although the quote often attributed to Churchill was quite literally referring to the hell of war and what the British endured during World War II, we're all probably aware that life isn't always going to be a picnic at all times. Even if you're doing what you love, there will undoubtedly be days that you don't want to do it. 

Do you think that Michael Jordan ever felt like taking it easy or slacking off? I think we can agree that Michael Jordan is a human, so he has in fact felt that way before. 

A key difference between someone that is successful and someone that could have been successful is in their ability to persist through the obstacles that life throws at them. We've probably all experienced in our own lives or witnessed someone embark upon a goal only to give up when meeting a slight bit of resistance. 

Think of the New Year's resolutions that that many of us set and then give up on within a few weeks. Maybe we had a goal to lose 10 pounds for the year and a month into the year, we actually gained 5 pounds. We're going to encounter trying times where we feel like giving up, but we need to realize that with every setback comes opportunity (link to post about why I embrace failure). 

The Capability to Remain Patient Allows One to Stay the Course 

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Among my favorite quotes of the sage Warren Buffett, is undoubtedly the one illustrated above. Applying his quote from an investing standpoint, I often think of the example that when I was starting out as a dividend growth investor. I invested a bit over $2,000 and my annual dividends at that time were around $80. 

While I'm still in the early innings of my investing career, the incredible thing is that I've managed to amass an investment portfolio worth about $14,000 which generates over $600 a year in dividends for me. Between dividend reinvestment and dividend increases, my annual dividend income is practically increasing by that $80 mark I started at. This will only accelerate as time progresses and compounding does the heavy lifting for me.

Unless you're basically a millionaire already, you won't be a millionaire tomorrow, next week, next month, or next year. Outside of winning the lottery or inheriting a fortune from a long lost uncle, it doesn't matter how hard you work in the next few months or the next year. 

If you have the expectation of achieving success in a very short time span, you'll eventually give up when you inevitably don't achieve the results you desire. The only way to achieve your financial goals or any goal in life for that matter, is to remain patient and stay the course. Nobody ever achieved success by giving up.

Conclusion:

The first step in achieving any success is the willingness to work harder than everyone else. There are no shortcuts to achieving incredible goals. Expanding upon this, you have to be willing to endure your fair share of challenges and obstacles along the way. Life is not a linear progression. There are peaks and valleys throughout life. And, finally, nothing in life worth achieving is going to be able to be achieved in the time it took for me to write this post or for you to read it. Great things take time, and no amount of effort is going to change that. If we're able to develop and implement these three traits into our lives over time, there is very little that isn't possible for us to achieve. I believe we're only limited by our willingness to put in the work, our ability to endure adversity, and to remain patient.

Discussion:

What do you think of the three keys to success? Are there any others that come to your mind? As always, thanks for taking time out of your schedule to read this post. I look forward to any comments you may have.

Net Worth Versus Dividends: Why I Prefer Measuring Dividends

As a dividend growth investor and a personal finance enthusiast in general, I track both my net worth and my dividend income. While I track both of these figures, I place more emphasis in one over the other. One can probably deduce which figure I support more than the other (hint: it's in the name of the blog).


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The Practicality of Using Net Worth to Measure Financial Success

Don't get me wrong. Although I prefer tracking dividends and place more emphasis on that, I certainly see the value in also tracking net worth. Net worth is a fantastic measure of your financial success because you can only become financially independent on a sufficient asset base. There are downsides to net worth if you don't properly track it and you include everything in the number.

I prefer to only include assets that generate an income for me. While your car may help you get to work so you can make money, chances are it probably won't generate an income for you. The same concept applies to a house.

The other notable drawback to using net worth to measure your financial success is that depending upon your asset allocation, your net worth may be highly volatile and subject to market downturns.

Without also measuring the dividends that one is receiving, one may be discouraged whenever the next bear market hits and their stock holdings are down 30, 40, or even 50%.

For those that are index fund investors, market downturns are actually even more discouraging because due to the low yield of index funds, this means that any downturn in the market forces retirees to sell off their index funds at the worst time to make up the difference between the cost of their lifestyle and the amount of dividends they collect from their index funds.

Why Using Dividend Income To Measure Financial Success Is Ideal

As they the personal finance mantra goes, cash is king. More specifically, ample cash flow to cover one's expenses renders one financially independent.

One of the many great things about dividend income is that regardless of what the market does, as long as one is diversified into great companies across most sectors of the economy, the cash flow will continue to increase right through a recessionary period.

While equating one's net worth with financial success can be a recipe for disappointment in a bear market, using dividend income to measure financial success can be a factor for motivation or comfort. If an investor is a retiree, they can sleep well at night knowing their stock holdings continue to generate an ever increasing amount of dividends. If an investor is still working, they can view the decline in their net worth as an opportunity to buy dividend stocks at very appealing valuations.

Conclusion:

I view both net worth and dividend income as very important metrics to track. Without an ample net worth, one can't become financially independent. After all, $100,000 can only generate so much in dividends for an investor without sacrificing a good bit of dividend safety and growth. But at the same time, when that $100,000 seemingly evaporates to $50,000 in the midst of a bear market, investors can take solace in knowing that their dividend income is largely independent of market volatility, which can actually help them take advantage of the market turmoil.

Discussion:

Do you measure your net worth? How about your dividend income? Do you see the case for tracking both, but placing more emphasis on dividend income than net worth? As always, thanks for reading and I look forward to replying to your comments.

June 2019 Dividend Income

Another month has come and gone, which means that July will be my last full month of undergrad, and it may even possibly be my last full month of formalized education for the rest of my life, aside from a certification or two in the future. Adding to the excitement of the fact I only have about a month left of school, I also benefited from setting a new personal record in terms of dividend income collected during the month of June. Without further ado, we'll delve straight into my results for June 2019.

Overall analysis:

In total, I received a personal record of $63.11 in dividends between my Robinhood account, retirement account, and M1 Finance account for June 2019. This is an quarter over quarter increase of 9.7% compared to the $57.53 I collected in March 2019, and an even more impressive YOY increase of 63.3% compared to June 2018 dividend income of $38.64. I collected $34.21 from my Robinhood account for the month, $28.42 from my retirement account, and $0.48 from my M1 Finance account.

Quarter Over Quarter Growth Analysis:

Breaking it down, there were a variety of factors in play that contributed to the 9.7% or $5.58 growth over March, which included the following:

The $28.42 in dividends collected from my retirement account mutual fund (CAIBX) increased my dividend income by $4.88 compared to March 2019.

I benefited from a dividend increase from Pepsico (PEP), which increased my dividends by $0.05 compared to March.

Johnson & Johnson (JNJ) increased my dividend income by $0.10 compared to March.

International Business Machines (IBM) increased my dividend income by $0.15 compared to March.

Exxon Mobil (XOM) increased my dividend income by $0.30 compared to March.

Southern Company (SO) increased my dividend income by $0.10 compared to March.

Year Over Year Analysis:

Taking it one step further, there were a number of material developments that allowed my dividend income to grow 63.3% YOY or by $24.47, which include the following:

My dividend income collected from CAIBX increased $21.29 compared to June 2018.

PEP increased my dividend income by $0.05 compared to June 2018.

British Petroleum (BP) increased my dividend income by $0.06 compared to June 2018.

I also benefited from an additional share of Dominion Energy (D) and a dividend increase, which caused me to collect an extra $1.16 from them compared to June 2018.

I received a dividend increase from Realty Income (O), which helped me collect an extra $0.02 from them compared to June 2018.

Home Depot (HD) announced a massive 32% dividend increase since June 2018, which increased my dividend income by $0.33 compared to June 2018.

JNJ accounted for $0.10 of my additional dividend income compared to June 2018.

XOM added another $0.30 to my dividend income compared to June 2018.

IBM accounted for $0.15 of my additional dividend income compared to June 2018.

Amgen (AMGN) added another $0.13 in dividend income compared to June 2018.

SO accounted for $0.10 of my additional dividend income compared to June 2018.

Pfizer (PFE) added another $0.16 to my dividend income compared to June 2018.

JM Smucker (SJM) accounted for $0.14 of my additional dividend income compared to June 2018.

Finally, the creation of my M1 Finance portfolio last September added $0.48 compared to the goose egg I collected from it last June.

Summary:

It's incredible to think that a year has gone by so fast after my portfolio's first June last year. I'm very pleased with both the 9.7% quarterly growth and the 63.3% YOY growth, but next year is set to be infinitely more exciting as I'll be able to contribute more capital than I ever have before. While 63.3% YOY growth is incredible, I fully believe I'll be able to more than double my dividend income collected next June from dividend increases, reinvestment of dividends into my Robinhood and retirement accounts, and fresh capital contributions to my retirement account and Robinhood account. It has been an incredible 2 years of investing, and the best is yet to come! I couldn't be more excited!

Discussion: 

How was your June? Did you have a record month? Did you have any new dividend payers for June? As always, I very much appreciate everyone for reading this post and I look forward to reading and replying to your comments!