Expected Dividend Increases for September 2019

As this is published, the last few days of August are here and September is fast approaching. Fall is fast approaching. This means that we're in the last month of the MLB regular season as teams are gearing up for the postseason. The Bucks will be opening the season in Houston on October 24 before we know it and all the excitement that I find in watching NBA basketball will soon be here. The last few days of each month also bring with it a reflection of the past month of dividend increases and predictions of dividend increases for the next month. With that said, we'll delve into my dividend increases for August before we discuss what I'm expecting in September.

The Only Dividend Increase for August Was A Great One

Altria Group (MO) announced a 5% raise in its quarterly dividend (as was predicted by myself last month), from $0.80/share to $0.84/share. While this is well below the company's 5 year DGR of nearly 10% (due one heck of a 2018 that featured two raises!), the company managed to extend its dividend increase streak to 50 years, providing 54 raises during the past 50 years. 

When we take into consideration that Altria acquired a 35% stake in JUUL Labs for $12.8 billion and a 45% stake in Cronos Group for $1.8 billion last December, it's understandable that management is being conservative and keeping its payout ratio around the 80% long-term target payout ratio. Using the company's midpoint adjusted diluted EPS of $4.31, Altria's payout ratio is a touch below 80% at 79.8%. This allows Altria to retain the other 20.2% of its earnings to begin to deleverage to return its balance sheet to its strength prior to its acquisition spree last December aimed at reshaping the company for many more decades of dividend increases. The company will be able to reduce its net debt to EBITDA ratio of 2.7 to below 2 by both repaying debt and growing its EBITDA in the years ahead.

Although high single digit dividend increases probably won't occur for the next few years, I believe Altria has taken the right steps in making sure it stays relevant in an industry that is rapidly changing. If there is any company that I have faith in, Altria is right up there with the best of them. Without going into too much detail, there are many reasons that Altria delivered 17% annual total returns from 1925 to 2003, and a competent company culture that is skillful at navigating the litigious and highly regulated industry of tobacco is certainly one of those reasons.

With a yield on cost near 6% on my shares of Altria, I'll gladly take mid-single digit dividend growth, especially when I'm confident the company is taking the necessary steps to stay relevant as a company. Across my 7 shares, this increased my annual forward dividends by $1.12.

Having discussed my sole raise for the month of August, we'll now transition into my expected dividend increases for September.

Expected Dividend Increase #1: Philip Morris International (PM)

I'm expecting a raise from PM similar to that of Altria. I believe its likely PM will announce a 4.4% increase in its quarterly dividend from $1.14/share to $1.19/share. Across my 4 shares, this would increase my annual forward dividends by $0.80.

Expected Dividend Increase #2: Realty Income (O)

I am expecting Realty Income to continue its trend of the first first dividend increase of the year being in the 2-4% range, with the others throughout the year being $0.005/share increases in the monthly dividend. Therefore, Realty Income's likely monthly dividend will be increased 0.2% from $0.2265/share to $0.2270/share. This would increase my annual forward dividends by $0.024 across my 4 shares.

Expected Dividend Increase #3: WP Carey (WPC)

Like Realty Income, I would expect WPC to increase its dividend by the same rate as it did in its previous increase. As a result, I'm expecting WPC to increase its quarterly dividend from $1.034/share to $1.036/share. Across my 3 shares, would increase my annual forward dividends by $0.024.

Summary:

August may have been a slow month in terms of the quantity of dividend increase, but when we consider that Altria is one of my largest positions, a 5% raise in its dividend was able to boost my annual forward dividends by $1.12. It would take an investment of $28.00 at a yield of 4% to replicate this completely organic increase in dividend income. This was a pretty typical month for me. The dividend increases continue to come in and along with reinvestment and fresh capital, compounding is becoming more noticeable with each passing month, quarter, and year. The joy of the DGI strategy is that the results continue to speak for themselves. There's no need for me to constantly stress out about my net worth because I know that what matters most to me is a growing dividend income.

Discussion:

Did you benefit from the raise from Altria as well? Was the raise from Altria satisfactory to you? Did you have receive any other dividend raises during August? As always, thanks for taking the time to read this post and I look forward to any comments you are free to leave below.

The Case for A Side Hustle: 3 Reasons Why Everyone Needs A Side Hustle

I was reflecting the other day on how it has been about 8 months since I began my Seeking Alpha side hustle. This reflection led me into thinking about how this side hustle has positively impacted me in several ways. I'll be discussing the three ways my side hustle has improved my finances and my life.

Reason #1: A Decent Income Generator

As a personal finance blogger, I'm all for transparency, which is why I believe in revealing the income that I have generated from my Seeking Alpha side hustle. While it's not an absolutely life changing amount, my earnings from Seeking Alpha are actually on track to surpass the income I generated at my first part-time gig in the first two years of college. That still manages to blow my mind.

As illustrated above, in nearly 8 months I've been writing for Seeking Alpha, I have earned just over $3,800 (my first article was published Christmas Eve last year). This works out to about a $500/month average, although recent months have been higher due to the fact I generally write 2 articles a week.

Even net of all taxes, I've still managed to earn about $3,000. This works out to nearly $400/month in additional income.

As I pointed out in my post on the impact of many side hustles, this income that I'm generating not only allows me to save and invest more, but it also means that I theoretically need less to eventually stop working the day job to cover my expenses.

After all, if I am already able to write a couple articles a week working a full-time job, there's no reason I couldn't write at least another couple a week as part of my semi-FI schedule.

Reason #2: It's Something I Find Enjoyment In Doing

While I do sometimes find some enjoyment in my day job, there are just as many days where I don't, and I feel a bit stressed out to say the least.

The great thing about side hustles is that I believe there is a side hustle for just about anybody.

Are you artistic and creative? Perhaps you could start a graphic design side hustle and pull in a few hundred dollars a month doing something you enjoy as a service to small businesses.

Are you analytical and do you enjoy investing? You could start an investment research side hustle and rake in at least a few hundred dollars a month with a bit of effort while also doing something you enjoy.

Whatever it is that you enjoy, chances are there is some type of way you can monetize it and also have fun doing it.

In my case, I find that the interaction with the Seeking Alpha community has improved my knowledge as an investor and some readers have provided me with fresh perspectives that I wouldn't otherwise have came across if I didn't write for Seeking Alpha.

Financial Panther has a great blog post that discusses how side hustles are often more than just the money, and I couldn't agree more. Side hustles can distract you and take your mind off whatever other stresses you have in your life when you maintain a balance with them.

While I wouldn't suggest someone side hustle 30 or 40 hours a week on top of a 9 to 5, there's certainly a case for side hustles to be a part of everyone's life.

Some Seeking Alpha readers have even private messaged me asking for my thoughts on particular stocks, and I have wrote about stocks to address their inquiry, which leads me into my final reason.

Reason #3: Other Opportunities Are Bound To Come To You

One final thing that is interesting about quite a few side hustles is that while many stay pretty casual and as a way to release stress for the side hustler, there is often the possibility that the side hustle could eventually turn into something much bigger, and lead to other opportunities.

In my case, writing for Seeking Alpha attracted the attention of dividend research firm, Sure Dividend. While I haven't yet wrote any pieces for them, I do intend to in the near future and the option is on the table for me.

Had I never started writing for Seeking Alpha, I likely never would have received this offer to write for Sure Dividend. It's also great because besides the dividends I'm receiving from the companies I own, my paycheck from my employer, and earnings from Seeking Alpha, I'll also have an additional income source through Sure Dividend.

The more we are able to diversify our income, the better off we'll be at dealing with the loss of any one of those incomes.

The great thing about a side hustle for a site like Seeking Alpha or Sure Dividend is that you never really know who is reading your work. I even once received a private message from the CEO of a mid-cap REIT that I wrote about, which was pretty cool.

You may even receive a full-time job offer at an investment firm or if you keep at your side hustle diligently for a few years, your following could become so large that it may eventually become worthwhile to quit your job and focus on your side hustle full-time.

While I'm a long ways away from being able to consider focusing considerably more on my side hustles, I know that the longer I write, the more my online presence will grow.

As I continue to increase my income and keep my expenses fairly low, my net worth and passive income will both grow. This could eventually give me the courage to make the leap toward making my side hustle my full-time job as my following and my income both grow.

Conclusion:

Beyond just the financial benefits of a side hustle, there is also the added benefit of side hustles being able to take your mind off of any stress at work, school, or with your family/friends. Some may find side hustles as a therapeutic release to help them cope with whatever issues are going on in their life.

Obviously, the financial benefits of a side hustle are quite notable. They can be a great way to earn hundreds, if not thousands of dollars a month in extra income which can be allocated to paying off student loans, building an emergency fund, investing, or even rewarding oneself through purposeful spending.

And in some cases, side hustles can lead to other opportunities and interesting interactions with others. The possibility of one day being able to turn your small-time side hustle into lucrative full-time work is just another reason to consider a side hustle.

Discussion:

Did I miss any reasons why we all need a side hustle? Are there any examples you can think of to further support my reasons for a side hustle? As always, thanks for reading and I look forward to replying to any comments you may have.

Why I Embrace "Failure"

Oftentimes, as Americans, we see how embedded the fear of "failure" is in our culture.

The fear of "failure" is the single greatest obstacle to success. It prevents us from taking action and pursuing our dreams.

We'll explore the reasons I have come to embrace "failure" in recent years, how it has dramatically changed the course of my life, and how it can change yours as well.

As I prefaced in my introduction above, the greatest obstacle to success is the fear of failure.

We first need to begin by redefining failure, and recognizing that an inability to capture success precisely when we want success doesn't necessarily constitute failure.

How many times have we seen people make New Year's resolutions or set goals only to give up on them, instead of reevaluating their situation, making small tweaks to their plan, and proceeding from that point?

This is more of what I would consider a set back. As Ross Perot stated years ago, "Most people give up just when they're about to achieve success. They quit on the one yard line. They give up at the last minute of the game one foot from a winning touchdown."

Unfortunately, more times than I can recall. We need to understand that life is not this linear progression, but rather a journey of peaks and valleys.

Our success in life is merely the sum of our past successes and failures. The more one fails in life, the more they'll typically succeed as well. This is because as Michael Jordan put it, "I've missed more than 9000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed."

In my own case, I am aiming for FIRE by the age of 35. While some people would probably reprimand me, asking me of the consequences if I fail to achieve that goal, I see it in a completely different way.

If I don't reach my goal, the worst case scenario is that I come somewhat close, and I still eventually achieve financial independence, whereas most never will.

If I worried too much about the possibility of not reaching my goal, don't you think I would have never even made an attempt at achieving it?

But if I do achieve my goal, I have achieved something most people never manage to do precisely when most of my peers will be just approaching the prime of their careers. If it weren't for the fact the FI community has grown rapidly in recent years and people actually have achieved it, you would swear that's an insurmountable feat based upon reports from most of the mainstream financial media. 50 years ago this month we achieved an unprecedented feat by putting a man on the moon, so why the hell shouldn't I try to become financially independent?

There will come a day in all of our lives that we approach the end and we are left to take stock of our lives. The most painful thing we can live with in that moment is the regret of the path we didn't take because we were too scared to embark upon an uncertain journey with no guarantee of success. If you aren't making mistakes, you truly aren't living. Just remember that the legends make more mistakes than the rest of us, but it's for that reason they eventually triumphed and became legends.

Every goal that once seemed impossible, became a reality when the crazy dreamers ignored the criticisms and excuses of others, and they just did it.

Moving to the second point, mistakes or "failures" can actually be a great thing if it happens earlier in your life.

When you're first starting out as an investor, a bad investment is disappointing, but it becomes especially costly in absolute terms later in your life.

Take for instance the fact that 99.7% of Warren Buffett's wealth was built after the age of 52, and we begin to understand that mistakes become more costly as we age.

This is one of the two reasons why we should invest as early as possible.

Not only do we benefit more from the power of compound interest, but we also benefit from learnings from our mistakes of the past. When we apply those lessons in the present, it makes us less likely to commit those same mistakes in the future.

I equate this to the adage that you can fall behind by 20 in the first quarter of a basketball game, but you better not be behind 20 with a few minutes left in the fourth quarter.

The further we progress in life, the more costly mistakes become in absolute terms, which is why we should aim to front load our mistakes.

Conclusion:

In order for us to achieve success, we first need to start by acknowledging that just because things don't go our way, it doesn't mean we failed. You only fail when you give up and learn nothing from your mistakes.

The most painful thing anyone can say on their deathbed is "what if I had opened that business" or "what if I had climbed Mount Everest?" Well, you didn't, and now that will be the last thought on your mind as you take your last breath on Earth.

Because you can't learn everything you'll need to know from the mistakes of others, you should be as open to making mistakes in your early years as possible because it is only then you will gain the wisdom that comes with the pain of mistakes and the valleys in your life. As the John Michael Montgomery song states, "life's a dance, you learn as you go."

We only live once, so I believe it's our duty to make every day count. We can only do that by letting go of this notion of the fear of "failure."

Discussion:

Have you dismissed the fear of "failure?" If so, have you noticed a complete transformation in your mindset? As always, thanks for reading and I look forward to replying to any comments you may have.

July 2019 Dividend Income

As I'm writing this, July has officially come to a close and the calendar has turned to August. The NFL regular season is just weeks away from starting, the MLB regular season has two months left, and the NBA regular season is still almost 3 months away.

As an NBA fan, I'm most looking forward to the regular season beginning. With all the big moves made this offseason, the NBA title picture is wide open for the taking. Fortunately, my Bucks very much remain in the picture after a decent offseason overall.

But most importantly for the intent of this post, we'll delve into the dividends I received during July.

I collected $33.84 in dividends during the month of July. Of which, $33.59 originated from the 13 companies in my Robinhood account and the remaining $0.25 originated from 11 companies in my M1 Finance account.

The $33.84 in dividends collected this month represents 6.9% quarter over quarter growth compared to the $31.67 in dividends collected in April 2019, and even more astonishingly, a 101.1% YOY growth rate compared to the $16.83 in dividends that I collected in July 2018.

There were a number of changes from April to July that accounted for the $2.17 difference in dividend income, which happened entirely in my Robinhood account as my M1 Finance account was unchanged from April to July:

I collected an additional $0.01 in dividend income from the monthly dividend payer, Realty Income (O) due to its consistent quarterly dividend increases. I love all my companies about equally like a parent loves their children, but of the 59 companies I own between my Robinhood account and M1 Finance account, Realty Income holds a special place in my heart as the only monthly dividend paying company I own.

I also collected an additional $0.10 in dividend income from Leggett & Platt (LEG), which was because of the 5.3% dividend increase they announced a while back.

I received $0.90 less from GlaxoSmithKline (GSK) compared to April, which is due to their varying earnings and target payout ratio.

Relative newcomer to the portfolio, Albemarle (ALB) contributed to $1.10 in dividends. For those interested, I have provided an in-depth analysis of Albemarle on Seeking Alpha, which led me to initiate a position in the company back in May.

Like Albemarle, I also added Eastman Chemical (EMN) to my portfolio in May, following an analysis of the company on Seeking Alpha. This added $1.86 in dividend income compared to April 2019.

Summary:

While the growth from April to July of this year was satisfactory, the most breathtaking takeaway from this post was the fact that my dividend income literally DOUBLED from July 2018 to July 2019. Admittedly, this was because of a relatively low starting point in terms of dividend income. However, I could argue that during this time, I wasn't even investing on a very regular basis due to paying my way through undergrad.

The real fun will begin early next year once I have my car fully paid in cash, a few other obligations paid off, and a small emergency fund built up. In addition to the increased impact of dividend growth and reinvestment that comes with a larger base of dividends, I will also be able to aggressively invest 60-70% of my net income into dividend companies. This will act as rocket fuel being thrown on the dividend flame, which I couldn't be more excited about.

Conclusion:

Did you have any new dividend payers during July? Did you reach any dividend milestones? As always, thanks for reading and I look forward to reading and replying to your comments.