Expected Dividend Increases for October 2019

It's hard to believe that another month is just days away from ending as I write this post. Football season is well under way and through the first couple weeks, the Packers have got off to a 2-0 start. While the first week was ugly from an offensive perspective and week two wasn't great aside from the first 15-16 minutes, the Packers have played fantastic defense thus far. And that's an encouraging sign given that defense wins championships. Meanwhile, the Bucks are just a few weeks away from playing their first regular season game in Houston. Aside from the excitement in the world of sports, it's time to examine the dividend increases we received in September and how they stacked up to our expectations. We'll also examine the dividend increases we're expecting for October.



Dividend Increase #1: Realty Income (O)

Realty Income (O) announced a 0.2% increase in its monthly dividend from $0.2265/share to $0.2270/share just as I was expecting in my previous post in this series. Across my 4 shares, this increased my annual forward dividends by $0.024.

Dividend Increase #2: WP Carey (WPC)

WP Carey (WPC) announced a 0.2% increase in its quarterly dividend from $1.034/share to $1.036/share. This was yet another dividend increase that was exactly what I was expecting, and I have to say, I love that! Across my 3 shares, WP Carey's dividend raise boosted my annual forward dividends by $0.024.

Dividend Increase #3: Philip Morris International (PM)

Philip Morris International (PM) announced a 2.6% increase in quarterly dividend from $1.14/share to $1.17/share. This increase was a bit less than what I was expecting, but given that PM is considering a merger with Altria Group (MO), it's understandable that the dividend increase was a bit on the conservative side this year. Across my 5 shares of PM at the time of the announcement, this increased my forward annual dividends by $0.60. Shortly after PM's dividend increase, I increased my position a bit. I outline my rationale in my recent article on PM on Seeking Alpha.

Expected Dividend Increase #1: Iron Mountain (IRM)

I'm expecting Iron Mountain to replicate it's 4% dividend increase from last year, which would result in an increase in the quarterly dividend from $0.611/share to $0.638/share. Across my 4 shares, this would result in a $0.432 increase in my annual forward dividends.

Expected Dividend Increase #2: Enterprise Products Partners (EPD)

When I take into consideration that Enterprise Products Partners is among the most consistent MLPs in terms of distribution increases, I would be shocked if the company doesn't continue its trend of increasing its quarterly distribution by 0.6% from $0.44/unit to $0.4425/unit. Across my 19 units, this would increase my annual forward distributions/dividends by $0.19.

Expected Dividend Increase #3: EQM Midstream Partners (EQM)

Despite EQM Midstream Partner's rough past couple months in terms of capital depreciation, I expect that the company will continue to deliver with another 1.3% increase in its quarterly distribution from $1.16/unit to $1.175/unit as the company nears completion on its Mountain Valley Pipeline. Across my 4 units, this would boost my annual forward distributions by $0.24.

Closing Thoughts: 

September was by in large what I expected it would be in terms of dividend increases. While Philip Morris' dividend increase was a bit less than I thought it would be, I can understand why the company exercised caution. My other two dividend increases were exactly what I was expecting. Overall, my annual forward dividends increased by $0.648 for the month of September. This is equivalent to investing $16.20 at a 4% yield.

Fortunately, I'm expecting October to ramp up, with $0.862 in dividend increases expected. This would be equivalent to investing $21.55 in fresh capital at a 4% yield.

Discussion:

How many dividend increases did you receive in September? Were they about what you expected, more than you expected, or less than you expected?

As always, thanks for reading and I look forward to your comments below!

Hobby Versus Side Hustle: Breaking Them Both Down

As a relative newcomer to actually implementing side hustles, it wasn't until I started this blog that I began to notice the key differences between side hustles and hobbies. It was for this reason I thought it would be helpful to identify my observations of the key differences between side hustles and hobbies.

We'll start by offering my definitions of both a hobby and a side hustle and describe the key similarity between a hobby and a side hustle before delving into the key differences.

Hobby: An activity performed solely for the enjoyment and not for monetary gain.

Side hustle: Activity performed for monetary gain, and possibly for enjoyment.

The major similarity between a side hustle and a hobby is the fact that they both could be performed for enjoyment. Another element is that as long as the hobby or side hustle isn't overdone, both can provide an outlet for us to escape the everyday monotony that is often associated with a day job.

In my particular case, two of my primary hobbies include this blog and watching sports.

While it's entirely possible that this blog could one day make money, that isn't the primary motivation. If it was a major motivation, I would have gave up long ago because this blog has yet to technically make a dime on its own (although it may have theoretically funneled a bit of traffic to my side hustle on Seeking Alpha). But regardless of whether this blog does or doesn't eventually make money, it's quite clear that it doesn't matter to me.

The sole purpose of this blog when I started it was to serve as 1) a creative and productive outlet for me so that 2) I could someday look back on it as I document my journey to financial independence and 3) proof that an average guy or gal can attain financial independence in a relatively quick amount of time with the right mindset and that you don't have to be a successful pro athlete, musician, actor, or startup billionaire to attain financial independence and security.

There are numerous other examples of hobbies that many of us engage in on a daily basis, such as watching sports, spending time with family, and so forth. As a very casual sports fan (aside from NBA basketball where I have more of an intermediate understanding of the game), sports is another way to escape from the day to day grind that is important to our mental health.

As I alluded to above when defining a side hustle and a hobby, the key difference is the ability for monetary gain. A hobby is often a side hustle without the earning capability and a side hustle is often a hobby with earning potential (if you're doing it right, as I believe your side hustle shouldn't feel like actual work or it negates one of the purposes of a side hustle which is to escape the feeling of tedious work).

In my case, I generally write a couple articles a week over at Seeking Alpha. It has proven to be a fairly decent side hustle when we consider that I enjoy the process of researching and writing about investment opportunities.

It's generally a nice way for me to spend part of my weekend finding investment opportunities for both myself and others, which helps from a mental health standpoint as I feel I am doing something productive with my life, even with part of my downtime.

Concluding Thoughts:

As we've shown, both side hustles and hobbies serve as a respite from the sometimes dull nature of our day jobs. I couldn't even imagine working 80+ hours a week at a job you despise while having no time for yourself. Perhaps it's immature and misguided of me to believe that side hustles and hobbies can serve as distractions from our day jobs, especially when we spend so much of our lives at our day jobs, but I've found that hobbies and side hustles can bring meaning to our lives in ways that jobs often can't because they aren't designed for our pleasure.

Discussion:

What are your side hustles? What are your favorite hobbies? Are there any new side hustles or hobbies that you are soon considering participating in?

If you've made it this far through this sometimes aimless rant, I applaud you and thank you for reading. This post served as a bit more of one from the soul with less of the formal writing style that I often include in my posts. As always, I welcome any comments you may have below.

August 2019 Dividend Income

The month of August has come to a close and that means that the beginning of the NFL regular season will be upon us in a matter of days. My Green Bay Packers are set to open the season against the Chicago Bears two days after this blog post will be published.

More importantly, the end of August means two additional things. It means that we only need to get through September and half of October before the NBA preseason begins, and the regular season begins two weeks after that. I'm more excited now for the Milwaukee Bucks than I ever have been in the 15+ years that I have been a fan. This very well could be their season to win it all.

Secondly, it's time for us to examine the amount of dividend income our portfolio generated for us in the month of August.

Before we delve into that, I'd just like to announce that I opened a Webull brokerage account last month and have since purchased 7 additional units in Enterprise Products Partners (EPD) and I initiated a new position position in The GEO Group (GEO), which I recently discussed in a Seeking Alpha article on GEO.

Analysis:

I received total dividends of $48.93 during the month of August, which is an 11.1% growth rate compared to the $44.04 in dividends that I received in May, and an 18.8% YOY growth rate compared to the $41.19 in dividends I received in August 2018.

Breaking it down a bit further, $45.51 originated from 12 companies in my Robinhood account, $3.08 from EPD in my Webull account, and the remaining $0.34 from 15 companies in my M1 Finance account.

The $4.89 increase in my dividend income compared to May is due to a variety of factors discussed below:

Since May, I have purchased an additional 3 units of Energy Transfer (ET), which accounts for the additional $0.61 of distributions received from ET.

Magellan Midstream Partners (MMP) also provided an additional $0.02 in distributions due to a distribution increase it announced since the distribution paid in May.

Realty Income (O) also paid an additional $0.01 in dividends compared to May 2019 due to its quarterly dividend increases doing their magic.

I also collected an additional $0.06 in distributions from EQM Midstream Partners (EQM) compared to May.

I benefited from both a distribution increase from EPD and the purchase of an additional unit, which explains the additional $0.46 in distributions.

Lowe's (LOW) provided an additional $0.14 in dividends compared to May due to its massive dividend increase it announced at the end of May.

I also benefited from owning an additional share of AT&T (T), which increased my dividend income by $0.51 compared to May.

The largest reason for the increase in my dividend income from May to August was the purchase of 7 units in EPD through my new Webull brokerage account. This accounted for $3.08 in additional distributions.

Conclusion:

I'm quite pleased with the dividend income that I collected in August 2019. I'm coming very close to approaching that $50 milestone for the middle months of each quarter, which is very encouraging. Given that I expect to invest a small amount in a new position in the near future that pays a dividend in the middle month of each quarter, this will be my last middle of the quarter month below $50 in dividend income.

More encouragingly, I continue to make progress on my goal of increasing dividend income in the first month of each quarter. I'd like to catch up my first month of the quarter income with the other months, and get those months above $50 by the end of the year. Fortunately, I believe that goal is well within reach.

Discussion:

How was your August? Did you have any new dividend payers? Was your August another record for the middle month of the quarter as mine was? As always, thanks for reading and I look forward to any comments you may have.

August 2019 Dividend Stock Purchases

While the past few months had been quiet on the capital deployment front for the past few months heading into August, that changed majorly because of two factors. First, I felt like I wanted to reward myself for having recently finished undergrad (and what better way to do so than by purchasing ownership in fantastic businesses that will pay me for many years to come?). And secondly, although I do still have to save up to purchase a car and I have a couple other expenses to prepare for, I did have a bit of flexibility with capital deployment for the month.

With that said, we'll take a look at how I deployed over $500 in capital in August (aside from the $231.80 in net retirement contributions) to begin my new series on my purchases each month.

As illustrated above, I started off August like how I start off many months. I was simply deploying capital I had amassed from dividends received by purchasing another unit of Energy Transfer (ET) for $14.25 in my Robinhood account.

As detailed in my most recent Seeking Alpha article on Energy Transfer a few weeks ago, I believe this company is rather mispriced given its strong operating fundamentals.

At a basic level, the concerns over an escalation in the US-China trade war and the 5 year bear market in the midstream sector, along with the industry wide concern of pipeline projects being halted by environmental activists have left Energy Transfer's unit price absurdly low.

This purchase of Energy Transfer added $1.22 in annual distributions. The yield on this purchase was 8.56%.

I then initiated a position in GEO Group (GEO) in my Webull brokerage account. I initially purchased 8 shares of the company for $17.96 a share and I added 3 shares to my Robinhood account.

Like Energy Transfer, GEO Group is also grossly mispriced in my opinion. I recently highlighted my decision to initiate a position in the company for those that would like a more comprehensive explanation on why I added GEO Group to my portfolio.

In spite of GEO Group's relatively strong operating fundamentals, my cost basis on GEO Group of $17.77 a share means that the price to AFFO that I paid for my position in GEO Group is 6.56 using the midpoint AFFO figure for 2019 of $2.71 a share.

GEO Group has been beaten down due in large part because its balance sheet is a bit lacking (although it isn't terrible per se), and that there are also political concerns, such as the uncertainty of funding from its revolving credit facilities beyond 2024, not to mention the risk that the 2020 elections are perceived to bring into the mix.

These purchases of GEO Group added $21.12 in annual dividends. The yield on my purchases to date is 10.8%.

Another position that I decided to add to just a few days ago was Prudential Financial (PRU). While I technically have a fractional share of Prudential in my M1 Finance account, this purchase marked the first purchase of whole shares in Prudential.

Since I wrote about the company on Seeking Alpha back in May, the stock price has plunged from $101 a share to a touch above $80 a share as I write this post on the last day of August.

For context, that is barely above its absolute bargain price of $75 a share when the market experienced a meltdown last December, culminating in a precipitous Christmas Eve sell off.

When we consider that Prudential is likely to generate at least $12 in EPS during this fiscal year, that implies that Prudential is trading at less than 7 times EPS using my cost basis of $77.98 a share.

While falling interest rates certainly aren't a boon to Prudential's business and the threat of a recession in another year or two isn't encouraging either, the company is priced quite attractively over the long-term.

The long-term value proposition has shifted dramatically from the time that I wrote about Prudential in May to now so much that I envision writing about Prudential once again in the near future.

The 3 shares of Prudential that I added to my portfolio will add $12.00 in annual dividends at an entry yield of 5.13%.

Finally, I added to my position in Altria Group (MO) following the announcement of its 5% dividend increase in the week prior.

The company is trading at a highly compelling valuation and the past week of rumors and now news that Altria and Philip Morris International (PM) are considering reuniting since they split 11 years ago has sent both stocks plunging.

While I think that the merger could be great for both in a number of ways (i.e. PM's expertise in operating in international markets and the ability for both companies to reduce redundancies within their operations), I believe that Altria is priced for favorable results regardless of whether the merger actually occurs.

At my purchase price of $44.25 a share, Altria is yielding 7.59%. With a yield that high, it simply doesn't take much for Altria to prove itself as a great investment over the long-term.

The 2 shares of Altria that I added to my portfolio will add $6.72 in annual dividends.

Summary:

I was debating starting a series summarizing my monthly purchases due to the fact that outside of this month, I won't be able to make any meaningful fresh capital contributions until early next year, once my car is funded and I have a 3 month emergency fund.

However, I came to the realization that over the past two years that I have been investing, my account has slowly been built up outside of a couple of $1,000+ buying sprees spread out over a number of stocks.

I see this as a great opportunity to encourage other newcomers to DGI that this strategy produces results for everyone. It just takes time for those results to amount to a life changing passive income.

I have also been curious to track how much my annual dividends grow from month to month as I have never actually tracked that figure.

In summary, the $41.06 in dividend income that I have added through purchases in my taxable accounts and the $8.29 in dividends that I have added through contributions to my retirement account have increased my annual dividend income from roughly the $600 mark to $649.56.

I'm very much looking forward to building upon these results and despite the lack of capital available for the rest of the year, I am confident I'll be able to end 2019 with $700+ in forward annual dividends.

Discussion:

Have you initiated any new positions lately? What positioned have you recently expanded? Was August as great of a month on the capital deployment front for you as it was for me?

As always, I thank each and every one of you for reading. I look forward to replying to any comments that you may have.