Expected Dividend Increases for September 2020

I feel like a broken record every time I write these blog posts lately, but another month is on the verge of passing us by, which will mean the year is officially 2/3 over!

With that aside, I'll be delving into the intent of this post by examining the dividend announcements during this month and previewing dividend announcements for next month. In the event that any more dividend cuts or increases come in over the next week, I will update this post to reflect such dividend announcement activity.

Dividend Announcements Since The Last Post:

Dividend Increase #1: Altria Group (MO)

Altria Group (MO) threw a curveball to shareholders a few weeks ago when it announced its dividend in late July rather than the late August that we have grown accustomed to over the years.

MO announced a 2.4% increase in its quarterly dividend from $0.84/share to $0.86/share, which was slightly below my expectations of a 3.6% increase in the quarterly dividend to $0.87/share as I predicted in my previous post of this series.

Overall, I'm pleased with MO's dividend increase this year as the increase still outpaced inflation despite an unparalleled societal response to COVID-19 that has upended the results of many businesses throughout the economy.

It goes without saying, but any dividend increase in a generational crisis such as this one is most definitely welcomed and a testament to the quality of MO as a business.

Across my 17 shares of MO, this dividend announcement boosted my annual forward dividend income by $1.36.

Dividend Increase #2: Lowe's (LOW)

Lowe's (LOW) announced last week that they were increasing their quarterly dividend 9.1% from $0.55/share to $0.60/share.

The company opted to delay its usual late May to early June dividend increase by a quarter, which was certainly a prudent move in light of the uncertainty.

While we certainly aren't out of the woods yet relating to COVID-19's potential disruptions to the economy and a widely distributed vaccine isn't a guarantee, I remain confident that the quality of Lowe's as a business will continue to deliver outsized results through this pandemic.

Across my 4 shares of LOW, this dividend announcement padded my annual forward dividend income by $0.80.

Dividend Cut #1: The GEO Group (GEO)

While GEO Group's (GEO) dividend cut came as a bit of a surprise, I understand why the company took the action that it did to reduce its quarterly dividend by 29.2% from $0.48/share to $0.34/share earlier this month.

Given that COVID-19 has resulted in lower occupancy levels at several of GEO's facilities and programs beginning in March and persisting through Q2, GEO has lowered its AFFO guidance for FY 2020 significantly from $2.57-$2.67/share in February to $2.29-$2.33 in August.

Adding to the rationale for the dividend cut, is the fact that the company will be allocating an additional $50-$100 million annually to debt repayment, which will help the company to deleverage to more sustainable leverage ratios for the long-term while also maintaining its status as a REIT.

Although the move hurts my dividend income in the short-term, I appreciate that GEO Group's management team made a decision that will be beneficial to the company in the long-term.

Across my 16 shares of GEO, my annual forward dividend income declined $8.96.

Dividend Cut #2: BP Plc (BP)

BP Plc (BP) announced earlier this month that it opted to cut its quarterly dividend by 50% from $0.63/share on its ADRs to $0.315/share.

Given the decline in global oil demand this year and fall in WTI crude's price from a 52 week high of $62 a barrel to the $40 range that it has been hovering around for a while now, it wasn't surprising to see that the company opted to cut its dividend for the near future as oil prices continue their gradual recovery.

Across my 11 shares of BP, this dividend announcement resulted in a $13.86 drop in annual forward dividend income.

Expected Dividend Increases for September:

Expected Dividend Increase #1: Realty Income (O)

Moving into the expected dividend increases section of this post, there are a number of very reliable dividend growers that I am confident will deliver dividend increases in the weeks ahead.

Starting with one of the most consistent dividend growers in my portfolio, I am expecting Realty Income (O) to increase its monthly dividend 0.2% from $0.2335/share to $0.2340/share.

As we have come to expect from a company of such high-quality, Realty Income has delivered solid results even in the midst of the COVID-19 pandemic, growing its AFFO/share by 6.7% YoY from $1.63 through H1 2019 to $1.74 through the first half of this fiscal year.

Across my 7 shares of O, I anticipate that my annual forward dividend income will be boosted $0.042.

Expected Dividend Increase #2: W.P. Carey (WPC)

Yet another consistent dividend grower in my portfolio is W.P. Carey (WPC), which has also delivered steady results.

In light of WPC's essentially flat AFFO YoY in the midst of an unparalleled operating environment fraught with challenges, I anticipate that W.P. Carey will announce a 0.2% increase in its quarterly dividend from $1.042/share to $1.044/share.

Across my 5 shares of WPC, I am forecasting my annual forward dividend income will be boosted $0.04 following WPC's expected dividend increase.

Expected Dividend Increase #3: Philip Morris International (PM)

Moving to Philip Morris International (PM), my second largest tobacco holding, I am anticipating a 2.6% increase in the quarterly dividend from $1.17/share to $1.20/share.

PM has reported relatively solid results through the first half of this fiscal year, with adjusted diluted EPS declining 2.0% YoY and increasing 8.0% on a like-for-like basis, excluding currency.

Across my 9 shares of PM, this dividend announcement would result in a $1.08 hike to my annual forward dividend income.

Expected Dividend Increase #4: Lockheed Martin (LMT)

As I outlined in a Seeking Alpha article on Lockheed Martin (LMT) earlier this month, I was quite impressed with the company's results through the first half of this year.

In short, the company grew its diluted EPS 7.9% YoY from $11.00 through H1 2019 to $11.87 through the first half of this fiscal year, while FCF surged 38.0% YoY!

Despite a difficult operating environment, LMT has shown little signs of slowing down as the company's fundamentals have improved in virtually every key area through a year fraught with uncertainty.

LMT's resiliency leads me to believe that the company will be announcing an 8.3% increase in its quarterly dividend from $2.40/share to $2.60/share.

This would result in a $0.80 increase in my annual forward dividend income given my single share of the stock.

Expected Dividend Increase #5: Visa (V)

Despite a difficult year for Visa (V) amid reduced consumer spending due to travel restrictions and the closure of many businesses across the world, I remain confident that V will deliver a dividend increase in the weeks ahead.

While I don't envision a teens or twenty percent plus dividend increase being announced in September as I believe V's management team and Board of Directors will be conservative in their dividend announcement, I am forecasting 10.0% increase in the quarterly dividend from $0.30/share to $0.33/share.

Across my 2 shares of V, I am forecasting a $0.24 boost in my annual forward dividend income.

Concluding Thoughts:

Even though my annual forward dividend income dropped by $20.66 as a result of dividend announcements during the month of August, these declines have mostly been offset by the deleveraging of my Robinhood margin (via dividend income) and fresh capital investments in my Capital Income Builder (CAIBX) mutual fund within my retirement account.

My annual forward dividend income heading into September is down about a percent compared to what it was at entering into August and is just under 3% off of the $1,252 annual forward dividend income record that was set earlier this year prior to the barrage of primarily COVID-19 related dividend cuts.

Fortunately, September appears as though it will be my first month where dividend announcements are positioned to propel my annual forward dividend income forward as I believe the bulk of the dividend cuts are finally behind the portfolio.

Discussion:

How was your month in terms of dividend announcements?

As always, thanks for reading and I look forward to your comments in the comment section below.

The Importance Of An FI Schedule And What Mine Would Look Like

It was a few weeks ago when I used a couple days vacation and therefore had a 4 day weekend, that I began to seriously ponder how I would structure my time in the event that I was financially independent.

As my vacation progressed, I started to realize just how important it is for my days to have at least a semblance of structure.

It would probably feel great to be FI and have unstructured days for the first few weeks initially and be mostly unproductive because I don't remember the last time that I was able to do so, which makes it a bit of a novelty to me that I would at least try for a bit.

However, I do believe that free and easy approach to FI would wear off for me after a while as I typically tend to follow the same pattern each and every weekend, whereby I balance my weekends with side hustles, media consumption, exercise, and spending time with family.

It is with that in mind, that I present my tentative daily FI schedule that I have been occasionally contemplating for the past few weeks.

FI Schedule:

10:00-11:00 AM: Wake up to no alarm clock, prepare/eat breakfast, brush teeth, etc.

11:00 AM-11:00 PM: Read several of my favorite personal finance blogs, watch various YT videos pertaining to personal finance, browse Seeking Alpha, and prepare/eat lunch

1:00-3:00 PM: Research, draft, edit, and publish a daily post for the blog

3:00-5:30 PM: Write and edit roughly half of a Seeking Alpha article on an enticing and timely dividend stock that caught my attention

5:30-7:00 PM: Exercise, shower, and prepare/eat dinner

7:00 PM-1:00 AM: Spend time with family, binge TV series, and get ready for bed

Concluding Thoughts:

While I'll readily admit that this schedule is at least a decade in advance of when I am anticipating I will reach FI and my interests are bound to change to at least some extent over the next decade, I maintain that it is never too early to begin planning what you would do when you eventually achieve financial independence.

This was an interesting activity to me because I had never thought about an FI schedule to this extent before and upon doing so, I have found that life is really open to possibilities when you aren't working 40+ hours/week at a day job.

I admittedly have barely filled the majority of my waking hours with activities I am confident I will feel the same about in 10 years (i.e. exercising and blogging/freelance writing in some capacity) upon contemplating an FI schedule, so I need to continue to work on filling this schedule with what truly drives me in life and gives me meaning to achieve the feeling of life fulfillment and fully enjoy financial independence.

Discussion:

Have you ever thought about what your schedule would potentially look like in FI?

If not, do you believe that you will eventually get into a routine when you eventually achieve financial independence based on your values and interests?

If you have thought about what your schedule would be upon achieving FI, have you achieved FI yet and did your schedule end up being relatively similar to what you thought it would be? 

As always, I appreciate your readership and welcome your comments in the comment section below!

This Action Is Depriving You Of Happiness And How You Combat It

Although the purpose of this blog primarily focuses on the logistics of achieving financial independence, I also go beyond that on occasion. After all, money is meaningless if one doesn't develop their character to paraphrase Aristotle.

What we'll be discussing in more detail today is something that all of us aim to achieve beyond simply attaining FIRE, which is happiness. It is the reason that we all live and breathe. Without even a remote chance of attaining true happiness, what would the actual point of life be?

The particular action that I often catch myself and others engaging in is the dirty deed of "wishing." While it sounds innocent to wish and wishing while taking action is actually a fine pursuit (commonly referred to as dreaming), simply wishing for something is the worst thing that one can do for both their short-term and long-term health and well-being for reasons detailed below.

Wishing Deprives You Of Happiness By Focusing On What You Don't Have

I'd be willing to wager that we all have passively wished for something, whether it be a million dollars, time to pass or rewind, etc.

The issue with those wishes is that aside from the second being impossible, (unless time travel becomes feasible, which seems unlikely) it also is impractical to wish for something without aggressively pursuing it.

As a quip to someone passively wishing something that I've heard a few times in my Midwest upbringing goes, "wish in one hand and @#$% in the other and what do you have?"

Rather than focusing on what you do have (something I have referenced in a past post), you focus on what you don't.

This action psychologically has been proven to deprive you of happiness. There's a reason that the concept of gratitude is as prevalent as it is when discussing how to attain happiness.

All That Time Spent Wishing Could Be Spent Chasing Your Dreams

As I've alluded to in another post, the best time to start chasing your dreams was yesterday, but today is the second best time, so what are you waiting for?

One of the biggest reasons that you absolutely must chase your dreams, is that the inaction and the mystery of what could have been will haunt you until your very last breath. 

It's oftentimes difficult to chase your dreams, whether that dream is to become financially independent, a successful musician, (insert your dreams here).

This is for a variety of reasons, including your own fear of "failing" (a winner is really just a loser that doesn't quit, so don't fear "failure"), your perceptions of what others will think of you (helpful hint: they're probably too busy living their own lives to care or they don't share your dream, so they'll never truly understand), or perhaps you're overwhelmed with the amount of work that it will take to achieve your dream (remember that every 1,000 mile journey begins with a single step).

In my case, I find comfort in the fact that regardless of whether or not I achieve financial independence at an early age, I'm giving everything I have to achieve that goal that I have held for many years, and that I will be better off financially, even if I fail to achieve my dream. 

When you are doing everything that you can to realize a dream as I am, all you can do is continue to work toward that dream, and reevaluate as your circumstances change.

I also have found that as you disclose your dreams to others, there may be some that try to dissuade you from pursuing that dream and there will be some that support you in the pursuit of your dream.

Some may try to dissuade you from pursuing your dream, but it is worth noting that they probably don't understand your dream precisely because it isn't their dream. 

Not everyone will understand and that is fine, so you need to work toward realizing your dream in order to eventually achieve self-actualization on Maslow's Hierarchy of Needs, which is essential to achieving happiness and living a fulfilling life.

And finally, I have found in my journey of striving for financial independence and attaining at least $20,000 in annual forward dividends to do so, it can be overwhelming at times to fathom how much dividend income that seems to be to me at this time.

The important thing that I remind myself of time and time again is that simply starting the process itself is a small victory. 

Breaking down a goal into many small and actionable steps increases the odds of achieving that goal, which is what I have done by setting various financial milestones, such as $100, $500, $1,000 in annual forward dividend income, and so on.

When you reframe your mindsets from the common fears referenced above into the latter pragmatic mindsets, chances are that you'll find yourself invigorated with a sense of purpose that allows you to fearlessly chase your dreams.

Concluding Thoughts:

Wishing isn't a bad thing by itself because desire is the first step toward achieving a goal, but it becomes a problem when you aren't taking any action toward realizing your dream. The worst thing in this life is to one day draw your last breath and realize that your life is replete with regrets.

While it can be difficult to chase your dreams, the reality is that you have no choice but to do so if you wish to live a fulfilling life with few regrets.

Once you reframe your mindset from one of self-defeat to empowerment toward realizing your dreams, you will find that working toward your dreams will become instinctive, thereby increasing your chances of living a fulfilling life.

Discussion:

Have you ever succumbed to the trap of passively wishing for something?

Do you share the same mindset that I do toward letting go of your fears of not achieving your dreams, what others will think of you, or that your dream is overwhelming?

As always, I appreciate your readership and welcome your comments in the comment section below. 

July 2020 Dividend Stock Purchases

Today, I'll be highlighting dividend stock/mutual fund purchases within my portfolio during the month of July.

As I'll discuss below, July was a continuation of relatively low deployment of investment capital for me due to the fact that I am finishing up on deleveraging from a bit of credit card debt before my promo 12 month interest free APR expires (which will soon carry a ~25% APR) and other various small debts.

As illustrated above, between my 7% gross contribution and my employer's 3% match on my contributions in my retirement account, I was able to contribute gross capital of $251.24 and $239.94 in capital net of sales charges.

These contributions allowed my Capital Income Builder (CAIBX) holdings within my retirement account to grow from 116.430 shares entering July to 120.546 shares entering into August.

Assuming $2.14 in annual forward dividends/share, the extra 4.116 shares of CAIBX boosted my annual forward dividend income by $8.81, which equates to an average net yield of 3.67%.

When also weighing the $300 of my own capital that I contributed to my Robinhood portfolio and the $60.09 in dividends that reduced my margin balance from approximately $2,100 entering July to just under $1,750 heading into August, my annual forward dividend income was increased by ~$18.00 (given the 5% cost of capital for Robinhood margin).

Concluding Thoughts:

Overall, I deployed $600.03 in capital during the month of July to investments/deleveraging Robinhood (compared to $661.35 in June) and added $26.81 in annual forward dividend income, which worked out to an average yield of 4.47% on my capital deployed.

When factoring in the impact of dividend announcements during July (D and WFC dividend cuts and an SJM dividend increase), my annual forward dividend income increased $8.81.

While it has been a slow and steady endeavor to restore my dividend income to my all-time high of $1,252 just a couple months ago, I'm now less than 2% away from doing so.

Discussion:

Did you experience any dividend cuts during July as I did with D and WFC?

How was your month in terms of dividend stock purchase activity?

As always, I appreciate your readership and look forward to reading your comments in the comment section below.