Expected Dividend Increase for November 2020

As I'm writing this blog post, we're just a couple months away from the year coming to a close. I've indicated it before in past blog posts and I will again: the speed with which this year is passing us by has not and will not cease to amaze me.

Since the only dividend increase that I'm expecting in my whole share portfolio during November is Iron Mountain and the dividend increase that I'm expecting from Hormel Foods (HRL) will be statistically insignificant, this blog post will be more of an update on dividend increases that were received in October from Visa and AbbVie, as well as the distribution cut from Energy Transfer.

Pending Dividend Increases/Expected Dividend Increases for October/Surprise Distribution Cut

Pending Increase #1: Visa (V)

I will reiterate my thoughts pertaining to Visa's (V) upcoming dividend announcement once again just as I did in my previous post of the series, which is that I'm expecting a 10.0% increase in V's quarterly dividend from $0.30/share to $0.33/share when V reports its earnings on Wednesday.

Even though this year has been difficult as a result of COVID-19 due to business closures and travel restrictions, the fact that V has plenty of room with regard to its payout ratio leaves me confident that although we won't see nearly as strong of a dividend increase as last year's 20% increase, V will still deliver a robust dividend increase all things considered.

UPDATE:

I was a bit surprised to learn that V announced a 6.7% increase in its quarterly dividend from $0.30/share to $0.32/share, which was slightly below my expectation outlined above, but I don't fault V for taking a conservative approach to their dividend increase for this year while the global economy gets back on track in the months ahead.

Across my 2 shares of V, this announcement increased my annual forward dividends by $0.16.

Missed Expected Dividend Increase #1: AbbVie (ABBV)

Given that AbbVie (ABBV) has reported earnings in November over the past couple years and has also announced its dividend increases in November, I failed to include ABBV's expected dividend increase.

ABBV has delivered fair operating results year to date, especially considering the impact of COVID-19 on both its Botox Cosmetic and Therapeutic businesses.

As a result of ABBV's operating results and the accretive impact of its acquisition of Allergan earlier this year, Yahoo Finance analysts are expecting $10.44 in EPS this year and $12.14 in EPS next year, which leaves plenty of room for a high-single digit dividend increase.

I am expecting ABBV to announce a 9.3% increase to its quarterly dividend from $1.18/share to $1.29/share when the company reports earnings this Friday.

UPDATE: 

ABBV managed to exceed my expectations as the company announced that it was hiking its quarterly dividend 10.2% from $1.18/share to $1.30/share.

Across my 6 shares of the stock, my annual forward dividends were boosted by $2.88 as a result of the above dividend announcement.

Distribution Cut: Energy Transfer (ET)

Energy Transfer announced a 50% cut to its quarterly distribution from $0.305/unit to $0.1525/unit.

While this did catch me a bit by surprise in that ET's distribution remained relatively well covered prior to the announcement of its distribution cut, I do understand the rationale for the decision to cut the distribution.

When considering the possibility of contending with penalties for operating without a permit in the case of DAPL and additional disputes pertaining to the Mariner pipeline in Pennsylvania, as well as ET's debt load, I think that despite how painful this cut was for me, it was a necessary one for the continuity of the business going forward.

It also provided a much needed reminder for me to focus more on dividend growth and capital appreciation going forward, which is why I will be emphasizing the purchase of SWANs such as PepsiCo (PEP), Johnson & Johnson (JNJ), and General Dynamics (GD) in the weeks ahead.

This distribution announcement resulted in a $35.38 plunge in my annual forward dividends/distributions across my 58 units of ET.

Expected Dividend Increase for November: Iron Mountain (IRM)

Staying on the theme of reiterating my outlined expectations in the previous post of this series, I am doubling down on my thoughts relating to Iron Mountain's (IRM) upcoming dividend announcement.

Given that IRM is working to reduce its AFFO payout ratio to a more sustainable payout ratio that is in line with its data center REIT peers, I'm not expecting a significant increase in IRM's dividend.

Due to this stated objective of IRM, I am expecting that IRM will announce a 1.1% increase in its quarterly dividend from $0.6185/share to $0.6250/share.

This announcement would increase my annual forward dividends by $0.208 across my 8 shares of IRM.

UPDATE:

I initially thought that IRM's earnings were going to be reported on October 29, but I noticed after I published this blog post that IRM will be reporting earnings on November 5.

Concluding Thoughts:

Aside from the distribution cut from ET in the final few days of this month, I was pleased with the dividend announcements this month as V and ABBV both delivered nice dividend increases, especially in light of how this year has been on the dividend announcement front. 

Despite the $3.04 uptick in annual forward dividends from V and ABBV, my annual forward dividends declined $32.34 as a result of the halving of ET's distribution.

Discussion:

Have you benefited from any first time dividend increases as I did from V's recent dividend announcement?

Has your portfolio stabilized in terms of dividend announcements as mine has over the past couple months (aside from ET's recent announcement)?

As always, I appreciate your readership and look forward to any comments that you are free to leave in the comment section below!

My Single Biggest Takeaway After 3 Years of Dividend Investing

It was just a few weeks ago that I reached a massive milestone on my dividend growth investing journey, which was the 3 year mark of when I began investing and it was almost exactly 3 years ago that I received my very first dividend ($1.35 courtesy of GPC).

It has been such an amazing journey over the past 3 years, which aside from beginning my investing career, also led to the very birth of this blog, as well as my work on Seeking Alpha.

In this blog post, I'll be discussing my biggest takeaway after 3 years of dividend investing. If you haven't read my previous two posts of this series, be sure to check out my lessons learned after one year as a dividend investor and my lessons learned after two years as a dividend investor.

If you had told me just 9 months ago that 2020 would be a year in which my portfolio sustained 8 dividend cuts and 1 dividend suspension, I sure wouldn't have believed you!

Yet that is exactly what has transpired since the dividend cuts began to trickle in this spring and into the summer as a result of the unprecedented government response with the goal of curbing the spread of COVID-19.

To date, my portfolio's net annual forward dividends have declined by $73.858 this year as a result of dividend announcements that have been increases, cuts, and suspensions. 

When considering that the weighted monthly average of my annual forward dividends is around $1,135 year to date, this works out to a 6.5% decline in my annual forward dividend income as a result of dividend announcements.

While this news would have been deflating to the me of 9 months ago had you left out the details of the extent to which the world has been locked down since early this spring, I find it absolutely amazing that even in the midst of a global pandemic and the resulting aggressive government response to combat the virus, my portfolio's net annual forward dividends declined by merely 6.5%!

Despite all of the twists and turns that this year has taken along the lines of COVID-19 and unexpected expenses on my end that somewhat limited my ability to deploy capital at the rate I intended at the beginning of this year, my net annual forward dividend income of $1,282 at the time of writing this post is an all-time high.

I would argue that out of my numerous takeaways on dividend investing the past few years, this is my most powerful yet. My portfolio experienced its worst year of dividend announcements this year and I encountered a few thousand dollars of unexpected expenses during the year, but my portfolio's net annual forward dividends is the highest it has ever been.

This really goes to show that dividend investing in the form of fresh capital investments (even when capital is somewhat limited), dividend announcements (which in any "normal" year would lead to mid-single digit growth in annual net forward dividends for my portfolio), and reinvestment can overcome even the most challenging years.

Concluding Thoughts: 

I hope that this blog post was a ringing endorsement of the effectiveness of dividend investing in an average person's ability to actively work toward achieving financial independence.

2020 has been one hell of a year to be an investor in terms of volatility, but if there is a single investing strategy that has allowed me to sleep well at night even in the midst of a global pandemic and an election year, it has been dividend investing.

Even in a year of chaos, dividend investing has been one of the few constants in my life, which is why I firmly believe dividend investing is by far the most powerful investing strategy for most regular Joes and Janes.

Discussion:

What's your biggest takeaway from 2020 as a dividend investor?

How has your dividend income fared this year from a dividend announcement standpoint?

As always, I greatly appreciate this audience's readership and welcome any comments that you may have in the comment section below.

September 2020 Dividend Stock Purchases

 As I'm taking the time to write this post, it's nearly the middle of October!

We just experienced our first overnight freeze here in Central Wisconsin a few nights ago, which means that fall is in full effect and our first snowfall is likely just a few weeks ago.

With that side note out of the way, I will be delving into the intent of this post, which is to discuss my dividend stock purchases during September.

Starting with the activity in my retirement account, I deployed $317.43 in capital between my 7% contribution, my employer's 3% contribution, and the $63.66 in dividends during the month that were reinvested.

Net of the $11.44 in sales charges, I deployed $305.99 in capital to my Capital Income Builder (CAIBX) position, which boosted my share count from 125.273 heading into September to 130.445 going into October.

This increased my annual forward dividends by $11.07, which equates to a net yield of 3.62%.

Moving to my Robinhood account, my margin fell from $1,683.91 at the beginning of September to $1,619.88 at the end of September as a result of the net dividends of $64.03 that I received in my Robinhood account during the month.

This reduction in my margin helped to pad my annual forward dividends by $3.20 when factoring in the 5% interest rate on Robinhood margin over the first $1,000.

Concluding Thoughts:

I deployed $370.02 in capital (including dividend reinvestment) during September and added $14.27 in annual forward dividend income as a result of my capital deployment, which works out to an average weighted yield of 3.86%.

When also including the dividend announcements during the month of September for my portfolio, my annual forward dividend income was up just over $17 and I came into October just over 1% away from my all-time high annual forward dividend income of $1,252.

I am continuing to make significant progress in deleveraging my Robinhood margin and anticipate that I will have all margin repaid by the end of October (aside from the $1,000 of interest free margin). My credit card debt was less than $2,000 heading into October (most of which is interest free until next March), which means that I will be able to resume my $1,500/month capital deployment schedule starting in November.

Discussion:

How was your September in terms of capital deployment?

Were you fortunate enough to not have endured a dividend cut in your portfolio's dividend announcements during September?

I appreciate your readership and look forward to replying to your comments in the comment section below!

September 2020 Dividend Income

Summer ended nearly 2 weeks ago and it has become abundantly clear as we just experienced our first overnight freeze here in Central Wisconsin.

In just a few more weeks, we'll likely be experiencing our first snowfall, which will usher in 5 months of unpredictable winter weather!

With that aside, I'll be delving into the intent of this blog post, which is to examine the dividends that I collected during the month of September.

Analysis:

During the month of September, I received $139.46 in net dividends against the $136.28 in dividends that I collected in June 2020, which represents a 2.3% quarterly growth rate.

Even more impressive, is the fact that the $139.46 in net dividends received during the month represents a 99.2% YoY growth rate compared to the $70.00 in dividends collected in September 2019.

Delving into more detail, I received $64.03 in dividends from 20 companies within my Robinhood portfolio net of the $5.00 in Robinhood Gold fees and $2.75 in Robinhood Gold margin costs. I collected $11.30 in dividends from 6 companies within my Webull portfolio. I also collected $63.66 in dividends from my CAIBX mutual fund holding within my employer-sponsored retirement account. Finally, I received $0.47 in dividends from 24 companies within my M1 Finance portfolio.

The additional $3.18 in net dividend income from June 2020 to September came as a result of the following activity within my portfolios:

The dividends that I received from my position in BP Plc (BP) declined $3.46 as a result of BP's recent dividend cut.

I also received an additional $0.04 in dividends from my position in J.M. Smucker (SJM) due to its recent dividend increase.

I received $3.28 less in dividends from my position in Wells Fargo (WFC) as a result of its recent dividend cut.

I received $6.98 in additional dividends as a result of continued contributions to my CAIBX mutual fund holding within my retirement account.

I benefited from $2.91 less in Robinhood margin costs as a result of my commitment to reducing my Robinhood margin used down to $1,000 (as the first $1,000 of margin used is interest free).

My M1 Finance dividend income fell $0.01, which was as a result of BP's dividend cut.

Concluding Thoughts:

September marked yet another record month in terms of dividend income, which is really what the harnessing of DGI in the pursuit of financial independence is all about!

Despite the challenges that COVID-19 have posed for me from a dividend standpoint and the fact that dividend announcements this year have resulted in roughly a 7% decline in my annual forward dividends, my annual forward dividends are currently at a record $1,270 at the time that I am writing this post.

This just goes to show how powerful the DGI strategy is when the three aspects of it are utilized (i.e. fresh capital investment, dividend growth, and dividend reinvestment) even in the middle of the most challenging business environment arguably in most of our lives.

I am looking forward to soon once again resuming my ~$1,500/month capital deployment schedule beginning next month, which I am confident will really begin to advance my annual forward dividends in the most meaningful way since I began investing in September 2017.

Discussion: 

How was your September in terms of dividend income?

Did your portfolio's dividend cuts show themselves for the first time in September as was the case for mine with BP and WFC?

I'm grateful for your readership and welcome your comments in the comment section below!