Expected Dividend Increases for August 2021

As I'm writing this blog post, the heat and humidity has made its way back to Central Wisconsin with high temperatures reaching into the upper 80s Fahrenheit.

Playing basketball in the driveway will be a bit less comfortable with the heat, but that's not enough to stop me from getting exercise doing something I enjoy as long as I stay hydrated!

Without further ado, I'll be discussing the dividend increases that I received during July 2021 and looking ahead to the dividend increase that I am expecting for August 2021.

Actual July 2021 Dividend Increases 

Dividend Increase #1: Wells Fargo (WFC)

While Wells Fargo fell short of my expectation of a 150% increase in the quarterly dividend from $0.10/share to $0.25/share, it still increased its dividend 100% to $0.20/share, which is a step in the right direction for the company to restore its dividend to the pre-COVID level of $0.51/share in a few more years.

I'd rather a company gradually increase its dividend back to pre-COVID levels to build a cushion and prevent another dividend cut in the future than to have it rush to restore its dividend prematurely.

Across my 8 shares of WFC, my net annual forward dividends soared $3.20 due to the company's dividend increase.

Dividend Increase #2: J.M. Smucker (SJM)

One company that really delivered beyond my wildest dreams in July was J.M. Smucker, which announced a robust 10% dividend increase in the quarterly dividend from $0.90/share to $0.99/share.

The previous two dividend increases leading up to this dividend increase were pretty anemic, so it's nice to see SJM getting back to solid dividend growth.

My net annual forward dividends advanced by $0.72 across my 2 shares as a result of the company's dividend increase.

Dividend Increase #3: National Retail Properties (NNN)

Wrapping up the dividend increases that I received for July 2021, National Retail Properties announced a dividend increase that came in below my expectations. Rather than the 3.8% increase in the quarterly dividend from $0.52/share to $0.54/share that I was predicting, NNN increased a 1.9% increase in the quarterly dividend to $0.53/share.

I was somewhat surprised by the announcement given the recovery in NNN's AFFO/share that I cited in my previous post of this series, but I'll take whatever dividend increases I can get. Perhaps NNN will make up for it with a stronger dividend increase next year.

Across my 11 shares of NNN, my net annual forward dividends increased by $0.44 due to the company's dividend increase.

Expected Dividend Announcement(s) for August 2021

Dividend Increase #1: Altria Group (MO)

The only dividend increase that I am anticipating for August is from the 3rd largest holding in my portfolio in terms of annual dividend income, which is Altria Group (MO).

Most readers are probably aware, but for those that aren't, MO recently announced that it was selling its Ste. Michelle Wine Estates business for $1.2 billion to a private equity firm to focus more on its core business.

In addition, the company expects to use its proceeds to repurchase shares at what look to be an attractive valuation, which will also reduce the company's total dividend obligation, and create a bit more leeway for the next dividend increase.

As a result, I am expecting that MO will announce a 4.7% increase in the quarterly dividend from $0.86/share to $0.90/share.

Should this dividend increase play out as expected, my net annual forward dividends would increase by $2.72 across my 17 shares as a result of the company's dividend increase.

Concluding Thoughts:

My net annual forward dividends increased by $4.36 due to dividend increases received in July 2021, which is equivalent to investing $109 in fresh capital at a 4% average yield.

Looking ahead to next month, I am expecting that MO's dividend increase will help my net annual forward dividends to increase by $2.72, which would be like investing $68 in one's own capital at a 4% average yield.

Discussion:

How was your July as it relates to dividend increases?

What companies are you anticipating you will receive dividend increases from in August?

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

My Exciting Announcement and 3 Takeaways

Over the past few weeks, and most recently in my July 2021 Dividend Stock Watch List piece, astute readers may have noticed references to The Motley Fool. That's because just over a month ago, my first piece was published by TMF on whether UnitedHealth Group's (UNH) dividend was as safe following its dividend increase as it was leading up to that dividend increase.

It wasn't long after my first article was published with TMF that I had an epiphany, which was that I could make as much money from TMF as an equity analyst/writer, if not more than I was making at my day job while also finding more meaning and fulfillment in my work.

It was with this in mind that I spent the next few weeks after my day job each day working toward brainstorming the types of content that I could pump out at TMF to blossom into an essentially full-time endeavor when combined with my Seeking Alpha content as well.

The end result was that I ended up putting in my 2 week notice at my employer on June 28th and recently completed my last day in the corporate world as an employee in the traditional sense on Friday, July 9th (I can't rule out an eventual return to the corporate world, so I'll qualify that with "at least for the foreseeable future").

Based on the fact that freelancing contributed $1.4 trillion to the U.S. economy in 2020 and that it is estimated that the majority of the U.S. workforce will be freelancers by 2027, my decision was inevitable in my opinion, especially after having enjoy working remotely most of 2020 and part of this year.

Image Source: Pexels

The First Takeaway: Life Is Too Short Not to Live on Your Terms

While there are varying viewpoints on where we go after passing away at the conclusion of our time on Earth, there is a general consensus among those of differing religious beliefs that this is the one and only life we have here on this Earth.

Because none of us know when we will draw our last breath, it can be argued that we should live our lives more in the present and not get caught up in how others perceive us or the way we live our lives.

While I didn't mind the individuals that I worked with/for and most of my job responsibilities, I have known for a while that I didn't want to be an employee forever.

Don't get me wrong; it's great to have a predictable paycheck and solid benefits that often go along with a day job. 

If I could sum up my decision in one word, it would likely be "autonomy." 

While I now have a great deal of responsibility in managing my workload and providing for myself, the upside is that I have the freedom to choose when I work and the nature of my work. In reclaiming a sense of autonomy for the first time arguably since before I attended the public school system, I'm also likely not giving up anything on the financial end with my career decision.

When factoring in my loss of benefits (worth about $160/month between my 3% employer contribution retirement match, dental, and vision insurance), drastically reduced transportation spending to the tune of roughly $100/month, my day job net income of roughly $2,200/month, and the employer portion of the self-employment taxes (net of the SE deduction) that also go along with being a freelancer, I only need to write 23 articles a month or essentially 1 a day, Monday-Friday at TMF to break even financially.

In even just a slightly optimistic scenario, I could end up making more money doing something that I enjoy with a greater degree of freedom than what I had at my day job.

Even in a pessimistic scenario, I end up making what I was making before or slightly less with more autonomy, which is something that is hard to put a price on.

The Second Takeaway: People Respond to Those Chasing Their Dreams

While many that have disclosed the pursuit of their dreams have been greeted with hostility from others in the past, that fortunately wasn't my experience when I handed my resignation letter to my employer.

Although they obviously didn't want to see me leave, they were happy for me and overwhelmingly supportive of my decision.

Perhaps that's because they have known for a couple years of my Seeking Alpha side hustle and my overall ambition to achieve FI.

At any rate, I'm glad to have spent the first 4 years of my career at my prior workplace as it was as supportive and welcoming environment that any young college grad could hope for from an employer.

The Third Takeaway: Dividend Investing and Frugality Allowed My Entrepreneurial Mindset to Take Root

In many ways, it is very difficult for most people to take a so called "leap of faith" and go from a steady paycheck as an employee to a more variable income as a freelancer or their own "boss."

Because I am fortunate enough to live with my parents and I possess frugal tendencies that come to me naturally, I didn't find it that difficult to put in my notice and transition from an employee to a freelancer.

After all, my average monthly expenses are merely $800-$900, which sets a pretty low bar for me to clear while also continuing to build my dividend stock portfolio.

The second piece of the puzzle, however, is just as important.

While I have a long ways to go before my net dividend income is able to fully cover my expenses, I have been blessed to make a tremendous amount of progress in my nearly 4 years of investing.

As of my writing on July 17th, 2021, my average monthly net dividend income of $153 covers 15-20% of my expenses off the bat.

While I don't envision the need to dip into my net dividend income to cover my expenses and I intend to reinvest that capital as well as $1,000-$2,000+/month in dividend stocks, it's reassuring to know that a nice portion of my expenses are already covered, further lowering the bar for me to make this a viable career move.  

Concluding Thoughts:

I'm very grateful to have been blessed with an interest in dividend growth investing (and financial markets in general) and FI. Without my interest in these particular topics, I'm not sure whether I would have had the financial confidence to freelance as a career in order to live life on my terms.

I look forward to producing content here on the blog on a weekly basis, Seeking Alpha on a weekly basis, and TMF on a regular basis!

Discussion: 

What are your thoughts on freelancing?

Are you a freelancer?

If so, are you a part-time freelancer with a day job or is freelancing your career as is now the case for myself?

July 2021 Dividend Stock Watch List

 As I'm writing this blog post, the temperatures here in Central Wisconsin reflect that of a pleasant summer with highs in the low-80s Fahrenheit and lows in the mid-50s Fahrenheit. Since it often gets oppressively hot and humid where I live, I'm very much enjoying the more ideal temperatures.

With that aside, I will finally be getting to the dividend stocks that are on my July 2021 watch list.

Image Source: Pexels

Dividend Stock #1: Pinnacle West (PNW)

The Arizona electric utility that provided service to roughly 1.3 million customers throughout most of Arizona in 2020, with the exceptions of half of Phoenix, the Tucson metropolitan area, and Mohave County in the northwestern part of the state (per Pinnacle West's recent 10-K) recently caught my attention.

Due to the huge influx of residents into Maricopa County's Phoenix-Mesa-Chandler metropolitan area (according to Census.gov), Pinnacle West has benefited from consistent customer base growth year after year, and this trend continued in the first quarter of this year, with 2.1% customer growth for the utility (per Pinnacle West's Q1 2021 earnings press release).

The company demonstrated its resiliency last year, growing its diluted EPS by 2.1% over 2019 in arguably the most challenging operating year in recent memory.

Looking ahead over the next 3 years, Jason Fieber pointed out in a recent post that CFRA is anticipating 5% annual earnings growth during that time (more or less in line with past growth), which should enable the company to grow its dividend at least at a 5% clip given the company's healthy mid-60% diluted EPS payout ratio in 2020 (data sourced from Dividend and Stock History page).

While Pinnacle West isn't dirt cheap by any means, the company is a fair buy when considering Yahoo Finance's average analyst estimate of $4.97 in diluted EPS for 2021 is less than 17 times this year's earnings against the current share price of $83.65 (as of July 11, 2021).

Pinnacle West's 4.0% yield (triple the S&P 500's 1.3%), mid-single digit annual earnings growth potential, and potential for slight valuation multiple expansion should translate into high-single digit to low-double digit annual total return potential over the next decade.

Dividend Stock #2: Clorox (CLX)

Given that the consumer staples company best known for its eponymous Clorox brand paid out $4.44 in dividends per share in FY 2021 and that the company is anticipating $7.45-$7.65 in adjusted EPS for the year ended June 30, 2021 (data sourced from Clorox's Q3 2021 earnings press release and Clorox's Dividend page), Clorox's adjusted EPS payout ratio for the fiscal year will be around 59% at the midpoint figure of $7.55 in adjusted EPS.

This leaves the company with a slight bit of room to expand its payout ratio, which leads me to believe that the dividend will grow ever so slightly ahead of whatever earnings growth the company can deliver in the long-term.

When taking into consideration that Clorox is trading at just under 24 times this year's earnings and that the stock's 2.6% yield is double that of the S&P 500's 1.3%, I believe that while Clorox isn't a bargain, the company is about fairly priced at the current share price of $180.88 (as of July 11, 2021). It's certainly not significantly overpriced as it was earlier this year and last year when it was well into the $200s.

Clorox's 2.6% yield in combination with 6.0-7.0% annual earnings growth and a static valuation multiple make it likely the company will deliver annual total returns around 9-10% over the next decade.

Dividend Stock #3: Kimberly Clark (KMB)

The third and final dividend stock on my watch list for July is Kimberly Clark, a large-cap consumer staple in its own right.

Kimberly Clark's reasonable payout ratio and fair operating fundamentals allowed the company to deliver a 6.5% increase to its quarterly dividend to start this year from the previous $1.07/share to $1.14/share.

Even after the solid dividend increase, Kimberly Clark's adjusted EPS payout ratio is positioned to be around 61% at the midpoint of its $7.40-$7.55 guidance for 2021, which strikes a nice balance between rewarding shareholders with immediate income and also retaining enough earnings to invest in growing the business.

Factoring in that Kimberly Clark is trading at 18 times this year's midpoint adjusted EPS and the 3.5% dividend yield is nearly triple that of the S&P 500's 1.3% (based on the $135.02 share price as of July 11, 2021), I believe that Kimberly Clark is another business trading right around fair value.

Kimberly Clark's 3.5% yield and 5.0-6.0% annual earnings growth make it a safe income play with dividend growth that will likely outpace inflation in the years ahead, which make it a solid buy in my opinion.

Concluding Thoughts:

Since I have one week of earned and unused vacation pay from my day job coming my way, as well as my income from my Seeking Alpha and Motley Fool side hustles, I anticipate that I will have over $3,000 in capital to invest during July 2021.

I'm very excited to deploy my capital into the 3 businesses above, as well as several others to advance my net annual dividends to new heights. I anticipate that I will be investing over $3,000 in capital at an average weighted net yield of 3.5% in July, which would take my net annual forward dividends from about $1,780 to begin the month and just under $1,900 to head into August.

Discussion:

Are any of PNW, CLX, or KMB on your watch list for this month?

If not, what dividend stocks are on your watch list at this time?

Thanks for reading and I look forward to your comments in the comment section below!

June 2021 Dividend Income

 As I'm writing this blog post, the 4th of July is just two days away and there are just 182 days left in 2021. Can you believe we're closer to 2022 than we are to 2020?!

Moving to the intent of this post, I will be discussing my dividend income for the month of June 2021. 

Analysis:

During the month of June 2021, I received a record $197.54 in net dividends against the $165.45 in net dividends collected in March 2021, which represents a 19.4% quarterly growth rate.

June 2021's net dividends are a staggering 45.0% higher than the $136.28 in net dividends received in June 2020!

Breaking things down by account, I received $117.36 in net dividends from 29 companies in my Robinhood account, $67.48 in net dividends from the Capital Income Builder (CAIBX) position within my retirement account, $12.24 in net dividends from 6 companies in my Webull account, and $0.46 in net dividends from 23 companies within my M1 Finance account.

The $32.09 increase in my net dividends collected from March 2021 to June 2021 was due to the following activity within my portfolios:

I received an additional $5.41 in net dividends within my CAIBX account as a result of a higher share count from March 2021 to June 2021.

My net dividends received from UnitedHealth Group (UNH) were $1.65 higher due to the company's dividend increase last month and my purchase of a share of the stock in my Robinhood account last month.

I also collected an additional $0.16 in net dividends from my stake in PepsiCo (PEP) within my Robinhood account due to the company's dividend increase.

My net dividends received from T. Rowe Price Group (TROW) were $4.32 higher in my Robinhood account due to the stock paying me my first dividend during June after I initiated a position in April.

I collected an extra $4.13 in net dividends from BlackRock (BLK) due to my decision to open a position within my Robinhood account during April.

My net dividends received from Royal Dutch Shell (RDS.B) edged $0.12 higher as a result of the stock's recent dividend increase.

I also collected an additional $1.15 in net dividends from my Prudential Financial (PRU) position between my Robinhood and Webull accounts due to an addition within my Robinhood account.

My stake in Viatris (VTRS) paid its first dividend in June in my Robinhood account, which drove my net dividends higher by $1.21 during the month.

I received an extra $1.02 in net dividends from L3Harris Technologies (LHX) in June, which was a result of my recent purchase of an additional share of the stock within my Robinhood account.

My net dividends collected from Realty Income (O) were boosted $0.95 due to my purchase of 4 extra shares of the stock in my Robinhood account and the recent dividend increase.

I received an additional $1.68 in net dividends from Microsoft (MSFT) as a result of my decision to open a starter position within my Robinhood account in the stock back in May.

My net dividends collected from International Business Machines (IBM) inched up $0.04 in my Robinhood account due to the company's recent dividend increase.

I received an extra $1.21 in net dividends from Johnson & Johnson (JNJ) within my Robinhood account, which was a result of the company's recent dividend increase and my purchase of another share of the stock recently.

My net dividends collected from Southern Company (SO) were $0.10 higher due to the company's recent dividend increase in my Robinhood account.

I received a $0.78 increase in my net dividends from Pfizer (PFE), which was a result of my purchase of 2 additional shares recently within my Robinhood account.

My net dividends collected from WEC Energy Group (WEC) were boosted by $0.68 due to my recent purchase of another share of the stock in my Robinhood account.

I received an additional $7.53 in net dividends as a result of the elimination of my Robinhood Gold and margin expenses.

Finally, my net dividends collected from my M1 Finance account were $0.05 lower due to the timing of dividend payments from Fastenal (FAST), Norfolk Southern (NSC), and Starbucks (SBUX).

Concluding Thoughts:

My portfolio's net dividend income continued its momentum in June 2021, with a 19.4% quarterly growth rate and a year-over-year growth rate of 45.0%.

While the $747.70 in net dividends that I have collected through the first 6 months of 2021 represent a 51.0% year-over-year growth rate compared to the $495.16 in net dividends received through the first 6 months of 2020, I am on track to fall roughly $100 short of collecting $1,800 in net dividends this year at the rate I am going, assuming a 51.0% growth rate over 2020's $1,127.05 net dividend total.

Needless to say, I will need to step it up a bit in the remaining months of 2021 to meet my goal!

Discussion:

How was your June in terms of dividend income?

Did you receive any dividends for the first time as I did with TROW, BLK, VTRS, and MSFT?

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