February 2022 Dividend Stock Watch List

As I'm writing this blog post, we're already more than two weeks into 2022. The temperatures have largely remained frigid here in Central Wisconsin, which is backed up by sub-zero Fahrenheit low temperatures.

With that out of the way, I'm going to go over a few dividend stocks that I'll be observing heading into and throughout February.

Image Source: Pexels

Dividend Stock #1: Duke Energy (DUK)

The first stock that I'm interested in buying for February is the large utility Duke Energy. While I own a fractional share of DUK in my M1 Finance portfolio, I don't yet own whole shares of the stock. 

And based on the fact that DUK is trading at a forward P/E ratio of just under 19 at the current $104 share price (as of January 16, 2022), the stock is trading at a reasonable price. This is the case with the stock's 4%+ annual earnings growth that analysts are forecasting over the next five years.

Given that DUK paid $3.90 in dividends per share in 2021 and is expected to generate $5.24 in EPS for the year, this equates to a manageable 74.4% payout ratio. This should allow DUK to deliver 4% annual dividend growth, which is an attractive combo with the stock's 3.8% dividend yield. DUK has raised its dividend for 17 years straight, which makes it a Dividend Contender.

In addition, DUK maintains a reasonably healthy balance sheet. That's because the company's interest coverage ratio of 2.9 through the first three quarters of 2021 leaves it with a buffer to withstand a temporary downturn in operating fundamentals (data sourced from page 16 of DUK's Q3 2021 earnings press release).

Dividend Stock #2: Coca-Cola (KO)

The second stock that I'm keeping tabs on for next month is the mega-cap beverage maker Coca-Cola, which I indirectly own in my retirement account via the Capital Income Builder (CAIBX) mutual fund. As I explained in my recent Motley Fool article, KO has plenty of room for growth in developing markets. That's why analysts forecast that KO will deliver 10% annual earnings growth over the next five years.

KO paid $1.68 in dividends per share in 2021, which works out to a 73.4% payout ratio against the $2.29 in adjusted diluted EPS that analysts anticipate in 2021. When considering the high expectations for earnings growth in the medium term, I wouldn't be surprised to see 6% to 7% annual dividend growth. This would also enable KO to lower its payout ratio and retain more capital to generate future growth for shareholders.

And KO's 2.7% dividend yield can be purchased at a rational forward P/E ratio of 25 at the current $61 share price (as of January 16, 2022). Simply put, KO is a classic dividend growth stock with a track record as a Dividend King. Since the stock is steadily growing its earnings and the payout ratio is on the high end of sustainable, KO should be able to build on its reputation as a Dividend King going forward.

Dividend Stock #3: Mastercard (MA)

The third and final stock that I'll be following in February is the payments processing stock Mastercard. As I explained in a Motley Fool article on the stock last month, COVID-19 should actually accelerate MA's growth from 22% annually over the past five years to 26% in the next five years. That's because more consumers have been interested in new payment methods as a result of the pandemic.

MA paid dividends per share of $1.76 in 2021. Compared to the $8.27 in adjusted diluted EPS that is expected for the year, this is equivalent to a 21.3% dividend payout ratio. This payout ratio should give the stock the flexibility to continue its 10 year dividend growth stock in the future. MA's 0.5% dividend yield isn't very high, but the potential for double-digit annual dividend growth makes up for the low yield.

MA also boasts a nearly flawless balance sheet, which is another positive for shareholders. And the stock is priced at a forward P/E ratio of 35 and a $371 share price (as of January 16, 2022), which appears to be a fair price for the stock's quality.

Concluding Thoughts:

Heading into February, I anticipate that I will once again be able to invest over $2,000 into these high-quality dividend growth stocks, among others as well. I'm looking forward to continuing to put capital to work in many more wonderful stocks as the year progresses.

Discussion:

Are any of DUK, KO, or MA on your watch list for February?

If not, what stocks are you interested in for the month?

I appreciate your readership and welcome your comments below!

December 2021 Dividend Stock Purchases

As I'm writing this blog post, it's hard to believe that we're nearly two weeks into 2022. The temperatures remain frigid, with the lows bottoming out in the double-digits Fahrenheit below zero in Central Wisconsin.

With that aside, let's look at my dividend stock purchases that I completed to close out the last month of 2021.

Starting with my retirement account, the net dividends that I received from my Capital Income Builder (CAIBX) mutual fund holding within my retirement account were reinvested. As the quarters progress, this will be the only way that my share count of CAIBX continues to grow since I left the job that sponsored my retirement plan six months ago to write full-time. 

When also factoring in the $10 annual fee for 2022 that was deducted from my CAIBX share balance last month, my share balance grew 2.444 shares from 176.015 to 178.459. Assuming net annual dividends of $2.13 per share, this led my net annual forward dividends $5.21 higher. And based on the $166.90 that was reinvested after the $10 annual fee at an average cost of $68.32 per share, this works out to a 3.12% net dividend yield.

Moving to my Robinhood account, I started off the month by purchasing 13 shares of Alliant Energy (LNT) at an average cost of $58.85 per share. My rationale for this purchase was outlined in my December 2021 Dividend Stock Watch List post a while back, which included LNT's dividend growth track record, strong balance sheet, and reasonable valuation. Given the $20.93 in net annual forward dividends that were added due to my purchase, my net dividend yield was 2.74% on this investment. And with a 6.2% dividend raise that will officially be announced this month, my yield on cost will go moderately higher in the near future.

I also added another share to my position in Crown Castle International (CCI) at a cost of $193.20. As I discussed in a Motley Fool article from a couple of months ago, I believe CCI is a stock with secular growth catalysts and strong dividend growth potential at a fair valuation. This dividend stock purchase boosted my net annual forward dividends by $5.88, which equates to a net yield of 3.04%.

Another stock that I added to in December was WEC Energy Group (WEC). I purchased another share of the stock at a share price of $93.75. This was based on the investment thesis that the essential nature of WEC's services and its low dividend payout ratio will make it a dividend stock that will pay investors for life. Based on the new annualized dividend per share of $2.91, this worked out to a net yield of 3.10%.

I also purchased three shares of Hershey (HSY) during the month at an average cost of $189.83 a share, which was my first whole share purchase of the stock. This decision can be explained by HSY's dividend growth track record, solid financial footing, and rational valuation, which I also noted in my December 2021 Dividend Stock Watch List post. Against the $10.81 in net annual forward dividends that were added to my portfolio, this translates into a 1.90% dividend yield.

Another position that I added to in December was the Dividend King Leggett & Platt (LEG). I upped my position in LEG by buying four shares of the stock at an average cost of $39.98 per share. In terms of quality, you can't get much better than LEG. And at a forward P/E ratio of barely 13 ($3.03 average 2022 EPS estimate), this was too much of a bargain to pass up. Considering the $6.72 boost in my net annual forward dividends, this works out to a net yield of 4.20%.

The final dividend stock purchase that I made within my Robinhood portfolio was the nutrition and weight loss company Medifast (MED). I opened a three share position in the stock at an average cost of $204.50 per share. At my purchase price, MED was trading at a forward P/E ratio of just over 12. Stacked against analysts' annual earnings growth estimate of 20% over the next five years, this was a classic growth at a reasonable price stock to buy. And what makes the stock even better is that it has no long-term debt. This should allow MED to build on what has been a short, yet impressive dividend growth track record. Given that my purchase of MED added $17.04 in net annual forward dividends, my net yield was 2.78%.

The first and only dividend stock that I bought in my Webull account was one unit of Enterprise Products Partners (EPD) at a cost of $21.58. A look at my portfolio reveals that I am a huge believer in EPD, which is my largest investment holding in terms of the annual passive income that it provides to me. The short and sweet explanation is that EPD is arguably the best business in its industry. What more proof does one need than the company's 20+ consecutive years of distribution increases? The $1.80 in net annual forward distributions that this purchase added to my portfolio worked out to an 8.34% net yield.

Concluding Thoughts:

During the month of December, I put $2,583.33 in capital to work when including reinvested dividends. This investment activity is what allowed me to grow my net annual forward dividends by $71.30 during the month. This equates to an average weighted dividend yield of 2.76%, which should bode very well for the future dividend growth of my portfolio. 

When also considering the $17.98 in dividend increases that I received during the month, my net annual forward dividends advanced from more than $2,205 entering the month to $2,295 heading into January 2022.

Discussion:

How was your December 2021 in terms of capital deployment?

Did you open any positions in your portfolio as I did with LNT, HSY, and MED?

As usual, thanks for reading and feel free to share your thoughts in the comment section!

December 2021 Dividend Income

As I'm writing this blog post, we're a couple of days into 2022. And based on the wind chill dipping down into the single-digits below 0 degrees Fahrenheit, the time of the year is certainly beginning to show here in Central Wisconsin.

With December 2021 in the books, it's now time to look at how much my portfolio generated for me in net dividends during the month. As I alluded to in my previous blog post, I received a record in net dividends (including the $10 annual fee for my Capital Income Builder mutual fund).

But just how much of a record was December 2021 for the portfolio? Let's dive in to find out.

Analysis:

During the month of December 2021, I collected a record $353.38 in net dividends. Against the previous record of $229.54 set in September 2021, this represents a 54% quarterly growth rate.

And on a year-over-year basis, my net dividends received in December 2021 skyrocketed 113.4% over December 2020's $165.60 in net dividends.

More specifically, I collected $172.48 in net dividends from 36 stocks within my Robinhood portfolio. I also received $166.90 in net dividends from my Capital Income Builder (CAIBX) mutual fund in the retirement account sponsored by my previous employer. In addition, I collected $13.55 in net dividends within my Webull portfolio from 6 stocks. Finally, I received $0.45 in net dividends in my M1 Finance account from 22 stocks.

The $123.84 increase in net dividends collected from September 2021 to December 2021 was due to the following activity within my portfolio:

Beginning in my retirement account, my net dividends received from CAIBX in December were $96.90 higher than in September because of both a higher share count ($0.41 of the difference) and the special dividend ($96.49 of the boost).

My net dividends collected from Broadcom (AVGO) were boosted by $1.50 within my Robinhood and Webull portfolios, which was the result of the recent dividend hike in the quarterly dividend from the stock.

I received another $0.90 in net dividends from Simon Property Group (SPG) in my Robinhood account, which was due to the payout increase in the quarterly dividend to $1.65 per share. 

My net dividends collected from Crown Castle International (CCI) were $5.88 higher within my Robinhood portfolio, which was the result of my purchase of the stock made in November and the first dividend I received from the stock.

I received another $2.92 in net dividends from Main Street Capital (MAIN) in my Robinhood account. This was a combination of a higher share count from my additions in November, an increase in the regular monthly dividend, and the stock's $0.10 per share supplemental dividend.

My net dividends collected from Lockheed Martin (LMT) were boosted by $3.40 within my Webull and Robinhood portfolios, which was both the dividend raise announced in September and an extra share that I purchased in September.

I received $3.57 in net dividends from Raytheon Technologies (RTX) in my Robinhood account, which was the first dividend I received since purchasing the stock last November. 

My net dividends collected from McDonald's (MCD) were $4.14 within my Robinhood portfolio, which was the first time I received a payment from the stock since buying it in October.

I also received an extra $0.14 from Realty Income (O) in my Robinhood portfolio, which was due to the increase in the monthly payout back in November.

My net dividends collected from KeyCorp (KEY) were boosted by $0.22 within my Robinhood account, which was the result of the dividend hike announced in November.

I received another $1.92 in net dividends from American Electric Power (AEP) in my Robinhood portfolio, which was due to the dividend increase announced in October and my purchase of two more shares in October.

My net dividends collected from Exxon Mobil (XOM) increased $0.11 within my Robinhood account, which was also the result of the dividend increase in October.

I also received an extra $0.18 in net dividends from Microsoft (MSFT) in my Robinhood portfolio, which was due to the payout hike in September.

My net dividends collected from Amgen (AMGN) were boosted by $1.76 within my Robinhood account, which was the result of my purchase of an additional share in August.

I received another $1.06 in net dividends from Johnson & Johnson (JNJ) in my Robinhood portfolio, which was due to my purchase of an extra share in November.

My net dividends collected from Visa (V) were boosted by $0.49 within my Robinhood and Webull accounts, which was the result of the dividend hike in September and my purchase of another share in September.

I received an extra $4.35 in net dividends from Cummins (CMI) in my Robinhood portfolio, which was due to opening a position back in October. 

My net dividends collected from J.M. Smucker (SJM) were $0.99 higher within my Robinhood account, which was a result of my share purchase in August.

I received $3.25 less in net dividends from PepsiCo (PEP) in my Robinhood and M1 Finance portfolios, which was due to the timing of the dividend payment.

My net dividends collected from Pinnacle West Capital (PNW) was $0.14 higher within my Robinhood account, which was the result of the recent dividend increase.

I received $3.48 less in net dividends from Digital Realty Trust (DLR) in my Robinhood portfolio, which was due to the timing of the dividend payment.

Concluding Thoughts:

Overall, I'm very pleased with the $1,823.11 in net dividends that my portfolio generated in 2021. I'm looking forward to the next year of deploying fresh capital, reinvesting dividends, and receiving raises from my holdings.

Since I received so much in special dividends in December 2021, I'm expecting a moderate drop-off in net dividends received in March 2022. But at the rate I'm going, I wouldn't be surprised if my portfolio were to surpass $450 in net dividends in December 2022.

Discussion:

How was your December 2021?

Did you receive first-time dividends like I did from CCI, RTX, MCD, and CMI?

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

Review of 2021 Financial/Personal Goals

As I'm writing this blog post, today is the last day of 2021. Other than the temperature being in the low-single-digits Fahrenheit and the several inches of snow cover here in Central Wisconsin, it would be hard to tell that we're just hours away from January 2022. The year went by so very fast and was filled with big decisions like quitting my day job to focus on writing for The Motley Fool and Seeking Alpha.

Since it's the end of the year, that brings me to whether I accomplished my financial and personal goals for the year. Let's dive in!

Image Source: My portfolio

2021 Financial Goals:

1. Collect at least $1,800 in net dividends during the year - Success - $1,823.11

In a bit of a spoiler alert for my December 2021 dividend income, I received a record $353.38 in net dividends/special dividends. I'll save the details behind that figure for my monthly dividend income post, but that brought me to $1,823.11 in net dividends collected during the year. 

In hindsight, my goal to receive at least $1,800 in net dividends for the years was just within reach. This signals that I was on the mark between setting both a reasonable and ambitious goal.

2. End 2021 with at least $2,200 in net annual forward dividends - Success - $2,295.05

I also achieved my second goal to end 2021 with at least $2,200 in net annual forward dividends, which is evidenced by my screenshot above in which my portfolio will produce $2,295.05 in net annual forward dividends as of today heading into 2022. Since I only beat my goal by a few percent, I would argue that this was also a goal that struck a good balance between being lofty and attainable. 

The single greatest factor that helped me to reach my goal was consistently deploying capital. Because I deployed over $2,000 in capital in 10 of the 12 months in 2021, I was able to invest more than $27,000 for the year!

3. Amass at least $55,000 in investments/end 2021 with a net worth of at least $65,000 - Success - $70,700 in investments and $84,500 in net worth

Due to my commitment to capital deployment for the year and the huge bull market, I was able to crush my goals of amassing at least $55,000 in investments and ending the year with a net worth of at least $65,000.

Financially, 2021 was a year beyond my wildest dreams for this point in my life. With each passing year, I become more motivated to work even harder and smarter to help my portfolio be all that I know it can be.

2021 Personal Goals:

1. Publish at least 1 blog post each week - Success - 52 blog posts published during the year

Once again, I was able to achieve my goal of writing one blog post each week. Looking ahead to 2022, I'm going to keep my goal the same as it has been for years now. That's because I believe writing one blog post each week for this site is enough content for me to properly document my journey to financial independence for myself and posterity.

2. Publish 1 Seeking Alpha article each week - Success - 59 articles published for the year

I also was able to exceed my goal of publishing 1 Seeking Alpha article each week. There were several weeks during the year that I had 2 Seeking Alpha articles published, which explains how 59 of my articles were published during 2021.

Similar to blog posts, 1 Seeking Alpha article each week is a nice balance for me. That's why I'm running the goal back for 2022.

3. End 2021 with 8,000+ followers on Seeking Alpha - Fail - 5,862 followers

Unfortunately, I was unable to run the table with my financial and personal goals due to falling short of 8,000+ followers on Seeking Alpha. But to be fair, I did gain over 800 followers over the end of last year on the articles that I published. It wasn't entirely surprising that I failed to reach 8,000 Seeking Alpha followers. I wasn't exactly covering popular tickers for most of the year because I find that too many articles are published on certain stocks and I enjoy researching those less covered stocks.

Overall, I believe I did pretty well with my personal goals for the year. Going 2 for 3 on your goals is just a sign that you're pushing yourself, but also being realistic about those goals.

Concluding Thoughts:

I'm really thrilled to have attained all but 1 of my goals for 2021. The year in general was great for me and I look forward to giving 2022 my best shot as well. That's all I can do, so I'll let the cards fall where they may!

Discussion:

What were your goals for 2021? 

Were you able to accomplish them too easily? 

Did they prove to be too ambitious?

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