March 2022 Dividend Stock Watch List

As I'm writing this blog post, we're a couple of weeks into February. It's hard to believe that we're already over six weeks into 2022.

With that aside, I'm going to discuss a few dividend stocks that I'll be watching in the weeks ahead.

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Dividend Stock #1: U.S. Bancorp (USB)

The first stock that I'm considering purchasing next month is the regional bank U.S. Bancorp. There are a few reasons why USB is on my watch list, which I discussed in a recent Motley Fool article.

First, USB is trading at a current year P/E ratio of 13.5. This is a rational valuation in my opinion. USB's price to tangible book value of 2.5 is also moderately lower than its 13-year median of 3.1, which is despite the fact that its fundamentals are arguably as strong as ever.

Second, USB's earnings are going to be propelled higher by interest rate hikes (i.e., higher net interest income) and growth in its payments business. That's why analysts are forecasting 10% annual earnings growth over the next five years.

Third, USB offers a 3.1% dividend yield at its current $59 share price (as of February 15, 2022). This is well above the S&P 500's 1.4% dividend yield, but USB paid out only just over a third of its earnings last year.

Dividend Stock #2: Air Products & Chemicals (APD)

The second stock that I am thinking about buying in March is the industrial gases stock Air Products & Chemicals (APD). As I explained in a Motley Fool article, there are several reasons that I'm looking at APD right now.

APD has raised its dividend for 40 consecutive years. You'd think that with four decades of dividend increases, APD's dividend growth would significantly decelerate by now. But the most recent 8% raise isn't that far below the 10% clip since 2014. 

APD's earnings are expected to compound at 11% each year over the next five years, which should power at least high-single-digit dividend increases in the medium-term as well. For a 2.6% dividend yield, this is an attractive level of dividend growth potential.

And with a P/E ratio of 24 for this year at the present $248 share price (as of February 15, 2022), APD is fairly priced in my opinion for its quality and growth prospects.

Dividend Stock #3: NextEra Energy (NEE)

The third and final stock that I'm contemplating purchasing next month is NextEra Energy (NEE). Those looking for more in-depth reasoning for why I like NEE can check out the same article that I linked in the APD section above, but here are the basic reasons. 

Like APD, NEE is a Dividend Aristocrat. NEE has 26 years of dividend growth on its resume, which looks primed to continue. That's because analysts anticipate NEE's earnings will grow 9% annually through the next five years.

This should also allow for high-single-digit annual dividend growth, which is enticing when paired with NEE's 2% dividend yield. 

NEE at $75 a share trades at a P/E ratio just under 27, which isn't an unreasonably high valuation for a stock of its quality.

Concluding Thoughts:

Going into March, I expect that I'll be able to put $2,600 in capital to work (including reinvested dividends). Based on the stocks on my watch list, I'll probably be able to add somewhere in the ballpark of $75 to my net annual forward dividends from fresh capital and dividend reinvestment alone. That's not even counting the fact that I'm expecting 6 dividend increases next month, which will add even more to my net annual forward dividend income.

All in all, I'm pleased with the direction the portfolio is heading and excited to keep building it up.

Discussion:

Are any of USB, APD, or NEE on your watch list for March?

If not, what stocks are you considering buying?

As usual, thanks for reading and I look forward to your comments in the section below!

January 2022 Dividend Stock Purchases

As I'm writing this blog post, we're halfway through February already. The temperatures are wildly swinging from just above freezing one day to well below freezing the next day.

With the month of January well in the books, I'll go over my dividend stock purchases and sales for the month.

I purchased four shares of 3M (MMM) at an average cost of $177.81 a share. As I outlined in my January 2022 Dividend Stock Watch List post, 3M is a reasonably valued, high-yield dividend stock with a relatively strong balance sheet. Given that I added $23.68 in net annual forward dividends from this purchase activity, my average net yield was 3.33%.

I also opened a five share position in Allstate (ALL) at an average cost of $122.77 a share. I noted in my January 2022 Dividend Stock Watch List post that ALL offers a market-beating dividend yield and has a massive investment portfolio that will benefit from upcoming interest rate hikes. These dividend stock purchases boosted my net annual forward dividends by $16.20, which works out to a weighted average net yield of 2.64%.

I purchased three shares of Union Pacific (UNP) at an average cost of $250.92 a share. As I discussed in my January 2022 Dividend Stock Watch List post, UNP is essential to the modern economy. Not to mention the stock provides investors with a market-topping dividend yield at a fair valuation. Since I added $14.16 in net annual forward dividends from these buys, my average net yield was 1.88%.

I also bought another share of Medifast (MED) at a cost of $220.92. As I explained in my December 2021 Dividend Stock Purchases post, MED offers investors tremendous annual earnings/dividend growth at a bargain valuation. My net annual forward dividends were boosted by $5.68 as a result of my dividend stock purchases, which equates to a weighted average net yield of 2.57%.

I purchased an extra share of Texas Instruments (TXN) at a cost of $182.33. I added to my position in TXN for the same reasons that I started the position. As I highlighted in my November 2021 Dividend Stock Purchases post, TXN is a top-notch dividend growth stock trading at a fair valuation. My net annual forward dividends advanced $4.60 higher as a result of my purchase, which works out to a 2.52% average net yield.

I sold off several of my positions in stocks including Orion Office REIT (ONL), Equitrans Midstream (ETRN), Ventas (VTR), and PPL Corp (PPL). 

I closed my position in ONL because it simply came from the spin-off of Realty Income (O) and I didn't see the value in keeping/expanding my position in the stock. 

ETRN recently encountered yet another setback in bringing its Mountain Valley Pipeline (MVP) into service, which has been going on for several years now. Because of all of the regulatory setbacks, this was the last straw for me and I lost hope that MVP will ever be placed into service. This was central to my investment thesis when I bought in years ago. 

I sold VTR because the stock cut its dividend nearly two years ago and hasn't made any effort to restore its dividend yet. I'm willing to give a dividend stock a chance after a cut or suspension, but even I run out of patience at some point. That's what happened here.

I also sold PPL because the dividend growth has decelerated greatly the last few years and a dividend cut is likely to occur due to the sale of its operations in the United Kingdom.

All told, these four sales raised $696.67 in capital. My net annual forward dividends dropped by $31.88 due to these sales.

I bought another five shares of Viatris (VTRS) at an average cost of $14.63 a share. I added to my position in VTRS because of the recent dividend hike and absurdly cheap valuation. Considering the $2.40 in net annual forward dividends that I added from this purchase, my weighted average net yield was 3.28%.

I also added a share of American Water Works (AWK) at an average cost of $164.13. I further built my AWK position because of the low payout ratio and exceptional earnings growth prospects. My net annual forward dividends grew by $2.41 as a result of my purchase, which works out to an average net yield of 1.47%.

I deployed a portion of my sales proceeds into Medical Properties Trust (MPW) because of its solid dividend growth track record, status as the second-largest non-government owner of hospitals in the world, and attractive valuation. I purchased 16 shares of MPW at an average cost of $22.26 a share. My net annual forward dividends were boosted by $17.92, which equates to a weighted average net yield of 5.03%.

I also deployed my sales proceeds into Kinder Morgan (KMI), which offers a safe and growing dividend at an enticing valuation. I purchased 20 shares of KMI at an average cost of $17.20 a share. My net annual forward dividends advanced $22.20 higher, which works out to an average net yield of 6.45%.

Concluding Thoughts:

Factoring out the capital that I redeployed from the stocks I sold to MPW and KMI, I invested $2,721.87. Since I added $77.37 in net annual forward dividends from this capital deployment, my average weighted net yield was 2.84% in January. Adding in the $15.08 in extra net annual forward dividends from dividend increases during the month, my net annual forward dividends surged from $2,295 to start the month to just under $2,390 heading into February.

Discussion:

How did your January 2022 go for capital deployment?

Did you open any positions in your portfolio like I did with ALL, MPW, and KMI? Did you close any positions like I did with ETRN, ONL, PPL, and VTR?

As always, I appreciate your readership and look forward to your thoughts in the comment section!

January 2022 Dividend Income

As I'm writing this blog post, it's already early February. After weeks of mostly frigid temperatures, the next week will bring upper-30 degree Fahrenheit highs. 

Now that January is in the books, I'll turn my attention to dividend income for the month. 

During January 2022, I received $128.80 in net dividends. This equates to a 12.4% quarterly growth rate compared to the $114.59 in net dividends that my portfolio generated in October 2021. 

Furthermore, my net dividends increased 60.5% year-over-year against the $80.26 in net dividends that I collected in January 2021.

Digging in further, I received $118.44 in net dividends in my Robinhood account from 24 stocks. I collected $10.09 in net dividends within my Webull portfolio from five stocks. Third, I received $0.27 in net dividends from 12 stocks in my M1 Finance account. 

The following activity within my portfolio led to a $14.21 rise in my net dividends from October 2021 to January 2022:

I collected an extra $0.13 in net dividends from Realty Income (O) within my Robinhood account, which was due to the dividend increase announced last November.

My net dividends received from Main Street Capital (MAIN) were $0.94 higher in my Robinhood portfolio, which was the result of the payout raise last November and four shares of stock that I purchased during that month. 

I collected an additional $0.03 in net dividends from W.P. Carey (WPC) within my Robinhood account, which was due to the dividend increase declared last December.

As an aside, my net dividends received from Medtronic (MDT) in my Robinhood portfolio were split up into two dividend payments for some reason - one for $2.36 and one for $0.79. The $3.15 in net dividends collected from MDT were the same as in October 2021.

My net dividends collected from Digital Realty Trust (DLR) were $3.48 higher within my Robinhood account, which was due to the timing of DLR's dividend payment. 

I received an extra $0.24 in net dividends from American Tower (AMT) in my Robinhood portfolio, which was the result of the payout raise last December.

My net dividends collected from GlaxoSmithKline (GSK) declined $0.01 within my Robinhood account, which was due to the varying payouts of the stock.

I received a $4.90 boost in net dividends from Omnicom (OMC) in my Robinhood portfolio, which was the result of the dividend stock purchases made late last year.

My net dividends collected from Merck (MRK) increased $0.97 within my Robinhood account, which was due to the purchase of an additional share last September and the dividend increase last November.

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

My net dividends collected from Eastman Chemical (EMN) were $0.28 higher within my Robinhood account, which was due to the payout raise last December.

Concluding Thoughts:

My net dividends are consistently growing from quarter to quarter. And given my consistent $2,000 to $3,000 deployment of capital each month, my net dividends should continue to grow going forward.

Discussion:

How was your dividend income in January 2022?

Did you receive any dividends for the first time in January as I did with OMC?

As usual, thanks for reading and feel free to share your thoughts in the comments below.

Expected Dividend Increases for February 2022

As I'm writing this blog post, January is just a few days away from wrapping up. This should hopefully mean that the days of sub-zero Fahrenheit temperatures will soon be coming to an end here in Central Wisconsin.

Since we're basically at the end of the month, I'm going to be going over dividend increases in the portfolio that occurred in January 2022. Overall, there were quite a few surprise dividend increases this month (and there was the surprise that Realty Income kept its monthly dividend at $0.2465 per share when I was expecting a slight raise). I'm also going to be looking ahead to the dozen dividend increases that I'm expecting in February 2022. Yes, I'm actually projecting 12 dividend increases next month!

Actual Dividend Increases for January 2022

Dividend Increase #1: BlackRock (BLK)

BlackRock announced an 18.2% increase in its quarterly dividend from $4.13 to $4.88 per share. For the sake of conciseness, BLK's raise more than doubled my expectations. But this really shouldn't be much of a surprise given that BLK is an absolute world-class business.

My net annual forward dividends soared $3.00 across my single share of the stock as a result of the announcement.

Dividend Increase #2: Alliant Energy (LNT)

Just as Alliant Energy alluded to and I outlined in my previous post of this series, the company made its 6.2% increase in its quarterly dividend from $0.4025 to $0.4275 per share official in January. This is nothing new for the electric and natural gas utility headquartered in my home state. LNT consistently hands out 6% to 7% dividend raises.

Across my 13 shares of LNT, my net annual forward dividends increased $1.30 due to the dividend increase.

Dividend Increase #3: Kimberly Clark (KMB)

Kimberly Clark announced a 1.8% increase in its quarterly dividend from $1.14 to $1.16 per share, which came in below my expectations. The good news is that this was KMB's 50th straight year of dividend increases, which will now make it a Dividend King.

My net annual forward dividends edged $0.32 higher across my four shares of KMB as a result of the dividend announcement.

Dividend Increase #4: Wells Fargo (WFC)

The first dividend increase that came as a surprise to me was from Wells Fargo, which hiked its quarterly dividend by 25% from $0.20 to $0.25 per share. While WFC has a ways to go before it returns to its pre-COVID dividend of $0.51 per share, the company is strongly trending in the right direction. I'm looking forward to another whopper of a dividend hike in July from WFC.

Across my eight shares of WFC, my net annual forward dividends surged $1.60 higher due to the dividend raise.

Dividend Increase #5: Enterprise Products Partners (EPD)

Another dividend (technically distribution) increase that I didn't expect was from Enterprise Products Partners. The stock announced a 3.3% increase in its quarterly distribution from $0.45 to $0.465 per share. EPD is the model of consistency within the midstream industry, which is proven every year with distribution increases.

My net annual forward dividends were boosted by $2.16 across my 36 units of EPD as a result of the distribution raise.

Dividend Increase #6: Energy Transfer (ET)

Another midstream stock that hiked its distribution in January was Energy Transfer (ET), which announced a 14.8% increase in the quarterly distribution from $0.1525 to $0.175 per unit. ET is doing a spectacular job of executing and deleveraging, which is why I believe the distribution will be restored to $0.305 per unit sooner rather than later.

Across my 58 units of ET, my net annual forward dividends soared $5.22 due to the recent distribution raise.

Dividend Increase #7: Viatris (VTRS)

The final increase that came as a welcomed surprise to me was from Viatris, which bumped its quarterly dividend up 9.1% from $0.11 to $0.12 per share. Viatris has been a publicly traded company for barely a year and it already delivered a strong increase to its shareholders. So far, so good!

My net annual forward dividends rose $1.48 across my 37 shares of VTRS (at the time of the announcement) as a result of the dividend raise.

Expected Dividend Increase #1: Genuine Parts Company (GPC)

The first dividend increase that I'm anticipating in February is from Genuine Parts Company. Because analysts are forecasting that GPC's adjusted diluted EPS will increase 9% to $7.34 in 2022, I believe that the stock will raise its quarterly dividend by 8% from $0.815 to $0.88 per share.

If this raise plays out as I expect, my net annual forward dividends will be boosted by $1.56 from such an announcement.

Expected Dividend Increase #2: Home Depot (HD)

The next raise that I'm expecting next month is from Home Depot. Given that analysts are forecasting $16.19 in adjusted diluted EPS for next year, I predict that HD will announce a 10.9% increase in the quarterly dividend from $1.65 to $1.83 per share. 

My net annual forward dividends would increase $1.44 across my two shares of HD if my projection is proven correct.

Expected Dividend Increase #3: Albemarle (ALB)

The third dividend hike that I'm forecasting will be announced in February is from Albemarle. Since it's expected that ALB's EPS will surge 48% in 2022 to $5.99, I believe the stock will raise its quarterly dividend by 41% from $0.39 to $0.55 per share. 

If this raise does materialize, my net annual forward dividends would skyrocket $3.20 higher across my five shares of ALB.

Expected Dividend Increase #4: Prudential Financial (PRU)

The next dividend increase that I'm expecting for next month is from Prudential Financial. My prediction is that PRU will announce a 5.2% increase in its quarterly dividend from $1.15 to $1.21 per share. 

If my projection is correct, my net annual forward dividends would surge $2.40 across my 10 shares of PRU.

Expected Dividend Increase #5: L3Harris Technologies (LHX)

The fifth dividend raise that I believe will be announced in February is from L3Harris Technologies. I am expecting a 9.8% hike in the quarterly dividend from $1.02 to $1.12 per share. 

My net annual forward dividends would be boosted by $1.60 across my four shares of LHX if my prediction is accurate. 

Expected Dividend Increase #6: Digital Realty Trust (DLR)

The next dividend increase that I'm expecting next month will be from Digital Realty Trust. I'm anticipating that DLR will announce a 5.2% increase in its quarterly dividend from $1.16 to $1.22 per share.

If my projection is right, my net annual forward dividends would increase by $0.72 across my three shares of DLR.

Expected Dividend Increase #7: United Parcel Service (UPS)

The seventh dividend hike that I'm forecasting in February is from United Parcel Service. UPS will be targeting a 50% payout ratio of the prior year's adjusted EPS and analysts are expecting $11.62 in adjusted EPS in 2021. That's why I believe UPS will declare a 42.2% increase in its quarterly dividend from $1.02 to $1.45 per share.

Across my four shares of UPS, my net annual forward dividends would skyrocket $6.88 higher if my prediction is correct.

Expected Dividend Increase #8: Cisco Systems (CSCO)

The next dividend increase that I'm expecting next month is from Cisco Systems. Since analysts are forecasting a 6.2% increase in CSCO's adjusted EPS to $3.42, I project that CSCO will announce a 5.4% raise in the quarterly dividend from $0.37 to $0.39 per share.

My net annual forward dividends will increase by $0.88 across my 11 shares of CSCO if my forecast is proven right.

Expected Dividend Increase #9: T. Rowe Price Group (TROW)

The ninth dividend raise that I'm projecting will occur in February is from T. Rowe Price Group. I believe that TROW will announce a 10.2% increase in its quarterly dividend from $1.08 to $1.19 per share. 

Across my four shares of TROW, my net annual forward dividends would be boosted by $1.76 if my prediction is correct.

Expected Dividend Increase #10: Omnicom Group (OMC)

The next dividend hike that I expect will be declared next month is from Omnicom Group. My projection is that OMC will raise its quarterly dividend by 7.1% from $0.70 to $0.75 per share. 

My net annual forward dividends would go $1.40 higher across my seven shares of OMC if my estimate is right.

Expected Dividend Increase #11: Allstate (ALL)

The eleventh dividend increase that I'm forecasting for February is from Allstate. My prediction is that ALL will raise its quarterly dividend by 6.2% from $0.81 to $0.86 per share. 

Across my five shares of ALL, my net annual forward dividends would increase by $1.00 if my projection is accurate.

Expected Dividend Increase #12: 3M (MMM)

The next dividend increase that I'm predicting next month is from 3M. I believe that MMM will announce a 5.4% increase in the quarterly dividend from $1.48 to $1.56 per share. 

My net annual forward dividends would be boosted by $1.28 across my four shares of MMM if my prediction is correct. 

Expected Dividend Increase #13: Medical Properties Trust (MPW)

The final dividend increase that I'm expecting in February is from Medical Properties Trust. I predict that MPW will raise its quarterly dividend by 3.6% from $0.28 to $0.29 per share.

Across of my 16 shares of MPW, my net annual forward dividends would increase by $0.64.

Concluding Thoughts:

January was far better for dividend increases than I could have ever imagined. The seven dividend increases that I received during the month helped my net annual forward dividends to surge $15.08 higher. It would take $430.86 of fresh capital invested at an average weighted dividend yield of 3.5% to replicate the impact of my dividend raises in January.

Looking ahead to next month, my net annual forward dividends would be propelled $24.76 higher if all of my predictions are correct. This would require an astonishing $707.43 in fresh capital to match with a 3.5% dividend yield.

Discussion:

How was your January 2022 for dividend increases?

Are you expecting any dividend increases from your newer holdings like I am with ALL and MPW next month?

I appreciate your readership (especially in a blog post as lengthy as this one!) and look forward to your comments in the section below!