End of a Quarter, Start of My DGI

28 Sep 2013 22:30
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It is the end of my first quarter and received all of my dividends. Luckily I was able to save an additional $200 and just transferred it to my brokerage account and combine that with some leftover funds from rebalancing my portfolio to a DGI strategy leaves me with enough to invest in 2 or 3 securities over the next two months.

Now that the first quarter is behind me I can start tracking and updating how much dividend growth occurs from quarter to quarter of which I’m off to a head start as Microsoft (MSFT) announced a 21.7% increase in their dividend that starts in December.

In the quarter ahead my attention will be on Seagate Technologies (STX) to see if they announce a dividend increase in November or December. STX payout ratio is currently 32% leaving lots of room for growth. On the other hand this is a technology stock and dividend payments (never mind growth) is still something new for this sector so I see the odds of a dividend increase at 50/50.

With no dividend increase it will leave me with a tough decision. STX has been a stellar performer, they announced a dividend increase right after I bought the stock pushing the yield up at that time to 6% (now currently 3.49%). Additionally STX has also returned a 70% increase in stock price.

Selling STX may be my first test of trusting dividend growth criteria versus looking at the potential for stock price growth. This will also present a scenario that is currently not part of my strategy. If I sell then what do I buy? Do I stick with the 3% criteria? If I do then I lose the dividend growth. Right now my knee jerk reaction would be to invest in a DG stock paying at least 3.5% to compensate. Of course December is still three months away so still some time to strategize what-if scenarios.

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