Follow the dividend investment decisions of a person who has no background in financial investment and wishes to take control of their financial future to retire from their full-time job at 60.

New Buys PFE and IBM - 30 Dec 2019 19:07

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IRA Buy: Pfizer (PFE)

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Purchase Price: $38.95/share
Increase in Forward Annual Div: $23
Inflation Beating Streak: 9 Years
Div Growth Streak: 10 Years
Yield: 3.9%
Payout Ratio: 53%
Most Recent Dividend Increase: 5.55% / Dec 2019

IRA Buy: International Business Machines (IBM)

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Purchase Price: $133.32/share
Increase in Forward Annual Div: $19
Inflation Beating Streak: 22 Years
Div Growth Streak: 24 Years
Yield: 4.86%
Payout Ratio: 55%
Most Recent Dividend Increase: 3.18% / Apr 2019

Looks like my last two buys for 2019…happy New Year everyone. - Comments: 0

Weekly Portfolio Summary - 28 Dec 2019 11:35

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Fairly quiet week with the old portfolio as I did little with the holidays and all. Speaking of holidays it was wonderful to get together with family and relax from the daily grind of work, hopefully all of you had the same luxury.

Almost done for the year will be interesting where 2020 goes and I'm sure it will be a circus with the upcoming Presidential election so nothing to do but hold on tight and keep investing.

Portfolio Activity

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Portfolio News - (In Case You Missed These Headlines)

Preferred Apartment Communities (APTS)

Medical Properties Trust (MPW)

Pfizer (PFE)

Prospect Capital (PSEC)

Walmart (WMT)

Interesting Blog Posts or Articles

Blog Posts

Articles

Can an ETF Provide Real Dividend Income Growth? - 26 Dec 2019 12:34

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Back in 2011 I started shifting my portfolio to a more dividend focus. Since that time I kept a notebook of different ideas and things I learned along the way. The other day I decided to flip through some of the earlier pages and revisit some of my comments when I started this journey and stumbled upon one note from 2012 that said “Not enough history on dividend growth ETFs – revisit and analyze in 5 years”.

Apparently I forgot about this note as it was 7 years ago and I never did investigate further. But the thought nagged at me as it was still relevant and was making me question if an ETF is a simpler approach. Of course I had to address this nagging feeling so here is my analysis 2 years late.

Screening Criteria

  • Minimum of $1 billion of Assets Under Management
  • Minimum of 5 years of consecutive annual increases in distributions
  • Minimum dividend yield of 1.7%

Screen Results:

The iShares Core Dividend Growth ETF (DGRO), specifically targets companies that pay a qualified dividend, must have at least five years of uninterrupted annual dividend growth and their earnings payout ratio must be less than 75%.

The WisdomTree US LargeCap Dividend ETF (DLN), seeks to track the performance of dividend-paying large-cap companies in the U.S. equity market. The WisdomTree Large Cap Dividend Index consists of the 300 largest companies ranked by market cap from the WisdomTree Dividend Index.

The iShares Select Dividend ETF (DVY), seeks to track the investment results of the Dow Jones U.S. Select Dividend Index composed of relatively high dividend paying U.S. equities with fund weightings determined by yield instead of market cap.

The Schwab US Dividend Equity ETF (SCHD), includes 100 stocks based on strong fundamentals, such as cash flow to debt, return on equity, dividend yield and consistent dividend payouts for at least 10 consecutive years.

The Vanguard Dividend Appreciation ETF (VIG), tracks U.S. stocks that have increased dividends on a regular basis for at least 10 consecutive years.

The Vanguard High Dividend Yield ETF (VYM), seeks to track the performance of the FTSE High Dividend Yield Index, which measures the investment return of common stocks of companies characterized by high dividend yields.

I will admit I was surprised by this and expected a larger return of ETFs, however, it may signal that this is more of a total return investment philosophy than a pure income growth play.

Comparative Analysis

The top three performers are highlighted in green for each category.


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Conclusion

From a pure dividend growth perspective there were 3 consistent ETFs results with DVY, SCHD and VYM.

When we look at the 6 ETFs from a total return perspective we see much better results from DGRO, DLN, and VIG. This performance difference is more than likely based on what holdings constitute their portfolios. For example, DVY has the lowest 5 year total return but their holdings are heavily weighted towards financials and utilities. But VIG has a more diverse and higher quality amount of holdings.

This leads me back to why the screening results were so low and that most dividend growth labeled ETFs are designed for a total return strategy. If your objective is total return you should balance this with other growth type ETFs and here an interesting article I found on this topic from last November by John Hancock Investments. That said, this analysis and ETF screen did not factor in total return and if this is your strategy you should expand the search as there may be better investments.

For those more interested in a consistently rising ETF dividend income stream I would narrow it down SCHD and VYM. The two funds have low expense fees and decent dividend growth rates that well exceed the rate of inflation.

Overall, if you are uncomfortable picking individual stocks but want a dividend income stream ETFs are a viable option to achieve this result. - Comments: 0

Weekly Portfolio Summary - 21 Dec 2019 12:05

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Markets moved higher putting my RMD theory into the old trash can. Two nice dividend announcements this week from Pfizer and Waste Management helped grow my future earnings.

Portfolio Activity

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Portfolio News - (In Case You Missed These Headlines)

AbbVie (ABBV)

Preferred Apartment Communities (APTS)

Chevron (CVX)

General Mills (GIS)

Goodyear Tire (GT)

Merck (MRK)

Pfizer (PFE)

Prospect Capital (PSEC)

Phillips 66 (PSX)

Waste Management

W.P. Carey (WPC)

Weyerhaeuser (WY)

Interesting Blog Posts or Articles

Blog Posts

New Buy GT - 20 Dec 2019 18:33

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Brokerage Buy: Goodyear Tire & Rubber (GT)

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Purchase Price: $15.49/share
Increase in Forward Annual Div: $46
Inflation Beating Streak: 5 Years
Div Growth Streak: 6 Years
Yield: 4.13%
Payout Ratio: 34%
Most Recent Dividend Increase: 14.29% / Oct 2018

GT price dropped to the upper and of my buy price of $15.50/share. Being this company lives off of new car buying cycles it has some pretty big price swings so this will be the limit of my exposure and I plan no more buys. - Comments: 0

Weekly Portfolio Summary - 14 Dec 2019 13:39

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It was this time last year stocks began to decline. Will be interesting to watch next week if IRA RMDs have any impact on markets and we see another decline in the same timer period.

Portfolio Activity

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Portfolio News - (In Case You Missed These Headlines)

AbbVie (ABBV)

Brookfield Renewable Partners (BEP)

Cummins (CMI)

Johnson & Johnson (JNJ)

3M (MMM)

Merck (MRK)

Pfizer (PFE)

Ryder System (R)

AT&T (T)

T. Rowe Price

United Parcel Service (UPS)

Walgreens Boots Alliance (WBA)

Interesting Blog Posts or Articles

Blog Posts

Articles

New Buy BPR - 13 Dec 2019 00:18

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Roth IRA Buy: Brookfield Property REIT (BPR)

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Purchase Price: $18.35/share
Increase in Forward Annual Div: $40
Inflation Beating Streak: 1 Years
Div Growth Streak: 1 Years
Yield: 7.21%

After spending the second half of 2019 getting my hotel allocation up to my target my REIT portfolio is once again balanced so I can return to investing in diversified global REITs. Brookfield (BPR) fis that bill perfectly and if prices stay stable I will be accumulating for the next 6 months.

BPR Asset Summary:

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Recent Sell WHG - 12 Dec 2019 23:32

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Brokerage Sell: Westwood Holding Group (WHG)

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Sell Price: $30/share
Decrease in Forward Annual Div: -$97
Payout Ratio: 275.66%

Westwood is the latest victim of declining active managed finance companies and I now question if they can still cover their dividend payment going forward. Since the 4th quarter of 2018 WHG has had declining Net Operating Cash Flow every single quarter and last month announced a lower rate structure to be be more competitive.

With dividends already under pressure from declining Net Operating Cash Flow I cannot see how the dividend can be funded going forward with reduced rates. While I believe lowering rates was the right business decision it will have to come at the cost of shareholder dividends. - Comments: 0

Weekly Portfolio Summary - 07 Dec 2019 13:11

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Fairly quiet week as we head into the Christmas & Hanukkah holidays and so too was my portfolio with no new additions. Nothing to do but sit back, collect dividends, and reinvest said dividends.

Portfolio Activity

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Portfolio News - (In Case You Missed These Headlines)

First American Financial (FAF)

Goodyear Tire & Rubber (GT)

Johnson & Johnson (JNJ)

Merck (MRK)

Qualcomm (QCOM)

Domtar (UFS)

Interesting Blog Posts or Articles

Blog Posts

Articles


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