The Slowly But Surely Dividend Growth Portfolio - May Update

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Includes: AAPL, SBUX, T, WMT
by: Christopher Price

Summary

I began purchasing dividend growth stocks in July 2015.

In the months since then, I've put additional capital to work in dividend-paying stocks on a monthly basis.

My dividend income is providing a growing stream of passive income that should one day, slowly, but surely, prove fairly substantial in spite of my relatively small investments.

My monthly statements for May have come in from both of my individual brokerage accounts. It's also about a month from the last update of my "Slowly, But Surely" dividend growth portfolio. Therefore, it's time to give another update of how the portfolio performed over the last month.

May is generally not the biggest month for dividend growth investors, as it is the second month of the quarter, and a greater percentage of companies pay out in the third month of the quarter. Regardless, I had a month that was decent, considering my income from just three months earlier.

My first purchase took place in July 2015. It was only $100 toward Wal-Mart (NYSE:WMT) stock. My estimated dividend income from that purchase was a whopping $2.74 spread out over the course of a year. My forward expected dividend income is now several times that small payment. My first payment came in August, when Apple (NASDAQ:AAPL) paid me the massive amount of $0.64. This was definitely not an impressive payout, but it was a start.

Some people might wonder why I would track my dividend growth portfolios. As I've noted in previous reports, I wanted to give people a view of a portfolio as it was being built from the ground up. I also wanted to show people that it's possible to grow a nice dividend income over time with relatively small purchases.

I've added capital to the portfolio each month since that first investment last July. For the month of May, I was able to invest $271.21 into my accounts. If I were able to invest that much every month, the total would be just over $3,000 on an annualized basis. Many of the people on Seeking Alpha and personal finance bloggers around the web have portfolios that are much larger than this amount. This could cause people to get discouraged from even starting an investing journey. I don't have thousands to invest every month, but my goal is to use what I am able to invest to build a nice stream of dividends while hopefully seeing some capital gains over time. Therefore, without dragging out this article, here is where my dividend growth portfolios stood as of May 31, 2016:

The Slowly, But Surely Dividend Growth Portfolio as of May 31, 2016 Click to enlarge

As it is easy to see, the portfolio has not returned a massive amount in terms of capital gains. However, most of my positions have seen positive returns over the past few months. Of the companies that are in the red, Wal-Mart has actually turned positive since May 31, and I am up quite a bit more overall.

As far as dividend income for May was concerned, I was able to pull in $9.18 in dividend income for the month. This was obviously $9.18 more than the same month last year, as I had not yet started my portfolio. More impressive than this growth was an increase of right around 46 percent over my dividend income from just three months earlier. I realize that it is very unlikely that I can keep this growth up for even three or six months, but it's still nice to note.

Overall, three of the companies that I own paid me in May. The biggest payout was from AT & T (NYSE:T), followed by Apple. I recently looked at Apple and whether it was a good buy for dividend growth investors. As I'm adding to the position on a regular basis at various valuations (i.e., dollar-cost averaging), it's pretty obvious that I think it is. The company has an attractive P/E ratio when compared to the S&P 500 as a whole, and there is also the issue of the growing dividend, which has increased by more than 10 percent on an annualized rate since it was reinstituted just five years ago.

I did have one new holding that paid me a dividend in May. This was Starbucks (NASDAQ:SBUX). I am looking to build a small starter position in this stock that's outside of the main core of my Loyal3 account. I believe that the company is headed for more growth outside of the US and that the dividend, which is currently at a payout ratio of well below the 50 percent mark of total income could grow at a clip of 10 to 15 percent for several years into the future based on the expected growth. I only earned 9 cents from SBUX, but as we all know, pennies turn into dollars over time.

My current expected dividend income is right around $12 on a monthly basis, and I figure that I could replace about 7 hours of actual work (at a rate of $20/hour, not counting taxes that are not incurred from dividend income). I only have about 2073 more hours to knock out from my dividend income. As I'm also expecting some pension and Social Security income, I figure that I won't need to replace quite that much; however, I would consider cutting way back if I hit enough income to replace 2080 hours anytime before 60 years of age.

Hopefully, you find this update to be of interest and it helps you get motivated to start investing if you don't have a massive amount of money to invest each month. If you'd like to keep up with the monthly progress of the account, be sure to hit the follow button. I'd appreciate the support.

Disclosure: I am/we are long AAPL, T, KO, K, RDS.B, SBUX, MCD, WMT, UL, BNS.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am not a licensed financial professional. This article is for informational/entertainment purposes. Be sure to consult a professional and do due diligence before investing in equities, as losses up to and including all capital invested can be incurred.