I'm rather late with my monthly review post. Some heavy options trading activity last month resulted in two fairly lengthy options update posts, which spilled over into the first week of the month when I usually prepare my monthly reviews.
This month, I closed one of my DivGro positions, Caterpillar, Inc (CAT). I'm concerned about CAT's near-term future and the sustainability of its dividend. I also trimmed my Cisco Systems, Inc (CSCO) after a covered call option was exercised. I used the cash to add shares to an existing DivGro holding, Pfizer Inc (PFE).
The net result of my October trades is that DivGro's projected annual dividend income (PADI) decreased by about $49. I'm still on schedule to achieve my goal of increasing PADI to $12,000 before year's end.
As mentioned, I had a busy month trading options. In October, I added another $907 in options premiums, which increased my year-to-date options income to $4,130. Of course, these options are potential obligations until they expire or get exercised. I mark option income as secured income only when I no longer have that obligation against me. Please see my October 2016 options updates, Part 1 and Part 2, for details.
The main goal of DivGro is to generate a growing dividend income stream. That's why I like to review my dividend income and any changes that would affect future payments.
In the month of October, I recorded dividend income totaling $824. 15 different DivGro stocks paid dividends. The year over year increase for October is 126%. Including this month's total, I've collected dividend income of $13,320 this year.
Projected annual dividend income is the total dividend income I expect to receive in the next 12 months. I recorded 1 buy and 2 sells. Also, 3 stocks announced dividend increases. These activities removed $1 from DivGro's PADI, which now stands at $11,289.
The following chart plots DivGro's projected monthly dividend income (red line) against monthly dividends:
In October, I added shares to an existing position:
• Pfizer Inc (NYSE:PFE)
This month, I sold shares and reduced my position in the following stock:
• Cisco Systems, Inc (NASDAQ:CSCO)
Lastly, I closed the following position:
• Caterpillar Inc (NYSE:CAT)
As a result of these transactions, DivGro's PADI decreased by $49.
The following stocks announced dividend increases:
DivGro's PADI increased by $48 due to these dividend changes.
I received dividends from 15 different stocks this month, for a total of $824 in dividend income:
• Chubb Limited (NYSE:CB) - $16.56
• Cisco Systems, Inc - $52.00
• Eaton Vance Tax-Managed Global Diversified Equity Income Fund (NYSE:EXG) - $58.86
• The Gap, Inc (NYSE:GPS) - $37.95
• Kimberly-Clark Corporation (NYSE:KMB) - $92.00
• The Coca-Cola Company (NYSE:KO) - $35.00
• Main Street Capital Corp. (NYSE:MAIN) - $42.55
• Altria Group Inc. (NYSE:MO) - $45.75
• Nuveen AMT-Free Quality Municipal Income Fund (NYSE:NEA) - $16.51
• Nike Inc (NYSE:NKE) - $7.52
• Nuveen Premium Income Muni Fund 2 Inc (NPM) - $9.45
• Realty Income Corp. (NYSE:O) - $10.10
• PennantPark Investment (NASDAQ:PNNT) - $219.80
• PennantPark Investment (PNNT) - $60.20
• Reynolds American, Inc (NYSE:RAI) - $46.00
• Reynolds American, Inc (RAI) - $46.00
• STAG Industrial Inc (NYSE:STAG) - $27.80
Duplicate entries are for dividends received from different accounts.
It is worth looking at the markets to understand the environment we're investing in, even though I no longer compare DivGro's performance to those of the markets:
|Sep 30, 2016|| |
|Oct 31, 2016|| |
In October, the DOW dropped 0.91%, the S&P 500 dropped 1.94%, and the NASDAQ dropped 2.31%. Yield on the benchmark 10-year Treasury note rose to 1.83%.
Based on the total capital invested and the portfolio's current market value, DivGro has delivered a simple return of 17.25% since inception. In comparison, DivGro's IRR (internal rate of return) is 9.65%. (IRR takes into account the timing and size of deposits since inception, so it is a better measure of portfolio performance).
I track yield on cost (YoC) for individual stocks, as well as an average YoC for my portfolio. DivGro's average YoC increased from 4.35% last month to 4.37% this month.
Another interesting statistic is percentage payback, which relates dividend income to the amount of capital invested. DivGro's average percentage payback is 10.26%, up from last month's 9.89%.
Finally, DivGro's projected annual yield is at 3.99%, down from last month's value of 4.02%. I calculate projected annual yield by dividing PADI ($11,289) by the total amount invested.
I now have nearly 16% of my portfolio in cash and my focus remains on preparing DivGro for options trading. As mentioned last month, I need to transfer several of my DivGro positions to a trading account at Interactive Brokers, which offers low commission rates for options trades. Volatility remains very low (see the CBOE market volatility index VIX), so option premiums are not so high at the moment.
Please see my Performance page for various visuals summarizing DivGro's performance.
This article is a summary of my October 2016 monthly review of DivGro, which first appeared on my blog on November 21. Interested readers can click on the link for more details, including a spreadsheet of my entire portfolio.
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Disclosure: I am/we are long ALL THE STOCKS MENTIONED.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.