Free Market Capitalist December Dividend Income

|
Includes: ABBV, ABT, ADP, APU, BDX, CLX, DWDP, EMR, FPI, GE, GIS, JNJ, MCD, MMM, MSFT, O, PEP, SYY, T, XYL
by: Penny Dividend Fortress

Summary

December 2016 income update.

Buy of the month was AT&T.

Added to our stake in GE, ABBV, GIS, APU, T and O.

Year end return of 15.02%.

Happy New Year to all my great readers and followers. Thanks for reading my articles in 2016, and I hope you keep reading and following my articles in 2017. I will continue to work hard for my followers in the new year.

I have been investing for 13 years now. Investing is a major passion of mine. Over the years I have owned many different companies. Most were good investments, and some were not so good investments. I have learned a lot from the bad investments. I've also sold companies at the wrong times when I should have been buying instead. We all live and learn. Thirteen years of studying the markets and economy has lead me to put together this portfolio of companies. I hate to use the word "stocks." Taking pride in company ownership sounds much better to me.

Our (my wife and I) investing strategy is to buy only dividend-paying companies to create a passive income for retirement and financial independence. We buy small- to large-cap companies with promising futures. A company's commitment to dividend growth is our most important measure followed by capital growth. We have a long-term investing view. We buy our stocks through a low-cost taxable brokerage account. Our goal 29 years from now is to have at least 14% yield on cost. We believe we have created a very strong portfolio capable of achieving this goal.

In this low-yield environment, we are fortunate that our yield is at 3.6%. Currently, five of our companies yield more than our yield on cost. They are AbbVie (NYSE:ABBV) 4.09%, Realty Income (NYSE:O) 4.23%, AmeriGas Partners (NYSE:APU) 7.85%, AT&T (NYSE:T) 4.61%, and Farmland Partners (NYSE:FPI) 4.5%.

End of December 2016 Dividend Yield on Cost 2045 Dividend Yield Goal
3.6% 14%

Starting with the month of April 2016, I will provide a monthly update that will analyze the performance and portfolio characteristics of our company stakes. Now let's get to the meat of the story.

December 2016 Income Results

For the Year 2016 we earned $60.21 in dividends. Our goal for 2017 is to double our dividend income to $123.80. 2017 will be a fun investing year.

From January 2016 to the end of December 2016, our portfolio was up a nice 15.02%-- beating the S&P 500 yearly gain of 11.96%. For the month of December, our portfolio had a return of 3.47%, ahead of the 1.82% gain for the S&P 500. December's gain was the second straight monthly increase for the S&P 500. Below is a chart of September dividends vs Decembers dividends. We re-invest the dividends back into the same company that paid them. December dividends increased 13.7% from September.

September EMR $0.68 December EMR $0.78 +14.7%
September JNJ $0.39 December JNJ $0.47 +20.5%
September MMM $0.57 December MMM $0.64 +12.3%
September MCD $0.43 December MCD $0.58 +34.9%
September LMT $1.73 December LMT $2.01 +16.2%
September BDX $0.20 December BDX $0.26 +30%
September PEP $0.34 December NA
September O $0.70 December O $0.88 +25.7%
September MSFT $0.27 December MSFT $0.39 +44.4%
September XYL NA December XYL $0.03
September Stock Dividends $5.31 December Stock Dividends $6.04 +13.7%

December Stock Purchases and Why We Bought Them

My Buy of the Month was AT&T, picking up .2544 shares on December 6, at a price of $39.31. As of January 6, T was at $41.32, representing a 5.1% gain. We believe DirecTV Now will be a big hit with TV watchers over the long term. Offering four different packages will help bring in more customers who each want a different package that meets their TV viewing needs and budget. AT&T is working on a number of growth projects from connecting the Internet of Things, 5G wireless, and new online TV packages. Exciting events are happening at AT&T that will power dividend growth higher. AT&T currently yields 4.6%

AmeriGas Partners: This winter's very cold weather over much of the nation has been beneficial for AmeriGas. Since December 7th, APU's stock price has risen from $44.48 to $48.07, a 8.1% increase. February will be the fourth quarter in a row of its $0.94 quarterly distribution. Then in early May a distribution increase should be announced. I expect the quarterly distribution will increase to $0.96 or 2.1%. The May 2017, distribution increase will be the 12th consecutive yearly increase in a row.

General Mills (NYSE:GIS): General Mills is working hard at making its cereals taste better and be healthier than ever before. Two Girl Scouts cookie-inspired cereals will be released in early January, Thin Mints and Caramel Crunch (Caramel DeLites). We can't wait to try them. Also a new Veryberry Cheerios with real fruit and Total with real fruit. General Mills is a great long-term holding to capture quality income. General Mills yields 3.08%.

General Electric (NYSE:GE): If General Electric wants to stay a top-notch industrial, it needs top-notch employee education now and in the future. THE GE Additive Education Program will provide middle schools, high schools, and colleges around the world with 3D printers. School students will be gaining great knowledge from this program. GE knows 3D printing is here to stay and will be very valuable in the future for the company. GE's new dividend hike will be paid on January 25th. GE is the industrial to own over the next 10 years.

Realty Income: On December 13, 2016, Realty for the 89th time increased its monthly dividend to $0.2025 from $0.202. The new dividend is payable on January 13, 2017; the ex-dividend date was on December 29, 2016. As of 3rd quarter 2016, Realty had 98.3% of all their properties leased. In 2014 and 2015, 98.4% of all properties leased. Realty is one solid company.

AbbVie We keep buying AbbVie because we believe the company is trading at a lower price than what the company is really worth. We believe $75-$80 a share is where ABBV should be trading at. Humira is still strong and the future pipeline is strong also. AbbVie is not afraid to make an acquisition to help boost growth. The company is very committed to growing its dividend. AbbVie yields 4.01%.

The chart below lists what companies and how many shares we purchased in November. We are bullish on all the companies we purchased and are very happy to have more of each company.

APU .2213 Shares
GE .3769 Shares
O .1769 Shares
GIS .1613 Shares
T .2544 Shares
ABBV .1623 Shares

Current Portfolio Positions

We believe that by picking superior individual companies we can achieve greater returns than just picking a market matching ETF or mutual fund. So far this year we are beating the S&P 500 by a good amount. We are bullish on every company we own--if not, we would not own them in the first place.

We stay 100% invested in equities at all times. We do not invest in bonds because there is no growth in a bond's yield. Our cash level always stays around 0%-1% of the portfolio. As a man of action, I'm not going to have money sitting around in the money market sidelines. The more income we can produce now will mean more income well into the future.

Company # of Shares Avg Share Cost Yearly Income % of Portfolio Income
AbbVie 1.0426 $61.46 $2.66 3.8%
Abbott Labs (NYSE:ABT) 2.0733 $40.29 $2.20 3.2%
Automatic Data Processing (NASDAQ:ADP) 1.0092 $86.50 $2.32 3.3%
AmeriGas Partners 2.1760 $42.59 $8.18 11.8%

Becton Dickinson & Co. (NYSE:BDX)

.3632 $153.74 $1.04 1.5%
Clorox (NYSE:CLX) .7196 $118.83 $2.28 3.3%
Dow Chemical (DOW) 1.6292 $49.39 $3.00 4.3%
Emerson (NYSE:EMR) 1.6440 $52.10 $3.12 4.5%
FarmLand Partners 13.4698 $11.03 $6.86 9.9%
General Electric 12.8042 $29.12 $12.29 17.7%
General Mills 1.1111 $60.12 $2.13 3.1%
Johnson & Johnson (NYSE:JNJ) .5883 $108.24 $1.87 2.7%
McDonalds (NYSE:MCD) .6175 $112.92 $2.30 3.3%
3M (NYSE:MMM) .5796 $160.82 $2.56 3.7%
Microsoft Corp. (NASDAQ:MSFT) 1.0157 $56.12 $1.57 2.2%
Realty Income 4.6141 $56.85 $11.21 16.1%
Pepsico (NYSE:PEP) .4511 $101.97 $1.35 1.9%
Sysco Corp. (NYSE:SYY) 1.4167 $46.66 $1.87 2.7%
AT&T .2544 $39.43 $0.50 0.7%
Xylem (NYSE:XYL) .1920 $52.24 $0.12 0.1%
Total Stock Retirement Dividends $69.43

In 2014 the portfolio had a return of 8.86%. For 2015 our portfolio returned 6.08%. Looking at the past year, from 12/31/15 to 12/30/16 we saw a 12.66% return. As a long-term investor, I'm looking to hold all these companies for the next 10, 20, or 30 years from now.

Conclusion

We strive to produce a safe, reliable income, while not taking on too much dividend risk. As you can see, a lot of my purchases are currently small. Most range in the $10-$50 per stock purchase. One does not need to make big stock purchases to march towards financial independence. Picking the right companies to buy is much more important. With my monthly articles, I hope to be a good investing role model.

I hope you found my article interesting and looking forward to more articles from me. Feel free to ask any questions and follow me. I enjoy answering your questions.

Disclosure: I am/we are long ABBV, ABT, ADP, APU, BDX, CLX, DOW, EMR, FPI, GE, GIS, JNJ, MCD, MMM, MSFT, O, PEP, SYY, T, XYL.

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: Before you buy any stock you must do your own research. I may buy or sell any stock listed in my article in the next three business days.