2017 has been a great year so far with new dividend income records set every month. In March I got paid from 29 different companies which means that I am getting a dividend paycheck virtually on every day and totaling almost $150. The QoQ growth remains impressive, although, as expected, it is considerably lower than during the month before. Royal Dutch Shell (RDS.B) remains my top dividend-paying stock, fueled by the recent repurchases right before the last ex-dividend date.
Portfolio Buys | 13 repurchases
March saw another $2,300 in fresh capital deployed, which, as almost every time, is highly above my minimum investment target. I just can’t help but buy more dividend stocks despite the current valuation.
My major investments boiled down towards buying 7 more shares of Altria (MO) and 8 more shares of BMW (OTCPK:BMWYY). I will outline in detail the reasoning for both of these purchases and their timing.
On top of that I bought 4 more shares in B&G Foods (NYSE:BGS) as its stock price remains depressed following its earnings report. The same applies to Toronto-Dominion Bank (TD), which fell by more than 10% following reports of Wells Fargo-like practices. I have bought another 4 more shares here as despite these allegations I consider this to be the best bank for dividend investors.
So there is a lot going on here again and a full and detailed overview can be found below.
Let’s now turn to my purchases on Altria and BMW.
Why did I buy more Altria?
Altria remains in top spot on my watchlist, and having patiently waited for the stock to have a break following its very strong rally, the surprisingly bearish report from RBC Capital finally delivered such an occasion. As RBC Capital set a price target of $62 dollar for Altria, indicating up to 14% downside from its previous high, the stock gradually retreated from $75.55 down to $71.3. This is not a huge contraction, but given MO’s stellar long-term stock performance it offered at least a glimpse of hope towards a better entry point.MO data by YCharts
I bought 10 shares of Altria at around $72.3. It is not a big discount, but with MO I am happy every time the stock just retreats a fraction. For me MO is never a SELL, almost always a HOLD and sometimes you get those rare BUYING opportunities. This was not really one of them, but I got too nervous seeing that stock price getting catapulted that I just had to pull the trigger. If it drops more, I will buy more. It is as simple as that with that great company.
MO went ex-dividend on March 13 and I bought on March 30. This was right after I happened to finish my special ex-dividend date analysis on the tobacco sector and where I found that waiting for the ex-dividend date to occur or pass on average yields higher returns compared to buying the stocks just before the ex-dividend date.
As far as Altria is concerned this company is now my second largest portfolio holding with a weight of 6%. Although the current yield has sharply fallen down to 3.3% my YoC is at 3.9% which I consider to be very healthy. Altria’s long-term prospects and its dividend brewery remain smoking hot though. Altria’s biggest investment with an above 10% stake in Anheuser-Busch InBev is performing very well but the big news could come from the anticipated market release of iQOS products in 2017 (a sort of reduced risk tobacco product).
Altria is working intensively with Philip Morris International (PMI) to commercialize this new product segment as soon as possible. If this risk-reduced tobacco product gets rolled out in the US in 2017 it could prove to be another game changer for Altria. The race for Big Tobacco to develop, market and commercialize cigarette alternatives is on and with smoking rates decreasing in many important markets, it is certainly a race to be won for Altria and Philip Morris.
Why did I buy more of BMW?
Shares in BMW got hit on March 10 when the company reported record sales and profits for 2016. On top of that it raised its dividend by around 9%. I digested these figures and found nothing that could justify that drop in the stock price.
Source: BMW Motorrad Vision Next 100
The market cited a small decline in YoY EBIT margins (from 9.2% in 2015 down to 8.9% in 2016) as the main reason for that drop in the stock price. Even the higher dividend could not prevent the stock from tumbling. Particularly the Q4 results were blamed for that selling. While the first nine 9 months have been showing an increase of sales by more than 3% and a pre-tax profit rise of almost 9% these figures decreased following Q4. Bottom-line this can best be seen by a 2% decrease in EBIT for entire 2016 whereas from Q1-Q3 it showed an increase of 2%.
I do not regard this contraction in margins during Q4 as critical as investors as they seem to have forgotten that the company has already signaled higher expenses as 2016 comes to a close. According to CFO Friedrich Eichiner the market launch of the BMW 5-series and preparations to start production of new models required significant upfront payments and expenses.
All purchases in March can be found below:
Dividend Income: What happened on the dividend side?
My income from 29 corporations amounted to $149.71 in dividends, up +35% QoQ and +213% YoY.
The top 5 companies are bringing in 55% of total income in March which is not nicely balanced yet. More than a quarter of total income (27%) originates from Royal Dutch Shell. I am very confident and bullish with my position in this stock. As I have recently pointed out, Shell should have the cash flow going forward to uphold its dividend. The company is pursuing three priorities for cash starting with debt reduction as number one and then followed by dividends and then buybacks. To achieve this, four pillars consisting of divestments, reducing capital investment, reducing operating costs and delivering new projects will underpin this financial framework to manage the down-cycle. Combined with cash generated from the BG acquisition the company will be able to further diversify its future cash flows. I will carefully monitor the upcoming Q1/2017 earnings report due on May 4.
Here is a look at my favorite chart, the net dividend income development by month over time between 2015 and 2017:
And here is a detailed overview of March dividends:
Expressing the monthly dividend income in terms of gifted working time is really motivating. Assuming an average hourly rate of $16, this translates to roughly 9.4 hours an average worker has to work for this. Simply receiving this money for doing virtually nothing is a pure blessing and a great position to be in. My all-time gifted working time has now grown to almost 73 hours. Assuming an 8-hour working day this translates to roughly 9 full days of active work that has been replaced by passive income since I started my journey. March alone added 1.2 days to that figure! At that pace I will have easily replaced more than two weeks of active work by passive investing by the end of the year.
Due to ongoing investment activities in March, my projected forward income has now reached $1,960 and is slated to cross $2,000 in forward income by the end of April. Speaking of April, I am expecting a decent month, slightly above January. Going forward, May with most of my annually paying German dividend stocks about to pay, will then easily break all previous records.
With lots of dividends in April already received here is a snapshot from the Dividend Calendar Tool about the remaining upcoming dividend payments in April. This tool has proved to be extremely useful for my tracking processes.
My portfolio composition
As of today, based on cost basis, my portfolio is composed as follows (an additional breakdown by dividend income will still follow in a later update [I really need to focus on this now!]):
|Company Name||Ticker||Sector||Portfolio Weight||Sector Weight|
|Altria Group Inc||(MO)||Consumer Goods||5.51%||23%|
|Omega Healthcare Investors Inc||(OHI)||REIT||3.68%||10%|
|Gilead Sciences, Inc.||(GILD)||Healthcare||3.41%||9%|
|Cisco Systems, Inc.||(CSCO)||Technology||3.40%||18%|
|Verizon Communications Inc.||(VZ)||Technology||2.72%||18%|
|Royal Dutch Shell Plc||(RDSB)||Basic Materials||2.50%||12%|
|PepsiCo, Inc.||(PEP)||Consumer Goods||2.43%||23%|
|B&G Foods, Inc.||(BGS)||Consumer Goods||2.39%||23%|
|Royal Dutch Shell plc (ADR)||(RDS.B)||Basic Materials||2.27%||12%|
|Main Street Capital Corporation||(MAIN)||Financial||2.11%||14%|
|Philip Morris International Inc.||(PM)||Consumer Goods||2.03%||23%|
|Procter & Gamble Co||(PG)||Consumer Goods||1.94%||23%|
|Bayerische Motoren Werke AG||(FRA:BMW3)||Consumer Goods||1.88%||23%|
|Wells Fargo & Co||(WFC)||Financial||1.80%||14%|
|The Coca-Cola Co||(KO)||Consumer Goods||1.79%||23%|
|Bank of Nova Scotia||(BNS)||Financial||1.68%||14%|
|Walt Disney Co||(DIS)||Services||1.51%||11%|
|DuPont Fabros Technology, Inc.||(DFT)||REIT||1.23%||10%|
|General Mills, Inc.||(GIS)||Consumer Goods||1.20%||23%|
|General Motors Company||(GM)||Financial||1.13%||14%|
|Spectra Energy Partners, LP||(SEP)||Basic Materials||1.13%||12%|
|Johnson & Johnson||(JNJ)||Healthcare||1.12%||9%|
|Senior Housing Properties Trust||(SNH)||REIT||1.12%||10%|
|CVS Health Corp||(CVS)||Services||1.08%||11%|
|Total SA (ADR)||(TOT)||Basic Materials||1.05%||12%|
|Exxon Mobil Corporation||(XOM)||Basic Materials||0.98%||12%|
|Pebblebrook Hotel Trust||(PEB)||Services||0.83%||11%|
|Vodafone Group Plc (ADR)||(VOD)||Technology||0.79%||18%|
|CoreSite Realty Corp||(COR)||REIT||0.71%||10%|
|Commonwealth Bank of Australia||(CBA.AX)||Financial||0.67%||14%|
|Citizens & Northern Corporation||(CZNC)||Financial||0.67%||14%|
|Canadian Imperial Bank of Commerce (USA)||(CM)||Financial||0.67%||14%|
|Colgate-Palmolive Company||(CL)||Consumer Goods||0.66%||23%|
|Flowers Foods, Inc.||(FLO)||Consumer Goods||0.64%||23%|
|JPMorgan Chase & Co.||(JPM)||Financial||0.59%||14%|
|Realty Income Corp||(O)||REIT||0.59%||10%|
|Stag Industrial Inc||(STAG)||REIT||0.57%||10%|
|Royal Bank of Canada||(RY)||Financial||0.51%||14%|
|Care Capital Properties Inc||(CCP)||REIT||0.50%||10%|
|Fortress Investment Group LLC||(FIG)||Financial||0.49%||14%|
|Honeywell International Inc.||(HON)||Industrial Goods||0.48%||0%|
|Teekay Tankers Ltd.||(TNK)||Services||0.45%||11%|
|Starwood Property Trust, Inc.||(STWD)||REIT||0.43%||10%|
|Time Warner Inc||(TWX)||Services||0.36%||11%|
|BP plc||(BP.L)||Basic Materials||0.36%||12%|
|Fresenius Medial Care||(FRA:FME)||Healthcare||0.34%||9%|
|Hospitality Properties Trust||(HPT)||REIT||0.33%||10%|
|Unilever N.V. (ADR)||(UN)||Consumer Goods||0.31%||23%|
|Dominion Resources, Inc.||(D)||Utilities||0.31%||3%|
|International Business Machines Corp.||(IBM)||Technology||0.30%||18%|
|CF Industries Holdings, Inc.||(CF)||Basic Materials||0.28%||12%|
|Apollo Investment Corp.||(AINV)||Financial||0.25%||14%|
|Apollo Commercial Real Est. Finance Inc||(ARI)||Services||0.25%||11%|
|DHT Holdings Inc||(DHT)||Services||0.24%||11%|
As always, I hope that you find this update interesting and relevant. The biggest inspiration for me are reading these updates from other authors and following their progress over the years. Compared to them I am still really at the beginning of my journey and I would appreciate if you want to follow/continue to follow my journey as well. I hope to inspire many more readers to also start and share their journey.
Disclosure: I am/we are long AAPL, BP.L, CSCO, KO, CL, XOM, GILD, JNJ, MCD, PM, PG, RDS.B, UN, DIS, PEP, VZ, V, WFC, GIS, BGS, SEP, MSFT, MAIN, IBM, CTL, TNK, HCP, ABBV, FIG, CLDT, RY, EPD, QTS, DFT, GM, CZNC, OHI, CM, T, JPM, STAG, HPT, FDX, AINV, SNH, DHT, FRO, HON, STWD, PEB, MS, CF, SO, RAI, FLO, CCP, BNS, MO, PFE, CVS, TWX, O, COR, HCN, TOT, VOD, TD, ARI, D.
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.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.