April marked the start of the hot phase in the German dividend season, with Daimler (OTCPK:DDAIF) paying me a substantial amount and thus pushing the QoQ figures. At the same time dividends from companies like Pepsi (NYSE:PEP) and B&G Foods (NYSE:BGS) that were paid in January weren't paid in April but were either already paid in March or are due to be paid in May.
Portfolio Buys | 14 repurchases
I have deployed $2,676 in fresh capital and sold stock worth $838. Still, at around $1,800 this figure remains way above my $1,000 target, and I feel excited about this as I do not try to time the market but simply buy when I either see fair value or simply continue my automated stock savings plans.
On top of that I bought more shares of Daimler, Altria (NYSE:MO) and Canadian banks Bank of Nova Scotia (NYSE:BNS) and Toronto-Dominion Bank (NYSE:TD), which both continued to depreciate following anxiety about booming Canadian real estate prices in major metropolis areas in Toronto and Vancouver.
I sold out my position in Vodafone (NASDAQ:VOD) amid concerns that the business is going nowhere and the dividend safety. Shortly after that the stock rallied following a more optimistic outlook but that does not change my opinion on that stock. I have exited my very small position in International Business Machines (NYSE:IBM) as the business transformation does not look very promising right now and the company continues to post revenue declines for 5 consecutive years. Although the dividend yield has now almost reached 4%, I will very likely sit on the sidelines until I am comfortable in seeing a trend reversal here.
Let's now turn to my purchases on AT&T and ExxonMobil.
Why did I buy more AT&T?
AT&T, a U.S. based telecommunications giant providing solutions across the following segments: Business Solutions, Entertainment Group, Consumer Mobility and International, and sports a market cap of $237 billion.
Following its latest earnings release the stock plummeted and its yield reached that ominous 5% threshold again after having been lower in yield for several months.
When such a dividend stalwart is selling off that heavily, it always grabs my attention, and I am performing some due diligence to see if the stock is a buy now.
The stock price decreased notably following a rather significant revenue miss in the first quarter and a 3% YoY revenue decline. Despite net earnings remaining on track, the vulnerable revenue results disappointed investors.
Thought not as bad as what Verizon (NYSE:VZ) reported a couple of days earlier, AT&T also lost almost 350,000 postpaid phone subscriptions.
All this fueled a significant sell-off as investors got increasingly concerned over what had happened instead of envisioning the long-term prospects of the stock following the acquisition of Time Warner (NYSE:TWX) and AT&T's leading role in rolling out 5G networks.
The dividend is covered with quarterly free cash flow of $3.2 billion just exceeding quarterly dividends of $3.0 billion. Although the margin here is very small, the dividend remains very safe given the sheer size of the company and its ability to generate cash. There have certainly been cozier times in the past regarding AT&T's payout ratio, but with the company being right inside a large business transformation, such an apparently high payout ratio should not be that concerning. However, despite all the optimism here regarding the dividend, we should not forget that the market is pricing the stock for a reason in the 5% yield territory.
It is perceived as risky. Still, AT&T's large and reliable cash flows should allow the company to service its debt and grow its dividend, albeit slowly at first, going forward. I do believe in the company's transformation and do not overly single out one bad quarter and instead happily use that notable sell-off to add to my position and benefit from averaging down.
I consider AT&T to be one of the cornerstones in every dividend portfolio despite all the hiccup around recent earnings.
Why did I buy more Exxon Mobil?
Exxon Mobil (XOM), one of the world's largest corporations and the largest inside the Oil & Gas industry, has been trading sideways for months and was sporting a 3.8% yield when I grabbed shares following the company's excellent Q1 earnings.
On April 28, my birthday, the company reported breathtaking Q1 results. Certainly, earnings more than doubling and revenues rising 30% YoY made the headlines, but these did not come unexpected given a horrible first quarter in 2016 following the slump in oil prices back then.
What I liked much more is Exxon's strong cash flow generation, which allowed the company to easily cover its dividend and also raise it by 2.7% for the 34th consecutive time.
With commodity markets recovering, Exxon's earnings and cash flows soared.
The company delivered very solid business performance and investment discipline and also demonstrated its long-existing commitment to keep and sustainably grow the dividend.
This is exactly what I, as a dividend growth investor, am looking for. I am looking to add more in the future.
All purchases in April can be found below:
Dividend Income: What happened on the dividend side?
My income from 21 corporations amounted to $128.28 in dividends, up +31% QoQ and +620% YoY.
The top 5 companies are bringing in 57% of total income in April which is not nicely balanced yet but also distorted by that annual dividend payment from Daimler.
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 April dividends:
Expressing the monthly dividend income in terms of gifted working time is really motivating. Assuming an average hourly rate of $20 (I have now adjusted this figure to my actual hourly rate as suggested by mmarra2 in my previous portfolio update article), this translates to roughly 6.4 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 more than 65 hours (decreased compared to previous update following a higher average hourly rate). Assuming an 8-hour working day this translates to roughly 7 full days of active work that has been replaced by passive income since I started my journey.
At that pace I remain on track to 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 April, my projected forward income has now reached $1,990. Going forward, May, with most of my annually paying German dividend stocks about to pay, will easily break all previous records.
Here is a snapshot from the Dividend Calendar Tool about the expected dividend payments in May. As it does not support German stocks so far, this does not yet factor in at least another $100 in dividend payments from German companies. This tool has proved to be extremely useful for my tracking processes and I would be happy if you give it a try as well, for free of course.
My portfolio composition
As of today, based on cost basis, my portfolio is composed as follows:
|Altria Group Inc||(MO)||Consumer Goods||5.33%||25%|
|Omega Healthcare Investors Inc||(OHI)||REIT||4.50%||11%|
|Gilead Sciences, Inc.||(GILD)||Healthcare||3.30%||9%|
|Cisco Systems, Inc.||(CSCO)||Technology||3.29%||16%|
|Unilever N.V. (ADR)||(UN)||Consumer Goods||2.84%||25%|
|Royal Dutch Shell Plc||(RDSB)||Basic Materials||2.42%||12%|
|PepsiCo, Inc.||(PEP)||Consumer Goods||2.35%||25%|
|B&G Foods, Inc.||(BGS)||Consumer Goods||2.31%||25%|
|Royal Dutch Shell plc (ADR)||(RDS.B)||Basic Materials||2.19%||12%|
|Verizon Communications Inc.||(VZ)||Technology||2.06%||16%|
|Main Street Capital Corporation||(MAIN)||Financial||2.03%||14%|
|Philip Morris International Inc.||(PM)||Consumer Goods||1.96%||25%|
|Procter & Gamble Co||(PG)||Consumer Goods||1.87%||25%|
|Wells Fargo & Co||(WFC)||Financial||1.86%||14%|
|Bayerische Motoren Werke AG||(FRA:BMW3)||Consumer Goods||1.81%||25%|
|The Coca-Cola Co||(KO)||Consumer Goods||1.73%||25%|
|Bank of Nova Scotia||(BNS)||Financial||1.62%||14%|
|ExxonMobil Corporation||(XOM)||Basic Materials||1.60%||12%|
|Walt Disney Co||(DIS)||Services||1.46%||11%|
|Johnson & Johnson||(JNJ)||Healthcare||1.24%||9%|
|DuPont Fabros Technology, Inc.||(DFT)||REIT||1.19%||11%|
|General Mills, Inc.||(GIS)||Consumer Goods||1.17%||25%|
|Spectra Energy Partners, LP||(SEP)||Basic Materials||1.09%||12%|
|General Motors Company||(GM)||Financial||1.09%||14%|
|Senior Housing Properties Trust||(SNH)||REIT||1.07%||11%|
|CVS Health Corp||(CVS)||Services||1.05%||11%|
|Total SA (ADR)||(TOT)||Basic Materials||1.02%||12%|
|Commonwealth Bank of Australia||(CBA.AX)||Financial||0.87%||14%|
|Pebblebrook Hotel Trust||(PEB)||Services||0.81%||11%|
|CoreSite Realty Corp||(COR)||REIT||0.69%||11%|
|Canadian Imperial Bank of Commerce (USA)||(CM)||Financial||0.65%||14%|
|Citizens & Northern Corporation||(CZNC)||Financial||0.65%||14%|
|Colgate-Palmolive Company||(CL)||Consumer Goods||0.64%||25%|
|Flowers Foods, Inc.||(FLO)||Consumer Goods||0.62%||25%|
|JPMorgan Chase & Co.||(JPM)||Financial||0.57%||14%|
|Realty Income Corp||(O)||REIT||0.57%||11%|
|Stag Industrial Inc||(STAG)||REIT||0.55%||11%|
|Royal Bank of Canada||(RY)||Financial||0.50%||14%|
|Care Capital Properties Inc||(CCP)||REIT||0.49%||11%|
|Fortress Investment Group LLC||(FIG)||Financial||0.48%||14%|
|Honeywell International Inc.||(HON)||Industrial Goods||0.46%||0%|
|Teekay Tankers Ltd.||(TNK)||Services||0.44%||11%|
|Starwood Property Trust, Inc.||(STWD)||REIT||0.41%||11%|
|Time Warner Inc||(TWX)||Services||0.35%||11%|
|BP plc||(BP.L)||Basic Materials||0.34%||12%|
|Fresenius Medial Care||(FRA:FME)||Healthcare||0.33%||9%|
|Hospitality Properties Trust||(HPT)||REIT||0.32%||11%|
|CF Industries Holdings, Inc.||(CF)||Basic Materials||0.27%||12%|
|Apollo Investment Corp.||(AINV)||Financial||0.24%||14%|
|Apollo Commercial Real Est. Finance Inc||(ARI)||Services||0.24%||11%|
|DHT Holdings Inc||(DHT)||Services||0.23%||11%|
|Dominion Resources, Inc.||(D)||Utilities||0.00%||3%|
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, 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, 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.