Sand In My Shoes - April Update

Includes: HRL, MMM, PEP, WRK
by: Brian Soule

The broader markets are up for a fourth straight month, and my portfolio has benefited from this action.

Dividends for April were low (as expected), but some new additions and several dividend increases have added nicely to my future retirement income.

The plan that is in place seems to be working well, and we are going to stick with it until it is not.

The S&P 500 is up 17.5% year to date through April 30th. That is a remarkable return for a single year, never mind for one-third of a year.

Now, nobody expects the market to be up 17.5% again this summer and 17.5% again this fall, but a market like this results in two things. First, it is getting very hard to find a good bargain. And second, the equity portion of my portfolio is growing much faster than the fixed income portion.

But the good news from the dividend front keeps rolling in. While April is historically a slow month for dividends in my portfolio, the projected dividends for the rest of the year and for the next 12 months are up. And, that's what I'm focusing on, which will be helpful when this nice run eventually ends. Image Credit

April Dividends

Dividends in April

All graphs and charts created by author unless otherwise specified

So, total dividends paid in April were actually down from January, but remember the PepsiCo (PEP) dividend artificially inflated January's dividend total. The April total this year easily surpassed the same month from last year (see below).

April Performance

There you can see the happy news; the Sand in Shoes portfolio is up 12% for the year so far. Since I've started purchasing shares of fixed income funds, I can say the income from those funds has been edging up for the past several months. Just in November, the income was $408.61.

With over $100,000 in fixed income investments in the portfolio, certainly, the twelve hundred I've invested in the past three months are not the sole reason for the 10% jump, but, of course, it has had something to do with it.

I plan on turning up the contributions into my fixed income investments a little bit, to the point I'm investing slightly more than the previous month's payout.

Again, I would dearly love to be pumping the $400+ per month into dividend paying stocks, but as you will see below, the asset allocation continues to be out of whack. And, maybe in the next (and inevitable) downturn, I will be very happy that my fixed income investments are paying out nicely, so I can scoop up bargains as I see them.

Individual Stocks

Below, you can see the positions in the Sand in Shoes portfolio as of the end of April 2019. If you are extremely perceptive and have a great memory, you will see a new position, which I'll discuss below shortly. The portfolio yield has dropped from just barely 3.7% to a bit over 3.5%. Part of that is the addition of the relatively low-yielding Hormel Foods Corp. (HRL), and part of that is the price increase in many of the stocks I own.Positions as of April 30

Every one of my financial stocks were up over 10%, adding over $1,100 to the gains. But these were offset by $600 in losses in my REITs, and almost $550 in a single stock, namely 3M Co. (MMM). Another stock that offset some of my other gains was Hormel, which was down almost 11% from March 31 (which, spoiler alert, is why I added shares of that stock this month).

Projected Dividends

Projected Dividends

Total expected dividends for the year 2019 now total $3,267.24. It appears the new normal for a quarter is now well over $800. I am looking forward to, soon, reporting that the new quarterly total is $900. Or, shortly thereafter, that the yearly total is $4,000. Which probably won't be long. And, I couldn't be more happy about that.

Sector Diversification

Consumer Discretionary 7.5%
Consumer Staples 9.2%
Energy 7.3%
Financials 10.6%
Health Care 10.4%
Industrials 8.2%
Materials 13.4%
REIT 10.2%
Technology 8.5%
Telecom 6.4%
Utilities 8.3%

You may remember that I am trying to keep each of the eleven sectors at an equal weighting - so roughly 9% per sector. Because of my new addition, the materials sector is now quite a bit overweight. It seems the best place to add new money would be the telecom sector or maybe consumer discretionary or energy. Despite the recent drop in my REIT stocks, the sector is still a bit overweight, though less so than March.

Asset Allocation of the Portfolio

Asset Allocation of overall portfolio

Domestic fixed income continues to be well below my target level, but I am at least trying to stem the damage as I talked about earlier by purchasing more fixed income investments with the distributions. Now, the international fixed income has also dropped well below my target. I will continue to monitor these asset classes and continue to add funds as best I can.

Sales and Purchases in April

I sold just under $1,500 of the S&P 500 index fund as was the plan. As you can see above, I still have over $38,000 left in that fund.

With most of those funds, I purchased 30 more shares of HRL at $41 per share on April 12. As I type this, HRL is under 40. So, again, I didn't catch the low, but I am very happy with this purchase even so.

A little later in the month on April 17th, I purchased 27 shares of WestRock Co. (WRK) for $36.15 per share. The yield on the stock had just crested 5%, which is a very juicy yield for a company like WRK. I have long been following this stock and couldn't pass up the opportunity to snap up a few dozen shares. I have an article percolating for this most recent purchase, so stay tuned.

Forward-Looking Dividends

And now, for what has become my favorite section of these update articles. Below, you can see my projected dividends for the next twelve months, given information available as of April 30. The total, if nothing changes (it will) for the next twelve months, is $3,346.77.

Of course, I plan on adding new shares every month, and of course, since my portfolio is comprised almost exclusively of stocks with growing dividends, I do expect this total to increase each and every month. Considerably.

Dividends Rolling 12 months

In my portfolio, there were six dividend increases announced last month. Below, you can see the impact those increases plus my addition of HRL and WRK shares had on the annual retirement income for the fetching Mrs. Soule and myself. Changes - Dividends 12 Months Rolling Once again, as last month, I did not quite get to $100. But I got pretty close. If I add an average of $100 in dividends per month, I will crush my goal of $10,000 in dividend payments in a single year by 2027.

And, here is the chart I started using to trace projected dividends back in August of last year. Fairly steady climb so far, and I expect it will stay fairly steady as long as my plan of adding roughly $2,000 to a new or existing position continues.

Final Thoughts

Yet another good month, and unless you have a lot of junk in your portfolio, you are likely up double digits this year as well.

My dividends for April were less than exciting, but the first month of each quarter is the lowest one for my portfolio. May and June will be much more interesting, and the 2nd quarter of 2019 will be well over $800 in dividend income, with most of those dividends already declared.

The future is looking bright, and the plan is moving along nicely. I have designs to add in excess of $450 to my fixed income investments in May. I will almost certainly be selling roughly $1,500 of my S&P index fund in May and purchasing additional shares of stock, whether that be entering a new position or adding to an existing one.

I hope everyone is enjoying these updates, and I wish you all the best of luck in reaching whatever goals you have set for yourself. I look forward to reporting milestone after milestone as I reach them, and I definitely look forward to getting some more sand in my shoes.

Disclosure: I am/we are long AAPL, AMGN, APD, BAC, BLK, C, CSCO, CVS, ED, EMN, GPC, HD, HRL, IFF, ITW, JNJ, LEG, MMM, MMP, O, OHI, PEP, PPL, SO, T, VZ, WMT, WRK, XOM. 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.