Dividend Portfolio Review: New Dividend Record For May

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Includes: AAOI, AAPL, ABBV, AINV, AMD, ARCC, ARI, ATVI, AVGO, AYX, AZSEY, BABA, BAC, BASFY, BAYZF, BEP, BGS, BIP, BMWYY, BNS, BP, BX, BZUN, CBAUF, CL, CM, COR, CSCO, CTL, CVS, D, DATA, DDAIF, DHT, DIS, DRHKF, EA, ED, EPD, EQT, FB, FMS, FSNUF, GE, GILD, GIS, GM, HCR, HD, HON, HUYA, INCY, INTC, IQ, JD, JNJ, JPM, KMI, KO, LNXSF, MAIN, MCD, MDGEF, MIC, MMM, MO, MOMO, MS, MSFT, MU, NEP, NVDA, OHI, OSAGF, PEB, PEP, PFE, PG, PM, QCOM, QTS, RDS.B, RY, SEMHF, SHLX, SNH, SO, STAG, STWD, SXTSY, T, TD, TEAM, TGT, TNK, TTD, TTWO, TXN, UN, UNIT, V, VONOY, VZ, WB, WBA, WFC, WRCDF, XOM
by: Stefan Redlich
Summary

May recorded $440 in dividend come, up 20% Y/Y and 59% sequentially, making it the best month since I started my long journey.

May was a very busy month as I divested several smaller holdings as the trading war started to heat up.

I outline the portfolio composition by sector and portfolio weight for every holding.

Projected 12-month forward income has crossed the $3,000 mark, and Gifted Working Time amounts to over 60 hours.

It's May, and this is the best time of the year for a German dividend investor, as this is the month where most of Germany's companies distribute their annual dividends. As such, it was no surprise that May set a new record in dividend income, but I am still baffled by the amount and the growth compared to the previous year.

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With Trump catching investors completely by surprise when he announced new tariffs on Chinese exports, markets wobbled heavily and eventually took a significant beating as the month unfolded. I had to raise capital by selling out smaller holdings and carefully redeploy into larger holdings. So far however, "Sell in May and Go Away!" would have been the much better route to take.

Portfolio Changes | 1 new stock, 6 sales and 22 repurchases

I invested a net total of around $1,300 in May and grew the portfolio with one new stock I wanted to own for a long time, and suddenly a buying opportunity arose I had to take for an initial position in The Trade Desk (TTD).

There were no major purchases this month as the sudden flare-up in the trade war and the actions against Huawei were not painting an attractive picture for investing. Still, that did not mean I stopped investing as you never know how quickly things could change. At the same time, being able to buy quality businesses at fair prices has never been a bad idea.

On the sale side, I decided to reduce the number of positions in my portfolio by selling shares of Incyte (INCY), Electronic Arts (EA), Take-Two Interactive (TTWO), Consolidated Edison (ED), Qualcomm (QCOM) and Pebblebrook Hotel Trust (PEB).

With Qualcomm, I got very lucky as I was able to sell at around $86, only days before the disastrous court ruling hammered the stock price. Regarding Pebblebrook Hotel Trust, I was satisfied with the performance and the dividend income, but I did not see any major catalysts for the stock, and with around 4.5% YoC, it was also not that attractive in terms of dividend income. I would rather redeploy funds into BDCs like Mainstreet Capital Corporation (MAIN) or Ares Capital Corporation (ARCC).

Following the ex-dividend dates of Daimler (OTCPK:DDAIF) and BMW (OTCPK:BMWYY), I added to both my holdings and lowered my cost basis. The automobile sector is facing intense risks, but given how much both stocks have been beaten down, I was willing to take that risk and will monitor how it develops from there.

Speaking in terms of risk, I also added another share of 3M (MMM) at around 3.5% yield, the highest in years, as the stock continues to get punished for its disappointing operating performance and dark outlook.

Needless to say, that the stock has dropped even more since then and even dipped below $160, but catching the bottom is never easy. I also got tempted by the massive sell-out in the semis when I added to Nvidia (NVDA) and Micron Technology (MU) only to see both stocks drop almost another 20% since that purchase.

The other purchases I made are mostly routine investments between $50 and $115 each into Wells Fargo (NYSE:WFC), Visa (NYSE:V), McDonald's (NYSE:MCD), Johnson & Johnson (NYSE:JNJ), Apple (NASDAQ:AAPL) and the lesser-known Commonwealth Bank of Australia (OTCPK:CBAUF). In May I also added AT&T (T) and Home Depot (HD) to my automated savings plan.

All net purchases and sales in May can be seen below:

Investments

Dividend Income: What happened on the dividend side?

My income from 33 corporations amounted to $440 in dividends, up 59% sequentially and up 20% Y/Y. Although that's a new record and the first time I surpassed $400 in monthly dividends, it should be noted that unlike in 2018 both Daimler and BMW paid in May which naturally boosted dividend income. However, this effect is mostly balanced by the fact that I had sold Omega Healthcare Investors (NYSE:OHI), both Daimler and BMW cut their dividends, and Drillisch (OTC:DRHKF) slashed its dividend basically to zero as it is trapped in a red-hot bidding war for 5G licenses in Germany.

Break down of all dividends as follows:

Dividends

Here is a look at my favorite chart: the net dividend income development by month over time between 2015 and 2019, where you can easily see the development of my dividend income as well as the average annual dividend in a given year:

Next, I have scattered all the individual dividend payments I have ever received and colored them by year, rearranging the years side by side rather than horizontally as in previous updates:

The readability of the numbers is rather poor, as there is so much data, but the bigger picture becomes apparent regardless of these numbers. I am just looking at the size and quantity of the bubbles as they keep on climbing higher and expanding in size.

It remains fascinating to watch how all these metrics develop over time. Right now, as I am still in the early stages, these metrics are not that impressive but the growth is truly striking, and all these instruments help me measure it and provide meaning to it. Now that I have entered the fourth year of my road to financial independence, it is really motivating and encouraging to see how these bubbles are increasing in size and quantity and (slowly) moving up the scale.

Speaking in terms of meaning, another way to express the monthly dividend income is in terms of Gifted Working Time (GWT). I am assuming an average hourly rate of $25 here. In 2018, I generated 121 hours in GWT, equaling slightly more than $3,000 in annual net dividends. For this year, I am targeting a 15% increase. This results in $3,450 in targeted annual net dividends, or 138 hours in GWT.

What this shows is as follows:

  1. All time (blue area) - Around 294 hours, or 36.8 days, of active work have been replaced with passive income since the start of my dividend journey. Assuming a five-day work week, that equals more than seven full weeks, or more than an entire month, of vacation funded via dividends.
  2. YTD (green bars) - Around 61.1 hours, or 7.6 days, of active work have been replaced with passive income in 2019 already.

Upcoming June Dividends

The snapshot below is taken from my newly released Dividend Calendar & Dashboard Tool (make sure to follow instructions) and shows expected gross dividend payments for June.

My portfolio composition

At end of May, my portfolio is composed as follows:

Company Name Ticker Portfolio Weight
Apple Inc. (AAPL) 6.29%
Cisco Systems, Inc. (CSCO) 4.48%
AT&T Inc. (T) 4.34%
Visa (V) 4.24%
McDonald's Corp (MCD) 3.89%
Siemens Healthineers (OTC:SEMHF) 3.13%
Royal Dutch Shell (RDS.B) 2.98%
Altria Group Inc (MO) 2.53%
Johnson & Johnson (JNJ) 2.43%
Commonwealth Bank of Australia (OTCPK:CBAUF) 2.42%
Micron Technology, Inc. (MU) 2.34%
Southern Co. (SO) 2.19%
AbbVie Inc. (ABBV) 2.16%
Gilead Sciences, Inc. (GILD) 2.13%
Main Street Capital Corporation (MAIN) 2.05%
Microsoft Corporation (MSFT) 1.90%
Baozun Inc. (BZUN) 1.84%
Wells Fargo & Co. (WFC) 1.82%
3M Co. (MMM) 1.43%
Texas Instruments Incorporated (TXN) 1.41%
Daimler (OTCPK:DDAIF) 1.41%
Philip Morris International Inc. (PM) 1.28%
PepsiCo, Inc. (PEP) 1.28%
Toronto-Dominion Bank (TD) 1.27%
Wirecard AG (OTCPK:WRCDF) 1.22%
Bank of Nova Scotia (BNS) 1.22%
Honeywell International Inc. (HON) 1.19%
Bank of America Corp (BAC) 1.18%
Procter & Gamble Co (PG) 1.17%
Verizon Communications Inc. (VZ) 1.06%
Dominion Energy Inc. (D) 1.05%
Unilever NV ADR (UN) 1.03%
Canadian Imperial Bank of Commerce (CM) 1.01%
Alibaba Group Holding Ltd (BABA) 1.00%
BP (BP) 0.98%
B&G Foods, Inc. (BGS) 0.97%
Morgan Stanley (MS) 0.95%
Bayerische Motoren Werke AG Preference Shares (OTCPK:BMWYY) 0.94%
Intel Corporation (INTC) 0.89%
The Coca-Cola Co. (KO) 0.83%
Target Corporation (TGT) 0.78%
Advanced Micro Devices, Inc. (AMD) 0.77%
QTS Realty Trust Inc Class A (QTS) 0.77%
Ares Capital Corporation (ARCC) 0.76%
Allianz SE (OTCPK:AZSEY) 0.74%
BASF (OTCQX:BASFY) 0.70%
JPMorgan Chase & Co. (JPM) 0.70%
Blackstone Group LP (BX) 0.69%
Royal Bank of Canada (RY) 0.68%
General Motors Company (GM) 0.66%
Tableau Software Inc Class A (DATA) 0.65%
NVIDIA Corporation (NVDA) 0.63%
Sixt (OTC:SXTSY) 0.59%
Walt Disney Co. (DIS) 0.57%
Nextera Energy Partners LP (NEP) 0.55%
Stag Industrial Inc. (STAG) 0.51%
Pfizer Inc. (PFE) 0.50%
Momo Inc. (MOMO) 0.47%
General Mills, Inc. (GIS) 0.44%
Pebblebrook Hotel Trust (PEB) 0.43%
Kinder Morgan Inc. (KMI) 0.42%
Exxon Mobil Corporation (XOM) 0.39%
CoreSite Realty Corp (COR) 0.39%
Drillisch (OTC:DRHKF) 0.38%
Enterprise Products Partners L.P. (EPD) 0.37%
Bayer AG (OTCPK:BAYZF) 0.36%
Starwood Property Trust, Inc. (STWD) 0.32%
Senior Housing Properties Trust (SNH) 0.31%
Colgate-Palmolive Company (CL) 0.31%
HUYA Inc - ADR (HUYA) 0.31%
Apollo Investment Group (OTC:AINV) 0.30%
Fresenius SE (OTCQX:FSNUF) 0.29%
Atlassian Corporation PLC (TEAM) 0.28%
Shell Midstream Partners LP (SHLX) 0.28%
Broadcom Inc (AVGO) 0.27%
Omega Healthcare Investors Inc (OHI) 0.24%
Activision Blizzard, Inc. (ATVI) 0.24%
IQIYI Inc (IQ) 0.24%
JD.Com Inc (JD) 0.23%
Walgreens Boots Alliance Inc. (WBA) 0.23%
Consolidated Edison, Inc. (ED) 0.22%
Lanxess AG (OTCPK:LNXSF) 0.22%
CVS Health Corp. (CVS) 0.19%
Uniti Group Inc. (UNIT) 0.19%
Macquarie Infrastructure Corp. (MIC) 0.18%
Osram (OTCPK:OSAGF) 0.17%
Home Depot (HD) 0.17%
Facebook, Inc. Common Stock (FB) 0.17%
Qualcomm (QCOM) 0.15%
CenturyLink Inc. (CTL) 0.15%
Fresenius Medical Care (FMS) 0.15%
Teekay Tankers Ltd. (TNK) 0.14%
MediGene AG (OTCPK:MDGEF) 0.12%
Weibo Corp (WB) 0.12%
Apollo Commercial Real Est. Finance Inc (ARI) 0.11%
DHT Holdings Inc. (DHT) 0.11%
Brookfield Infrastructure Partners L.P. (BIP) 0.11%
Brookfield Renewable Partners (BEP) 0.11%
Vonovia (OTCPK:VONOY) 0.11%
EQT Corporation (EQT) 0.10%
TAKE-TWO INTERACTIVE SOFTWARE, INC Common Stock (TTWO) 0.09%
Alteryx (AYX) 0.08%
General Electric Company (GE) 0.07%
Incyte Corporation (INCY) 0.07%
Applied Optoelectronics Inc (AAOI) 0.05%
Hi-Crush Partners LP (HCLP) 0.03%

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Disclosure: I am/we are long ALL STOCKS MENTIONED. 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: I am not offering financial advice but only my personal opinion. Investors may take further aspects and their own due diligence into consideration before making a decision. I am long all stocks mentioned in the portfolio composition table.