Seeking Alpha

November 2019 Dividend Portfolio Update

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Includes: AAPL, ABBV, AINV, ALB, AM, APLE, ARCC, ARI, ATVI, AVGO, AZSEY, BA, BAC, BAYZF, BEP, BGS, BIP, BMWYY, BNS, BP, BX, CBAUF, CL, CM, COR, CSCO, CTL, CVS, D, DDAIF, DHC, DHT, DIS, DRHKF, DXC, EPD, EQT, ET, FMS, FRO, FSNUF, GE, GEO, GILD, GIS, HD, HON, INTC, JNJ, JPM, KMI, KO, LNXSF, MAIN, MCD, MIC, MMM, MO, MPLX, MS, MSFT, NEP, NVDA, OSAGF, PEP, PFE, PG, PM, QTS, RDS.B, RY, SHE, SHLX, SO, SPG, STAG, STWD, SVC, SXTSY, T, TD, TGT, TXN, UN, UNIT, V, VONOY, VZ, WBA, WFC, WRCDF, XOM
by: Stefan Redlich
Stefan Redlich
Growth, dividend investing, long-term horizon, value
Summary

November generated $262 in dividend income, up 14% Y/Y and 10% sequentially.

I raised capital in November for private purposes by selling out smaller positions and closing a larger one. Despite net investments below $0 forward dividend income continued to rise.

Projected 12M forward income has eclipsed $3600 with Gifted Working Time amounting to over 5 weeks YTD.

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

Stock continued to move upward in November setting new all-time highs across the board fueled by optimism regarding the phase 1 trade deal and a surprisingly calm month in terms of Trump's tweets.

So far it has been another banner year for stocks but after last year's heavy December sell-off the bar has been lowered substantially at the beginning of this year and all those not panicking on Christmas last year have been gifted a huge present. With the Holiday season having been launched now I am not expecting any type of similar gift this year but it all depends on if the trade deal is inked and Trump agrees to lower rather than raise tariffs.

Dividends

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Portfolio Changes in November

It was another busy month for me as I scrambled to raise capital in order to pay for taxes and ancillary costs related to my latest real estate investment. Thus I was forced to sell stocks and it was quite difficult to do as ultimately I had bought them as I considered them to be a good investment case.

I completely exited my position in General Motors (NYSE:GM). Since my purchase two years ago the stock was hardly moving at all. Occasional sharp gains following strong performances in North America were quickly eliminated over the next couple of months. Dividend growth is non-existent and despite very healthy coverage based on earnings payout ratios, cash flow based metrics present a different picture due to giant capital expenditure (up to $27B per year). I am not thinking the dividend will be cut right now but during the next recession whenever that will occur a cut is inevitable. Closing that position reduced my annual dividend income by $30.4.

I also sold out my small positions in Frontline (FRO) and German chemical company Lanxess (OTCPK:LNXSF) thereby reducing dividend income by around $4.50. Frontline had a great run following the sudden explosion of tanker rates and after having been deeply in the red over the last couple of years I was relieved to be able to close the position at a significant profit. It was always meant to be a small speculative gamble (as my expertise is definitely not in understanding these type of businesses) and it paid off. For the same reason I also reduced my position in another shipper - Teekay Tankers (NYSE:TNK) - a stock which was down as much as 70% in my portfolio at its peak. This was even more speculative but given the massive depreciation of that stock price over the last two years I am still keeping a small speculative position to purely gamble with.

I also sold one share of Target (TGT) before earnings which was a bet on the wrong direction but I surely was not expecting Target to come up with another home run and fly even higher. Having said that I am also not disappointed about that given that I still have a couple of shares and those I sold I bought at around half the price, i.e. that it is just a matter of realizing big profits or even bigger profits.

These sales reduced dividend income by a total of $37.45 annually but all that lost income was more than offset by a couple of purchases mentioned subsequently:

  • Speculative buy The GEO Group (GEO): +$13.44 dividend income p.a.
  • Conviction buy Apple Hospitality REIT (APLE): +$12 dividend income p.a.
  • Conviction buy Energy Transfer LP (ET): +$10.98 dividend income p.a.
  • Speculative buy Service Properties (SVC): +$10.80 dividend income p.a.
  • Speculative buy DXC Technology (DXC): +$3.36 dividend income p.a.

Those irregular purchases added $50.58 in forward dividend income offsetting all of the lost income. On top of that purchases related to my regular monthly stock savings plans added a further $15.14 in dividend income resulting in a net annual dividend income increase of around $28.

I also extended the scope of my monthly savings plan by adding Boeing (BA), Broadcom (AVGO), J.P. Morgan (JPM) and Microsoft (MSFT) to the list of stocks, four stocks I have very strong confidence in over the long-term.

All net purchases and sales in November can be found below:

Dividend Income: What happened on the dividend side?

My dividend income from 28 corporations amounted to $262, up 10% sequentially and 14% Y/Y. Strong Y/Y growth is driven by ongoing purchases in AT&T (T) - by far the largest dividend contributor with a share of around 30% in November alone - and AbbVie (ABBV) with the latter also growing its dividend by a juicy 10.3%. This also positively influenced sequential development. The biggest driver for quarterly growth though were my various purchases and additions to MLP stocks of ET, MPLX (MPLX) and Antero Midstream Partners (AM) with the latter being very speculative and prone to a dividend cut anytime. Recent purchases of Simon Property Group (SPG) and APLE - a monthly dividend payer I am very keen on extending to a sizable position in 2020 - also helped.

All dividends break down as follows:

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:

This view looks very cluttered at first, but it is very rich in information. It shows every single dividend payment I have received since I started my journey in 2015 in the shape of circle colored differently by year and sized based upon their contribution. The view is broken down by month and by year (not by year and by month!) and thus allows to better see the development over time. For every year of a certain month, a white rectangle indicates the average monthly dividend. The area where dividends fall below that average is filled dark red whereas the area above is colored dark green. Personally, I absolutely love this redesigned view of my old "bubbles chart" as it is much clearer to identify developments and trends in my dividend income.

Now, zooming in on November only and arranging the view differently in the shape of a whisker plot shows the range of dividend income by individual stock over the years. This allows to easily spot dividend growth and dividend cuts, as for instance, the whisker around SHN is very tall with a blue circle of 2018 at the maximum and a pink 2019 circle showing the massive dividend cut.

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 361 hours, or 45.2 days, of active work have been replaced with passive income since the start of my dividend journey. Assuming a five-day workweek, that equals more than two entire months of vacation funded via dividends.
  2. YTD (green bars) - Around 127.8 hours, or 16 days, of active work have been replaced with passive income in 2019 already. That equals more than three full weeks of work.
  3. Highlighted in pink is the accumulated YTD total at the end of the current reporting month (November) across each year.

Now that the year is almost over I know for sure that I will achieve my target of 138 hours which is great given that I have been able to add less capital than expected to my portfolio throughout the year as I haven't factored in the big tax payments and real estate cost into my yearly planning. Once December is completed I am expecting GWT to have reached around 140 hours which would imply almost one entire active working month has been replaced with passive income. That would be a milestones towards my goal of obviously replacing 100% of active working time with passive income.

Upcoming December Dividends

The snapshot below is taken from my Dividend Calendar & Dashboard Tool (make sure to follow instructions) and shows expected gross dividend payments for November spearheaded by that big quarterly dividend from AT&T.

My dividend portfolio composition (excludes non-dividend paying companies)

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

Company Name Ticker % Market Value Market Value (€)
Apple Inc. (AAPL) 8,44% 8.734
AT&T Inc. (T) 5,91% 6.109
Visa Inc Class A (V) 5,25% 5.430
Mcdonald's Corp (MCD) 4,13% 4.269
Cisco Systems, Inc. (CSCO) 3,76% 3.893
Johnson & Johnson (JNJ) 2,77% 2.870
Commonwealth Bank of Australia (OTCPK:CBAUF) 2,74% 2.833
Royal Dutch Shell Plc Class B (RDS.B) 2,71% 2.805
Southern Co (SO) 2,61% 2.697
Altria Group Inc (MO) 2,56% 2.644
AbbVie Inc (ABBV) 2,51% 2.596
Wells Fargo & Co (WFC) 2,48% 2.570
Microsoft Corporation (MSFT) 2,34% 2.416
Main Street Capital Corporation (MAIN) 2,25% 2.330
Gilead Sciences, Inc. (GILD) 2,17% 2.244
Siemens Healthineers (SHE) 2,08% 2.148
Bank of Nova Scotia (BNS) 1,64% 1.692
3M Co (MMM) 1,50% 1.551
Texas Instruments Incorporated (TXN) 1,50% 1.549
Procter & Gamble Co (PG) 1,40% 1.452
PepsiCo, Inc. (PEP) 1,40% 1.450
Bank of America Corp (BAC) 1,32% 1.370
Philip Morris International Inc. (PM) 1,27% 1.311
Toronto-Dominion Bank (TD) 1,26% 1.301
Honeywell International Inc. (HON) 1,23% 1.269
Daimler (OTCPK:OTCPK:DDAIF) 1,19% 1.235
Canadian Imperial Bank of Commerce (CM) 1,16% 1.199
Verizon Communications Inc. (VZ) 1,15% 1.194
Wirecard AG (OTCPK:WRCDF) 1,14% 1.180
Dominion Energy Inc (D) 1,13% 1.172
Unilever NV ADR (UN) 1,05% 1.084
Morgan Stanley (MS) 1,00% 1.036
Intel Corporation (INTC) 0,99% 1.027
The Coca-Cola Co (KO) 0,94% 975
Blackstone Group LP (BX) 0,94% 975
QTS Realty Trust Inc Class A (QTS) 0,93% 961
NVIDIA Corporation (NVDA) 0,93% 959
JPMorgan Chase & Co. (JPM) 0,93% 957
BASF BASFY 0,92% 956
BP plc (BP) 0,91% 939
Target Corporation (TGT) 0,87% 904
Bayerische Motoren Werke AG Preference Shares (OTCPK:OTCPK:BMWYY) 0,83% 855
Ares Capital Corporation (ARCC) 0,82% 847
Allianz SE (OTCQX:OTCPK:AZSEY) 0,76% 785
B&G Foods, Inc. (BGS) 0,76% 782
Royal Bank of Canada (RY) 0,69% 716
Nextera Energy Partners LP (NEP) 0,65% 671
Walt Disney Co (DIS) 0,65% 668
Sixt (OTC:SXTSY) 0,59% 612
Stag Industrial Inc (STAG) 0,54% 559
CVS Health Corp (CVS) 0,53% 545
Pfizer Inc. (PFE) 0,47% 485
General Mills, Inc. (GIS) 0,47% 482
Enterprise Products Partners L.P. (EPD) 0,46% 475
Kinder Morgan Inc (KMI) 0,43% 446
Shell Midstream Partners LP (SHLX) 0,42% 435
Bayer AG (OTCPK:OTCPK:BAYZF) 0,40% 416
CoreSite Realty Corp (COR) 0,40% 409
Exxon Mobil Corporation (XOM) 0,36% 371
Broadcom Inc (AVGO) 0,35% 366
Starwood Property Trust, Inc. (STWD) 0,35% 359
Apollo Investment (OTC:AINV) 0,33% 341
Colgate-Palmolive Company (CL) 0,30% 309
Energy Transfer Partners (ETE) 0,29% 302
Activision Blizzard, Inc. (ATVI) 0,29% 300
Senior Housing Properties Trust (SNH) 0,29% 298
Apple Hospitality REIT (APLE) 0,28% 290
Fresenius SE (OTCQX:OTCQX:FSNUF) 0,28% 287
Brookfield Infrastructure Partners L.P. (BIP) 0,27% 283
Drillisch (OTC:OTC:DRHKF) 0,27% 276
Lanxess AG (OTCPK:LNXSF) 0,26% 269
Walgreens Boots Alliance Inc (WBA) 0,26% 265
Home Depot (HD) 0,24% 252
BP (BP) 0,23% 243
Osram (OTCPK:OSAGF) 0,23% 236
Macquarie Infrastructure Corp (MIC) 0,19% 194
Centurylink Inc (CTL) 0,19% 192
Brookfield Energy Partners (BEP) 0,17% 172
The GEO Group Inc (GEO) 0,17% 171
DHT Holdings Inc (DHT) 0,14% 146
Fresenius Medial Care (FMS) 0,12% 129
Uniti Group Inc (UNIT) 0,12% 126
EQT Midstream Partners (EQT) 0,11% 119
Apollo Commercial Real Est. Finance Inc (ARI) 0,11% 117
Albemarle Corporation (ALB) 0,11% 116
Vonovia (OTCPK:VONOY) 0,11% 115
Service Properties Trust (SVC) 0,10% 108
MPLX LP (MPLX) 0,08% 87
General Electric Company (GE) 0,08% 80
Boeing (BA) 0,05% 47

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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.

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.