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Blue Chip DRiP Portfolio: Record Dividend Income To Close Out 2019

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Includes: ABBV, ADM, AM, ARCC, AVGO, BP, BPR, CAH, D, DEA, ENB, ET, F, GD, GLW, IP, IRM, JNJ, KEY, KHC, KO, LAND, LYB, MCD, MMM, MSM, NWL, PFE, PFF, PRU, QCOM, RDS.B, SBUX, SO, SPG, T, UPS, V, VLO, WBA, WFC, WRK, XOM
by: Blue Chip DRiP
Summary

The holidays have come and gone, and so has 2019. Let's ring in the New Year with a record-breaking December update and new goals for 2020!

The portfolio had our best month yet - receiving $1835.96 in dividend income from 33 different stocks. That brings our 2019 total dividend earnings to $7649.87, smashing our goal of $6,500.

We made 4 cash buys and 13 DRiPs in December. These investments add $262.57 annually, bringing our total forward estimated annual dividend income to $15,570.66.

Two of our holdings paid increased dividends in December. Our current, updated portfolio is below.

That's a Wrap on 2019

Wow. December flew by in the blink of an eye. Film a two-week HBO pilot - check. Relocate the family from California to Idaho - check. Christmas and Hanukkah festivities and gifts - check. As I pen this article from the comfort of a camp chair in an echoey living room, my family eagerly awaits the moving trailer with all our belongings crammed into it. This has been an expensive month, both financially and emotionally. Moving definitely takes a toll on the body and mind... and the pocket book.

Although I wasn't able to save and invest as much as I'd hoped in December, it was a great reminder of some significant principles. The road is never straight, and life can sure throw a wicked curve ball. It's especially important during times of strife that we keep our eyes laser-focused on the prize. Nobody said financial freedom was gonna be easy. Nothing worth attaining ever is. Whether saving and investing $10 or $1000 or $1 million a month, the keys remain the same. Consistency and discipline. Pay yourself first, find time to invest, seek out diamonds in this overvalued environment of soaring stock prices... and most critical, no friends on a powder day.

Goals Achieved, Let's Set Some More!

At the risk of sounding like a broken record, I can't stress enough the importance of conceiving and achieving goals. Repetition of incremental achievements is essential and makes success habitual. In my November Review, I stated my final remaining dividend income goal for 2019:

  • Generate $6,500 in total dividend income by the end of 2019.

We already earned over $5,800 coming into December, so we needed just under $700 to achieve the goal. I'm happy to report that December 2019 has been our highest dividend-paying month ever! With $1835.96 collected, our 2019 dividend income total is up to $7649.87, crushing our final goal of 2019! I must say, setting and achieving all of our dividend income goals for 2019 has been very satisfying!

No time to rest on our laurels. Here's our next set of dividend goals for 2020:

  1. Generate $2,000 in dividend income in one month.
  2. Generate $15,000 in total dividend income by the end of 2020.
  3. Increase our forward estimated annual dividend income to $20,000 by the end of 2020.

Dividend Income: Full Year 2019

As mentioned earlier, we pocketed $7649.87 in dividend income during 2019. I started the Blue Chip DRiP portfolio at the end of February, which is why the first two months of 2019 show goose eggs for dividend income. Otherwise, I'm dead set continuing the consistent growth trend and look forward to our first full year of earnings in 2020.

Dividend Income Received: December 2019

Ticker / Stock Name Income (Sept.) Income (Dec.)
(ADM) Archer-Daniels-Midland $33.25 $33.25
(ARCC) Ares Capital $84 $108.9
(AVGO) Broadcom $37.10 (Oct.) $71.94
(BP) BP plc $61.50 $98.40
(BPR) Brookfield Property REIT $57.75 $108.20
(D) Dominion Energy $70.65 $70.65
(DEA) Easterly Government Properties $26 $39.32
(ENB) Enbridge Inc. $63.63 $85.94
(F) Ford $30 $67.99
(GLW) Corning Inc. $15 $32
(IP) International Paper Company* NA $41
(JNJ) Johnson & Johnson $15.20 $44.65
(KEY) KeyCorp $45.33 $45.33
(KHC) Kraft Heinz $20.00 $40.00
(KO) Coca-Cola $20.00 (Oct.) $26.95
(LAND) Gladstone Land Corp. $10.02 $10.04
(LYB) LyondellBasell Industries $76.65 $76.65
(MCD) McDonald's* NA $18.75
(MMM) 3M $47.52 $83.52
(NWL) Newell Brands $52.90 $53.57
(PFE) Pfizer $18.00 $39.60
(PFF) iShares U.S. Preferred Stock ETF $16.02 $40.90
(PRU) Prudential Financial $57.00 $57.00
(QCOM) Qualcomm Inc. $52.70 $53.12
(RDS.B) Royal Dutch Shell $75.20 $75.20
(SO) Southern Company $62.00 $62.65
(UPS) United Parcel Service $19.20 $38.55
(V) Visa* NA $3.60
(VLO) Valero Energy Corp. $63.00 $76.50
(WBA) Walgreens Boots Alliance $27.45 $38.89
(WFC) Wells Fargo $25.50 $51.00
(WRK) WestRock Company $22.75 (Aug) $41.85
(XOM) Exxon Mobil $63.51 $100.05
* = New position Total: $1268.83

Total: $1835.96

Increase: 44.69%

Noteworthy Tidbits

  • Our highest dividend payer for the month: Ares Capital with $108.90. Coming in a close second was Brookfield Property REIT with $108.20.
  • December income of $1835.96 was $567.13 more than the $1268.83 received from the previous quarter/September payouts. That's a whopping 44.69% increase QoQ!

So, why the large QoQ increase in dividend income? A few reasons:

  • Dollar-cost averaging. I deployed new cash to these tickers before their most recent ex-div dates: ARCC, AVGO, BP, BPR, DEA, ENB, F, GLW, JNJ, KHC, KO, MMM, PFE, PFF, UPS, VLO, WBA, WFC, WRK, XOM.
  • New positions. IP, MCD, and V added income this month that didn't exist in September. Happy to have these new members in the family!
  • Dividend increases. Broadcom increased its dividend by 22.6%, from $2.65 to $3.25 annually. WestRock increased its dividend by 2.2%, from $1.82 to $1.86 annually. These combined raises account for a $13.64 increase to our annual passive income. This may seem like peanuts to some. Considering I would need to invest $341 in a stock paying a 4% yield to earn $13.64/year, I see it as a testament to the power of dividend increases.

Stock Transactions: December 2019

We made 4 cash purchases in December:

Ticker / Name # of Shares Share Price Amt. Invested Est. Annual Income
(BPR) Brookfield Property REIT 60 $18.11 $1086.60 $79.20
(MSM) MSC Industrial Direct Co.* 15 $71.56 $1073.40 $45.00
(SBUX) Starbucks* 17 $87.47 $1486.99 $27.88
(SPG) Simon Property Group 8 $144.01 $1152.08 $67.20
Total: $4799.07 Total: $219.28
* = New Position 4.57% avg. yield

We had 13 DRiP (dividends automatically reinvested) purchases in December:

Ticker/Name Amt. Reinvested # of Shares Share Price Est. Annual Income
(PFF) iShares U.S. Preferred Stock ETF $40.90 1.11 $36.85 $2.22
(SPG) Simon Property Group $151.20 1.01 $150.35 $8.48
(F) Ford $67.99 7.62 $8.93 $4.57
(UPS) United Parcel Service $38.55 .34 $115.51 $1.31
(SO) Southern Company $62.65 1.01 $62.13 $2.51
(XOM) Exxon Mobil $100.05 1.44 $69.61 $5.01
(JNJ) Johnson & Johnson $44.65 .32 $141.73 $1.22
(MMM) 3M $72 .43 $170.29 $2.48
(NWL) Newell Brands $53.57 2.8 $19.11 $2.58
(KO) Coca-Cola $26.15 .48 $54.45 $0.77
(QCOM) Qualcomm $53.12 .6 $88.70 $1.49
(DEA) Easterly Government Properties $39.32 1.68 $23.24 $1.75
(ARCC) Ares Capital $103.71 5.56 $18.66 $8.90
Total DRiP: $853.86

Total: $43.29

5.07% avg. yield

December Purchases: Takeaway

  • Cash invested $4799.07 + DRiP reinvested $853.86 = $5652.93 total invested in December.
  • These investments add approximately $262.57 of annual passive dividend income.
  • This raises our estimated forward annual dividend income to $15,570.66
  • Moving forward, I can expect to pocket an average of $42.66 of passive income each and every day without lifting a finger! In my bachelor days, that might have been enough to live off of. But with two kids, a wife, and a dog, and living in a ski town and having a healthy addiction of traveling and mountain biking thousands of miles a year... I've still got a lion's share of work to do to achieve 100% financial emancipation. But the groundwork has been laid, and I wouldn't change a thing.

We opened 2 new positions in December - MSC Industrial Direct Co. and Starbucks. If you'd like to read my deep dive articles regarding these purchases, they are available here: MSC Industrial Direct Co. and Starbucks. We are glad to have them as part of the Blue Chip DRiP family. Otherwise, we continued to employ diversified dollar-cost averaging within existing positions. We try to balance purchases between lower-yielding/higher dividend growers and some higher-yielding players, with a potential higher-risk/speculative company sprinkled in for flavor.

Diversification Checkup: Sector Allocations

Stock Sector Current % of Portfolio Goal % of Portfolio
Basic Materials 4.68% (was 4.71%) 5%
Communications 5.52% (was 5.57%) 5%
Consumer Cyclical 5.00% (was 4.61%) 5%
Consumer Defensive 7.27% (was 7.30%) 8%
Energy 17.71% (was 17.19%) 12%
Financial 11.70% (was 11.95%) 10%
Health Care 11.27% (was 11.70%) 10%
Industrials 8.72% (was 8.66%) 10%
Real Estate / REIT 12.55% (was 12.49%) 12%
Technology 8.21% (was 8.32%) 10%
Utilities 5.88% (was 5.97%) 10%
Misc. (ETFs, Funds) 1.49% (was 1.53%) 3%
100% 100%

I do not include cash in the allocation chart, but I do keep $20-30k in dry powder available in case a great opportunity presents itself. As you can see in the chart, there are no major changes since last month. The biggest increase was in the Energy sector, mainly because stocks like Energy Transfer LP (ET) and Antero Midstream Corp. (AM) have bounced back a little recently. I'm overweight in Energy and underweight in Technology and Utilities. That's ok. I'm not a "stickler" for exact allocations and won't buy purely based on sector. I do, however, like having a guideline to make sure we stay the course. In the coming months, I'd like to add to my Utilities, but they've run up pretty high and I don't want to chase. If they correct down to a more enticing valuation, I will pounce.

Top 10 Holdings: Ranked by Position Size

Below are my Top 10 Holdings ranked by position size within our portfolio. I include last month's rankings for comparison, as well as their contribution to our passive income stream.

Ticker / Name Ranking Percentage of Portfolio Ann. Div. Income
(SPG) Simon Property Group 1 (was 4) 3.7% (was 3.49%) $680.48
(ET) Energy Transfer LP 2 (was 3) 3.64% (was 3.5%) $1127.09
(T) AT&T 3 (was 2) 3.61% (was 3.61%) $626.70
(ABBV) AbbVie 4 (was 1) 3.5% (was 3.63%) $608.88
(MMM) 3M 5 (was 5) 3.16% (was 3.16%) $336.56
(XOM) Exxon Mobil 6 (was 8) 2.49% (was 2.51%) $405.21
(VLO) Valero Energy Corp. 7 (was 6) 2.44% (was 2.6%) $306
(GD) General Dynamics 8 (was 7) 2.38% (was 2.57%) $179.52
(QCOM) Qualcomm Inc. 9 (was 9) 2.34% (was 2.3%) $213.98
(BPR) Brookfield Property REIT 10 (NA) 2.20% (NA) $511.99

As a rule of thumb, I try not to let any single position grow over 5% of the overall portfolio value. This rule is not hard and fast but keeps me from getting carried away with any individual holdings, no matter how glorious they may seem.

Notable changes since November

SPG jumped into the #1 spot because I increased my position. ET moved up a little bit because of the recent increase in share price. The biggest change was Brookfield Property REIT nudging Cardinal Health (CAH) out of the number 10 spot. This was due to increasing my position in BPR. Other than that, my top holdings stayed pretty much the same MoM.

Top 10 Holdings: Ranked by Income Generated

This is another fun chart that I added this month. I thought it might be beneficial to track my biggest dividend payers:

Ticker / Name Ranking Estimated Annual Income % of Portfolio Income
(ET) Energy Transfer LP 1 $1127.09 7.24%
(AM) Antero Midstream Corp. 2 $824.10 5.29%
(SPG) Simon Property 3 $680.48 4.37%
(NYSE:T) AT&T 4 $626.70 4.02%
(ABBV) AbbVie 5 $608.88 3.91%
(BPR) Brookfield Property 6 $511.99 3.29%
(ENB) Enbridge 7 $457.25 2.94%
(ARCC) Ares Capital 8 $423.75 2.73%
(IRM) Iron Mountain 9 $407.55 2.62%
(XOM) Exxon Mobil 10 $405.21 2.60%

As with position size, I try not to let any single position generate over 5% of the portfolio's total dividend income. Again, this rule is not hard and fast, but it helps keep me accountable. ET is now responsible for over 7% of our total dividend income, with AM generating over 5%. To keep myself sleeping well at night, I won't add to these positions until I balance income more appropriately.

The Whole Enchilada: The Blue Chip DRiP Portfolio as of 12/31/19

Last but not least is a spreadsheet of the entire Blue Chip DRiP Portfolio as it currently stands. Although overall value and unrealized gains/losses are not my primary focus, this is where I keep tabs of everything:

Looking Forward to the New Decade

We were blessed with a white Christmas and New Years here in Sun Valley, Idaho. The skis are waxed and the fat bike tuned up. Here's to a prosperous 2020 balanced with enjoying life in the "now" and investing for a financially free "tomorrow". We hope you find some useful nuggets in these monthly reviews that help as we strive towards investing goals together.

Curious... what's on your 2020 watch list? What would improve my monthly reviews? Looking forward to the comments!

PS: Thanks for clicking the "Follow" button, and feel free to read my other articles. Best of luck as we journey towards financial emancipation!

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: This is not stock advice. These are purely my opinions. I'm not a professional. Do your own research. Best of luck in your investing journey!