Dividend Stock Purchase: Lanny's July 2021 Summary

Summary

• The journey to financial freedom does not take breaks and one must continue to persevere through uncertainty, put cash to work and push that forward dividend income forward.
• Investing consistently in Dividend Income Stocks allows you to create & build another income source.
• Stick to the strategy that works for you, but review if there is anything that may impact your strategy going forward.

Cn0ra/iStock via Getty Images

Welcome back to another month of Dividend Stock Purchases! 2021 is flying by, seven months are closed already. The S&P 500 is getting so, so close to 4,500 – not sure how businesses are truly able to continue to crush earning estimates and show promising outlooks. The Delta-Variant has the world concerned and we are still barely at 51% vaccinated here in the U.S.; that needle is barely moving, literally.

The journey to financial freedom does not take breaks and one must continue to persevere through uncertainty, put cash to work and push that forward dividend income forward. What did July 2021 activity show? You will have to dive in and see the dividend stock purchases!

Dividend Stock Purchase And Dividend Income: Path to Financial Freedom

Investing consistently in Dividend Income Stocks allows you to create & build another income source. Dividend Income is our primary vehicle on the road to Financial Freedom, which you can see through my Dividend Portfolio, which continues to build and build. Further, I have written about every stock purchase and month of dividend income since we started this site, plenty of dividend history for you, the reader!

How do I make dividend stock purchases and screen for dividend stocks? I usually put the stocks through our Dividend Diplomat Stock Screener and trade on Ally Bank’s investment platform (one of our Financial Freedom Products).

Purchasing dividend stocks takes capital or money. How do I build the capital to make these stock purchases? I save anywhere from 60-85% of my take-home pay and strongly believe Financial Freedom does not happen by hitting a home run on an investment. Nothing matters more than your savings rate on your journey to Financial Freedom, plain and simple. Therefore, I work my butt off to make sure expenses remain in-check and that my savings rate is meeting our investment and financial independence goals! Then, you rinse and repeat.

Dividend Stock Purchase Activity

My dividend stock portfolio was burnt by dividend cuts in 2020 and lost over $800+ in forward dividend income. Therefore, I was ready to get back to basics and acquire more shares in the best quality dividend stocks out there.

In fact, I believe Dividend Stocks and Dividend Growth is BACK! I even wrote about this in my article related below and we have kicked off a fun dividend news series, going over the amazing dividend announcements we have seen recently.

Starting in June 2020, I was really on my investment game, investing back to higher than normal levels, due to low investment levels in April & May. I was investing close to $3,500 to $5,000, in total with my wife, starting in June of 2020, and the momentum hasn’t stopped purchasing dividend stocks! In 2021, I have seen dividend stock purchases, in total, amount to approximately $4,000 – give or take a few hundred dollars.

Therefore, it’s time to see if my July dividend stock investments finished strong. Time to see the dividend stock purchases below.

Vanguard High Dividend Yield (VYM)

You’ll see in my stock purchase activity below, I invested quite a bit into a Vanguard Exchange Traded Fund (ETF). This has helped me amass an investment with Vanguard of over $35,000 since last year!

I make a weekly purchase of 3 shares into Vanguard’s High Dividend Yield ETF. There were no special opportunities/large drops in the market, therefore I only bought on Mondays throughout July, see the screenshot below:

Vanguard High Dividend Yield has 412 different stocks and 3 of their top 10 holdings are dividend aristocrats, such as Johnson & Johnson (JNJ), Procter & Gamble (PG) and Exxon Mobil (XOM).

This will be different than other dividend stock purchase summary posts and how I breakdown each investment. I usually like to use the Dividend Diplomat Stock Screener and I will do my best to use on the VYM ETF.

1. Price to Earnings: Based on the metrics below, the ETF shows signs of undervaluation at ~19.9x earnings. The stock market is well over 35x+ earnings, which is insanely overvalued. Therefore, VYM shows positive signs here.
2. Payout Ratio: The Dividend Payout Ratio is between 60% and 65%. This is right at the ceiling of where we like the dividend payout ratio to be and sure is higher than that perfect dividend payout ratio.
3. Dividend Growth Rate: Dividend growth rates of over 7%+ over the last 9 of 10 years, with consistent dividend increases, is excellent. There is no wonder why this is considered a high dividend yield fund. Also – in case you missed it – they had a huge dividend increase from last year for Q1, to the tune of 18%!
4. *Bonus* Dividend Yield: Given the trailing 12 month dividend is $3.00 and the average share price that I acquired them of $104.46 (in my taxable account), the dividend yield averaged 2.87%. This is significantly higher than the S&P 500 index and is a dividend yield slightly at my overall dividend stock portfolio (currently). That’s what happens with the stock market keeps setting records.

In total, my dividend stock purchases of VYM, in my taxable account (as I purchased 5 shares in my Roth), totaled $1,253.52, acquiring 12 total shares. This added $36 in forward dividend income. I will continue this going forward, 3 shares per week. This will allow me to stay invested and have time in the stock market, versus timing the stock market.

Verizon Communications (VZ)

I was busy buying the king of 5G communications during the month of July 2021. Why? Well, first Warren Buffett owns $8 billion worth of this dividend stock.

Next, this dividend stock has been routinely on my dividend stock watch list. Their stock price truly has not changed this year and has remained in the rough range of $54-$58 per share.

However, as always, prior to purchasing, I ran Verizon through the Dividend Diplomats Stock Screener. Therefore, let’s see how VZ stacked up within the stock screener:

1. Price to Earnings: 25 analysts are projecting $5.12 for FY 2021 earnings. Therefore, based on an average purchase price of $55.64, the price to earnings on 2021 projection is 10.87. This is significantly below the S&P 500, currently, as well as other competitors. See the analyst projections below.
2. Dividend Payout Ratio: At a dividend per year of $2.51 and earning projections stated above for 2021 at $5.08, the dividend payout ratio is perfect, or at least what we consider to be a perfect dividend payout ratio. We love the dividend payout ratio in the 40%-60%, which we consider the perfect payout ratio sweet spot. Therefore, Verizon retains half of the earnings to continue development and growth, but still uses 49-50% of their earnings to pay back their shareholders!
3. Dividend Growth: Verizon is heading down the road of a dividend aristocrat. Verizon has increased their dividend for 16+ years, albeit at an average dividend growth rate of 2%.

Overall, I purchased 8 more shares of Verizon at an average price of $55.64 for a total capital deployment of $445.12. This added $20.08 to my forward dividend income projection.

I am well on the road to 100 shares of Verizon. I’ll continue to keep watching and possibly acquiring more shares, so long as the stock price stays below $56. See my Verizon stock activity below:

Viatris (VTRS)

Yes, you read that correctly – Viatris! I have been adding shares quite often lately, as they are the spin-off from Pfizer (PFE) and the joint company with Mylan. The company owns brands such as Lipitor, Viagra and Xanax, to name a few.

In fact, Viatris just crushed estimates – analysts were expecting $0.88 this quarter, but instead, Viatris reported earnings of $0.98. This sent the stock price soaring well over 5% today, see the shot below:

However, though they are now over $15 per share, I obviously was buying at much lower prices. Here is how Viatris performed through our dividend stock metrics:

1. Price to Earnings: 14 analysts are projecting $3.53 for FY 2021 earnings. Therefore, based on an average purchase price of $13.75, the price to earnings on 2021 projection is 3.89. This is significantly below the S&P 500, currently, and a P/E ratio of 4 is a little unbelievable. See the analyst projections below.
2. Dividend Payout Ratio: At a dividend per year of $0.44 and earnings projections stated above for 2021 at $3.53, the payout ratio is only 12.5%. Let’s think about this here. The payout ratio is only 12.5%. The safety is immense here in the dividend and Viatris has plenty of room to reinvest back into the business and jack up the dividend when they want to!
3. Dividend Growth: This is to be determined until they are a public company for longer, as it hasn’t even been a year yet.

Overall, I purchased 35 more shares of VTRS at an average price of $13.75 for a total capital deployment of $481.17. This added $15.40 to my forward dividend income projection.

One could argue to keep buying shares, as the metrics are simply phenomenal, wow. Here is proof of my stock purchases of Viatris:

Provident Financial Services (PFS)

I have been preaching about Provident Financial Services for a few months now. This is a great community bank, that is simply growing at each quarter-end, whether it be through organically or through merger & acquisition. Provident is based in New Jersey and definitely has good market ground in that general area – such as New York, Pennsylvania, etc.

Given how pumped up I am about Provident, let’s see how they turned out through the Dividend Diplomats Stock Screener:

Overall, I purchased 36 more shares of PFS at an average price of $21.63 for a total capital deployment of $778.72. This added $33.12 to my forward dividend income projection. Here is the screenshot of my July purchase activity of Provident:

Dividend Stock Purchase Summary (Plus the ~$500 and Less)

Now that most of us here in the U.S. have the access to buy stocks at zero cost, my stock purchases can be smaller than usual. The brokerages really have paved the way to make it “easier” or at least, less costly, for investors. Thank you Robinhood, Charles Schwab, E-Trade, you name it! I easily have saved hundreds of dollars this year alone in trading fees.

Given that, I don’t want to dive into so much detail on smaller purchases. Therefore, the remaining dividend stock purchases will be reflected in a screenshot below. The screen is directly from the brokerage that I use – Ally Investing.

Here are the screenshots from my April Dividend Stock purchases!

Taxable Account:

Roth IRA:

Sales for the month: No sales for the month.

I summed up everything here and no real small stock buys. You could say I was very focused in July, to say the least.

In addition, I purchased 5 more shares of Vanguard’s VYM in my Roth IRA, as I thought the price was low enough to add shares from the idle cash in my Roth IRA.

In total, I deployed a total amount of $3,474.20 and added $115.28 to our forward dividend income, equating to an average dividend yield of 3.31%. The average dividend yield of 3.31% is above my portfolio, in total, and definitely adds to my forward passive income. Financial freedom, getting closer baby!

My Wife’s Dividend Stock Purchase Summary

My wife has accounts where we also make dividend stock purchases. Though we are married, we are still running two separate, individual, taxable accounts. All is good, especially because we use the same platform, but just haven’t wanted to deal with the administrative tasks of combining. In actuality, I don’t think it’s even possible to combine on the retirement-based accounts.

We weren’t too busy buying stocks this past month, but managed to snag a few shares. As stated earlier, we are also acquiring 3 shares of VYM per week, to stay invested in the market.

Taxable Account:

Roth IRA:

We added the traditional 12 shares of Vanguard, just like my account. However, the dividend stock purchases did not stop there.

We have analyzed and talked about the undervalued dividend stock of SpartanNash (SPTN). This undervalued stock is yielding over 4% with a dividend growth rate at ~7%. The payout ratio is in the perfect range and it’s hard not to like what they are bringing to the table.

We also added 2 shares to the dividend aristocrat – Walgreens Boots Alliance (WBA), grabbing some yield at a decent price.

My wife’s portfolio is typically full of safe and sound dividend investments and since we’ve been together, her portfolio has been blossoming into an extremely significant part of our family’s finances.

In total, $2,247.29 was put into investments, producing $54.74 in Dividend Income going forward. This is an average dividend yield of 2.44%.

Summary & Conclusion

We are back to over $4,000 for the month I’ll try to continue the trend in August. However, with the stock market at all-time highs will make things a little more difficult/interesting here. Combined, my wife and I invested $5,721.49 for July and added $170.02 to our forward dividend income total (2.97% yield overall)! Just shy of $6,000. Not sure I’ll be able to keep it this high!

I will maintain my main message. Stick to the strategy that works for you, but review if there is anything that may impact your strategy going forward. You are in control and the emotion button is hard to turn off. Persevere and stay consistent, if you are able to. Time to lock in and stay ready for further opportunities. This was one step closer to financial freedom and I hope to continue making strides. Lastly, my dividend portfolio has been updated to reflect all dividend stock purchases above (outside of my wife’s).

I am continually looking at my August Dividend Stock Watch List and always keeping an eye on the stocks on Bert’s expected dividend increases, as well. It is all about the road to financial freedom and I cannot wait to have that crossover point. That crossover point where the passive income, from dividends, overcomes the total expenses in a given month.

I know I’ve said it many times, but each and every month, we do make inches towards the financial freedom goal. We will get there and we are very excited you have joined us on the journey.

Thank you for stopping by, good luck and happy investing out there!

Original Post

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.