This is my real-world portfolio which I plan to use to retire on within 3-5 years, intending to live entirely off dividend income. The bulk is in a taxable account but I began a Roth in 2017 which is a small portion. At this point I have 34 stocks. You can find the complete list at the bottom of this post.
Probably the best - but quite long - overview both of my investing goals and how I actually go about selecting companies is this post: Doing the "Deep Dive" for My Next Potential Stock Purchase.
June felt like a silly month to me. My Roth never came close to the February highs but my taxable account did and then some, enough so that on June 8 and for a couple of days around it I passed my all-time highs. The market pulled back a little - I lost about 2.8% from then to June 30 - but I'm not complaining. My taxable account is still above February 19. None of this represents the US economy but it does reflect monetary policy. I'm still just riding the ride for the most part.
My one dividend cut was Core Civic (CXW) which I almost immediately sold. I received three dividend increase announcements and a fourth that I'm calling an increase.
Here's a quick numbers summary:
- Number of buys: 2
- Number of sells: 1
- Dividend increase over June, 2019: 21.13%
- Dividend increase over March, 2020: -2.32%
- June change in overall portfolio value: 1.73%
- June change in taxable account value: 1.89%
- June change in Roth value: -1.17%
- Current overall portfolio yield: 3.64%
- Taxable account yield: 3.38%
- Roth yield: 8.53%
- Increase in annual (12-month) projected dividend income from May 31, 2020: 1.04%
Trades Made and Dividends Received
- 6/17/20 - Bought Philip Morris (PM) at $74.00
- 6/18/20 - Sold Core Civic (CXW) at $10.27
- 6/19/20 - Bought Exxon-Mobil (XOM) at $47.26
- 6/3/20 - Valero (VLO)
- 6/5/20 - Pfizer (PFE)
- 6/10/20 - Archer Daniels Midland (ADM)
- 6/10/20 - Exxon-Mobil (XOM)
- 6/11/20 - Microsoft (MSFT)
- 6/15/20 - NextEra Energy (NEE)
- 6/15/20 - LyondellBasell (LYB)
- 6/22/20 - Dominion Energy (D)
- 6/26/20 - Lockheed-Martin (LMT)
- 6/29/20 - Gilead Sciences (GILD)
- 6/30/20 - Ares Capital Corporation (ARCC)
- 6/30/20 - UnitedHealth Group (UNH) - increase from $1.08 to $1.25 per share
There really isn't a lot to say about the trades that I didn't cover in my post, Buying PM and XOM, Selling CXW. Buying PM was an "in system" purchase using accumulated dividends though I did play the "buy before the ex-dividend date" game which is not something I do a lot. CXW? Part of the reason for selling was a dividend cut it didn't need to make but the big reason is I don't know what the company plans to do. I try not to buy companies when I can't figure out what their business is and how they go about it. In this case I sold one.
On an even-up level swapping CXW for XOM represented a loss of dividend income but the combined purchases resulted in an overall increase.
Dividends rolled in but total June income is slightly below March's. Apple Realty's (APLE) dividend suspension is part of this but the main reason is because Newtek (NEWT) paid in March but won't pay for the 2nd quarter until July. Plug NEWT back in and I'd have had about a 2% increase.
To Cheer About: I appreciate the very nice increase I received from UNH. Yes, the yield continues to be low due to share price movement but the dividend growth has been terrific. Two Harbors (TWO) and New Residential (NRZ) both announced increases for July. Each of these represents a partial recovery from a 90% cut so while it's a step in the right direction they're nothing to get excited about. NEWT announced a $.56 per share dividend for July. It's a variable rate payer so these are a little harder to assess but last year it paid $.46 for the same quarter so I'm considering it an increase. They have been involved with SBA loan programs and have turned this into some solid revenue numbers.
Now for the Boos: I updated my spreadsheet dividend growth numbers. Every single change I made from when I last did this in December was to reduce a company's historical 5-year DGR. Based on five-year dividend growth numbers, my portfolio's annual internal (organic?) dividend growth rate is now 8.62%, down from 9.30%. A few cuts and several companies delaying the date of their usual dividend increases will do that. Hopefully it starts heading the other way before long but I don't know if or when this will happen. These are tough times. A year or two of some token increases may be coming.
So ultimately, the dividend train kept rolling. I had more increase than decrease announcements though the CXW cut was a big one. But I was able to increase my 12-month projected dividend income during the month so I am fairly pleased.
Chart of the Month I have a bunch of charts in my Excel spreadsheet. I think I'll start plugging one of these in each month, just need to remember to rotate them. This one tracks my monthly dividend income progression since entering the market in March, 2017.
Monthly Dividend Income with Trend Line:
Plans Going Forward
I'm pretty short of cash right now though the dividends I've received since buying PM and XOM have begun to replenish things. I could buy something after Altria (MO) and PM pay on July 10 - I'll add to existing positions with buys as small as $1,000. What the market does will influence my approach. If it drops I may wait a bit until I have the $5,000 I need to enter a new position in case something I like drops. July is a lighter dividend month so this will probably be in August. Companies I am interested in but do not yet own, along with my target prices, are:
- Chlorox (CLX) - $105.00
- Duke Energy (DUK) - $75.00
- Con Edison (ED) - $65.00
- Home Depot (HD) - $200.00
- Pepsi (PEP) - $100.00
- Texas Instruments (TXN) - $100.00
Besides this list Proctor and Gamble (PG) has some recent growth numbers I haven't cared for but it sure has done well recently. I haven't given CLX or PEP a close look (have for the others) since December. I'll likely do that over the 4th of July weekend to see if I should adjust their target prices.
On the sell side, once their prices recover I plan to sell Tanger Factory Outlet Centers (SKT), NRZ and TWO. I don't have a target sell price but all three are far too exposed to economic downturns to be the sort of companies I want to own. I doubt their prices come up enough in July but you never know. I have three other REITs and three BDCs and haven't decided what I'll do with them yet.
So this was June. Solid month but not spectacular - a little boring actually other than the CXW news. My projected annual dividends increased a little though they are still below where they were entering March. I continue to buy stocks as dividends accumulate. It feels like progress.
I'll post my second quarter update within the next few days.
Happy investing everyone!
One-time NOTE: SA has a disclosure section to fill out. It's a hassle. Since I'm not getting paid to blog, from now on I'm listing everything I own in the last paragraph of my posts rather than using that feature.
I am long: AAPL, ABBV, ADM, AOS, APLE, ARCC, BBY, CGBD, CVS, D, GD, GILD, GOOGL, IRM, ITW, LMT, LYB, MO, MSFT, MSM, NEE, NEWT, NRZ, OHI, PFE, PM, SKT, T, TWO, UNH, VLO, VZ, WSM, XOM.