2020 February Dividend Income + Warren Buffett's annual letter

Two months in to the new year and the markets are experiencing some significant volatility, down over 20% from their recent highs.  It is during these volatile times, that investors seemingly appreciate their dividend income even more - as it provides an opportunity to reinvest the income into equities that appear attractively valued for the long term.  The question for many investors in the coming weeks and months is what if any companies in their portfolios will need to cut their dividends and which companies will be able to weather the storm and be able to increase the dividend in the next 12 mos?  It will be interesting to see how things develop in the next 12 months to say the least.

2020 January Dividend Summary

Although January 2020 ended with a volatile week of trading largely attributed to the coronavirus, no on would be able to tell based the monthly dividend receipts the PIV portfolio collected.  Take a look below for an account of the dividend transactions.

2019 December Dividend Summary

Well folks, that's a wrap for 2019.  According to Forbes, the last trading session for 2019 "...capped off a strong year for the stock market: In 2019, the S&P 500 rose by 29%, the Nasdaq by 35% and the Dow Jones Industrial Average by 22%. Both the S&P 500 and Nasdaq posted their biggest one-year gains since 2013, while the Dow’s performance was its best since 2017." Quite a year indeed and few would complain about their portfolio's climb in valuation if they were anywhere near or above the 29% return for the S&P index, especially in light of the average annual return for the S&P since 1957 which is roughly 8%.  Without further ado, let's take a look at the dividend income for this past month as well as where the portfolio stands in terms YoY and YTD dividend trends, portfolio diversification and total value.

2019 November Dividend Summary

It has been a bit quite on the investing front as of late for the PIV portfolio.  As I have mentioned before, activity for the portfolio, particularly that of buying equity shares, has not been as frequent as I had envisioned at the beginning of the year, primarily due to valuations that on the whole appear to rather expensive despite many believing such premiums are justified given the historically low bond yields that are often seen as the alternative investment to equities.  In any event, dividends continued to trickle in during November, below is the latest summary and YoY comparison.

2019 October Dividend Summary

Market has been on a bit of a tear lately hitting new records highs in the past week.  Many of the stocks that I had been hoping to build as they hung out near their 52 week lows have seen a jump in their valuations along with the rest of the market as a whole.  Stocks like CVS, CAH, MMM and many of the banks recovered nicely and from a strictly valuation perspective, and may have plenty of more room to run in the near term.  As much as I hate to admit it, it is sometimes difficult to average up even when the current valuation of a company, although higher than what my current cost basis may be, is still below what I believe is a rough estimate of the company's intrinsic value.  CVS and DAL are probably both good examples of scenario as it relates to the PIV portfolio.  In any event, dividends continue roll in and cash in the PIV accounts is building much faster than I am choosing to invest in recent months.  See below for October's dividend summary.

2019 September Dividend Summary

The end of the year is quickly approaching and the local weather seems to be changing just as fast.  The rate at which the weather declined from the low 90s just a few weeks ago to now averaging highs from mid 50s to low 60s this week is a bit of surprise (with the lows dropping to near freezing during the nights).  Thankfully the decline in the temps has no bearing on my portfolio value or dividend income. For the first 9 months of the year, the PIV portfolio has experienced a nearly 25% dividend income increase compared to the same period in the prior and I anticipate the portfolio will end the year at about the same rate.  Below is the monthly dividend summary for September 2019.

2019 July Dividend Summary

Another month is in the books.  For the past few months, these dividend income posts have been the only blog updates since my buy or sell activity has been nearly non-existent, but not for lack of capital.  Available cash for investing has been growing at a normal pace, however, I've been exercising some caution as I believe better opportunities will present themselves, who knows, perhaps we'll see a repeat of Q4 volatility like we did late in 2018, I would love it.  In any event, one thing that has been constant this year, despite my portfolio transactions having been less frequent than I had anticipated, is the continuing climb in YoY dividend income.  See the summary below.

2019 May Dividend Summary

Nearly half way through 2019 and the dividend income is adding up nicely and is being reinvested almost as quickly as it is deposited into the investment accounts in an attempt to take advantage of relatively low valuations of particular securities with the hope of enhancing the compounding effect over the long term.  Recent examples of such investments include BAYRY, CVS, and CAH.  Each of these companies has its near term challenges such as legal battles, balance sheet leverage, and/or regulatory concerns.  However, despite these challenges each offers a compelling valuation backed up by a very generous free cash flow yield and attractive corresponding dividend yields to boot, which patient investors can collect as they wait for business to adjust and respond to the near term headwinds.  Recent operating cash flow yields for the aforementioned stocks equate to 16.6%, 11.8%, and 21.1%, respectively.  In regards to BAYRY, May was the first time the portfolio has collected a dividend from the company as it only distributes a dividend once a year.  Take a look at the summary below for a breakout of the dividend income received in May.

2019 April Dividend Summary

Better late than never as they say.  Life has been super busy both professionally and on a personal level as it typically is this time of year for me.  I have multiple kids playing baseball and a daughter involved in dance so once I am done with work for the day I am usually dashing off to one more activities each evening. However, despite these times, the one great thing about passive income is that my invested capital keeps working with very little, if any involvement, from myself day to day.  At most, I reinvest the passive income and allocate new capital to where I perceive the greatest value to be a few times each month.  Below is the April dividend summary which reflects a favorable increase in YoY dividend income despite an ad hoc transaction that impacted the portfolio's income in April.  See below for further details.

2019 March Dividend Summary

The first quarter of 2019 is a wrap.  Overall I'm pleased with the portfolio's start to the new year and the YTD dividend income YoY performance looking really good for Q1 which of course is substantially driven by the March results since many companies pay their dividend in the last month of the quarter.  See below for the details.

2019 February Dividend Summary

Two months into the new year and still have yet to make my first purchase for 2019.  Nonetheless, my inactivity has not precluded my accounts from receiving monthly dividend deposits.  February continued the streak of YoY dividend income gains, ringing in a favorable variance of 24%.  Take a look at the breakout of this monthly dividend income below as well as some highlights from my reading of Warren Buffett's latest annual shareholder letter.

2019 January Dividend Summary

Other than collecting dividends in the month, all other investment activity has been on pause for longer than usual.  However, the many purchases that occurred in 2018 resulting in the additional of fresh capital infused into the PIV portfolio and reinvestment of dividends set up 2019 to see a nice YoY gain of 91% despite one particular dividend cut from a very unloved, and understandably so, company.  Take look below for the details of last months dividend income.

2018 December Dividend Summary

I have been really excited to compose this blog entry to not only report December's dividend income, but to also look back on the YTD activity as a whole compared to last year and also document where the portfolio stands at the of 2018 going into 2019.  Without further ado, let's take a look at how year in dividends came to close.

2018 November Dividend Summary

Favorable trends continue for November's dividend summary with an earlier than anticipated dividend payment received from a new position that was just added recently.  Through November 2018, YTD dividend receipts are up 54% compared to same period for 2017 (excludes special dividend from NGG in 2017).  Rate increases in 2018 amount to 6.5% and reinvested dividends combined with investment of additional capital accounts for an increase 47.5%.  See below for a breakout of the monthly dividend income.

2018 October Dividend Summary

October, the first month of Q4, is a wrap. As this post goes live, it is nearly half way thru November and just over a week away from the Thanksgiving holiday.  October's dividend summary brings bittersweet reflection and analysis.  To start, the bitter part is the impact of the dividend reduction GE announced in late 2017 (which at the time announced was a 50% cut) is now showing up as an unfavorable rate variance in my dividend summary (initial purchase was made in the later half of 2017 and prior to commencing this blog) and what is worse is that this will continue for the next year so long as GE remains a part of my portfolio due to another dividend rate cut announced here from $0.12 a quarter to $0.01 - a 92% cut, ouch! I am holding my position for now and will continue to keep a close eye on it.  It is far from a DGI opportunity at this point and, if anything, may be a speculative play or valuation play at some point (may be worth mentioning that the new CEO, H. Lawrence Culp, Jr., recently purchased 225,000 shares at $9.73 on 11/1/2018).  Today's closing price was $7.99/sh 😣.  If there is anything sweet to be salvaged from this month's summary, it is that despite the rate cut in GE's stock, YoY dividend income in October is up 41.5% over last year.  See below for additional details.

2018 September Dividend Summary

The third quarter of the calendar year is now in the books and companies will soon begin to report the latest quarter of earnings.  As many well know, September is one of the big 4 months of the year that tends to tally a large sum of dividend receipts and there is no exception with my experience.  See below for the monthly along with the YoY variance allocation between rate and volume - netting an increase of 34.6% increase in dividends.

Recent Buy - Bayer AG (BAYRY)

I've had Bayer (BAYRY) on a watch list I have listing many companies that I would consider owning at reasonable valuations.  Those who follow the markets will know that Bayer has captured some headlines in recent years.  First, the company announced some time back that it would be acquiring Monsanto and the $63 billion transaction was completed in recently weeks.  However, just before the transaction was closed, the company found itself in the headlines again as result of California court awarding a plaintiff $289 million who had sued Monsanto, claiming that the company's herbicide had helped cause the plaintiff's cancer.  What's more, Bayer recently revised its guidance for 2018 downward by about (~7%), which results in a forward P/E multiple of 12.7 (resulting in an earnings yield of 7.87%).  With all this relatively bad news, one may think "what the heck are you doing investing your precious capital in this company?".  Well, in short, I think the long terms benefits greatly outweigh the near term risks.  I'll have additional commentary below, but before I get there, let's take a look at some of the basic metrics I typically review in consideration of a stock purchase.

2018 August Dividend Summary

Although summer is not quite officially over, the month of August is and that leaves us with four month to go to close out the remainder of the year.  With just eight months of dividend income in 2018, I have reaped 48% more in dividend income YTD than what I received by this same point last year in 2017.  Take a look below and view the results for August 2018.

Recent Buy - Kraft Heinz Co (KHC)

Earlier this week I added to my KHC position, nearly doubling its size.  I initially bought 50 shares back in April and have wanted to further grow the size of this position but have been patiently waiting for the price to retreat below $60.  Shortly after their earnings release, I thought that my opportunity might not come again as speculation arose that KHC might be a potential suiter for an acquisition of Campbell's Soup Co (CPB), which I also happen to own.  This speculation combined with the KHC beating analysts' expectations for Q2 earnings led to a one day jump in price, amounting to an +9% increase in stock price on August 3rd.  However, as the past few weeks have shown, this valuation jump did not last.  Details on the purchase along with the updated valuation metrics can be seen below. 

2018 July Dividend Summary

July is in the books and the month of August is just flying right by.  Of course, the fact that my wife and I took the kids on a camping trip down to California last week to camp with my wife's side of the family down in Malibu, CA likely contributes to the feeling of how time seems to be passing quite fast as of late.  We camped at a state campground called Leo Carrillo State Beach and had a great time.  We try to get down there every year, but have missed this venture that past couple of years.  Now that I am back home and back to our routine trying to catch up in some respects.  I feel like I have been inactive on the investing front, but I did make two separate purchases of AT&T (T) last month, but it feels like it has been longer than a few short weeks.  Nonetheless, the dividends have continued to roll in and which of course is satisfying to see.  Below the summary for July along with the YoY comparison.