April 2020 Dividend Investing Review

Man, I am over this lockdown. At this moment in time, I should be sitting in a nice pub or café in Budapest. Drinking a nice malt whiskey or two. Along with finance, One of my main passions is travel. I like to go somewhere new and experience different cultures and places.

It makes me a little bit sad to think I won’t be traveling anywhere anytime soon but every cloud has a silver lining and the extra money I save can not be put to good use.

Looking at my investments I would say this month has been a good month in terms of my financial education. I finally started to try and learn and understand ETF’s.

With a high tax rate (41%) I made a case of sticking with investing in single companies. I think the high Tax rate influenced my decision fairly early on. For anyone who is interested I am working on another post which will examine the impact of TAX a little more in-depth.

I have also started to look at my investments a little bit differently. I’ve mentioned this before but when I started a couple of years ago I followed a monthly newsletter by Dividend growth investor. This newsletter has been hugely instrumental in starting my own journey. And instrumental in selecting my own screeners. However as this post quite rightly points out there can be dangers in just having screeners.

Screeners have their place of course but screening companies and aimlessly buying them based on 4 or 5 metrics is probably not wise. I got a little taste of the dangers when Shell cut their dividend. This left me thinking about my strategy to sell or not based on a dividend cut.

I came across this blog on twitter but I think European DGI gives a good write up on his thoughts about $RSD.A dividend cut

 Dividend Income

We have not yet eclipsed the 3 figures of dividend income in a single month since February. But Boy are we getting closer.

In April I collected a dividend total of $90.12. My YoY growth was a whopping 145.69% when compared to the $36.68 in 2019. A total of 13 companies paid me a dividend with 4 newcomers to the list this year.

The biggest payout was from Altria Group where I had increased my position in January. This accounted for over 33% of my dividend income for the month.

Dividend Raises

The good news is that 6 of the previously held companies increased there Dividend.

Nothing overly exciting here. Glanbia was the only company to increase in double digits by 10%. The others were not great but at least they beat the annual inflation rate for the United States which was 1.5% for the 12 months ended March 2020.

In total this dividend raises will increase my expected forward dividend income by $2.61 per quarter or $10.44 a year. This will buy me an extra 2 cups of coffee a year.

Dividend Chart

The chart below shows the Dividends I received in 2019 in Blue. The Red is what I have received so far this year and the green is the projected dividend income. The projected income is assuming that there are no dividend cuts and I add no more cash to my investments.

In Reality I will be continuing to add €1250 which will bring in roughly €37 in forward income each month.

April Investments

As promised, I kept my cool this month after a hectic march and have only added to my position in two of my existing companies.

In fact, I did not deploy all of my capital available this month. This is because I want to refine my strategy a little bit further to not just rely on simple screeners. Check out future posts where I discuss this.

Johnson & Johnson (NYSE : JNJ)

Johnson & Johnson (JNJ) is a dividend king which has increased its dividend for 58 years in a row. Their latest increase was 6% but was more significant as it has come in the middle of this covid 19 pandemic.

A 6% raise is inline with the their average raise of 6.32% over the last 5 years. This is 1.6% below the 5 year DGR for the S&P500

JNJ is engaged in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices & Diagnostics.

Last Month I added 1 single share of JNJ. This came from Dividends. Unfortunately my Broker Degiro does not offer automatic reinvestment of dividends. This is a shame but it also means I have to deploy the dividends manually to ensure I am compounding my gains.

The single addition brings my total exposure up to a mouth-watering 3 shares with an expected forward income of $11.40.

3M (NYSE : MMM)

3M is another dividend King who have increased their dividends for 61 years in a row. The dividend increase chart is not as pretty as JNJ but at least it is going in an upward projection.

Their last increase was 5.88% which is well below their 5-year DGR of 10.99%. Their payout ratio is just above 75% which may be one of the reasons why the growth rate is slowing down. But looking at previous years they have had a couple of years above 15% which I think skews the average a little bit.

I added 4 more shares of $MMM which brings my total exposure up to 9 shares and a forward income of $52.92.

My Portfolio

At the moment I have 40 companies in my portfolio. For the moment while I am analyzing my overarching strategy I am not looking to add any more companies. 40 companies are enough to be monitoring for the time being.

Thanks for reading and happy investing!

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