May 2020 Dividend Investing Review

Welcome to the dividend investing review for May. It is hard to believe that we are in June already. This year is just flying by even if we are still in lockdown. There is light at the end of the tunnel though as there are quite a few restrictions being lifted from Monday.

Typically May is a busy month for me but this year it was a little bit extra special with my sister giving birth to my godson. The only Issue I have is that he is all the way over in New York so I have to wait a little while to see him but I am hopeful i will get to new York before the end of the year.

Dividend Income

May has been my best month yet. It feels nice to be back in the 3 figure club after reaching the club for the first time in February. The one thing I like the most about dividend investing is that you can easily see how much you are growing each and every month.

In May I collected a dividend total of $131.43. My YoY growth was 483% compared to the $22.53 I received in 2019. A total of 12 companies paid me a dividend with 4 newcomers to the list this year.

The biggest payout was from Tanger Factory Outlet Centers which is a shame because they have currently suspended their dividends.

Dividend Raises

There were 5 dividend increases compared to May 2019.

AOS, EV and ABBV gave nice healthy raises. While O and ETN were not so good, at least they beat the annual inflation rate for the United States which was 0.3% for the 12 months ended April 2020.

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.

May Investments

May was an average month in terms of buying shares where I have added to 3 existing companies and 1 new company. I also sold all my shares in Walt Disney after they cut a dividend.

Why I sold Disney

I got a bit of a mixed reaction when I posted this on Twitter here. But for me, I bought Disney as a dividend growing company and not a growth company.

With a decent Payout ratio and a bright future, I felt they would do well long term while increasing dividends.They did not raise the Dividend in December before the pandemic so when they cut the Dividend altogether they no longer fit my initial thesis.

Since I sold them at $101.48 their share price has increased to $124.81. Was it a mistake? Given that we were in a pandemic, there could be some level of forgiveness for companies that cut their dividend. Especially when it makes sense to try and save the business. The Sunday investor also wrote a good post which shows that a dividend cut may not always be negative.

Why it wasn’t a mistake

However, I don’t believe it was a mistake for me personally. I have an investment thesis where I am focusing on income-generating assets right now. Disney no longer fit into my thesis so I had to sell. I did not know the price would jump so high afterward the cut. They could just of easily have fallen to $70. I always think it is important to have a plan and stick to it. There is no point in having a plan if you change the rules to suit when something goes against you.

The one lesson I have learned from this is that I currently have no provisions for growth stocks in my portfolio. This is something I am hoping to address over the next few months. I should also revisit my investment thesis around a dividend cut. Maybe a dividend cut should not be an automatic sell.

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 in line with their average raise of 6.32% over the last 5 years. This is 1.6% below the 5-year DGR for the S&P500

Dividend per share – Courtesy of IOCharts.io

JNJ engages 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 3 shares of JNJ. which gives me an added $12.02 in forward income.

Medtronic PLC (NYSE : MDT)

I have mentioned in the past that I felt I was very light in the healthcare sector and MDT seems like a good fit. MDT is a dividend Aristocrat with a 42-year dividend increase streak and they are headquartered in my homeland. What’s not to like about them?

To make them even more appealing they have a nice and healthy 55% payout, A 2.12% dividend yield but most importantly over a 10% 10-yr DGR.

I added 5 Shares to my portfolio which gives me an expected forward income of $10.80

Verizon Communications (NYSE : VZ)

Verizon communications are in the Telecommunications sector. They have a payout ratio of 52%, A healthy 4.2% dividend yield but a low 2.7% 10 yr DGR

I added 6 Shares to my portfolio which gives me an expected forward income of $14.76

Walgreens Boots Alliance(NYSE : WBA)

Walgreens Boots Alliance is in the Consumer Staples sector. They have a payout ratio of 47%, A healthy 4% dividend yield and a nice 13.6% 10 yr DGR

I added 5 Shares to my portfolio which gives me an expected forward income of $9.15

My Portfolio

In total, I spent $1398.43 with an expected forward income of $46.73. This gives a dividend yield of 3.34% which was double what I was receiving from Disney. I still have the same amount of stocks after selling Disney but buying Medtronic. As a result, my exposure to healthcare is increasing slowly but still a bit off from where I would like it. I have already made some purchases this month which may close the gap a little bit more, but that is for next months review 🙂

Thanks for reading and happy investing

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