March 2020 Dividend Investing Review

March has been a bit of a crazy Month, even for dividend Investors. Unless you have been living under a rock I am sure that you have been keeping up to date with what has been happening with COVID-19.

On a personal front, it has also been a bit of a roller coaster. Ireland has been in a lock down of sorts since the first week of March. This has meant that we had to close our doors to our cafe. Unfortunately leaving all of our staff on temporary leave.Including my wife. March is usually a Month where we celebrate as it was March 2016 when we first opened our door.

Luckily, I still work as an Controls Engineer in a Medical Device Company so our income hasn’t been impacted by a major amount. But it sucks to have to close for a few weeks.

On a more positive note, my dividend game has been strong this month once again. It may not have reached 3 figures like I did in February. But we still had massive growth from the same period last year!

Dividend Income

In March I collected a dividend total of $75.56. My YoY growth was a whopping 165% when compared to the $28.42 in 2019. A total of 14 companies paid me a dividend with 5 newcomers to the list this year.

Three of the newer companies , UPS, IBM,and LYB accounted of just under 50% of the dividend income for the month. This is mainly because last year I changed how I was buying companies each month. When I started, I was investing in 10 companies per month as I was following the dividend growth investor newsletter.

As I got more comfortable and started to learn how to chose companies on my own I only invest in one or two companies each month. I use Degiro (affiliate link) which has pretty low fees but doing 10 trades a month was costing €5. Stripping this back to 2 trades I was saving €4 a month which is €48 a year. It all adds up!

Dividend Raises

The good news is that each of the previous 9 companies increased their dividend.

The stand out performer is SJM who increased the dividend by by a nice and healthy 12.82%. The next best was AMP who gave a nice and healthy 7.78% increase. The rest of the increases were not impressive by any means but with the exception of MMM they all at least beat the annual inflation rate for the United States which was 2.3% for the 12 months ended February 2020.

In total this dividend raises will increase my expected forward dividend income by $1.57 per quarter or $6.28 a year.

Dividend Charts

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 their 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.

March Investments

March has been a busy month where I bought shares in a total of 13 different companies. This was a mix of reinvesting dividends and new capital.

Sonoco Products Company (NYSE :SON)

Sonoco Products Company (SON) is a $5 billion global provider of consumer packaging, industrial products and packaging supply chain services. Over the last 37 years, SON has increased its dividend each year making them a Dividend Aristocrat.

Last month I added 11 shares to my position in SON. This brings my total share in SON to 21 with an average cost of $51.07 per share. The current annual dividend is $1.72 per share which gives me an expected income of €36.12 for the year. Enough to pay my phone bill for 1 month!

SON currently have a healthy payout ratio of 48.7% which means that there is still some room to grows those dividends for a few more years to come.

Franklin Resources Inc. (NYSE: BEN)

Franklin Resources (BEN) is a global investment management company that provides investment management and related services to retail, institutional and high net-worth clients in jurisdictions around the world.

Last month I initiated a new position in BEN and bought 25 shares at an average price of $22.70. With a Annual dividend of $1.08, this gives me a healthy 4.75% dividend yield. Furthermore the 10 year DGR was 14.02% which if they keep up this rate would ensure my payment would increase nicely over the next few years. Keep in mind they boost a low payout ratio of 43.02% so I am hoping the dividends will be safe even throughout this COVID-19 pandemic

Community Trust Bancorp (NASDAQ: CTBI)

I added a single share to my portfolio of CTBI. Unfortunately my broker does not automatically reinvest dividends not does it allow to buy partial shares so using my dividends I purchased 1 share at $39.36. This brings my total shares in this company to 11. Below are some of the reasons why I used my dividends to purchase 1 share.

• Shares bought: 1
• Cost : $ 39.36
• Average Shares Cost: $41.18
• Annual Dividend: $1.52 per Share
• Expected Earnings: $16.72
• Dividend Yield: 3.69%
• Dividend Increases: 39
• 10-Year DGR: 3.09%
• P/E Ratio: 10.63
• Payout Ratio: 41.76%

Eaton Vance Corp (NYSE: EV)

Eaton Vance (EV) engages in the creation, marketing, and management of investment funds in the United States. It also provides investment management and counseling services to institutions and individuals. The company is known as a dividend aristocrat because it has increased dividends consecutively annually for 39 years.

I added 13 shares of BEN to my portfolio which increases my exposure to 18 shares in total. The average price per share is $42.14 which gives me a yield of 3.55%. The 10 year DGR is 8.59% and their current payout ratio is 42.86%

Cisco Systems (NASDAQ: CSCO)

My portfolio was rather light when it came to tech stocks, which is a little bit ironic because I am a bit if a tech geek. Cisco was on my radar for a number of months and when the price dropped to $40 I finally opened a position. I bought 13 shares at €40.35 which gives a dividend yield of 3.55% and an expected forward dividend income of $27.

Aflac Incorporated (NYSE: AFL)

Another company That I have been using my dividends to increase the amount of shares I own while dollar cost averaging down my average share price. In total I added 2 shares which takes my exposure up to 13 shares in total. Aflac are currently a dividend champion with 38 yearly dividends increases under their belts.

• Shares bought: 2
• Cost : $ 29.65
• Total Shares:13
• Average Shares Cost: $40.35
• Annual Dividend: $1.12 per Share
• Expected Earnings: $27
• Dividend Yield: 3.55%
• Dividend Increases: 38
• 10-Year DGR: 6.788%
• P/E Ratio: 9.69
• Payout Ratio: 25.34%

Exxon Mobil Corporation (NYSE: XOM)

As an investor, it is important to be honest with yourself and part of the reason for writing this blog is to keep a record of my investment transactions and my thoughts before buying them. To keep true to these values this was a strange buy for me as the company did not fit my profile. The dividend Yield was 8% and the Payout ratio is over a 100%. So Why did I buy this company? Honestly I bought these shares for no other reason than a gut feeling that oil stocks will not stay low forever. When the trade war is finished, i believe that oil stocks will rise as the cost of a barrel increases.

As I type out the above, I realise that it was a mistake to buy shares in this company based on a gut feeling and I need to learn to take emotion out of decision making and stick to my plan. The last company I used my gut feeling for was $SKT and that does not look like it will end well for me.

The question I have now is, do I hold onto the shares knowing I bought them for the wrong reasons or do I hold on to them?

• Shares bought: 14
• Cost : $ 43
• Total Shares:14
• Average Shares Cost: $43
• Annual Dividend: $3.48 per Share
• Expected Earnings: $48.72
• Dividend Yield: 8%
• Dividend Increases: 37
• 10-Year DGR: 7.52%
• P/E Ratio: 15.31
• Payout Ratio: 103.6%

The Walt Disney Company (NYSE: DIS)

Disney is another one of those companies that I am super bullish on long term. The Dividend Yield is a little low at 1.68% but they have a fantastic DGR. Their 10 year DGR stands at 17.53%. This post here explains why you can buy companies with a low dividend yield with a high DGR and achieve better results than a high dividend yield and a low DGR.

• Shares bought: 8
• Cost : $ 93.6
• Total Shares:13
• Average Shares Cost: $104.48
• Annual Dividend: $1.76 per Share
• Expected Earnings: $22.88
• Dividend Yield: 1.68%
• Dividend Increases: 9
• 10-Year DGR: 17.53%
• P/E Ratio: 29.68
• Payout Ratio: 29.68%

LyondellBasell Industries N.V. (NYSE: LYB)

LyondellBasell (NYSE: LYB) is one of the largest plastics, chemicals and refining companies in the world. LyondellBasell sells products into more than 100 countries and is the world’s largest producer of polymer compounds and the largest licensor of polyolefin technologies.

The chemical industry is highly sensitive to the economy since its products are used in the manufacturing of many discretionary consumer goods. So with consumer spending falling during this covid-19 crisis there is no doubt that sales will take a hit.

That said I believe LYB are in a stronger position than they were in 2009 when the declared bankruptcy during the financial crisis. I have added 5 shares to this dividend Challenger and averaged my share price down to $69.46.

I am optimistic on LyondellBasell long term outlook but realise that out of all the shares I have, these are one of the companies that I would not be surprised to see a dividend cut. Time will tell!

• Shares bought: 5
• Cost : $ 47.18
• Total Shares:17
• Average Shares Cost: $69.46
• Annual Dividend: $4.2 per Share
• Expected Earnings: $71.4
• Dividend Yield: 6%
• Dividend Increases: 9
• 10-Year DGR: N/A%
• P/E Ratio: 7.45
• Payout Ratio: 43.8%

The Coca-Cola Company (NYSE: KO)

Coca Cola is one of the companies that I like the most. Not only do we buy all of our sodas in our cafe from them but they have unbeatable brand strength. They are also slowly transitioning into trendier alternatives, such as bottled water, juices, milk and energy drinks.

While the payout ratio is creeping up a little high, the balance sheet remains strong and I believe the long term dividend for this company are safe. I have added 7 shares to my portfolio this month which gives me a total expected earning of $26.24 a year. Not quite the amount We spend with them from our cafe but still, better than a kick in the arse as they say in Ireland.

• Shares bought: 7
• Cost : $ 47.5
• Total Shares:16
• Average Shares Cost: $47.4
• Annual Dividend: $1.64 per Share
• Expected Earnings: $26.24
• Dividend Yield: 3.45%
• Dividend Increases: 58
• 10-Year DGR: 6.913%
• P/E Ratio: 25.84
• Payout Ratio: 79.23%

Sysco Corporation  (NYSE: SYY)

The food distribution industry provides essential services that are unlikely to go away anytime soon. Sysco is a simple business, well-known brand, dependable with reliable cash flow generation.They also happen to be a dividend aristocrat who have increase their dividend every year since they were formed 50 years ago.

I bought a total of 14 shares in Sysco with an average share price of $37.94. With a dividend Yield of 4.7% which increased my forward income by $25.2 per year. The also have a low payout ratio of 51.43%.

HASBRO (NASDAQ: HAS)

The last company I bought shares in was Hasbro.Hasbro is a play and entertainment company. The Company’s operating segments include the U.S. and Canada, International, and Entertainment and Licensing. I bought 12 shares at $45.88 which gives a dividend yield of 5.9%. More importantly their 10 year DGR is over 12% while the 1 year DGR is over 8%. They make the dividend contender list as they have increased their dividends for the last 16 years in a row.

• Shares bought: 12
• Cost : $ 45.88
• Total Shares:12
• Average Shares Cost: $45.88
• Annual Dividend: $2.72 per Share
• Expected Earnings: $32.64
• Dividend Yield: 5.9%
• Dividend Increases: 16
• 10-Year DGR: 12.8%
• P/E Ratio: 19.31
• Payout Ratio: 68%

My Portfolio

In my portfolio I have currently invested in 42 different companies. If you had of told me 3 years ago that I would own partial amounts of 42 companies I would of laughed at you. Over the course of the year I will look to maybe increasing my position in some of the holdings I already have as opposed to acquiring new companies.

Of course I am not going to buy companies, just for the sake of it or because I already own them. The market conditions have to be right and the company still needs to fit my profile.

I have included a breakdown below of my percentage exposure in each sector and the percentage of my total dividends for each sector. At the moment I am a little under exposed to Healthcare, Energy and Utilities so I will be looking to increase these positions over the coming months.

Mistakes this month

Nobody is perfect and over a long time period.Mistakes are inevitable. Even the great Warren Buffet makes investing mistakes. The important thing is to own your mistakes and learn from them.

While typing out the summary of the above companies,I realised that not all of them fit my investing strategy. Some of them like XOM for example have an extremely high payout ratio or LYB who cut their dividend during the last recession.

So why did I buy them?

I got caught up in the hype that the market was on sale and I needed to buy while the market was on sale. We went through a few days where the market was up one day and down the next and I always wanted to buy when the market was down. This caused me to forego my usually scrutiny and I was a little bit more lax on my investing strategy.

Looking back, that is completely the wrong way to invest. I got a little bit caught up in the twitter world and made some poor choices. Luckily I realised this after a conversation with one of my mates who works in finance asked me to explain my decisions.

I have got savings put aside that I wanted to deploy in a market crash, but there is no point deploying funds into companies based on bad decision making.

So I have decided to slow down and spread out the cash I have aside over the coming year and stick to my original strategy.

I have also decided to write down on this blog my research and rationale behind every purchase BEFORE i make a purchase. This will force me to research properly and give me the confidence that I made my choice based on sound research and not just twitter hearsay.

Summary

March has been a funny month. From a business perspective it has been a difficult month having to close our cafe with no real idea of when we can open again. I am also a little biased, but I miss our coffee, Iv gone from 3 cups a day to almost none so iv bought this machine to keep me going while we wait to open.

On the passive income side it was a good month with solid growth from the previous year. There were also some lessons to be learned which I hope will help me in years to come.

Thanks for reading and Happy Investing!

Disclaimer - Engineer my Freedom is not a licensed or registered investment adviser or broker/dealer. We are not providing you with individual investment advice on this site. Please consult with a licensed investment professional before you invest your money. This site is for entertainment, informational, and educational use only. Any opinion expressed on the site here and elsewhere on the internet is not a form of investment advice provided to you. We use information, data, and sources in the articles we believe to be correct at the time of writing them, but there is no guarantee of their accuracy, completeness, timeliness, or correctness. We are not liable for any losses suffered by any party because of information published on this site or elsewhere on the internet. Past performance is not a guarantee of future performance. By reading this site or subscribing to it, you agree that you are solely responsible for making investment decisions in connection with your funds.