May Dividend Income

After 35 years of clocking in and out of work and religiously saving at least 10% annually in my 401K every year, my countdown to financial independence is in sight. Each month is a step closer and let’s look at how this past month is getting me there.

For the month of May I made $2,821.76; an increase of 13.98% versus this time last year.  Not too shabby considering this was the first month of AT&Ts lower payout.

In May I received 8 dividend raises from AQN, BNS, CM, CTO, LEG, PKG, PSX and TU.  A solid month for raises that should add an additional $221 to my annual income going forward. 

On the home front it has just been busy as I take care of maintaining property for two homes (mine & my father-in-law’s).   The good news is all this yard work is making me loose some of the winter fat and hopefully I’ll be slimmed down to my usual summer weight.

My middle daughter graduated from college this month and already started a full-time career in corporate accounting.  Down to just one child left in college and fingers crossed he will be graduating early in December of 2023.  Next milestone is to get all three kids out of the house and on their own. Here are the charts we love to see:

DateSymbolCompanyAmount
5/2/22BGSB&G FOODS INC$273.24
5/2/22GISGENERAL MILLS INC$95.60
5/2/22TAT&T INC$333.02
5/2/22VZVERIZON COMMUNICATIONS INC$102.01
5/5/22BLVVANGUARD BD INDEX FDS LONG TERM BOND$14.05
5/5/22VCLTVANGUARD SCOTTSDALE FUNDS LONG-TERM COR$16.16
5/6/22HYGISHARES TR IBOXX HI YD ETF$19.46
5/6/22PFFISHARES TR PFD AND INCM SEC$43.65
5/9/22APDAIR PRODUCTS AND CHEMICALS INC$67.51
5/13/22OHIOMEGA HEALTHCARE INVESTORS INC$722.72
5/16/22ABBVABBVIE INC$217.27
5/16/22EPREPR PROPERTIES$85.49
5/16/22HASHASBRO INC$46.01
5/16/22IBCPINDEPENDENT BK CORP MICH$48.94
5/16/22PGPROCTER AND GAMBLE CO$120.53
5/19/22PSECPROSPECT CAP CORP$155.54
5/23/22ARTNAARTESIAN RES CORP$207.60
5/25/22FASTFASTENAL$12.83
5/27/22ODCOIL DRI CORP OF AMERICA$33.16
5/27/22WSMWILLIAMS-SONOMA INC$14.14
5/31/22NUSIETF SER SOLUTIONS NATIONWIDE NASDQ$17.65
5/31/22SBRASABRA HEALTH CARE REIT INC$87.16
5/31/22WMTWALMART INC$14.75
5/31/22M1 FinanceM1 DIVIDEND GROWTH ACCOUNT$73.27

Weekly Buys and Sells for the Week 5/27

Someone keeps turning that dividend growth crank, CTO Realty was not satisfied with giving us a raise in February and decided to up it again another 3.7% for a total annual increase of 12% for 2022 and Canadian Imperial Bank (CM) and Bank of Nova Scotia (BNS) followed that up with a 3% raise each.

Was hoping to add more to my positions but markets rallied for most of the week . Here are my trades for the week:

  1. Williams-Sonoma (WSM)   – increased position – Another good retailer taking it on the chin. Grabbed 1 shares @ $102.45 and a 3.05% yield.
  2. Armanino Foods of Distinction (AMNF)   – increased position – An OTC position that I can’t DRIP into so adding a few shares. Grabbed 50 shares @ $3.40 and a 3.53% yield.

Buys and Sells for the Week 5/20

That dividend raise song just keeps on playing with Leggett & Platt (LEG) raising their dividend 4.76% and Packaging Corp of America (PKG) with a 25% raise.

Retail was the dagger in the heart of the markets this week . Here are my trades for the week:

  1. Best Buy (BBY)   – increased position – Retail dropped like a lead balloon. Grabbed 2 shares @ $74.19 and a 4.74% yield.
  2. Bar Harbor Bankshares (BHB)   – increased position – Adding a little more to my small local bank position. Grabbed 2 shares @ $25.16 and a 4.13% yield.
  3. Packaging Corp of America (PKG)   – increased position – Recent raise puts this back over the 3% mark. Grabbed 1 shares @ $148.96 and a 3.36% yield.
  4. Amplify CWP Enhanced Dividend Income (DIVO) – new position – Used the proceeds from last weeks ETF sales to start this new position. Grabbed 305 shares @ 34.67 and a 5.08% yield and 459 shares @ 34.23 with a 5.14% yield.
  5. Global X S&P 500 Covered Call (XYLD) – new position – Used the proceeds from my PSEC sales to start this new position. Grabbed 168 shares @ 44.18 and a 10.88% yield.

Why I’m not a fan of Annuities

While perusing finance articles I came across one from MarketWatch called “Why don’t retirees like annuities?“. The article touched on the most common issues that annuities are not flexible, can be complicated to understand and laden with excessive fees. Without a doubt these are serious concerns for investors but the article did not address an additional concern I have with the total actual payouts.

Annuity salespeople are extremely pushy. Besides sidestepping any disclosure about commissions and fees they also dodge the question of how much money will actually be paid out over a lifetime. Instead they redirect you to a % that your money will return and how great it is because you can’t get a guaranteed income at that rate anywhere. But who exactly is it great for? You, the Salesperson, or the Insurance Company?

To answer this question lets look at an example where I have $100,000 I would like to invest into an immediate annuity. I head to my local annuity store and they provide me the following table:

Depending on which age I chose the annuity, my $100K investment will pay out a guaranteed rate of 5% to 6% for rest of my life. Sounds pretty good but the key words here are “for the rest of my life” and exactly how long is that?

I’m going to be generous and use pre-covid U.S. Life expectancies of 76.61 for males and 81.65 for females. We can also look at the region with the longest life expectancy (Hong Kong) with 82.38 for males and 88.17 for females. We can now compare these to the highest payouts for each annuity age bracket.

Life Expectancy Age76.6181.6582.3888.17
Immediate Annuity at 60$83,116$108,337$111,990$140,963
Immediate Annuity at 65$66,734$95,704$99,900$133,181
Immediate Annuity at 70$39,977$70,459$74,874$109,892
Table: Anticipated Lifetime Annuity Payouts for a $100K Immediate Annuity

In most scenarios you do not even get back your base investment. Assuming you are extremely lucky and get to age 88 the largest payout is ~$141K and that amount is over 28 years which equates to a growth rate of just 1.25% per year on the initial $100K investment.

Unless there is a medical breakthrough that allows us to live well beyond the age of 100 it appears the only person that benefits from this deal is the insurance company and it shouldn’t come as a surprise. First they are a business an need to make profit, second they employ actuaries that analyze your life expectancy risk and adjust your payouts to that risk.

Recently the House of Representatives passed the Secure 2.0 act which will allow annuity offerings in 401(k) plans. One of the bill sponsors,  Richard Neal, D-Mass., spoke on the House Floor on March 29, 2022 stating the act “…is protecting Americans and their retirement accounts.” Of course the question is protecting us from whom? Not the insurance companies that’s for sure. As a note, I am not railing against the good U.S. Representative Richard Neal, for the most part I thought the act introduced some welcome changes to the 401K system (like auto-enrollment). However you can see insurance lobbying influence with the annuity aspect.

One might argue that annuities benefit those who have little financial knowledge or financial self-control. This is a pretty good argument as many of us know quite a few financially irresponsible or illiterate people but there are other alternatives. The mutual fund industry has what is referred to as managed payout funds that solves the issue of figuring out how to do drawdown and sends you a monthly check but still allows you access to your investment.

The problem with managed payout funds is they were introduced during the worst time of the financial crisis (circa 2008) and it was for a market (baby boomers) who had yet to begin retiring. As such they have not really gained traction over the years and are not offered in 401K plans. My biggest issue with these is they are modeled on old outdated portfolio allocations of bonds with some equities all based on their other mutual fund offerings. There are so many more income sources they could employ (REITS, utilities, dividend growth, or covered calls to name a few). If the mutual fund industry adjusted their portfolio mix to include some higher yielding or dividend growth components it might be the best solution today. But alas there is little to nothing out there that fits this bill so I will continue to manage my own assets to generate income as annuities are a benefit to only the insurance company.

Buys and Sells for the Week 5/13/22

Dividend raises have slowed but the occasional one still trickles in like Phillips 66 (PSX) who raised their dividend 5.24% and Algonquin Power & Utilities (AQN) with a 5.98% raise.

Only one word to describe markets…DOWN. Here are my trades for the week:

  1. Air Products (APD)   – increased position – Bought the dip, can you blame me. Grabbed 1 share @ $226.37 and a 2.78% yield.
  2. Vanguard Long Term Bond Index (BLV) – sold position – This no longer fits my portfolio and part of my strategy to reallocate to targeted income sources. Sold 59 shares @ 79.70.
  3. Vanguard Long Term Corp. Bond Index (VCLT) – sold position – This no longer fits my portfolio and part of my strategy to reallocate to targeted income sources. Sold 58 shares @ 81.50
  4. iShares High Yield Bond (HYG) – sold position – This no longer fits my portfolio and part of my strategy to reallocate to targeted income sources. Sold 64 shares @ 77.00.
  5. iShares Preferred and Income (PFF) – sold position – This no longer fits my portfolio and part of my strategy to reallocate to targeted income sources. Sold 357 shares @ 33.07.

April Dividend Income

After 35 years of clocking in and out of work and religiously saving at least 10% annually in my 401K every year, my countdown to financial independence is in sight. Each month is a step closer and let’s look at how this past month is getting me there.

For the month of March I made $3,828.61; a decrease of -3.34% versus this time last year.  The main culprit for the decrease was my BGS payment sliding out into early May versus April of last year.

In April I received 7 dividend raises from ARTNA, BHB, DFS, IBM, JNJ, PG and SO.  A solid month for raises that should add an additional $131 to my annual income going forward. 

On the home I haven’t had much time as for some reason work has become stressful and I’ve been mentally fatigued lately.  Unfortunately, it has spilled into early May but hopefully things will lighten up soon.

Here are the charts we love to see:

DateSymbolCompanyAmount
4/1/22AGRAVANGRID$23.91
4/1/22ALLALLSTATE CORP$3.40
4/1/22BEPCBROOKFIELD RENEWABLE CORP$70.08
4/4/22GRMNGARMIN LTD$68.23
4/4/22KMBKIMBERLY-CLARK CORP$17.06
4/4/22WMTWALMART INC$14.75
4/5/22TUTELUS CORPORATION$57.93
4/6/22BLVVANGUARD BD INDEX FDS LONG TERM BOND$21.29
4/6/22IRMIRON MOUNTAIN INC$498.67
4/6/22VCLTVANGUARD SCOTTSDALE FUNDS LONG-TERM COR$14.96
4/7/22HYGISHARES TR IBOXX HI YD ETF$21.20
4/7/22MRKMERCK &CO. INC$149.88
4/7/22PFFISHARES TR PFD AND INCM SEC$48.38
4/11/22GSKGLAXOSMITHKLINE ADR$203.95
4/14/22AQNALGONQUIN PWR UTILS CORP$307.69
4/14/22MPWMEDICAL PROPERTIES TRUST INC$192.37
4/14/22WPCWP CAREY INC$577.88
4/18/22CPTCAMDEN PROPERTY TRUST$14.42
4/18/22EPREPR PROPERTIES$85.49
4/18/22KBALKIMBALL INTERNATIONAL$2.45
4/18/22LEGLEGGETT &PLATT INC$269.39
4/18/22PKGPACKAGING CORP OF AMERICA$4.04
4/20/22BCEBCE INC$410.73
4/20/22PSECPROSPECT CAP CORP$155.54
4/25/22NUSINATIONWIDE RISK-MANAGED INCOME ETF$18.28
4/26/22XRMIGLOBAL X FDS S&P 500 RISK$29.73
4/29/22AMNFARMANINO FOODS DISTINCTION INC$42.60
4/29/22BNSBANK OF NOVA SCOTIA$29.01
4/29/22CMCANADIAN IMPERIAL BANK OF COMMERCE$293.22
4/29/22OGEOGE ENERGY CORP$142.64
4/29/22M1 FinanceM1 DIVIDEND GROWTH ACCOUNT$39.44

Buys and Sells for the Week 5/6

Received a surprise and unplanned raise from Telus (TU) who just increased their dividend last November and decided to hike it again another 3.42%.

Not much to say about the markets other than volatility, volatility, and more volatility. Here are my trades for the week:

  1. Medical Properties Trust (MPW) – increased position – Been awhile since I bought a REIT. Grabbed 10 shares @ $18.32 and a 6.33% yield.
  2. United Parcel Service (UPS) – increased position – Not sure why no one is buying this but looks good at this price. Grabbed 2 shares @ 178.41 and a 3.41% yield.
  3. Best Buy (BBY)  – increased position – Building this out a few shares at a time. Grabbed 2 shares @ $90.90 and a 3.87% yield.
  4. Air Products (APD)   – increased position – Can’t seem to hold a share price above $240. Grabbed 1 share @ $233.33 and a 2.78% yield.
  5. Prospect Capital (PSEC)   – decreased position – Overallocated to BDCs and PSEC is the weakest of my holdings. Chose to scale back the position. Sold 911 shares @ $7.81.