Buys and Sells for the Week 7/15

I miscalculated markets this week. With inflation numbers slightly higher than predicted I really thought markets would fall on Friday but instead it went up up and up. I missed out on Thursdays lows so buying was really light this week. Here are my trades for the week:

  1. Hasbro Inc. (HAS)    – increased position – Below $80/share is enough to get my attention. Grabbed 2 shares @ $78.13 and a 3.58% yield.
  2. Independent Bank Corp (IBCP)   – increased position – One of my trading accounts had a small balance so I just swept up what little funds there were and put them to work. Grabbed 1.3 shares @ $18.94 and a 4.65% yield.

Movie Fun Night – Vote for your Movie

Me and the family are once again starting up our backyard movie night and this year we decided to try something different and let readers have a vote in the movie choice for this Saturday (7/16). To cast a vote simply leave a comment below by Friday. The choices for this weekend are:

  1. O Brother Where Art Thou – votes (2)
  2. My Cousin Vinny – votes (1)
  3. Stripes – votes (1)
  4. Big Daddy – votes (1)

Its a tough choice no doubt…I’ll update later in the week once I have the Family’s votes.

Buys and Sells for the Week 7/8

Markets were down early in the shortened week but recovered quickly. Wasn’t quite fast enough to trades in when the markets were done but I got a few. Here are my trades for the week:

  1. Schwab US Dividend Equity ETF (SCHD)    – increased position – Used my monthly Roth IRA contribution to add to this. Grabbed 7 shares @ $70.45 and a 3.44% yield.
  2. Bank of Nova Scotia (BNS)   – increased position – Price drop caught my attention. Grabbed 2 shares @ $57.00 and a 5.62% yield.
  3. Packaging Corp of America (PKG) – increased position – As long as share price remains low I will slowly build this out. Grabbed 1 share @ $135.56 and a 3.69% yield

June 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 June I made $5,789.87; an increase of 26.38% versus this time last year.  Biggest payout I have had this year, if only the first two months of a quarter were this nice.

In June I received 3 dividend raises from GIS, ODC and WPC.  These raises will add an additional $32.70 to my annual income going forward. June is a tough month for raises so I’ll take anything that comes.

Taking a mid-year look at my annual income growth goal of 12.5%, my income is currently exceeding that goal by 3% and the bulk of that is due to the massive 49% dividend raise from United Parcel Service (UPS) back in February. Since UPS is my largest position it made a significant dent, without that I would have been closer to my goal.

On the home front I am finally caught up on maintaining properties for two homes (mine & my father-in-law’s) and I can finally start enjoying summer.   Last year we started our backyard movie nights and cannot wait to get that started again, best part is we could not get a screen last year because of supply chain issues but I was able to get a 120” screen and cannot wait to try it out.  My daughter caught Covid and had a side effect of something called “Covid Eye”, long story short her eye is as swollen as Rocky Balboa’s except she didn’t say cut me Mick.

On another note, fellow blogger Northern Lights Investment is back from a very dangerous surgery and is blogging again but still in need of much recovery and far from out of the woods.  Also, another callout to fellow blogger Dividend Portfolio as he battles cancer and faces a tough road ahead.  Try to keep both in your prayers as they can use all the help they can get.  

Here are the charts we love to see:

DateSymbolCompanyAmount
6/1/22ALEALLETE INC$138.76
6/1/22DIVOAMPLIFY ETF TR CWP ENHANCED DIV$107.69
6/1/22PNWPINNACLE WEST CAPITAL CORP$207.96
6/1/22PSXPHILLIPS 66$28.87
6/1/22SJMSMUCKER J M CO$18.93
6/2/22CMICUMMINS INC$41.04
6/2/22UPSUNITED PARCEL SERVICE INC$345.18
6/3/22ENBENBRIDGE INC$254.72
6/6/22SOSOUTHERN CO$70.24
6/7/22JNJJOHNSON &JOHNSON$199.02
6/7/22VLOVALERO ENERGY CORP$35.28
6/8/22AMGNAMGEN INC$11.76
6/9/22DFSDISCOVER FINANCIAL SERVICES$15.61
6/9/22MSFTMICROSOFT CORP$67.84
6/10/22CVXCHEVRON CORP$23.96
6/10/22IBMINTERNATIONAL BUS MACH CORP$155.03
6/10/22PFEPFIZER INC$239.15
6/10/22SNASNAP-ON INC$33.96
6/10/22WBAWALGREENS BOOTS ALLIANCE INC$70.07
6/13/22MMM3M CO$63.12
6/15/22AVAAVISTA CORP$147.84
6/15/22EPREPR PROPERTIES$85.49
6/15/22FAFFIRST AMERICAN FINANCIAL CORP$163.33
6/15/22NWLNEWELL BRANDS INC$25.56
6/16/22DUKDUKE ENERGY CORP$67.39
6/16/22OGNORGANON &CO$5.71
6/16/22PRUPRUDENTIAL FINANCIAL INC$520.12
6/17/22BHBBAR HARBOR BANKSHARES$54.07
6/17/22RRYDER SYSTEM INC$54.57
6/17/22WMWASTE MANAGEMENT INC$46.92
6/21/22CMPCOMPASS MINERALS INTERNATIONAL INC$28.65
6/21/22PSECPROSPECT CAP CORP$98.13
6/21/22ULUNILEVER PLC$58.55
6/23/22QCOMQUALCOMM INC$177.49
6/24/22BPBP PLC$8.59
6/24/22KHCKRAFT HEINZ CO$9.70
6/24/22LMTLOCKHEED MARTIN CORP$25.80
6/27/22SCHDSCHWAB US DIVIDEND EQUITY ETF$33.46
6/28/22NUSIETF SER SOLUTIONS NATIONWIDE NASDQ$15.93
6/29/22TROWPRICE T ROWE GROUPS$25.14
6/29/22XRMIGLOBAL X FDS S&P 500 RISK$50.36
6/29/22XYLDGLOBAL X FDS S&P 500 COVERED$146.02
6/30/22ARCCARES CAPITAL CORP$551.61
6/30/22AVGOBROADCOM INC$8.43
6/30/22BEPBROOKFIELD RENEWABLE PARTNERS$280.60
6/30/22BEPCBROOKFIELD RENEWABLE CORP$70.08
6/30/22CTOCTO RLTY GROWTH INC$64.97
6/30/22GATXGATX CORP$55.27
6/30/22NEWTNEWTEK BUSINESS SVCS CORP$620.19
6/30/22PEPPEPSICO INC$60.72
6/30/22WEYSWEYCO GROUP INC$26.16
6/30/22M1 FinanceM1 DIVIDEND GROWTH ACCOUNT$74.83

Dividend Growth is Psychological

Throughout the years I have tried to quantitatively justify my attraction to dividend growth investing to both myself and others.  However, I never felt 100% satisfied with my explanations.  It is not that I did not believe the math & analysis or the books, articles and studies I have read on the subject. I just knew there was something else and my conclusion at the end of the day is that psychologically it comforts me.

Through self-reflection I have come to the conclusion the reasoning why it is psychologically comforting is simply a reflection of the environment I was raised in.  Since my earliest memories of childhood, I have been told that to be an adult you need to earn a regular paycheck and pay bills.  This is what I was taught by both my parents and educators.  This is how children’s books, cartoons, media, and movies depicted adults.  When I looked around at other adults (Aunts, Uncles, friends, etc..) this is what everyone else was doing, this was and still is the social norm.  Essentially, I have been psychologically programmed to expect a regular paycheck and to pay my bills every month.

This psychological programming explains why I was struggling to envision how to drawdown my wealth when I hit financial independence or retirement.  For me, saving a pile of cash was intended for buying something or to have in emergencies.  But to use a pile of cash to drawdown from to pay for day-to-day expenses was just difficult to get my head around.  My only choices were to either break my programming or find a different alternative.  I obviously choose the easier of the two paths and went to the alternative by using dividend growth investing which focuses on investing for cash flow. 

A growing cash flow felt like such a natural replacement for a paycheck.  I would get regular disbursements and the dividend growth aspect was like getting an annual raise at work.  Mentally this was a replacement for what I have been doing for the last 35+ years.  I completely understand that if I embrace a total return investing style (equity growth + dividends) my wealth might be greater however I also want to be mentally comfortable in so much that I have the luxury of focusing on other things in life and not money.   This is the number one reason why I chose and will keep continuing down the dividend growth investing path.  From my perspective I would rather spend my energy on other things in life rather than undoing my programming. Yes there are risks with this investing style but there are risks with any investments and that is okay if you recognize what they are and plan for them accordingly.

Today we are in a bear market with the S&P down 20% and the NASDAQ down 28%.  For young investors that have never experienced a bear market it seems like the worst of times.  For older investors it feels like retirement just moved that much further out.  For retirees that did not have a significant cash position now face a risk of cashing out more shares than they planned.  But as a dividend growth investor my dividend income is not down 20 or 28%.  As a point of fact, my June dividend payments this year will be larger than last June and next year’s payment will be larger than this year.  This is a comforting feeling and leads me to a feeling of being simply content.  Being content I can relax and enjoy the simple things in life while not stressing over finances.  What is your motivation for choosing dividend growth investing?

Buys and Sells for the Week 6/24

Normally post this at the end of the day but all my trades were done early in the week and my brokerage account only has a balance of 9 cents. Here are my trades for the week:

  1. Packaging Corp of America (PKG)   – increased position – Have we hit a bottom yet? Grabbed 1 share @ $134.14 and a 3.73% yield.
  2. Schwab US Dividend Equity ETF (SCHD)   – increased position – Still priced near its 52 week low. Grabbed 3 shares @ $70.53 and a 3.21% yield.

Buys and Sells for the Week 6/17

Another crazy week of down markets and we even saw the Dow dip below 30K after Thursday’s close. Not sure how much lower things will go but I’m in a buying mood. Also here are a few symbols I like but didn’t buy because I ran out of cash; AOS, ADP, BLK, HD, SNA, TXN, and WSO. Here are my trades for the week:

  1. Packaging Corp of America (PKG)   – increased position – Trying to increase one of my smallest portfolio positions. Grabbed 1 share @ $145.51 and a 3.44% yield.
  2. Schwab US Dividend Equity ETF (SCHD)   – increased position – Went from a little in to all in. Grabbed 39 shares @ $70.59 and a 3.21% yield.
  3. Hasbro Inc. (HAS)increased position – Is the recession going to hurt toy sales? Don’t know but like the price below $80. Grabbed 1 share @ $79.47 and a 3.54% yield
  4. Medical Properties Trust (MPW)   – increased position – Too cheap to ignore and cannot imagine hospitals not paying their rent. Grabbed 3 shares @ $14.37 and a 8.07% yield
  5. Garmin Ltd (GRMN)   – increased position – Its been 5 years since I added to this position. Grabbed 1 share @ $93.77 and a 3.11% yield
  6. Algonquin Power & Utilities (AQN)   – increased position – At this price the yield is hard to ignore. Grabbed 7 shares @ $13.06 and a 5.51% yield
  7. Bar Harbor Bankshares (BHB)   – increased position – Used the last of my cash on this buy. Grabbed 1 share @ $24.71 and a 4.21% yield
  8. Allete Inc. (ALE)   – increased position – I do like utility stocks as electrical grids keep expanding to accommodate EVs. Grabbed 35 shares @ $56.80 and a 4.58% yield

Buys and Sells for the Week 6/10

Received just one dividend raise so far for the month from Oil-Dri Corp of America (ODC) for a 3.7% raise. Didn’t make any trades last week but back on track. Here are my trades for the week:

  1. Packaging Corp of America (PKG)   – increased position – Trying to increase one of my smallest portfolio positions. Grabbed 1 shares @ $157.98 and a 3.16% yield.
  2. Best Buy (BBY)   – increased position – Retail stocks will stay on the ropes may as well take advantage. Grabbed 2 shares @ $76.33 and a 4.61% yield.
  3. Medical Properties Trust (MPW)   – increased position – Share price has been steadily dropping. Grabbed 4 shares @ $16.81 and a 6.9% yield.
  4. Schwab US Dividend Equity ETF (SCHD)   – new position – A new addition for my ROTH IRA. Grabbed 7 shares @ $76.52 and a 2.96% yield.

Living off a 100% Dividend Growth Portfolio May Have Risk

The idea of living off dividends and not touching the principal is always an appealing thought and I judge no one negatively for striving towards this goal as long as they enter the journey eyes wide open.

The two counterarguments to income investing I hear regularly are 1. What happens when dividends are cut? and 2. What about inflation?   In response to these two questions is the Dividend Growth Strategy and then the debates go on from there.  I am a big supporter of Dividend Growth but also grounded in the reality that it is not risk free. 

The two counterarguments have some merit albeit not as much of a “gotcha” moment as critics think.    As for dividend growth investors, the day you decide to retire and live off a portfolio with a 100% allocation to dividend growth stocks you may have just exposed yourself to a Sequence of Returns risk.

The best example to demonstrate this would be the 2008 great recession as the collapse of the financial industry had the largest effect on dividend cuts in the markets.  The Vanguard High Dividend Yield Index Fund (VYM) will be used to represent a basket of dividend growth stocks that generates $20,000 annually in dividends for someone that decides to retire on January 1, 2008.

From its dividend high of 2008 to its lowest point in 2010 our retiree would have seen their annual income from VYM drop from $20,000/yr to $15,120/yr.  If the retiree can figure out how to cut expenses and live on the reduced amount their reward for their sacrifice would be a return to the $20,000/yr mark in just 3 years.  However, if the retiree cannot cut expenses, we now run into a sequence of returns event.

The only way to meet their expenses a retiree begins to sell-off equity to cover the gap in dividend income.  However, selling stock reduces the amount of equity that can benefit from the dividend increases from 2011 to 2013.  Our retiree ends up selling off circa $11K of their portfolio and loses $460/yr in dividend income.  It now takes just over 4 years for the annual dividend income to recover.

Total Equities SoldLost Dividend IncomeYears to recover
No to Low Inflation$10,758$430.344

Luckily for the retiree inflation was non-existent to low during this time which allowed for a decent recovery.  But what would have happened if the first 3 years of the recovery period there was 8% annual inflation and then 2% annual inflation every year after that? With an 8% inflation rate our retiree would have ended up selling circa $19K of their portfolio and loses $756/yr in dividend income.  It now takes our retiree 7 years for the annual dividend income to recover.

Total Equities SoldLost Dividend IncomeYears to recover
No to Low Inflation$10,758$430.344
8% Inflation (first 3 years)$18,893$755.707

While the dividend income may have recovered in the short-term, it may cause a shortfall long-term.  That $756/yr in dividend income loss will never participate in future dividend growth and can throw a monkey wrench in where you thought your income might be 20 years down the road. Without that $756/yr earning dividend growth you potentially decrease your annual dividend by $3,500/yr 20 years down the line.

The easiest way to mitigate this risk is the same as in any other portfolio and that is with cash.  If the retiree included a cash position as part of the portfolio equal to 1 year of dividend income the cash could have been used to fill the gap until dividend recovered allowing all your original equity to benefit from a rising market.

Total Equities SoldLost Dividend IncomeYears to recover
No to Low Inflation$10,758$430.344
8% Inflation (first 3 years)$18,893$755.707
Portfolio w/1yr of Cash$0$03

The other option that could have mitigated this scenario is if dividend income greatly exceeded your expenses (by at least 30%) at the time of retirement.  While some may achieve this mark, the bulk of investors probably will not and should not plan to have a portfolio 100% dedicated dividend growth stocks but include some allocation to cash.

While an almost 25% dividend cut is difficult to live with, when you put it in perspective to the S&P 500 which during that time it dropped 56% and took 5 years to recover in a no to low inflation environment.  The amount of cash you need allocated to offset that would have greatly exceeded what a dividend growth investor needed to avoid a sequence of returns risk (imagine a cash position anywhere from 2 to 4 years of annual expenses).

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