BOC - My Dividend Growth Income - March 2023 Update

2023-04-05 05:37:00 ET

Summary

• Dividends received in March totaled $644.63, a new personal record.
• Forward dividend income grew by $130, translating to M/M growth of 2.27%.
• Roughly half of the increase in dividends was due to a slight change in holdings.
• The estimated forward dividend income is now $5,863.

Another strong month of growth is in the books for dividend growth portfolio. The buy-sell transaction in changing one position in my portfolio accounted for an increase in projected income of $69.59. This is in addition to the $60 added in forward income due to new purchases, dividend reinvestments, and dividend increases. Also, I am more than happy to report that I set a new personal record for total dividends received in a singular month with $644.63! Let's look at how my current and future dividend mountain has grown with another successful month under my belt.

Background

The initiation of tracking my DGI income on Seeking Alpha can be found here . My dividend income is tracked across all of my portfolios (taxable accounts and IRAs, not 401ks). A large portion of the target $100,000 will be produced within retirement accounts and thus not easily accessible during early retirement; however, I will aim to maintain a 33% proportion of dividend income in my taxable account. With this level of dividend income and adhering to the 4% rule on the overall taxable account size, I will be able to reasonably consider a change in career into a more part-time role or pursue other methods of income until I am able to access retirement funds. Meanwhile, my retirement accounts will continue to build and grow until I'm ready to begin taking distributions to fund my retirement.

Forward Income Added

During the month of March I added $130 in forward income, now making my total forward income $5,863. I received a record amount of dividends this month, $644.63, as March is a strong month for me based on the distribution cycles of my current holdings and was recently grown either further by the addition of the Schwab Dividend Equity ETF ( SCHD ) that pays out during the month.

My breakdown of income added via new purchases, dividend reinvestments, and dividend rate increases does not include forward income added via re-allocation of funds that already existed within my portfolio (i.e. the money from the sale of one security invested into another). I will only be breaking down the effect of "new" capital entering the accounts in this section. Also, I would like to reiterate that increased income and tracking of funds from my recurring 401(k) contributions are not included in these articles as the fund options available to me do not paint a clear picture on income and distributions.

For my weekly $150 purchases I accumulated shares of American Tower Corp. ( AMT ), Cogent Communications ( CCOI ), and Essential Properties Realty Trust ( EPRT ). Additionally, I continued my weekly $25 purchase of General Motors ( GM ) throughout the month. Let's first look at the forward dividends added via all new purchases:

• 2.748 shares of GM adding $0.99 in forward income
• 8.097 shares of EPRT adding $13.41 in forward income
• 3.21 shares of CCOI adding $11.88 in forward income
• 1.008 shares of AMT adding $6.29 in forward income
• 1.517 shares of Medical Properties Trust ( MPW ) adding $1.76 in forward income

March set a new personal record for my portfolio in terms of dividends received during a singular month. In total I received $644.63 in dividends and automatically reinvested them all. I'm already looking forward to breaking my personal record again! Here are all of the positions that reinvested their dividends this month:

• 0.089 shares of Visa ( V ) reinvested adding $0.16 in forward income
• 0.221 shares of Analog Devices Inc. ( ADI ) reinvested adding $0.76 in forward income
• 0.093 shares of Microsoft ( MSFT ) reinvested adding $0.25 in forward income
• 0.306 shares of Realty Income Corp. ( O ) reinvested adding $0.94 in forward income
• 0.044 shares of General Motors ( GM ) reinvested adding $0.02 in forward income
• 0.026 shares of UnitedHealth ( UNH ) reinvested adding $0.17 in forward income
• 0.116 shares of Home Depot ( HD ) reinvested adding $0.97 in forward income
• 3.363 shares of Schwab Dividend Equity Fund ( SCHD ) reinvested adding $9.42 in forward income
• 0.882 shares of Corning Inc. ( GLW ) reinvested adding $0.99 in forward income
• 0.44 shares of Digital Realty ( DLR ) reinvested adding $2.15 in forward income
• 0.86 shares of Fidelity National Financial ( FNF ) reinvested adding $1.55 in forward income
• 0.152 shares of Union Pacific ( UNP ) reinvested adding $0.79 in forward income
• 0.046 shares of Broadcom ( AVGO ) reinvested adding $0.85 in forward income

With great excitement comes great disappointment. Just as I had my best month in received dividends, I had arguably my worst personal month for dividend growth. I will go into further detail in the next section, but forward income added by dividend increases was significantly below expectations, in total, two companies announced increases to their distributions:

• Realty Income Corp. announced a 0.2% increase to the dividend, adding $0.46 in forward income. The company typically announces 4+ increases to the dividend throughout the year so the small increases add up.
• Best Buy ( BBY ) announced a 4.55% to the dividend, adding $2.98 in forward income.

Through the first quarter of 2023, here is how my forward income has grown via new purchases, dividend reinvestments, and dividend increases. In comparison to last month, the contributions from each of the three forward income drivers are more equal. If you would like to follow along with my transactions as they happen, please see my real-time dividend transaction tracker that I have setup to provide even greater detail on the power of dividend growth investing.

Lastly, I completed another month of capturing the effects of dollar cost averaging by observing a large number of transactions throughout the month that were spread out across numerous trading days. In total for 2023, my portfolio has witnessed 93 transactions on 41 different trading days.

Portfolio Re-allocation

I made a small change to my portfolio composition by selling one of my positions and converting most of the proceeds into a new position and adding to an already existing position. I decided to sell off my position in Best Buy ( BBY ) as I wanted to concentrate my portfolio slightly more into infrastructure. The new position that was established was Enterprise Products Partners L.P. ( EPD ), a cash cow with strong dividend performance that is central to our nation's operations. With the remaining proceeds, I purchased roughly 3 additional shares of AMT.

Best Buy's dividend increase announcement is still included in my dividend growth stats in the previous section due to how I'm accounting for the change in my income. Because it was an addition to my forward income for the majority of the month I included it in my tracker, the gain in dividend income from re-shuffling my portfolio is calculated as the gain from my new allocation versus the previous allocation that was accounting for the BBY dividend increase.

Disappointments

Last month contained not just one but two very disappointing announcements from companies I hold in my portfolio. Both American Tower Corp. and Digital Realty Trust ( DLR ) elected to not raise their dividends and thus ended long streaks in consecutive dividend raises that each had worked decades to achieve. While it could have been worse with a dividend cut, it's hard not to feel slighted by these surprise announcements.

Let's start with AMT, this one really hurt. For the past two years or so they have been one of my favorite dividend growth stocks largely due to the fact they increased their dividends quarterly and had done so for over ten years. In March of 2023 that all came to a halt as they announced they would not be increasing the dividend this quarter. While they will likely still increase the distribution in the next several quarters, it still signifies a big shift. I am still bullish on the long term potential of American Tower and believe this decision was nothing more than being financially prudent in a difficult time.

DLR came as a shock to me as well, I fully expected a slowdown in the dividend growth but a full halt? As any good dividend investor should do, this forces me to re-evaluate my investment thesis and re-assess the safety and strength of the dividend for this historically great dividend grower. I may explore alternatives to replace this holding in the coming months but more than likely I will keep this company as a long term staple in my portfolio due to its industry outlook.

Portfolio

There was minimal change to my portfolio composition throughout the month aside from the change in one of my positions. One thing that jumped out to me was the decrease in weighting of several REIT positions as it was a rough month for the sector as a whole.

Looking Forward

For the month of March I will be making some slight changes to my weekly $150 investments. I will continue to add to EPRT and will now also be purchasing shares in EPD and CVS. I find this to be a good balance of growth, yield, and dividend growth.

Summary

This was truly a month of highs and lows but one thing stayed consistent, my forward dividend income grew. As a dividend growth investor, that is the one metric that I am most concerned about and view this month as a success regardless of overall market performance and disappointments in a few of my holdings. In total I grew my future dividends by $130, translating to a growth of 2.27% over last month. My total forward dividend income is now $5,863 which is extremely close to a big target of mine at $6,000.

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