CARR - My Dividend Growth Income - Year End Summary

Summary

• In 2022, I shifted my investment strategy to focusing on dividend growth income investing and started this article series in August '22.
• Dedicating myself to create monthly articles to track the progress of my investments has improved my performance and sharpened my researching abilities.
• In just the 5 months of tracking this year, I observed massive growth in my forward dividend income.
• From August through December 2022, my projected dividend income grew by 20.38%, from $3,730 to $4,490.

I can't believe it's already been 5 months since I initiated this article series. As it is the end of the year, I will do a breakdown of December and then a further look at the year as a whole.

Forward Income Added

During the month of December I added $190.24 in forward income, now making my total forward income $4,490. I received a personal record in dividends during the month, $587.49, a picture perfect way to end the year.

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 Ally Financial ( ALLY ), Visa ( V ), Medical Properties Trust ( MPW ), and American Tower ( AMT ). Additionally, I continued my weekly $25 purchase of General Motors ( GM ) throughout the month. I was lucky enough to contribute further funds to my portfolio, outside of my recurring investments, totaling $500 in additional capital.

Let's look at added forward income due to new purchases:

• 0.942 shares of AMT adding $5.80 in forward income
• 8.376 shares of ALLY adding $10.05 in forward income
• 83.615 shares of MPW adding $96.99 in forward income
• 1.2 shares of V adding $2.16 in forward income
• 4.097 shares of GM adding $1.47 in forward income
• 1.536 shares of Realty Income ( O ) adding $4.57 in forward income
• 0.185 shares of Fidelity National Financial ( FNF ) adding $0.33 in forward income by selling the shares of F&G Annuities ( FG ) distributed to me as a shareholder after the spin-off and reinvesting those proceeds into FNF.

Next, let's look at increased forward income from reinvestment of dividends:

• 0.054 shares of Visa reinvested, adding $0.10 in forward income
• 0.763 shares of Cogent Communications ( CCOI ) reinvested, adding $2.79 in forward income
• 0.073 shares of Microsoft ( MSFT ) reinvested, adding $0.20 in forward income
• 0.022 shares of UnitedHealth ( UNH ) reinvested, adding $0.15 in forward income
• 0.279 shares of Realty Income reinvested, adding $0.83 in forward income
• 0.09 shares of Home Depot ( HD ) reinvested, adding $0.68 in forward income
• 0.019 shares of General Motors reinvested, adding $0.01 in forward income
• 0.207 shares of Analog Devices ( ADI ) reinvested, adding $0.63 in forward income
• 0.828 shares of Corning ( GLW ) reinvested, adding $0.89 in forward income
• 0.497 shares of S&P 500 ETF ( VOO ) reinvested, adding $3.32 in forward income
• 0.193 shares of T. Rowe Price ( TROW ) reinvested, adding $0.93 in forward income
• 0.14 shares of Union Pacific Railroad ( UNP ) reinvested, adding $0.73 in forward income
• 0.052 shares of Broadcom ( AVGO ) reinvested, adding $0.96 in forward income
• 0.054 shares of Lockheed Martin ( LMT ) reinvested, adding $0.65 in forward income
• 0.776 shares of Fidelity National Financial reinvested, adding $1.40 in forward income
• 0.05 shares of Global Payments ( GPN ) reinvested, adding $0.05 in forward income

Excitingly, six companies in my portfolio announced dividend increases during the month. Several of these increases were massive and have added a significant amount of forward income and I'm looking forward to more large increases in the coming months from my other positions.

• Carrier Global ( CARR ) announced an astronomical increase of 23.3% to their dividend, adding $5.04 in forward income. I have continued to reap the rewards of extreme price appreciation and dividend growth since purchasing immediately upon its spin-off from United Technologies back in April of 2020. The quarterly dividend has increased by 131% in the 10 financial quarters of its stand-alone existence. With a forward payout ratio of just 26.32% and projected mid-to high single digit revenue growth in the near future, there is still plenty of room for continued large increases in the dividend.
• American Tower kept true to their word of targeting a 12.5% annual increase to the dividend. The company raises the dividend every quarter and a large 6.1% raise this quarter brings the total TTM increase of the dividend to 12.2%. This recent increase added $10.53 in forward income.
• Broadcom announced yet another strong double-digit increase of 12.2%, adding $12.45 of forward income. CEO Hock Tan continues to impress with his ability to grow the company and expand margins every year well beyond the market average. Broadcom has become a must-own for dividend growth investors over the years.
• Realty Income announced a small 0.2% increase in the monthly dividend to $0.2485 per month, or $2.982 per year. Although this is small, I welcome any increase in a company that historically raises the payout several times per year and compounds quickly with monthly dividend payments. This small increase added $0.45 to my forward income.
• CVS ( CVS ) announced a 10% increase to the dividend for the second year in a row, raising the annual payout to $2.42 from $2.20. This raise increased my forward income by $9.51.
• My S&P 500 ETF ( VOO ) announced its most recent distribution that provided a healthy increase in forward income by $13.97.

One objective of mine as I began these articles was to look at the sources of income added and the percentages of the total added income contributed by each source. As expected, the definitive majority came from new purchases but significant contributions were made by dividend increases and reinvestments, delivering over $192 combined in less than half the year. Those are the two sources I'm most excited about as they are the main driver in creating a snowball effect in the long term.

As a recap for the end of the year, I went through my dividend data and put together some quick stats on what I was able to accomplish in just 5 months. In total, I received a total number of 52 dividend payments and witnessed 18 raises to dividends across my portfolio. Seeing these numbers on paper make it all the more exciting to see what can be accomplished for a full year in 2023.

Portfolio

The continued concentration into higher conviction picks and reduced weighting to the S&P 500 is exactly what I like to see as I continue to build out my long term plan. It will be interesting to see how this chart looks compared to the end of the year in 2023. As always, here is a breakdown of all the positions I own (aside from 401(k)s) broken down by weight in my portfolio and estimated annual income.

Looking Forward

I firmly believe in the long-term buy and hold with automatic dividend reinvestment strategy, however in 2023 I may make two changes to my blueprint. First, I will likely change from automatic dividend reinvestments to selective dividend reinvestments for a few companies in my portfolio. Once I build a solid base in some high-yield stocks, I will look to reinvestment the dividends received into some lower-yield, higher-growth positions or into appealing opportunities. Secondly, I am planning to sell off some lower weighted stocks in my portfolio that I don't have a high conviction for and then re-allocate that cash into currently owned, higher conviction securities. This will lead to greater concentration within my portfolio on companies in which I have a more bullish stance.

My goal for the long term is for Microsoft and Visa to be my cornerstones, a goal that I outline in full detail in a recent article of mine. Both companies have excellent profitability and credit ratings, in fact they are two of the best in the entire market. Combining this with a strong position in growth industries of the future, I find these two companies to be some of the most compelling investments you can make today.

Summary

I am thrilled with the growth in my forward dividends that I was able to achieve in a short period of time in 2022. In the time period from August through December I increased my forward income by $760 to an estimated forward annual total of $4,490, translating to growth of 20.38%. My goal for the near term is to continue growing my dividend income by 20%+ per year, something that I believe to be achievable by investing in strong companies and being consistent with my cash contributions. It is also my belief that keeping yourself accountable and closely tracking your personal finances will only help you, hopefully my journey can help inspire others to do the same.

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