SHEL - My Dividend Stock Portfolio: New June Dividend Record - 99 Holdings With 28 Buys

2023-07-18 09:15:46 ET

Summary

• The broad S&P500 edged up 1.2% in June, while the Dow Jones rose slightly by 0.8% during the month.
• Investment activity in June picked up significantly from May, with net investments totaling around $2,200, primarily targeted towards the financial sector and high-yielding BDCs.
• Dividend income hit a record of $837 in June, up 43% annually and down 13% sequentially, with the goal of adding at least $100 in forward dividend income every month.
• Gifted Working Time in 2023: Around 165.9 hours or 20.7 days of active work have been replaced with passive income in 2023, equivalent to more than 4 weeks of work.

The broad S&P500 edged up 1.2% in June, while the Dow Jones rose slightly by 0.8% during the month. The Federal Reserve decided to leave interest rates unchanged in June, and in the "dot plot" dots moved upward, pushing the median expectation to a funds rate of 5.6% by 2023-end. Inflation continues to trend down, but is still some distance away from the Fed's 2%+ target of price stability. There is still some doubt regarding a soft landing, but, in my opinion, there won't be any type of recession (at most a technical one) and if it will be as short-lived as the brief 2022 bear market in stocks, which, in my opinion, was also a non-noteworthy event.

Portfolio Changes in June

Investment activity in June picked up significantly from May as I was busy redeploying record dividends earned in May as well as additional income from other sources. Unfortunately, the markets are pushing my favorite BDCs higher almost every single day, but there are still some 10%+ dividend yields available and ready to be taken. As a result, buying opportunities continue to fade, but even with lower yields, I still very much favor BDCs and won't stop buying.

Overall, net investments totaled around $2,200 with the majority of those purchases targeted towards the financial sector in general and high-yielding BDCs in particular. I was really surprised to see W. P. Carey ( WPC ) trade below $70 again for no apparent reason given that their most recently reported earnings and investment activity continue to show the highest quality.

I used that recent stock price weakness to add to my holdings in WPC. My biggest purchase in June 2023 were several small transactions to acquire more shares of Ares Capital Corporation ( ARCC ) which has now become my #1 dividend payer in the entire portfolio and has helped achieve very strong June dividend income.

Overall, I did manage to add $165 in forward annual dividend income this month, which brings YTD added annual dividend income to around $738 already. My goal is to be able to add at least $100 in forward dividend income every month and as things are developing right now, this is a very reasonable and realistic target to achieve and overachieve as long as BDCs remain part of my asset allocation.

All these purchases break down as follows:

All net purchases in June can be found below:

Dividend Income June 2023

Dividend income hit a new all-time record for June of $837, an explosive 43% annually and down 13% sequentially. Adjusting for annual dividend payments and the March 2023 semi-annual dividend from the Commonwealth Bank of Australia ( CBAUF ) as well as the unusual March dividend from Hercules Capital ( HTGC ) - they usually pay in February - the real Y/Y growth rate retreats slightly to 38% and reverses to marginal growth of 3% sequentially.

Disregarding any special dividends, on an annual and sequential basis, the biggest income driver is by far the Ares Capital, a stock I am running on a bi-weekly savings plan and where my contributions quickly translated into meaningful dividend income. Dividends from Ares have now already and comfortably cleared the first psychologically-important level of $100 and are well on its way towards the next milestone of $200 coming in at $155 in the June quarter. Virtually all BDCs are on an upward trajectory and setting new 52-week highs along the way. And while that is great for my portfolio value, I am disappointed because it means I continue to get less dividends for every dollar invested.

Similarly striking is that net dividends from monthly dividend payers have continued to increase at a healthy pace and have hit almost $120 thanks to the special dividend from Main Street Capital ( MAIN ) in the June quarter.

The growing share of ARCC dividends can also be seen when just looking at the top three dividend payers in March and the other quarter-ending months. In 2022 my top three regular March-June-September-December (MJSD) dividend payers generated an average of $147 per quarter, which was sharply up from the $91 on average in 2021. Now the June quarter of 2023 has seen income from the Top-3 soar to $236 (up from $227 as of end of March 2023) following heavy investments into ARCC and organic dividend raises from all three. This is the type of development I want to see and I can't believe that already these three combined will provide at least $1,000 this year, more likely something between $1,100 to $1,200 as I am planning to keep up my investment pace with ARCC.

All this is depicted below:

Here is a chart that shows the development of my net dividend income by month over time between 2015 and 2023. You can see the growth of my dividend income and the average annual dividend for each year:

This chart is my favorite because it illustrates the progression of my dividend income over time and allows me to easily see the average annual dividend for each year.

Next, I have plotted all of the individual dividend payments I have received, coloring them by year and arranging the years side by side instead of horizontally as in previous updates. This visualization allows for a more comprehensive analysis of the distribution of my dividend payments over time.

By plotting the data in this way, we can easily see the distribution of dividend payments across different years and gain insights into the overall growth of my dividend income over time.

This visualization is initially quite cluttered, but it contains a wealth of information. It shows every individual dividend payment I have received since I began my investment journey in 2015, represented as a circle that is colored and sized according to its contribution. The view is organized by month and year, allowing for a more comprehensive analysis of the development of my dividend income over time. For each year and month, a white rectangle indicates the average monthly dividend. The area where dividends fall below the average is filled in dark red, while the area above the average is colored dark green. I greatly prefer this redesigned version of my old "bubbles chart" because it makes it much easier to identify trends and developments in my dividend income. This type of data visualization allows for a detailed examination of the distribution of my dividend payments over time and enables me to more easily identify trends and patterns in my income growth.

Now zooming in on June , we can immediately see a number of big green circles in a sea of black. The bigger the circle and the bigger the distance to the previous circle for the same stock, the bigger is the change in dividend income compared to the prior years.

The importance of Ares Capital Corporation is clear, with a reddish circle indicating the massive jump in dividend income over the last 12 months due to heavy ongoing monthly investments. Ares Capital recently raised its dividend by double digits, and while I don't expect that to become the norm, I am more than happy with its current yield and have no plans to stop these monthly savings plans. By the end of the year December 2023, quarterly dividends from Ares Capital should be somewhere between $175 and $225 I assume.

Overall, my aim is to observe numerous large orange circles positioned at the highest point on the scale. This signifies a positive trend of increasing dividend income, which is precisely what I'm striving for.

Another way to express the monthly dividend income is in terms of Gifted Working Time (GWT). Assuming an average hourly rate of $32.34 for 2023, my GWT and annual net dividends have been as follows:

• 2018: 121 hours GWT, $3,000 in annual net dividends
• 2019: 142 hours GWT, $3,600 in annual net dividends
• 2020: 152 hours GWT, $3,800 in annual net dividends
• 2021: 180 hours GWT, $5,050 in annual net dividends
• 2022: 229 hours GWT, $6,400 in annual net dividends
• 2023: Targeting at least 216 hours GWT, $7,000 in annual net dividends

I expect overall GWT to decrease in 2023 due to higher calculated hourly rates, as I project a 10% increase in the hourly rate due to inflation.

The overall target for the year with $7,000 in annual net dividends is very conservative, but I expect that I will have to take out some risk from my portfolio as mentioned above. Also, the stronger euro (I am receiving dividends in EUR and then converting those to USD at current exchange rates for these updates) will have adverse impact. Still, as the year unfolds, I expect to be able to pass that target and potentially even reach my next milestone of $8,000 as well. By the end of June 2023, my realized dividend income has been blowing away my expectations by several dimensions with YTD net dividend growth coming in at a sizzling and unsustainable 45% Y/Y. That growth will certainly come down substantially as the year unfolds, but given I am only targeting a low single-digit growth rate, it is already clear that barring a major disaster I will easily achieve a double-digit growth rate in dividend income, which is fantastic and should thus easily smash my original target of $7,000 in annual net dividends.

Across the years, my YTD Dividend Race has been as follows:

• 2018: Disappointing
• 2019: Phenomenal, benefiting from a low baseline in the prior year
• 2020: Fairly disappointing
• 2021: Phenomenal
• 2022: Much better than expected fueled by the very weak euro
• 2023: Targeting a conservative low single-digit growth rate (the more likely scenario is now a 10-15% increase in dividend income, possibly even 20%+)

I have updated the YTD Dividend Race chart to show the development of YTD dividend income on a daily basis, allowing us to see that most of my dividend income is generated mid-month and towards the end of the month. The chart also breaks down the development by month for the current year, making it easy to identify significant jumps in income.

Expressed in GWT, it presents itself as follows:

What this shows is as follows:

1. All time (blue area) - Around 1,102 hours, or 138 days, of active work have been replaced with passive income since the start of my dividend journey. Assuming a five-day workweek, this translates into almost 28 weeks of vacation funded via dividends, which itself is equal to more than half a year in total.
2. Full-year 2023 (green bars) - Around 165.8 hours, or 20.7 days, of active work have been replaced with passive income in 2023 already, which is basically equivalent to four full-time working weeks funded with dividends, or to put differently, the YTD dividends have so far provided me with an extra monthly salary and if this trend continues, it will accumulate to over two monthly salaries by year-end even though the second part of the year is expected to be weaker than the first half due to the volume of annual dividend payers in Q2.
3. Highlighted in pink is the accumulated YTD total at the end of the current reporting month ( June ).

This visualization allows us to see the overall impact of my dividend income on the amount of active work I am able to replace with passive income. It also enables us to see the progress made year-to-date, as well as the accumulated total at the end of the current reporting month.

Upcoming July Dividends

As every month, July is packed with dividend payments heavily concentrated around the 15th and at month-end when the dividend checks from Canada's big banks as well as JPMorgan will be arriving over a period of just 3-4 days.

Given the majority of my savings plans feature companies that pay dividends in January such as W. P. Carey, Altria ( MO ), Cisco Systems ( CSCO ), JPMorgan, Toronto-Dominion Bank, Bank of Nova Scotia, Stryker ( SYK ), Medtronic ( MDT ) as well as ongoing investments into stocks like Rithm Capital ( RITM ), it surely is going to be a big month that should easily set a new all-time dividend record for the month of July.

The snapshot below is taken from my free-for-all released Dividend Calendar (make sure to follow instructions in the video) and shows my expected dividend payments in July.

At the end of June, my dividend portfolio is composed as follows:

For further details see: