August Dividend Account Update

August has been a crazy month which is why I haven’t provided my dividend watch list update nor a net worth update (or any other post for that matter).  From August 3rd to August 7th I was in San Francisco, from August 12th to 13th I’ll be in Mystic, CT. for my parents’ joint 60th birthday celebrations, and then on August 14th night I leave for Las Vegas for the weekend for a buddy’s bachelor party.  All said and Done it’ll be the 18th before life slows down a bit, so I have decided to ignore the net worth update for this month as well as the watch list.  Notwithstanding, I think there is value to outline some changes that occurred in my dividend value fund.

After coming to terms with the idea that I am a value investor who uses increasing and responsible dividends as his first screener I came up with some rules to start selling equities:

  • There is an unrealized gain
  • I have owned the stock at least 12 months
  • P/E above 20
  • P/E is significantly higher than 5 year trailing P/E (in terms of percentage not whole number)
  • Graham Number is significantly lower than current price

I found that most of my positions destroyed the Graham number as provided by Guru Focus so I decided to eyeball this one in terms of a 200%+ in most cases and really rely on the other metrics.

July Dividend Sales

  • BDX Date of Sale 7/17/14
    • Over a year of holding – Original lots to be sold 12/07/11 & 1/6/2012
    • There is a gain
    • P/E above historic 5 year average – 25 PE vs 5 year historic 16.8
    • Graham number of 41.38 (288% from price of $118.68)
  • VFC Date of Sale 7/17/14
    • Over a year of holding – No real lots purchased – was done before my employer made me switch from sharebuilder to fidelity so just tiny fractional (to 1 share) purchases.  Notwithstanding, all proactive purchases were in 2011.
    • There is a gain
    • P/E above historic 5 year average – 22.17 vs 17.8
    • Graham number of 10.62 (589% from current price of $62.56)
  • MMM date of sale 7/17/14
    • Over a year of Holding – No real lots purchased (never purchased one whole share!).  Notwithstanding all proactive purchases were in 2011.
    • There is a gain – over 100%
    • P/E above 5 year average – 20.88 vs 16.6
    • Graham number of 46.19 (311% away from current price of $144
  • WAG – Sale of Half of shares $71.95
    • Over a year of Holding – Last real lot was purchased in June of 2012 (most other lots were purchased in late 2011).
    • There is a gain – I think this was my first 100% gain.
    • P/E above 5 year average – 23.93 vs 16.6
    • Graham Number of 35.69 (201% from current price of $71.95)
    • Note I got really really lucky on this position as the stock plummeted 15% on news that WAG was never going to take advantage of tax inversion.  I am hoping it stays low and I can pick up some more of this long term hold!
  • NFG – Sale of Half of shares
    • Over a year of holding – Last real lot purchase was in May of 2012
    • There is a gain – Approximately 50%
    • P/E above 5 year average – 21.39 vs 20.7
    • Graham Number of 45.70 (159% from current price of 71.87)
    • Thoughts: The P/E isn’t much higher than the 5 year average which is why I am only selling half of the shares
  • LEG – Sold Some Shares
    • The shares I am selling I have held over a year (still holding a majority of the shares I owned)
    • There is a gain – On the main lot I am selling was over 30% (held for a few years so not great compared to the broad market)
    • P/E – 24.89 vs 21.9
    • Graham Number of 7.39 (444% from current price of 32.93)
    • Thoughts: Most of the shares I bought within the last year or so.

I think the sales portions will decrease as one of my criteria is that the holding be more than a year, as such, there has to be a time where there just may be a stock that is not up for sale due to the time constraints alone.  For this section to have value for both me and a reader I am going to need to provide more details as of the date of sale.

July Dividend Purchases

  • On 7/17 I bought 15 shares of CTBI at $34.80 ($530)
  • On 7/30 I bought 10 Shares of AFL at $61.03 ($618)
  • On 7/31 I bought 5 Shares of XOM at $99.05 ($503).

I think for purchases from now on I will have to outline the metrics I am looking at…at the moment of purchase.  Notwithstanding even checking 10 days later or so, none of those 3 stocks have a P/E above 13, as well as well within the metrics I screen for:

  • P/E Below 20
  • P/E Below industry peers
  • Operating Margin above industry peers
  • P/B below 4 (or industry peers)
  • Payout ratio below 60%

July Dividend Income

A couple months back I started tracking my dividend income.  Surprisingly, for the first time my dividend income decreased when comparing year over year (from $80.01 to $74.60)Dividend IncomeIf I had to venture a guess it has to do with the timing of certain dividends being spilled into July 2013 vs June 2013, so it made the jump more dramatic in June while highlighting the shortfall in July.  Considering the fact that the account has increased in year over year value, I sell any equity that cuts their dividend and I have not remove any money from the account I just not worried about it.

 

2 Responses to August Dividend Account Update

  1. I think the most important thing to keep sight of is how your stream of income is growing over time. Looking at the chart above, it looks like you have a reasonable shot of getting pretty close to breaking the $1,000 mark for a year. The nice thing with any DG account is that once those dividends start rolling in, the growth will accelerate. Simply reinvesting that $1,000 will result in an extra $30-40 of dividends with no extra work on your part, even without including dividend increases. The two combined might push an $1,000 year into an $1,100 year without any additional capital.

    Big fan of the AFL purchase as well!

  2. Thanks for sharing your dividend income and recent sales/purchases with us. BDX, VFX and MMM are all long time holdings of mine since 2007 and I plan to keep them much longer. AFL is a good purchase. These days I have been keen on the financial sector adding to my WFC, AFL and CB the past few months. This month I added new positions in large Canadian banks TD, BNS and RY.

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