Dividend Income Update January 2018

The first dividend income update for 2018 is finally here, and I’m highly satisfied about the development of my “dividend income project”. Let’s summarize the results:

  • Total Dividend Income for January landed on $57.90 or 445.95 NOK
  • Last years dividend income for January was $12.86 or 99.04 NOK
  • Quadrupled the dividend income
  • 7 companies sent me a check

The following companies paid me in January

  • CSCO, $6.12
  • KMB, $11.17
  • PEP, $0.85
  • OMC, $11.29
  • O, $9,39
  • VER, $12.64
  • CAH – SOLD

The result is that I got $57.90, which is four times larger than the amount in 2017. Being able to quadruple your income isn’t something normal, and main reason is that I previously owned few companies that paid their dividend in January. Also, The Monthly Company or Realty Income Group helps a lot.

 

Pure dividend growth

The following diagram illustrates pure dividend growth, meaning the growth I get because management increased their dividend payout.

2017 vs 2018

Accumulated Dividend Income

Recent purchase/sell

  • Bought 50 shares of Realty Income Group (O)
  • Bought 200 shares of Veidekke (VEI)
  • Closed my position in Cardinal Health (CAH) after thinking and talking with friends about it since october.

Projected Dividend Income

The projected dividend income is now around $2400, and with 6% CAGR for the portfolio, I’m going to break $2500 this year. I might have to increase my goal to $3000 already. Damn. What happened to the days when I was struggling hitting $1000…Good times.

Nordic dividend vs US dividend

I don’t track the dividend growth of my nordic stocks, because they aren’t as strict when it comes to cutting the dividend. Is it bad? Good? Well, it’s two-sided: You want your dividend income no matter what, right? Maybe especially when the market crashes. Your favourite stocks will become much cheaper, and getting a stream of cash each month will help you on your quest to achieve more shares.

However, a company’s balance becomes weaker when they pay their dividend. When the payout ratio is about 40% and the company has a credit rating of BBB+, one shouldn’t worry. But nordic stocks can often have payout ratios around 80-100%. Forcing them to pay dividend while having negative EPS growth means that they might have to increase their debt in order to pay you (Statoil did this in 2016 when the oil price crashed). That’s not good either, right?

I think about it like this: I’m happy with the high dividend that I get now (5-7%) from many of my nordic stocks, but I’m fully aware that they might cut the dividend in bad times. Therefore I’ve created my portfolio so that solid US-based companies are the core of the portfolio, and nordic stocks are more like jokers. Some will cut their dividend, but I’m sure that they will return with strong force.

Thanks for reading,

Stockles

24 comments

    1. Hi Team CF,

      Thank you! Adding a lot of capital when markets are ATH should feel scary, but I try to think of the long term plan. Then todays contribution is small anyways, so might just add now when I have the capital. Can’t afford to wait until the market chrases. I also want to be invested when the market chrases, because that’s the only way I can test myself and grow as a person and investor. Thanks for commenting!

  1. Stockles, I appreciate your thoughts on the pros and cons of consistent dividend payers vs the less consistent sort that pay out based on fluctuating earnings and financial performance. I have to admit, I am a sucker for the consistent payers. I crave predictability in my life. Not just with dividends, but with most everything. Some people would call me boring, but I’m okay with that. Tom
    Tom @ Dividends Diversify recently posted…As The Dividends Deluxe TurnsMy Profile

    1. Hi Tom,

      I can definitely understand that. Having consistent payers in your portfolio is a time-testet way of achieveing great results. However, while you’re not among them, many “investors” buy a stock and don’t care about what the dividend does to the company. In the states, the dividend is the last thing that get’s cut, but here in europe, it’s the first thing. And each case will be different. For long term holders, we also want the fundamental return to be solid, which means that the company must be able to grow over time. Cutting the dividend might turn out to be a smart move (for some companies), and the total return will be very satisfying.

      However, I also like the predictability and will continue to look and add to companies were the dividend in safe.

      Thanks for commeting!

  2. Congrats on quadrupling your dividend income from last year! Your forward dividends are great. I am still at the “struggling to get to $1000” mark, but should hit it this year. That is an awesome way to kick off the year! Keep that growth going!

    1. Hi Beta Post 🙂

      You are right! It seems like Statoil is a buy now. Amazing cash flow and dividend. Pareto has a target price of 220, meaning we still got 40 NOK left. Are you buying?

  3. Congrats on a great month Stockles! We only share O, but I sure hope to get my hands on PEP, KMB, and CSCO one day. Hang on tight this February looks like it will be one hell of a ride!

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