Another month is in the books. From a percent increase standpoint, the stock market crushed it. However, there was much more to the story, as the company is well below its pre-pandemic highs still. There is a significant amount of unease and uncertainty in the marketplace. Will the economic relief packages work? When will the economy re-open safely? How many more companies will cut their dividend? All of these questions remain unanswered and and are fueling this uncertainty. But still, despite this, there is plenty of positive news for dividend investors. During these turbulent times, the dividends continue to roll in and provide us with an additional, passive income source. In this article, I’ll perform my April dividend income summary and highlight the previous month!
Receiving dividend cuts and watching your dividend income is never fun. In fact, it can even be discouraging seeing your income head in the wrong direction. So I thought I would start this article off by reminding us WHY we are dividend growth investors.
Dividend Investing is amazing for so many reasons. Slowly, over time, we are investing every dollar we can to build a growing, tax-efficient passive income stream by investing in undervalued dividend growth stocks identified by our dividend stock screener. There are some great values in the market today. In fact, many Dividend Aristocrats are trading at stock prices we haven’t seen since 2015. It is important to stick to your investing metrics and investing strategy.
For us, our investing strategy has remained consistent over the years. We established our Dividend Stock Screener when we created this website, but the reality is we were using it even before we were writing. It has been instrumental in finding undervalued dividend growth stocks over the year. But lately, we have also supplemented our stock screener with other carefully created lists to help us focus on quality. The lists have focused primarily on finding quality, dividend growth stocks (aka Dividend Aristocrats) that are made to weather this current pandemic, unlike some other industries.
Dividend investing is always a work in progress and your strategy evolves with time. You are always constantly learning something new and becoming better each day. The fun part of performing these summary reviews is that you see the results of previous investments and see the impact that each investment over time has on your passive income stream!
Bert’s April Dividend Income Summary
In April, my wife and I received $442.18 in dividend income. That is a 49.7% growth rate compared to last April. The following table provides a detailed listing of each dividend received.
Here are some of the highlights from the month:
- It was exciting to see the impact of new purchases from the first quarter in my wife’s portfolio. Total, Viacom, Cisco, and Genuine Parts Company were all new additions to the portfolio this year. The next dividend for GPC should be even larger since we continued to make purchases after the ex-dividend date.
- Well, I enjoyed that last nice dividend payment from Occidental Petroleum. The next dividend payment will reflect their slashed dividend. It was crazy to receive nearly 3 new shares via DRIP though from the company (As their price has tanked). In hindsight, I wonder if I should have turned DRIP off for this investment and used the cash elsewhere. Hmm, that’s a great topic to consider in the future.
- I am very happy to see CM’s dividend crack $50 per quarter. That position went from one of my smallest two years ago to a large one. There was a time I thought about exiting. Boy am I happy that I did not and decided to build on the position instead. Largest Canadian Banks are awesome!
- Other than those items, it was a pretty boring month of increases due to the power of dividend reinvestment. Man oh man do I love dividend investing!
Bert’s Portfolio Insights
In this section, I like to discuss the impact of stock purchased 401(k) contributions, and dividend increases had on my portfolio and forward dividend income. Typically, I include a chart detailing the impact of each. However, like March, April was crazy and I made a lot of really small purchases. I didn’t purchase the amount of stock I was expecting though, which was a little disappointing. But that is changing here in May as I will continue to invest in Dividend Aristocrats and other strong dividend growth stocks.
In April, I purchased $2,364 worth of stock. Some of the individual purchases included Cincinnati Financial, General Dynamics, and Leggett & Platt. I’ll write another article detailing the purchases in detail later in the month. Purchases of individual stocks added $96.44 in forward dividend income. 401(k) contributions added $31.61 as well. In total, purchases and contributions added $128.05 in dividend income.
And now, here comes the bad part. In this next table I am going to show you the impact that dividend increases and dividend cuts had on my portfolio. In April, I received two dividend cuts. One from Schlumberger and one from Shell. The Shell dividend cut was devastating, for obvious reasons, as it was out of the blue. I had been expecting the Schlumberger cut for a while.
Luckily, I did receive a few dividend increases from some powerhouse dividend stocks: Procter & Gamble, Johnson & Johnson, and IBM to help offset the impact of the cuts. Unfortunately though, it was not enough and I finished the month in the red. Net dividend cuts, offset by increases, caused my dividend income to decrease by $96.73.
Overall, the increase in my dividend income due to purchases was greater than the decrease due to dividend cuts. The Net increase on my overall income for the month was $31.42.
This was a bittersweet month. Of course I was happy with the results and the increase in dividend income compared to last year. Who wouldn’t love a 49% increase in their income? However, it is bittersweet because the turbulence in the market and the economic impact of the pandemic are starting to come through loud and clear to investors. The Shell dividend cut was brutal and a great reminder that the QUALITY of the dividend should always be more important that the YIELD on the investment. My May purchases will reflect this message and I can guarantee that you will see many Dividend Aristocrats on my May Dividend stock purchase summary. Let’s use the remainder of this pandemic to shore up our personal budgets and balance sheets and continue investing in high quality dividend stocks.
How did you perform in April? What was your year over year growth rate? What stocks did you purchase? Are you only investing in Dividend Aristocrats these days? How has your investment strategy changed as a result of receiving dividend cuts?