Wow….January just flew by. One giant blur to me. As I take some time to reflect on the month, I realize just how large of a roller coaster ride it was. Whether it was the wild swings of Mr. Market, receiving dividends, or purchasing a couple of stocks (ADM at the beginning of the month and CZNC at the end of the month), I always had something fun and exciting to look forward to. So now, just like every month, I took a step back and reviewed my monthly dividend income summary to see how my income stacked up against the same month in the previous quarter and the previous year. Let’s check it out!
In January, I received $103.54 in dividend income. This represents a 28% increase from January 2015 and a 2.25% decrease from October! Woah woah, a decrease. Don’t worry, there is an explanation for this and I will get to it later. I wanted to first focus on the positives here. So let’s check out what caused this increase compared to last year. Over the last 12 months, I only two of my transactions impacted my January dividend income figure. The first happened to be the very last stock I purchased in 2014, Schlumberger (SLB), one of the largest oil service providers. The stock hasn’t performed as well in terms of market value as I hoped, but let’s be honest, what oil company has? While oil is depressed, I will be more than happy to collect high yielding dividend checks from this company. The other transaction that impacted my January income was when I decided to add to my stake in Philip Morris in the second quarter of 2015. My transaction may have lacked the same oomph as Lanny’s last year, when he added a ridiculous amount of shares of Philip Morris when he solved his tobacco stock mystery and sold his stake in Lorillard to purchase PM. However, adding a modest amount to my current stake allowed my PM dividend income to increase nearly 56% from last year. No complains on my end!
The increase from last year was pretty easy to identify. But what the heck happened over the last three months. I identified three items that caused this odd change between quarters:
- Lanny and I purchased shares in Diageo (DEO) a long time ago in 2014. Man is it sad that two years feels like “forever” ago. DEO pays a semi-annual dividend in April and October and since January is an off month for the alcohol giant, it left a big void in my monthly income summary. I received $24.20 from DEO in October, which represented 23% of the dividend income I received that month. A pretty big void to fill.
- Luckily for me, the newly formed Kraft-Heinz Company (KHC), is trying to figure out which month of the quarter to distribute their earnings. Many in the community were puzzled when KHC announced and paid their dividend in November, the second month of the quarter, versus the traditional first month of the quarter. It caused some wild swings for many of us in October and November of 2015! What’s strange is that KHC decided to switch back their dividend payment cycle and distribute earnings in the first month of the quarter again. Who knows how this will continue? But you know what, this was a welcome change considering I had to replace the $24.20 void that DEO left behind.
- Lastly, I figured I would end this with the change that had the smallest impact on my monthly dividend income. If you all recall, I sold the three legacy mutual funds that I held after I received my capital gains distribution in December. One of the funds, OIEIX, paid a monthly dividend that ranged from $.25/month to $8/month. Nothing too significant. Now that I no longer own these stocks, I no longer receive this small check and therefore, my dividend income was $.31 less this month than October.
Isn’t that crazy. Three strange occurrences that had a large but offsetting impact on my dividend income for the month. Luckily for me it could have been a lot worse if KHC decided to continue paying their dividend in the second month of the quarter. This turned out to be a perfect cap to a hectic month for me. What’s nuts is that February is off to another crazy start. Let’s just say that I purchased a stock this last week but I haven’t had the opportunity to share it with all of you yet. What is fun is that it wasn’t one of the stocks I was watching during the recent downturn or is it one of the stocks from any of our “Top 5” listings. You will find out soon enough, but for now I am going to keep you in suspense. Let’s just say I follows Lanny’s strategy of purchasing at least $3,000 per investment. Despite the fact that my income decreased compared to October, I am happy with the results and my core dividend income seems to be increase. I can’t wait till April to see how much my income increases with the semi-annual payment from Diageo. What this month showed me is that I am taking another step towards financial freedom and the results of what we all are doing are beginning to show. This is when it gets fun, when you see and feel the progress. So let’s keep at it and keep on pushing along as we strive for the end goal of financial freedom!
Did you have a great month of January? What was your growth rate? Did you purchase any stocks while the market was depressed in the beginning of the month? Or are you exercising patience and trying to let the dust settle? Any suggestions for other stocks that pay a dividend in January and he first month of every quarter so that I can continue growing my income during this month?
-Bert