Man, talk about tough acts to follow. Lanny had one heck month hauling in a crazy $740 in dividend income during this “off” month. Congrats on the great month Lanny! With figures like that, I am setting myself up for yet another defeat in July, which makes perfect sense considering his portfolio is nearly triple the size of mine. However, I have one glimmer of hope this month that can catapult me to fictitious victory over Lanny. What is it? I own more shares of Kraft than Lanny. The question is, will this one-time special dividend be enough to push my dividend income for the month over $740. Let’s find out!
Dividend Income Summary
Bad news everyone. Unfortunately, despite the special dividend, I fell short of Lanny’s $740 mark but man was it close. I guess I can’t really complain though, because it was one of my best months ever. This July, I received $706.40 in dividend income, an increase of 667.74% from July 2014 and 483.5% from April 2015. I know what you are thinking and yes, those numbers are skewed due to the special dividend. So my dividend income less Kraft dividend (“adjusted dividend income”) was only $100.83, a 16.66% decrease from April 2015 and a 9.6% increase from July 2014. Ugh, a decrease….what the heck! Thank goodness I had the special dividend this month. While it sucks that the adjusted income decreased, here are some of the events and transactions that impacted my dividend income this month.
- I might as well discuss this one first. Have I mentioned yet in this post that Kraft issued a special dividend in July? I almost fell out of my seat when I found out that I was going to receive a cash dividend of $16.50/share earlier in the year and luckily for me, I owned ~36.5 shares of the food giant at the time. Hence why I was so pumped! When all was said and done, I received $605.57 as a result of the merger and quickly put this capital to work by increasing my position (and lowering my cost basis) in Norfolk Southern. Dividend investing at its finest!
- Strangely, I did not receive dividends from any new companies this month; which seems odd to me considering I have been deploying a decent amount of capital recently: investing in Norfolk Southern, IBM, Emerson Electric, and Johnson & Johnson during the quarter. Unfortunately, for each investment, I either missed the ex-dividend date s or the company pays a dividend in the loaded third month of the quarter. While this typically is not a big deal because heck, who cares what month the dividend is received? All that matters is your annual dividend total is increasing! The lack of new additions just jumps out in a month that saw my adjusted dividend income decrease. Man would it have helped to receive something from a new company in my portfolio so the change my adjusted dividend income could have been positive for the quarter!
- Now, on the items that negatively impacted my adjusted dividend income for the month. Lanny and I have been discussing this a lot recently behind the scenes and it has become a true pain to us. This month, our dividend income was negatively impacted by fluctuating exchange rates and the pendulum was not swinging in our favor in July. Due to a strengthening dollar, we saw our dividend income decline for GSK and CM, a British and Canadian company, respectively. What sucks about this is that we have zero control of exchange rates, so all we can do is sit on the sidelines and watch our dividend income shrink. In total, the exchange rate had a -$5.33 impact on my dividend income when compared to the same month in the last quarter. This caught us off guard this month and we will definitely consider this in future investment decisions (if we are assessing an international company vs. domesting).
- Lastly, I did not receive dividends from Diageo in July since DEO pays a semi-annual dividend in April and October. There it is! We have identified the largest contributor to the decline in adjusted dividend income between April and July since I received $14.30 from DEO in April. Missing out on this income was huge this month but luckily, this was a known fact and I was not expecting to receive a dividend from DEO.
Dividend Increases
Lanny probably said it best in his dividend income article….this was not a great month for dividend increases. Norfolk was supposed to increase their dividend at the end of the month, only to disappoint the two of us by maintaining their current dividend. We had a self-induced let down with this announcement as we were hyping ourselves up behind the scenes anticipating a solid increase. Just another reminder that a dividend, let along a dividend increase, is never guaranteed. The only other increase I received during the period was KMI, who increase their dividend by $.01/share on their march towards a quarterly dividend of $.50/share by the end of the fiscal year. The best news here…they are still not at the $.50/share mark, so hopefully that means there will be another dividend increase announced along the way!
Summary
While I may have sounded angry with a negative tone at some points of the article, I really have nothing to be upset about and it was all in good fun. I am fortunate to be in the spot I am and couldn’t be happier that I received over $700 this month for doing absolutely nothing. Plus, I made some moves outside of the investing world in July to improve my life by changing careers again after only four months. The move was a much needed jolt of energy and should help snap me out of the funk I have been in recently! If anything, this July is a motivator to keep pushing myself to continue investing in these strong dividend growth companies as soon as possible so I can maximize the power of dividend re-investing, share buyback programs, special dividends, or any other tool management uses to reward their shareholders. This is what it is all about!
How did you perform this month? Did you receive a special dividend from Kraft? Were you able to top Lanny’s $740 dividend income mark? Did you receive any dividend increases this month?
-Bert