Last week, I released my March dividend income summary.  Typically, I’ll show my stock purchases in the summary article.  However, in March, I made a lot of low dollar stock purchases, as the market showed its twists and turns.  As a result, I decided to split the articles so I can discuss some of the purchases in greater detail.  This article will summarize my March dividend stock purchases.

The month of March was turbulent in the market, to say the least.  Every new development with the pandemic and each state’s subsequent shut down were causing wild market swings.  Swings that I have never seen or experienced before.  Below is a chart of the S&P 500 during the month of March (per Yahoo! Finance).

Now that we are halfway through April, it is crazy to take a step back, take a deep breath, and just look at what happened to the market.  The S&P 500 closed at 3,090 on the first trading day of the month and ended at 2,584 on the final day.  The close was actually significantly higher than the lowest value, 2,237.

Read – Lanny’s March Dividend Stock Purchase Summary

See – Our Dividend Stock Portfolios

During the madness, my stock purchase mentality switched gears.  Rather than making large stock purchases, as I had in the past, I had suddenly switched to making very small dollar purchases.  As you’ll see below, I was often purchasing less than 5 shares at a time. Thank goodness my brokerage, Fidelity, started offering free trades in 2019 when the great “Brokerage Trade Wars” commenced.

See – The Dividend Diplomats Dividend Stock Screener

This switch felt appropriate given the chaos of the month and the fact that you really didn’t know what each day, let alone hour, was going to bring.  At any given moment, major companies were announcing major changes to operations. When the market would tumble, the Fed would announce a major program to help stabilize the market.  Then, economic relief and stimulus packages across the globe were announced to help flailing economies.  It was mayhem and it was difficult to pinpoint whether the market was at its bottom or whether you were reaching for the following sword.  The small purchases help me feel better about buying great companies at great prices.

Read – Why I Don’t Try to Time or Predict the Market

There was also another shift in my strategy as well.  After receiving dividend cuts from Occidental Petroleum (OXY) and Delta Airlines (DAL), both of which had large debt balances, I shifted my attention to focusing on Dividend Aristocrats.  During this time of economic uncertainty, where earnings were in free fall, I wanted to: 1. Focus on Aristocrats because they have managed to increase their dividend through previous economic cycles and 2. Companies that aren’t overburdened with debt and are less likely to have to pick between paying bondholders and shareholders.  This wasn’t the case with every purchase, but it was definitely on my mind for many of them.

Read – Dividend Aristocrats with Low Debt

Read – Who and What are Dividend Aristocrats?

Bert’s March Dividend Stock Purchase Activity

In March, my wife and I made 17 individual stock purchases.  We deployed $4,187.02 in capital and added $179.20 in dividend income.  That is an overall dividend yield of 4.28%.  Not too shabby, right?  Now, I won’t be able to cover  each individual purchase in this article. So I will highlight some of the larger purchases made during the month.

Dividend Stock #1: Discover Financial Services (DFS) 

I will file this under the category of unfortunate timing, as I purchased shares in Discover Financial Services before the bottom fell out of the company’s stock price.  At the time I am writing this article, Discover’s stock price is trading close to $35 per share.  As you can imagine, I am starting a nice unrealized loss in the face.

Discover, unlike Visa or Mastercard, has a portfolio of credit card and student loans on their books.  So the company  faces more exposure than the two other credit card giants in an economic downturn.  Not only are they potentially dealing with less credit card activity, but they are also exposed to delinquencies and poor loan performance.  It is not surprising that their stock price plummeted.  I may look to add to this position in April and lower my cost basis.

Dividend Stock #2: Genuine Parts Company (GPC)

I started purchased Genuine Parts Company shares in my wife’s portfolio back in January, before the economy turned south. Over the last two months, I have been adding to this position and lowering my cost basis over time.  What jumps out to me about GPC is that they are a Dividend Aristocrat (63 consecutive annual dividend increases) and they dominate an industry that performs well in all economic environments.  Leading in the secondary auto parts market is clutch because people will need to repair their car in good times and in bad.   Like I said with Discover above, I will have no problem adding to this position if the price continues to remain below $70 per share in the coming months.

Dividend Stock #3: ViacomCBS (VIAC)

Similar to GPC, I had been amassing a strong position in ViacomCBS before the economy turned south.  Since my initial purchase, I have watched their share price fall further, and further, and further.  So I have been adding and lowering my cost basis.  Although, I have not taken advantage of the company’s rock bottom prices in the low teens.

The company is losing some significant advertising revenue, especially with the cancellation of March Madness.  However, with more consumers at home, the company should experience an increase in their other services.  Pluto TV, movies, their new streaming service, classic sports game reruns, etc.  This won’t offset the full loss of advertising; but the company is positioned to increase viewership with more people stuck at home.  I am happy to continue adding to my position here as well over the next few months.

The Best of the Rest

Now, did any of you notice a trend in the three largest company purchases we made in March?  If not, let me help you out.  Look at the dates above and then look at the stock market chart I attached earlier. The majority of these stock purchases occurred before the stock market fell off a cliff.  Further, my purchases slowed down significantly towards the end of the month.  The end of March had significant uncertainty in the market.  Companies were just removing their earnings guidance for the year.  They weren’t just revising downward…they were removing. Even companies weren’t able to forecast what was going to happen over the remainder of the year.

As an individual investor, it caused me to pause and really think about investing at this time and trying to understand when things may start to turn around.  Thus, the activity slowed down accordingly.

This next table will show the remainder of my small dollar purchases made during the month.  Overall, I am very happy with the quality of the “other” companies during the month. The “Other” companies accounted for ~$2,077 of the purchases for the month, or about half of my overall purchases. So each of these small purchases really added up and made a difference.

Not every company in this table is a Dividend Aristocrat.  But many of them are.  There are just some crazy trends and items to point out here:

• I purchased Leggett & Platt (LEG) on 3/16 and 3/18.  Look at the difference in stock price between the first purchase and the second.  Their share price fell almost $7 per share!
• When I sam IBM’s share price at $93 per share, I had to at least grab one share of the company.  At that moment in time, IBM was yielding 6.94%.  Just insanity.
• Similarly, Realty Income in the low $40s was crazy to see as well.  But taking a step back, this was a very difficult company to assess at that moment in time.  We still don’t know what is going to happen and when the economy is going to reopen fully.  We have a better idea today than we did last month.  But it is far from certain.  How many of Realty Incomes tenants might close for good or default as a result of the pandemic?  If more than a few do, what will the impact be to Realty Income’s FFO and EPS?  Could it still support the dividend? These were the types of question I was asking about every investment in March and early April, which is why investing during this time frame was so difficult.

Summary

March and April are two of the most unique months I have ever experienced.  My investment activity slowed down compared to February.  After reflecting on the month, I feel like there was more that could have been done.  Still, despite that, I am happy and fortunate to have been in the position to deploy over $4,000 in capital and add $179 in forward dividend income.

We continue to focus more and more on saving every dollar possible, finding new ways to save during the pandemic, and building our income. Each new day that passes, we are learning more.  So everyone, please continue to stay safe and healthy.  Its time to continue pushing forward and reach financial freedom faster.

Bert