August marked a huge month on our journey towards financial freedom. We crossed a major dividend milestone. I wrote about how we crossed $12,000 in annual dividend income and now earn an average of over $1,000 per month in dividend income. Even without the milestone, August was very exciting. As usual, I”m going to show you exactly why. Each month, we summarize the dividend income we received to help monitor our progress and continue to push ourselves. Please continue reading my August dividend income summary!
Why I Invest in Dividend Stocks
Dividend income is the name of the game. In my mind, dividend investing is simple and the EASIEST form of passive income. Our goal is to achieve financial freedom by investing in high quality dividend growth stocks. That is why we invest in dividend stocks.
We find dividend stocks to purchase using our dividend stock screener. The stock screener uses 3 SIMPLE metrics to identify undervalued investment opportunities. Our stock screener has helped us find some awesome dividend stocks over the years. In an effort to help us, and our readers, we have built some stock lists using our stock screener. The lists include our legentary Top 5 Foundation Stocks and my 5 Stocks to Buy Now, Always and FOREVER!
Watch: Dividend Diplomats’ Dividend Stock Screener
Watch: Bert’s 5 Stocks to Buy Now, Always and FOREVER
Dividend investing in 2020 is as important as ever. The interest rates on our savings accounts continue to fall. In fact, I opened a “high yield” savings account with Capital One several months ago. At the time of opening, I was earning 1.50%. Now, I am only earning .65%.
With low interest rates in our forseeable future, we are looking for new ways to earn additional passive income. It is time to put our cash, that is earning nothing, to work! Dividend stocks are one of our suggested avenues for doing so. There are many great dividend growth stocks yielding well over the pathetic .65% interest rate I am receiving at Capital One.
Related: Cash is Dead – Why Holding Money in a Savings Account is a Fool’s Game
Building a significant stream of dividend income takes hard work, consistency, saving, investing, and time. I have been investing in dividend growth stocks since 2012. Slowly, but steadily, my income has increased. Now, in 2020, I am enjoying some of my strong income months yet. The best part is…I’m just getting started. We continue to save, invest, rinse, and repeat here in our household. The best is yet to come.
Each month, we share our dividend income summaries to highlight our growth and progress. This is a fun and helpful excercise that holds us accountable. Further, it helps you, our followers, see the stocks we are purchasing. The comments I receive each month are great, helpful, and motivating. That’s what it is all about.
Bert’s August Dividend Income Summary
In August, we received $642.39 in dividend income. That is a 9.4% increase compared to last year. Our growth rate slowed compared to previous months. For example, July’s annual growth rate was 47%. Despite the slowdown, I am very excited with the results. The following chart lists EVERY dividend we received during the month:
In every monthly dividend income summary article, I provide a few observations and highlights from the previous month. My notes for the month of August are as follows.
Observation #1: AT&T (T) Dividend Growth Compared to Last Year
Our AT&T dividends continue to grow! It sure is fun building up our position in this high yield, Top 5 Foundation Dividend Stock. Compared to last year, our AT&T dividend income grew by 16%. That shouldn’t exactly be surprising given our purchase spree over the last few months. AT&T is yielding over 7% and consistently trading below $30 per share lately. Quite frankly, the company crushes our Dividend Stock Screener. Therefore, I have been aggressively adding small dollar amounts to AT&T on our regular brokerage accounts.
Read: Our Top 5 Foundation Dividend Stocks
This is the really fun part. AT&T’s ex-dividend date for their August dividend was July 9, 2020. The 16% growth rate reflects the purchases made BEFORE the ex-dividend date. We have also been purchasing AT&T in handfuls after the ex-dividend date. Now, this has me really exicted for November. All my purchases this quarter will be reflected in the November dividend. That growth rate should be insane.
Observation #2: New Dividends Received from 2 Dividend Aristocrats
At the beginning of the pandemic, I re-focused my dividend investing strategy. After receiving too many dividend cuts, I decided to get back to the basics of dividend investing. That’s right, it was time to focus on high quality dividend growth stocks. In particular, I really wanted to purchase companies that were Dividend Aristocrats.
Dividend Aristocrats are companies companies that have increased their dividend for 25+ consecutive years. Aristocrats have increased their dividend through the Global Financial Crisis, Dot Com Bubble, and even the pandemic (for some). In uncertain times, you can’t beat investing in Aristocrats!
Read: Dividend Aristocrats: Who & What Are They?
That is why I decided to invest in companies such as General Dynamics (GD) and People’s United Bancorp (PBCT). In August 2020, I received my first dividend from the Aristocrats. That $4.40 dividend from General Dynamics won’t get me too far. However, just remember, EVERY DOLLAR COUNTS. No dividend received is ever too small for me. Nothing would make me happier than seeing GD’s stock price fall. If it does, I will take advantage of the opportunity to build my position.
Observation #3: Westrock Dividend Cut
Not every observation is positive. I wish it was; however, in this economic environment, it would be very difficult. Westrock cut their dividend in May. The company cut their dividend to save cash and use the proceeds to reduce their debt. Personally, I am skeptical the dividend cut was needed. Especially after taking a deep dive into their financial statements. I
n the long run, de-leveraging and improving your future financial position is not the worst reason to cut a dividend. But that doesn’t mean that it didn’t hurt when it happened. Nobody likes seeing their income DECREASE. I went from receiving nearly $31 in August 2019 from Westrock to just $14 in August 2020. Man, these dividen dcuts are brutal and I cannot wait until they are behind us.
Dividend Portfolio News & Updates: August 2020
In this section of my article, I discuss the impact of dividend increases/cuts on my dividend income. Further, I typically discuss the impact of dividend stock purchases as well. However, over the last few months, I have been publishing a separate article discussing dividend stock purchases. Rather than cram the results of the purchases here, it is more beneficial to discuss the buys at length.
Read: Lanny’s August Dividend Stock Purchase Summary – He Added over $5,000 to His Portfolio!
August was a relatively slow month for dividend increases. In fact, this was a point I have already discussed in our monthly “Expected Dividend Increases” series. I would consider it the calm before the storm. Why? We have some heavy-weight dividend stocks expected to announce a dividend increase in September.
Read: Dividend Increases Expected in September and Actual Dividend Increases in August.
Watch: Dividend Increases Expected in September
For my portfolio, the only dividend increase I was received was from Illinois Tool Works (ITW). The company announced a 6.5% dividend increase. This increase added $8.33 in dividend income to my forward dividend income. In this economic environment, I’ll happily take a 6.5% dividend increase my friends!
Unfortunately, I couldn’t celebrate for too long. After receiving the great news from ITW, BP delivered my dividend income a haymaker. BP cut their dividend by 50% in August after reporting a nearly $18 billion dollar loss.
In hindsight, I really shouldn’t have been suprised. Oil companies have been impacted by the pandemic and low oil prices in 2020. A brutal one-two punch. Shell was the first major oil company to cut their dividend several months ago. Exxon, Chevron, Total, and BP did not cut their dividend, hoping the economics would improve. Unfortunately, it appears that BP couldn’t wait any longer. I’m very curious how long Exxon and Chevron can maintain their dividend. 
The impact of BP’s dividend cut was significantly larger than the impact of ITW’s dividend increase. The chart below shows the net impact each had on my dividend portfolio. I guess I should be happy my dividend income didn’t decrease by three digits…
Summary
In conclusion, this was another strong dividend month. The dividend growth was lower than the past; however, it was great to receive almost $650 in dividend income in an “off month.” We are nowhere close to Lanny’s $1,000+ August dividend income total. There is still some work to be done to match that impressive feat! However, as always, we will continue to march forward one step at a time. Let’s keep making every dollar count. With each extra dollar saved or earned, it is time to put the cash to work and buy more dividend growth stocks. Financial freedom awaits. Let’s get after it!
Did you have a strong month of August? What was your dividend income total? Did you receive any dividend increases or cuts?
Bert
Congrats on nearly $650 in dividends! Nice T payout! Yeah, dividend cuts suck but I guess we just got to roll with the punches this year. The snowball will continue to grow and in the long-term it will be huge! 🙂
MDD,
Than you very much. That T dividend is going to continue to grow next quarter 🙂 Agree, the cuts are awful, no doubt. In the long run though, the dividends will come back and accelerate our dividend growth that much faster.
Bert
A solid showing for the month, congrats. While I have been saying the same thing for a few months now… one more time… dividend cuts suck and we all experienced a brutal 2020 in that sense at least you can still generate a year over year growth rate and stay diversifed to mitigate those cuts. Nice job heading into the home stretch of the year.
Keith,
I couldn’t have said it better myself. Thanks for the awesome comment and motivation to continue being aggressive the rest of the year. Let’s continue to get after it!
Bert
$650 in dividends rock the BP cut stinks as with all cuts. You can really start to see the growth now and will continue to see it. Good job
Thanks Doug! The BP cut was brutal. However, we will overcome it and continue pushing forward. I have definitely learned my lesson about heavy oil exposure…that’s for sure!
Bert
Congrats! A rock solid growth despite the difficult dividend environment. $650 spread nicely over many different companies helps you stay calm and sleep well at night. A dividend cut sucks but it is not killing your portfolio income. I for sure discovered during the market crash the value of high quality stocks even though they typically come with a lower yield. GD has been on my Top-5 list for weeks and I keep adding.
Thank you DGJ. It definitely provides some comfort having the extra income. However, I’ll be able to sleep more once it crosses $1,000 🙂 GD is a fantastic company that I wish I would have added more to earlier in the year. Nice job building the position in that Aristocrat!
Bert
Nice Bert
A great income and growth rate in this environment. That cut stings a bit for sure, but you will surpass that cut in no time!
keep it up
cheers
Thank you PCI! Much appreciated. If that’s the worst thing that happens to me, I will be just fine. Let’s keep things moving and push forward.
Bert
Congrats on near double-digit YoY growth in your dividend income. Keep that snowball rolling down the hill!
Thanks Kody! Keep pushing and eventually the snowball will start rolling on its own, right?
Bert
I join the comments – $ 650 is a good milestone. If you continue, you will succeed) However, I am wondering what do you think of AT&T? Good dividends, of course, but many analysts are inclined to believe that stocks will slowly fall in price … Will this not lead to a decrease in capital? I also have AT&T in my portfolio, so I’m interested in your opinion)))
Thank you Illia! Personally, I love AT&T. Their dividend is great. The payout ratio is solid. Sure, the price is not moving right now. However, the company is diversified and positioned well in sectors that are critical to life in 2020. They are also taking steps to reduce debt, which is nice to see.
Bert
Great work on the divs, Bert.
In terms of interest, my rates are in the gutter, as well. What I did last week (or the week before?) was switch my holding cash over to a different bank. When I do this, I find it seems to trigger a “promotional rate” within the other bank’s algorithm, so I suspect I’ll be getting offered something like +2% on new money there at some point in the relatively near future. It has worked many times in the past, so doing it again.
Take care,
Ryan
Ryan,
Thank you very much! What bank did you switch to and what was the rate?? That is an interesting take. I love the hustle and grind of playing the bank account promotion game haha
Bert
Some of the Dividend cuts have been brutal,still a good month .
Yes they have Desi; however, we will overcome them!!
Bert
Congratulations Bert. Even in these difficult times, you managed to increase your YOY income. Impressive.
Thank you Legend!! Very much appreciated.
Bert
Sorry to hear about the BP dividend cut, Bert. I suspect XOM will eventually follow suit, and it’s part of the reason I sold XOM recently.
Almost double digit YoY growth… I was about in line with you in this regard.
I loved seeing that ITW raise. ITW stock price has held up better than I thought this year.
Congrats on the two new dividend payers in August. It pays to have that diversified income stream.
Does T have a shot at being a triple-digit dividend payer for you in November?