Dividend Income Summary: Bert’s May 2020 Summary

Dividend Income, dividend stocks, January dividend

May is over. Boy did the stock market end with a bang! States are easing their lockdown restrictions and the economy is starting to open again. Already, the stock market is trading at their pre-pandemic levels. The impact of the reopening will be fascinating to follow over the next couple of months. When each month closes, we each type up our respective dividend income summaries to share our results, progress, and most importantly, hold ourselves accountable. My dividend income summary this month had some positive news. However, my dividend income was also plagued by some nasty dividend cuts. Let’s take a look at the detailed results.

Dividend Investing is amazing for so many reasons. Slowly, we invest every dollar we can to build a growing, tax-efficient passive income stream by investing in undervalued dividend growth stocks. We use our Dividend Stock Screener and a suite of other metrics to identify investments.

See – Our Dividend Stock Screener

Video – Watch Us Demonstrate How We Screen Using our Stock Screener

This Pandemic has taught me a lot about investing. More than ever, I have focused  on purchasing high-quality dividend growth stocks that will perform well in the pandemic.  Lanny has taken a similar approach as well with his purchases. This pandemic arrived suddenly and the impact was felt immediately. Unlike any other recession I have witnessed or read about.

Thus, by investing in Dividend Aristocrats and high quality dividend stocks, I am purchasing companies that have increased their dividend through multiple recessions. You cannot predict when and where the next recession will strike; however, you can choose to invest in companies that have a history of paying and increasing their dividend when the recession does arise.

Video – Our Top 5 Foundation Stocks 

See – Industries Built for the Coronavirus Pandemic and Dividend Investors

See – Investing in Industries that are for LIFE

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 writing 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!

Dividend Income Summary – May 2020

In May, my wife and I received $523.49 in dividend income. This was only a 3.63% increase compared to last year.  The chart below provides a detailed listing of the companies that paid us a dividend this month:

Dividend Income

Here are some of the highlights from the month:

  • Let me start with the obvious, albeit, most frustrating item from the month: Westrock’s dividend. At the beginning of May, the company announced a surprise 57% dividend cut. It was frustrating for a few reasons. First, personally, I think the dividend cut was excessive (covered in this article). The company stated the dividend cut was to pay down debt; however, their debt to service is minimal through 2021. Second, the cut was effective immediately. Thus, I received $16 less from Westrock this quarter. That was the largest reason for my small increase.
  • The only other negative change was Dow Dupont changing their dividend payment structure post spin-off.

Otherwise, May was a relatively boring month. I did not receive dividends from any new companies. Increases were mainly attributed to the Power of Dividend Investing. What do I mean by that?  My AT&T dividend increased $4.12 year-over-year due to the impact of dividend reinvestment and their annual dividend increase.  That, my friends, is why we love dividend investing.

Read: The Power of Dividend Investing

Read: We discussed all dividend increases and cuts in May, included Westock, in our monthly series. 

Portfolio News & HIghlights – May 2020

In this section, I discuss the impact of stock purchases, 401(k) contributions, and dividend increases had on my forward dividend income.  Typically, I include a chart to show each purchase.  However, I made a lot of micro purchases in May and the chart would be difficult to read.  Thus, I will break down my May stock purchases in a separate, detailed post.

Despite excluding the detailed results, I will state that I purchase $2,431 of stock. The purchases added $117 to our forward dividend income. It was exciting because I continued to purchase Dividend Aristocrats and other high-quality dividend stocks. The purchases were less than expected and slowed down significantly in the second half of the month when the market began to soar.

Video: Dividend Aristocrats – Who & What Are They? 

Now, here comes the bad part. The dividend cuts. In April, I received several dividend cuts that were partially offset by PG and JNJ’s dividend increases. So the impact wasn’t too bad. This month, the dividend cuts were significantly larger than the sole increase I received. The following table shows the impact dividend changes had on my portfolio:

Yikes! My income decreased $94 this month due to the cuts. Earlier I discussed the Westrock dividend cut. Now, I’d like to discuss the Occidental Petroleum dividend cut. Occidental Petroleum announced their SECOND dividend cut of 2020. You read that right unfortunately.  Their dividend’s collapse has demonstrated the importance of having a strong balance sheet and diversified revenue sources. The collapse in the price of oil decimated their revenues and cash flow. When coupled with a debt-laden balance sheet, it was a recipe for a dividend disaster. However, it is still shocking that the company had to cut their dividend twice. I wish the first one would have been sufficient.

Read: Dividend Cuts Have reduced Lanny’s Dividend Income by Over $800 in 2020

Read: Dividend Aristocrats with Low Debt

Despite the Dividend Cuts, my forward dividend income still had a net positive increase. 401(k) contributions also added another $28 to our forward income. Therefore, in May, our dividend income increased $50.61. Man, I cannot wait for the dividend cuts to stop rolling in.

Read: Stocks to Buy in a Post Pandemic World

Summary

Overall, the month was mixed. Despite the dividend cut from Westrock, our dividend income still increased compared to last year; however, the increase was minimal and barely outapace inflation. The market continues to frustrate me and there have already been way too many green days in June for my liking. However, as always, buying opportunities will present themselves. I have learned some great lessons from this pandemic and cannot wait to apply them to my investing strategy going forward, post recession. Let’s continue to make Every Dollar Count and building on our successes in 2020. Onward and upward everyone!

How did you perform in May? What was your dividend growth rate? Did you receive any big dividend increases or dividend cuts?  What stocks did you buy in May?

Bert

22 thoughts on “Dividend Income Summary: Bert’s May 2020 Summary

  1. Hi Bert, despite of the cuts you came out with a small dividend growth. I am sure you also took the opportunity to deploy capital at lower prices for some of the stocks on your watchlist. Keep up the motivation and let’s focus on those high quality dividend stocks.

  2. I felt the sting of some dividend cuts/suspensions in May as well, Bert. I hope we’ve seen the worst of it.
    At least you were able to make up for the income loss with at least one raise and some purchases. I unfortunately ended up negative for the month.
    Despite that, I’m optimistic that this is just a bump in the road on our journey to FI.

    • ED – You too?! Man, these dividend cuts are not fun. You are right, I am fortunate I was able to offset the impact. Hopefully the negative impact was minimal for you. We will be past these bumps soon enough my friend.

      Bert

  3. Congrats on another $500+ month. The market certainly has been volatile the past few months. If it isn’t swinging dramatically lower, it’s moving much higher. This massive run up is definitely going to make it more difficult to find bargain purchases.

  4. Congrats on a $500 plus month Bert! Even a small YOY increase is better than nothing at all (or worse, a decrease). The market is bouncing back. Where will it go next? Nobody knows, but I am glad to see the dividends still coming in. Keep up the great work! 🙂

  5. Great month. Those dividend cuts and suspensions stink but looks like you had some additions and a increase to help offset those stinking cuts. The good thing is oxy has gained some of their losses back. Still a long ways to go though. Here is to a great June.

    • Thank you Doug. Much appreciated! It blows my mind how much OXY’s stock price has rebounded. I think the price increased 50% over two days? Just incredible for a company that cut their dividend twice.

      Bert

  6. Dividend cuts are not great but it’s still nice to see that you saw growth for May despite all that. Are you selling the companies that are cutting their dividends or holding them for now?

    • Great question TITM – I have held all the companies that cut their dividend. IT is something I’ve considered. However, right now, I’m using new capital to invest in companies instead. What about you? What have you done with the companies that have cut their dividend?

      Bert

  7. Hi, Bert! I just stumbled upon your site and applaud the position you take on dividend stocks and frugal living. Excellent posts!

    Dividend stocks are the way to go. Even when the economy doesn’t allow them to grow, they provide a more consistent value. And what investor doesn’t like a more consistent return, right?

    I used to invest directly in stocks. Then switched into high-growth dividend funds. But recently I changed to a portfolio of funds that as a whole offers a more consistent return. Vanguard Utilities ETF is the core of my investments now—it’s 10+% return year-on-year is incredible. My return was only 6.3% in May, but it’s fair to say that reflects my portfolio’s lower volatility which previously fell less than the S&P 500.

    Although my investment strategy is less hands-off with the funds, it’s great to see your hands-on dividend-stock approach in action. Keep it up!

    • Shannon,

      Thank you for stopping by and the awesome, thoughtful comment! That is a nice return on your ETFs right there. If you aren’t going to invest in dividend stocks, I guess a dividend focused ETF is the next best thing, right? At the end of the day, we have the exact same goal, whether you buy individual stocks or the ETFs. Great minds think alike.

      Bert

      • If I was to get back into the thrilling game of stock picking, investing in dividend stocks as you’re doing is definitely where the money is. But ETFs are indeed the next best thing!

        It’s amazing that after I analyzed the returns of about 500 top-performing funds, a large dividend-paying utility fund came up as the most important of all. I take it that it’s just hard to beat the dividend payouts of those utilities if you’re an investor who likes a sizable yet steady income.

  8. You still came out on top despite cuts and suspensions. But they do sting! Thanks for sharing the CAH increae, didn’t see that one on my rader. We share the JNJ en PG increases as well 🙂

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