Saturday, February 21, 2015

Dividend Update - January 2015


I've just about got all of my spreadsheets up to date which is good because now it should just be maintenance to worry about.

These dividend updates reflect all dividends that I receive through my investing pursuits. I hope they can help inspire you to take control of your own finances and invest to build a passive income stream. What you use that stream for is up to you, whether it's to fund early retirement, just provide some FI/FU money, or even to provide for an annual vacation; the key is that it can provide options and open up all sorts of possibilities. You can check my dividend income or progress pages to see what dedication to an investment plan can give you.

A new year is wonderful isn't it?  It's a fresh start and a new beginning.  Last year I made some great strides on building up my portfolio and dividend stream and had great year over year growth from 2013 to the end of 2014.  But we're on to 2015 now so let's get into the details of January.

I received a total of $239.31 in dividends in my FI Portfolio in January.  Although that's a far cry from the almost $750 from December, it's 60.3% growth from January 2014 and 2.8% growth from October 2014.  The quarter over quarter growth is a bit disappointing but year over year showed excellent gains.  Even my little Loyal3 portfolio is humming along.  I received $11.14 in dividends in January and while that's not much in the grand scheme of things, a lot of little payments will add up to a big total.  Plus it was able to fund an additional $10 purchase of one of the companies.  I started my Loyal3 portfolio in August so there's no year over year comparison but compared to October 2014 that was 1,060.4% growth!  Now I just need to figure out how to do that with my FI Portfolio and I'll be set.  In my Roth IRA I received $25.67 during January which represented a 107.2% increase year over year and a 22.8% increase quarter over quarter.  The dividends in my Roth IRA give a "purer" view of dividend growth investing at work since I can't currently contribute to it due to reaching the MAGI levels, although I might be able to make a retroactive contribution once I do our taxes for the year.

My forward 12-month dividends for my FI Portfolio actually decreased quite significantly from EOY 2014.  I'll detail the reasons why below.  At the end of January my forward 12-month dividends stood at $5,172.75.  The forward dividends in my Loyal3 portfolio increased slightly to $54.60 which brings my total taxable accounts forward dividends to $5,227.34.  My Roth IRA's forward dividends increased slightly to $253.82 thanks to reinvestment of all dividends received in that account.  I don't have any goals set yet for dividends received for the year or forward dividends by the end of the year because there's just way too much in flux right now as far as income and expenses to be able to come up with a realistic forecast.  I'm hoping to try and make a guesstimate sometime later this month or early next month and get some goals out to get me through at least the first half of the year.  By the second half of the year I expect to have more clarity on the income/expense side of the equation to have a better idea of what possible investment capital I'll have coming my way.

There were two big reasons why my forward 12-month dividends decreased from December 2014 to January 2015.  One was the closing of my position in Lorillard (LO).  I had originally set the sell limit order back in 2014 and forgot that I had left it as good til cancelled but on January 13th the limit order triggered and the deed was done.  I wasn't excited about the Reynolds deal so I decided it was time to take my profits and invest the proceeds elsewhere.  I initiated the position in March 2013 and was able to earn a 59.5% capital gain as well as the dividends along the way.  The proceeds from this sale came to $1,963.52 after taking out commission but before taxes.  This reduced my annual dividends by $75.40.

The other big drop was due to my position in American Realty Capital Properties (ARCP).  They announced that their juicy monthly dividend was being dropped all the way to zero.  This decreased my annual dividends by $192.36.  When the accounting mishaps were first announced last year I debated selling out of my position, but decided to wait for the dust to settle to see what happens since the dividend was in tact.  However, things have changed and the dividend has since been cut to zero and it's been announced that the dividend once, if?, reinstated will be in line with peers.  I take that to mean something in the 4-6% yield range which based on the current price would be just $0.465 annually which is over a 50% cut.  Surprisingly the share price didn't react much to the news as it was about in line with where most people expected.

So now I'm at a crossroads with my position in ARCP.  There's still a lot of questions regarding the accounting scandal that should hopefully be answered soon and conservative management, if they ever get that in place, should be able to right the ship given the massive quantity of properties that they own.  The question now is whether it's worth the potential for more negative news about the accounting issue, whether the company and the dividend will be "safe" once things settle out, what will the future dividend growth even look like, and is it worth the headache of dealing with what will probably still be a fairly volatile stock.  I'm willing to give new management time to correct the course but there's also other REIT options that I'm interested in that have less question marks with comparable yields to where ARCP's will most likely end up.  I need to do a bit more research about the company as I'm not 100% convinced which route is the best, sell or hold.  So, I'm asking for some help from you guys.  What's your opinion on ARCP?

Below is the chart showing the monthly dividend totals for each year that I've been investing as well as the monthly average.  It's not always an increase as some companies have weird payout schedules and eventually some positions will get dropped, but the long-term trend is what matters.  There's not much to compare to just based on the monthly average so far for this year since we're only one month in but the rolling 3-month average is at $447.27.  That's a very solid $68 per month increase from my 2014 monthly average and a $2 increase from the 4Q2014 average of $445.07.  With more contributions/investments and expected dividend increases the gap should continue to widen.


FI Portfolio - Dividend Income
Company Dividend Amount
EOG Resources (EOG) $1.36
Medtronic (MDT) $28.10
Phillip Morris (PM) $62.61
Wal-Mart (WMT) $30.44
Realty Income (O) $16.82
General Electric (GE) $39.38
Baxter International (BAX) $20.28
PepsiCo (PEP) $40.32
January Total $239.31
2015 Total $239.31

Roth IRA - Dividend Income
Company Dividend Amount DRIP Shares
JP Morgan Chase (JPM) $8.69 0.156
Phillip Morris (PM) $12.41 0.152
Wal-Mart (WMT) $4.57 0.053
January Total $25.67
2015 Total $25.67

I've updated my Dividend Income page to reflect January's changes.

How did your dividends do in January?  Start the new year off on the right track?

14 comments:

  1. Like yourself, I sold out of LO, I just did it a month earlier. As for ARCP, it is a tough call. Most folks, myself included, sold their positions. I chalked it up to a lesson learned (and kicked myself for not buying O in 2013 instead)! Either way, you're in a great position to continue building your financial nut and generating a great level of dividend income.

    ReplyDelete
    Replies
    1. w2r,

      I was debating it but the more I thought about it I wasn't a fan of the Reynolds merger/buyout so it was time to sell. I'm still torn on what route to take with ARCP. I believe they should finally announce the missing financial statements on March 2nd and I don't think there's much long-term damage from it, although who knows in the short-term. It's definitely a speculative position now. There's definitely plenty of other companies and REITs I should have bought instead of ARCP but hindsight is always 20/20. I expect to make a decision before they release the statements as to the route to take and then obviously readjust if I decide to hold through the announcement.

      Thanks for stopping by!

      Delete
  2. Hi JC! I sold my LO and ARCP (prior to the cut and at a lower price! ) Like you I wasn't excited about the merger with Reynolds. A dividend cut is an automatic sell for me, hopefully I can do a better job next time and sniff it out before things get ugly. Preservation of capital is key!

    Solid progress! Take it easy.

    ReplyDelete
    Replies
    1. ILG,

      I'm surprised to hear of all the people that sold out of LO. They had a good run and just recently announced another solid dividend increase. If they stayed as a standalone company I'd continue to hold.

      At least your decision is made regarding ARCP. If I was paying attention to the markets over the last 3 months I probably would have sold out and been done with it. Now that we're only a week away from the released financial statements I kind of want to hang on and see what the damage is and what happens. ARCP is definitely not a long-term holding for me any more and I expect to divest of it sometime this year so it's balancing the sell now and take the loss or wait and sell at who knows what price.

      Thanks for stopping by!

      Delete
  3. I see we have a few names in common for January's dividend income. The ARCP debacle seemed to have thrown quite a few dividend bloggers' income. But I guess sometimes you just have to cut your losses and look ahead. Thanks for sharing your recent update with us.

    ReplyDelete
    Replies
    1. DivHut,

      The ARCP mess certainly was a pain for several bloggers' dividend income. I definitely don't view it as a long-term holding and will most likely sell out of it this year possibly as early as tomorrow as I weigh my options. There's other REITs that I would like to own and while they aren't cheap by any means they aren't grossly overvalued at the moment. It feels good to get back on track and hopefully I'll be able to start being much more consistent with my writing.

      Thanks for stopping by!

      Delete
  4. You're putting up some solid numbers JC and having great growth in your dividend income. Good work buddy. I initially thought I'd jump in on ARCP after the stock collapsed, but after my research I just don't like the model they are pursuing. I was a developer chasing triple net (credit tenant) leases, and it was awesome. But they seem to be chasing a growth at all cost approach, while taking on weak brands like Red Lobster. I have no doubt that the company could re-rent many of the best locations if they had cherry picked a couple dozen , but my concern stems from taking on so many locations at once. The only way my former group would have taken on so many locations at once......and paid such a price for them......is if the tenants were thriving and the risk of vacancy was super low. I could be wrong, but I don't see this deal working out well for ARCP. Again, I couple be wrong and I'm fairly conservative.....

    -Bryan

    ReplyDelete
    Replies
    1. Bryan,

      I share your concerns about ARCP and will be selling out in the future barring some really good news and guidance from new management. Their pursuit of growth was something I was hoping they would tone down but it seemed to just continue on and on.

      Thanks for the insight.

      Delete
  5. JC,

    Looks like you're still off to a solid start for the year even with the loss of some big payers. I've been fortunate in that ARCP was a pretty small part of my portfolio, so I've been able to truck right past it.

    Keep it up!

    Best regards.

    ReplyDelete
    Replies
    1. Dividend Mantra,

      ARCP wasn't too much of my portfolio before and obviously it's even less now thanks to the big drop. I'm pretty happy with the fact that with dividend growth from my other companies and a couple more purchases and I should be back to even. And that's without selling the rest of ARCP and reinvesting it somewhere else. I'll be able to get back ahead of where I was in a couple months so it's not a huge loss. Although it does sting a bit.

      Thanks for stopping by!

      Delete
  6. Hi JC,

    Your January results look great compared to this time last year - congrats!

    I only hold JPM from your January dividend list but they seem to be doing okay against the legal and security issues they've been facing.

    I don't have much advice on ARCP and I don't know anything about the company. But in general I think it really comes down to this: If you think that money could be better used invested in another company then sell, or if you believe ARCP will get its act together then hold. Unrealized loses are real in the sense that your position is worth less now - the question is, how long will ARCP take to recoup the 'loss' vs. another company?

    Best wishes (and especially to Luke)
    -DL

    ReplyDelete
    Replies
    1. Dividend Life,

      No complaints on the year over year growth. Forward 12-month dividends were way up as well as dividends received. JPM has been pretty good to me because I bought back in 2011/2 when everyone was hating on financials.

      Regarding ARCP if I was paying attention to the markets more over the last few months I probably would have closed my position. However, now that we're a week away from getting the financial statements restated I'm tempted to hold on and see what happens. If it truly was just a minor change in FFO then I expect a pop in the share price and even more if the dividend is resumed, albeit at a lower price. So now I have to weigh whether it's better to sell out ahead of the announcement or wait to see the results. It's a speculative position now and I will be closing my position at some point this year. With the lower expect yield once the dividend is resumed I have other REITs in mind with less question marks and clean track records with comparable yields.

      Thanks for stopping by!

      Delete
  7. I made about $40 in January from my remaining position in PM. The other is KO. Another month or so and I'll be back on track investing after my post-home-buying hiatus. I cannot wait. Everything month I don't invest I feel like I'm delaying retirement that much longer. Losing out on compounding interest and accumulated nest egg. Argh!

    WE

    ReplyDelete
    Replies
    1. WE,

      I know what you mean about feeling delayed. It's great when you get to funnel your savings directly to investments and watch your financial nut and dividend income grow each month.

      Thanks for stopping by!

      Delete