Saturday, May 9, 2009

* Progress Update - April 2009

Once again it is time for a goals/progress update. I am pleased to report that annualized dividend income rose in April, extending the streak to 2 months after February's decline. Since I began publicly tracking annualized dividend income in November 2007, it has increased in 16 of the last 17 months. The good news is that as of the end of April, my annualized dividend income is now up for the year.

My goals were defined in this December 1, 2007 Investing Goals post and updated in my 2009 Investing Goals post. Below is an updated version of the table found in the original post.
Description Dividend
on Cost
2027 Goal 110,000 20.00%
2017 Goal 30,000 10.00%
2009 Goal 8,000 5.00%
December/2008 5,636 5.28%
Purchases YTD 1095 -0.11%
Div. Changes YTD (332) -0.29%
Sales YTD (739) -0.08%
April/2009 5,660 4.80%
Purchases 246 -0.07%
Div. Changes (4) 0.00%
Sales (52) 0.04%
March/2008 5,470 4.83%
The above information covers the current month and year-to-date through the current month.

Click here for a Detailed Historical Progress Table.

For the month, annualized dividend income increased $190, and Yield on Cost (YOC) decreased -0.03%. These changes were a net of new purchases, dividend changes and sales. Let's examine each of the these categories:

Purchases: The $246 increase in annual dividend income and (0.07%) decrease in YOC related to the following purchases (yield at the time of purchase):
  • 68 UTX (3.41%)
  • 60 MCD (3.61%)
  • 63 CVX (3.75%)
  • 55 ABT (3.61%)
All four purchases lowed my YOC. With my recent "flight to quality", future purchases in the near-term will likely lower my YOC. As noted in earlier updates, I generally expect YOC to drop each month since most new investments will yield less than my current YOC, and dividend increases will not be sufficient to offset it.

Dividend Changes: The ($4) decrease in annual dividend income and (0.00%) no change in YOC related to the following dividend changes (a=dividend stated in annual terms, q=quarterly, m=monthly):
  • $2 KMB $0.58q>$0.60q 0.01%
  • $10 KO $0.38q>$0.41q 0.00%
  • ($5) SDY $2.21a>$2.11a 0.00%
  • $1 CNI C$0.23q>C$0.2525q 0.00%
  • $9 WMT $0.2375q>$0.2725q 0.01%
  • ($1) BLV $4.03a>$4.02a 0.00%
  • $1 O $0.14175m>$0.14206m 0.00%
  • ($21) ETO $1.97m>$1.90m (0.02%)
As for the ETFs/CEFs, the volatility in their income does not align with my income portfolio's goal of consistently growing income. As such, in May I started the process of trimming back my ETFs/CEFs income holdings.

Sales: The ($52) decrease in annual dividend income and 0.04% inrease in YOC related to the following sale:
  • ($52) HD 0.04%
As discussed in "A Two Step Process To Follow After A Dividend Freeze", I determined that HD no longer met my investment criteria and there were better alternatives available. Given that, I sold HD and purchased ABT.

I see 2009 as a troubled and volatile year. Given that backdrop, I will continue to focus on quality and upgrading my portfolio. As noted last month, this strategy will not lead to the highest current income, but should optimize long-term results. Based on year-to-date results, I believe my revised estimate of $6,300 of annualized dividend income on December 31, 2009 is still obtainable.

That's it for this time. The next monthly progress update will be on Saturday, June 13th.