Saturday, July 3, 2010

* Progress Update - June 2010

Once again it is time for a goals/progress update. As a result of selling BP plc (BP) and a dividend cut by Alpine Dynamic Dividend Fund (AOD), I must to report that annualized dividend income declined in June breaking the streak of 15 consecutive months of increases after February 2009's decline. Since I began publicly tracking annualized dividend income in November 2007, it has increased in 29 of the last 31 months.

My goals were defined in this December 1, 2007 Investing Goals post and updated in my 2010 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%
2010 Goal 9,500 5.00%
December/2009 7,274 4.84%
Purchases YTD 1,855 -0.20%
Div. Changes YTD -76 -0.01%
Sales YTD -175 -0.01%
June/2010 8,878 4.62%
Purchases 342 -0.07%
Div. Changes -201 -0.11%
Sales -175 -0.01%
May/2009 8,912 4.81%

The above information covers the current month and year-to-date through the current month.

For the month, annualized dividend income decreased $34, and Yield on Cost (YOC) decreased 0.19%. This month's changes were a net of new purchases, dividend changes and sales. Let's examine each of the these categories:

Purchases: The $342 increase in annual dividend income and 0.07% decrease in YOC related to the following purchases (yield at the time of purchase):
  • $116 Abbott Laboratories (ABT) 3.77% [Analysis]
  • $106 The Coca-Cola Company (KO) 3.40% [Analysis]
  • $120 Procter & Gamble Co. (PG) 3.15% [Analysis]
All three stocks lowered 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 $201 decrease in annual dividend income and the 0.11% decrease in YOC related to the following dividend changes (a=dividend stated in annual terms, q=quarterly, m=monthly):

  • ($2) U.S. Preferred Stock Index (PFF) $2.36a>$2.33a
  • ($1) Intermediate-Term Bond ETF (BIV) $3.44a>$3.43a
  • ($2) Long-Term Bond ETF (BLV) $3.96a>$3.95a
  • ($232) Alpine Dynamic Dividend Fund (AOD) $0.12m>$0.055m
  • $27 Johnson & Johnson (JNJ) $0.49q>$0.54q [Analysis]
  • $9 Pepsico, Inc. (PEP) $0.45q>$0.48q
Sales: As a result of BP's inability to stop the oil flow in the gulf, I lost confidence in the stock and sold it just before its dividend cut. The entire $175 decrease relates to the sale of BP.
Even with this month's setback, I am still on target to achieve my goal of an annualized dividend income of $9,500 by December 31, 2010 and I believe annualized dividend income of $10,000 by December 31, 2010 is still obtainable, assuming minimal future sales and dividend cuts.