Saturday, November 12, 2011

Dividend Income Progress Update - October 2011

Once again it is time for a goals/progress update. I am pleased to report that annualized dividend income increased in October, extending the streak to 16 consecutive months of increases after June 2010's decline. Since I began publicly tracking annualized dividend income in November 2007, it has increased in 45 of the last 47 months.

My goals were defined in this December 1, 2007 Investing Goals post and last updated in my 2011 Investing Goals post. Below is an updated version of the table found in the original post.

Description Dividend
on Cost
2027 Goal 110,000 10.00%
2017 Goal 30,000 5.80%
2011 Goal 15,500 4.70%
December/2010 11,407 4.55%
Purchases YTD 5,341 -0.25%
Div. Changes YTD 657 0.12%
Sales YTD (1,753) 0.04%
October/2011 15,652 4.46%
Purchases 602 -0.06%
Div. Changes 36 0.02%
Sales (271) 0.02%
September/2011 15,285 4.48%

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 $367, and Yield on Cost (YOC) was down 0.02%. This month's changes were a net of new purchases, dividend changes and sales. Let's examine each of the these categories:

Purchases: The $602 increase in annual dividend income and (-0.06%) decrease in YOC related to the following purchases (yield at the time of purchase):

- $139 Nucor Corporation (NUE) 4.6%
-   $82 Johnson & Johnson (JNJ) 3.5%
- $116 Intel Corporation (INTC) 3.6%
- $107 Pepsico, Inc. (PEP) 3.3%
-   $96 Microsoft Corporation (MSFT) 3.0%
-   $62 Wal-Mart Stores Inc. (WMT) 2.7%

All the above purchases lowered my YOC, except NUE. As noted in earlier updates, I generally expect YOC to drop in most months since new investments will yield less than my current YOC, and dividend increases will not be sufficient to offset the decline.

Dividend Changes: The $36 increase in annual dividend income and 0.02% increase in YOC related to the following dividend changes (a=dividend stated in annual terms, q=quarterly, m=monthly):

- ($7) U.S. Preferred Stock Index (PFF) $2.56a>$2.54a
- $20 Illinois Tool Works Inc. (ITW) $0.34q>$0.36q
-   $9 Leggett & Platt, Incorporated (LEG) $0.27q>$0.28q
-   $4 Cincinnati Financial Corp. (CINF) $0.40q>$0.4025q
-   $1 Realty Income Corp. (O) $0.14487m>$0.14518m
-   $9 Alerian MLP Infrastructure ETN (MLPI) $1.55a>$1.57a

Sales: In October, I sold 78% of my position in Automatic Data Processing, Inc. (ADP) at a substantial gain. As a result of its increased price, the current yield had fell to an unacceptable level.

In October, I reached my goal of $15,500 in annualized dividend income by December 31, 2011. I plan to use the excess income between now and the end of the year to reduce positions in higher yielding and higher risk stocks.

That's it for this time. The next monthly progress update will be early December.

Full Disclosure: Long all the aforementioned securities. See a list of all my dividend growth holdings here.

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(Photo: sanja gjenero)

Tags: [NUE] [JNJ] [INTC] [PEP] [MSFT] [WMT] [PFF] [ITW] [LEG] [CINF] [O] [MLPI]