Portfolio Characteristics

[rnsmth]

Looking to 2022 - Portfolio income growth

Growing portfolio dividend/distribution income at 10% a year has been a goal. I know we've accomplished more than that over the past 3 years. 2021's portfolio income is 11.5% higher than 2020's, for example.

Looking to 2022 I have these data: $ received in 2021

I have an estimate of 2022 dividends in SSD's forward 12 month income projection.

That projection is based on current shares owned multiplied by current dividend rate for each position. It does NOT included unannounced dividend increases or changes in share counts (via reinvestment of accumulated dividends/distributuions.

It also does not include a NIE special dividend in Janaury, so

When I take SSD's next 12 month income projection and add NIE's special divvy for the conservative projection of 2022's income, it comes to 9% higher than 2021's total. No reinvestments, no dividend increases (and I get several in the next two months), no smoke and mirrors.

I reckon I should raise my 2022 objective up to greater than 2021's 11.5% instead of just 10%.

[fenders53]

Sustained 10% port div growth is very hard to consistently achieve organically, but you can keep reshuffling the port and accomplish it for years to come.

[rnsmth]

(12-30-2021, 04:07 PM)fenders53 Wrote: Sustained 10% port div growth is very hard to consistently achieve organically, but you can keep reshuffling the port and accomplish it for years to come.

This is with 100% of all dividends/distributions reinvested for the last few years, and the trims of some of the profits in lower yielding stocks, like JNJ, DLR and PEP.   , like I have written about in the past week.

[fenders53]

(12-30-2021, 05:18 PM)rnsmth Wrote:

(12-30-2021, 04:07 PM)fenders53 Wrote: Sustained 10% port div growth is very hard to consistently achieve organically, but you can keep reshuffling the port and accomplish it for years to come.

This is with 100% of all dividends/distributions reinvested for the last few years, and the trims of some of the profits in lower yielding stocks, like JNJ, DLR and PEP.   , like I have written about in the past week.

I wasn't trying to be negative.  You've done every well.  10% is tough to sustain organically though.  I see nothing wrong with your trims as I mentioned on this thread.  I will definitely reshuffle things around in my own port if my needs (or my companies) change yields and growth rates.  

I actually think 2022 will be another above average year for dividend growth.

[rnsmth]

Not a lot exciting in my dividend land this week. Got some dividends, bought some more shares of RY and a a little bit of TU. That is pretty much my routine now, collect some dividends and buy some shares. It is adding up like a snowball slowly rolling along and picking up more substance as it goes.

Next week, Monday, I should get the special dividend from NIE. More shares of RY will be purchased, more dividends will roll in and more shares will be bought.

I do not know with certainty what share prices will do, but I am pretty darn sure our portfolio income will grow somewhere between 10% and 13% year over year. I can easily live with that given a portfolio wide yield of about 4%.

[rnsmth]

Notable additions to our portfolios in the last month or so.

"Dominion

increased dividend by 6%, delivering first raise since the payout was reduced in 2020
The regulated utility has one of the strongest underlying growth rates in the sector after shedding its natural gas transmission and storage business last year. Management expects to deliver 6% annual dividend growth through 2025, beginning with this raise."

About a 3.4% current yield. Dividend growth of 6% a year throughy 2025. Dividend Safety score 0f 80. I can live with that. Opened in early December and have brought it to a full weight position since then.

EOG. 

Also started this position in Deceember and I have brought it up to a full weight position. Oil. One word.

With recent 82% dividend increase, and a $2 a share special dividend paid in December, the payout ratio has only increased 2 percentage points, to a forward estimate of 28%. As a bonus, I suppose, the position has increased its market value by 20% in the month or so since I first purcashed it.

Here is a bit from Simply Safe Dividends about EOG's valuation.

"Valuation

EOG's current dividend yield of 2.84% is 112% above its 5-year average of 1.34%, which indicates that the stock may be undervalued unless you believe that the company's outlook has weakened.

It's worth noting that EOG's forward P/E ratio of 9.9 is well below its 5-year average of 20.1 and the Energy sector average of 12.1. An unusually low P/E ratio means that investors may have become pessimistic about EOG's prospects for growth.

[fenders53]

EOG has had a remarkable run. It's my opinion PE's are fairly meaningless for commodity based stocks. When the current earnings are horrible, the shares crash and the PE is still sky high. And that is when the shares are actually a good value. Fast forward to this year. They are printing money now, PEs will remain low even as the shares rise. If you load up at the top of the cycle you will wish you had not.

That was NOT intended to be EOG pessimism. I own a lot of shares. They will have a wonderfully profitable year in my opinion. They may even pass out another special dividend. Maybe this is a super cycle for oil that last for five years. But it probably isn't, and buying shares after the stock already ran 300% is not prudent.

Pull up a 25 year chart on any major oil stock. It's pretty clear we need to trim rather than ride it back down, when that time comes. Buy and hold oil worked for 80 years, then it didn't anymore.

[rnsmth]

It has been a more active week than I usually have.

Trimmed VZ and CM and then liquidated my small PG position and took my newest position (STOR) up to a .81 weight position, Earlier in January I had trimmed a little from CSCO for the same purpose.

Account balances came back up some, and now we are down by about 2.5% from our high.

Dividend/distribution income is at an all time high.

EOG and CM paid divvies today

Not a bad week.

[rnsmth]

(01-15-2022, 09:56 AM)fenders53 Wrote: EOG has had a remarkable run.  It's my opinion PE's are fairly meaningless for commodity based stocks.  When the current earnings are horrible, the shares crash and the PE is still sky high.  And that is when the shares are actually a good value.  Fast forward to this year.  They are printing money now, PEs will remain low even as the shares rise.  If you load up at the top of the cycle you will wish you had not.  

That was NOT intended to be EOG pessimism.  I own a lot of shares.  They will have a wonderfully profitable year in my opinion.  They may even pass out another special dividend.  Maybe this is a super cycle for oil that last for five years.  But it probably isn't, and buying shares after the stock already ran 300% is not prudent.

Pull up a 25 year chart on any major oil stock.  It's pretty clear we need to trim rather than ride it back down, when that time comes.  Buy and hold oil worked for 80 years, then it didn't anymore.

I bought EOG at a 3.45% current yield.  It has a most recent dividend increase of 82% and a 5 year DGR of 17%.  Low debt.  Profitable at $30 per barrel oil.

Still probably undervalued and has a Very Safe SSD dividend safety rating.

Buy and Monitor, that is my mantra.

[fenders53]

EOG is going to make a fortune this summer. It seems inevitable. I won't buy a lot more, but the shares I own were a good idea. I always keep one eye open with oil for good reason.

[rnsmth]

My response to a comment on another dividend growth board:

++I am going to bring this up, because I see so many comments on how great investments are during the good times, but they tend to disappear during other times. ++

Kathy and I have lots of great investments, for us. Dividend/distribution income is at an all time high.

I have highlighted a recent one, EOG, this morning.

We are very happy with our Canadian banks. LMT has done very well.

Buy quality, collect dividends and reinvest them into fairly valued or undervalued companies with mid-yield or better dividends and average or faster dividend growth.

Dividend safety, current yield, dividend growth and valuation at time of purchase, those are our four pillars for the overwhelming majority of our equity investments.

In the next month I will be trimming some more overweight and overvalued positions back to full weight or less and using the proceeds to add to or open positions that meet acceptable levels on those four pillars.

[fenders53]

I know I am the only one commenting on this thread and I hope that's OK. I like your strategy because you have rules, but they are not inflexible. Your point on investment board chatter is accurate. A ticker is popular when the sun is shining, then not so much when the price dips. EOG will be one of those examples. It will be a strong buy until it isn't. A historical chart demonstrates you will get burned on the sector if you buy the top and hold. EOG is doing about the same thing they have for a decade. The cherry picked 7yr return is nothing. Extremely negative just a few months ago. There was one helluva lot of opportunity cost holding it while SA oil bulls pounded the oil table for years. I stopped reading their sector biased foolishness long ago. It's my best stock this quarter but I won't ride it back down when that time comes.