Thursday, December 8, 2016

Monthly Review: November 2016

I'm writing this monthly review at my parent's home in South Africa. Three weeks ago, my father underwent quintuple bypass surgery. While he is still weak, he is recovering slowly but steadily. We're all grateful to be on this side of the operation... it was quite stressful, especially for my 80-year old mother.

In between helping my parents, I've had ample time to tinker with DivGro and to continue writing articles. One Seeking Alpha article, 10 Dividend Growth Stocks For November 2016, has received more than 10,000 page views, the first time I've reached that milestone! Meanwhile, my new options update and pulse article series are generating lots of interest.

This month, I closed two of my DivGro positions and added shares to another position. Along with three dividend increases, the net result is that DivGro's projected annual dividend income (PADI) increased by about $216 to $11,505. I'm quite close to achieving my 2016 goal of increasing PADI to $12,000, but it will be touch-and-go!

In November, I added another $1,543 in options premiums, increasing my year-to-date options income to $5,674. Each option represents a potential obligation until it expires or gets exercised. I label options income as secured income only when I no longer have the obligation. Please read my November 2016 options update for details.

November Highlights

The main goal of DivGro is to generate a growing dividend income stream. That's why I like to review my dividend income and any changes that would affect future payments.

This month, 14 stocks in my portfolio paid dividends. I received a total of $664, an increase of 13% over the amount received in November 2015. So far this year, I've collected dividends totaling $13,984.

Projected annual dividend income (PADI) is the total dividend income I expect to receive in the next 12 months. I recorded one buy and two sells. Also, three stocks announced dividend increases. These activities added $216 to DivGro's PADI, which now stands at $11,505.

Following is a chart showing DivGro's projected monthly dividend income (red line) against monthly dividends received:


Comparing dividend income by month is another way to see progress:


Transactions

In November, I added shares to an existing position:

• Qualcomm Inc (QCOM)

Additionally, I closed the following positions:

• BHP Billiton plc (BBL)
• Helmerich & Payne Inc. (HP)

As a result of these transactions, DivGro's PADI increased by $172.

Dividend Changes

The following stocks announced dividend increases:

• Nike Inc (NKE) – a 12.50% increase announced on 17 November
• Union Pacific Corporation (UNP) – a 10.00% increase announced on 17 November
• The Walt Disney Company (DIS) – a 9.86% increase announced on 30 November

DivGro's PADI increased by $44 due to these dividend changes.

Dividends Received

I received dividends from 14 different stocks this month, for a total of $664 in dividend income:

• Apple Inc (AAPL) – $57.00
• AbbVie Inc. (ABBV) – $57.00
• Caterpillar Inc (CAT) – $46.20
• Eaton Vance Tax-Managed Global Diversified Equity Income Fund (EXG) – $58.86
• General Dynamics Corporation (GD) – $26.60
• Main Street Capital Corp. (MAIN) – $42.55
• Nuveen AMT-Free Quality Municipal Income Fund (NEA) – $24.41
• Realty Income Corp. (O) – $10.10
• Omega Healthcare Investors (OHI) – $183.00
• The Procter & Gamble Company (PG) – $21.42
• Raytheon Company (RTN) – $17.58
• STAG Industrial Inc (STAG) – $27.80
• AT&T Inc (T) – $72.00
• United Parcel Service, Inc. (UPS) – $19.50

Markets

It is worth looking at the markets to understand the environment we're investing in, even though I no longer compare DivGro's performance to those of the markets:

Oct 31, 2016
DOW: 18,142.42S&P 500: 2,126.15NASDAQ: 5,189.1310-YR BOND: 1.83%
Nov 30, 2016
DOW: 19,123.58S&P 500: 2,198.81NASDAQ: 5,323.6810-YR BOND: 2.37%

In November, the DOW gained 5.41%, the S&P 500 gained 3.42%, and the NASDAQ gained 2.59%. Yield on the benchmark 10-year Treasury note rose to 2.37%.

Below are charts showing the market activity of these indices in November, courtesy of Google Finance. (Click on the charts to see detail). Each chart shows a 20-period exponential moving average (in red) and a 50-period exponential moving average (in green) . I've also included a 10-period relative strength index below the main chart.


Market Value

This month, DivGro's market value increased by 3.41% to $343,269. Compared with November 2015's market value of $176,223, the year over year increase is 95%.

Market ValueCash DepositsSimple Return
Nov 30, 2015
$176,223.00$169,052.004.24%
Oct 31, 2016
$331,960.02$283,119.6017.25%
Nov 30, 2016
$343,269.00$285,474.3020.25%

Here's a chart showing DivGro's market value breakdown. Dividends are plotted at the base of the chart so we can see them grow over time.


Given the current market value of $343,269, my portfolio has delivered a simple return of 20.25% since inception. In comparison, DivGro's IRR (internal rate of return) is 10.77%. (IRR takes into account the timing and size of deposits since inception, so it is a better measure of portfolio performance).

Portfolio


Here is a snapshot of DivGro's state on the last day of November 2016:


I track yield on cost (YoC) for individual stocks, as well as an average YoC for my portfolio. DivGro's average YoC increased from 4.37% last month to 4.40% this month.

Another interesting statistic is percentage payback, which relates dividend income to the amount of capital invested. DivGro's average percentage payback is 10.41%, up from last month's 10.26%.

Finally, DivGro's projected annual yield is at 4.03%, up from last month's value of 3.99%. I calculate projected annual yield by dividing PADI ($11,505) by the total amount invested ($285,474).

Goals Review

I've set some challenging goals this year:
  1. PADI: Increase projected annual dividend income to $12,000
  2. Dividends: Earn $10,800 in dividend income
  3. Dividends: Write 120 articles for DivGro
  4. Seeking: Write 52 premium articles for Seeking Alpha
  5. DivNet: Write 8 articles for The DIVNet
Here is a set of gauges representing the progress I've made towards achieving these goals. The last gauge is a reference – it indicates where the other gauges should be after 335 out of 366 days:


I'm slightly behind on my PADI goal and I've accepted that I won't achieve my DivNet goal this year.

Looking Ahead

I have 15% of my total portfolio value in cash. In December, I want to add shares to several positions and sell covered call options on those positions. I'm hoping to complete the process of transferring my FolioInvesting account to Interactive Brokers so I can trade options on several additional positions. Interactive Brokers is an online brokerage with very competitive commission rates for options trades.

Please see my Performance page for various visuals summarizing DivGro's performance.

Thanks for visiting! Please feel free to comment on this review article below.

12 comments :

  1. Great month there DG!
    On the option trades you did not report anything, is that because you are waiting for the switch to IB? What is going to be you trading style when you will start with options?
    Cia ociao
    Stal

    ReplyDelete
    Replies
    1. Hi Stal -- check out my November options update article:
      http://divgro.blogspot.co.za/2016/11/options-update-november-2016.html

      I'm not planning anything different when I switch to IB, except that I would consider closing certain options early when I have 80-90% of the value secured. Also, I can roll options that go against me...

      Delete
  2. FerdiS,

    There are so many things I really enjoyed in this update, so THANK YOU for sharing! Your options premiums is incredible, over $600 received in dividends is also incredible, your YoY increase in portfolio is a word that's even stronger than incredible :), and your goals and progress toward them is incredible as well. Think I've said incredible enough for one comment; great job! lol

    ReplyDelete
    Replies
    1. Thanks, Passive Income Dude -- that's an incredible comment! :-)

      I'm enjoying the options trading adventure. Boosting dividend income that way is a nice way to leverage the investments I've made over nearly 4 years. I'll set new goals for 2017 soon, so look for that post in the coming weeks. Thanks for reading and commenting!

      Delete
  3. Thanks for sharing, FerdiS. That is a great dividend amount per month, esp for Nov which is a slow month for most investors.

    Sorry to hear about your father and wishing him a well recovery.
    R2R

    ReplyDelete
    Replies
    1. Thanks R2R -- I'm quite happy with November's income, especially when adding the secured options income. The year-over-year increase is reasonable, so I can't complain about that!

      My father is doing OK, but the recovery is slow. Two steps forward and one step back is progress!

      Delete
  4. Wow, what a great update. Everything is firing on all cylinders for you. I hope your fathers recovery is swift and painless.

    ReplyDelete
    Replies
    1. Thank you, Investment Hunting -- I appreciate your comment and wishes. My father's progress is slow and it is testing our patience. But it is a very big operation and takes a lot out of an 81-year old!

      Delete
  5. Hitting on all cylinders. I've been with IB for years now. It is probably the best brokerage for early retirees, especially if you want to sell options to monetize the portfolio.

    ReplyDelete
    Replies
    1. Thanks for the recommendation. I've had an account with IB for a few years, too, although I've not used it very actively. The reason I need to create a new account is that we've formed a trust, and I want the account to be a trust account with full options trading authorization.

      Take are and happy investing!

      Delete
  6. awesome month divgro!

    I didnt know that you are trading options as well?!
    Is it okey to add you to my blog post every month where I share the income of the community?!

    best regards
    Chri

    ReplyDelete
    Replies
    1. Thanks Chri for visiting and commenting. Of course you can include my income in your community post. It would be an honor to be included!

      Cheers
      FerdiS

      Delete

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