My November 23 passive income

 Here is the list of passive income that I received on November 2023

Interest - $127.55 $TSLY - $62.84 $JEPI - $46.79 $ABBV - $43.42 $VZ - $23.75 $BMY - $15.95 $AAPL - $14.73 $O - $12.89 $PG - $10.24 $CAT - $4.05 $MA - $2.90 $FCX - $0.76 Total Income - $365.68

Recent Dividend Increases

 Recently Kroger’s $KR raises the dividend by 11.5%. The yield is 2.5%, PE is 14.46, and the payout ratio is 32.6%.

General Mills’ $GIS raises the dividend by 9.3%. The yield is 2.82%, PE is 18.09, and the payout ratio is 50.94%.

Goldman Sachs raises the dividend by 10%. The FWD yield is 3.1%, PE is 10.65, and the payout ratio is 33.01%. 5 yr CAGR is 26.81%, A great dividend growth company.

Dividends

Dividend Investing

Dividend Stocks

Dividend Income

 

Why you should invest in Dividend Paying Stocks

Photo by Sortter on Unsplash

In this article, I want to show examples of how one can build wealth by investing in dividend-paying stocks over the long term by sharing the dividend income in my portfolio. I started investing in dividend-paying stocks in 2017 with no income from dividends. In 2022, I am earning $2,583 yearly from dividends. How much money am I adding monthly to my portfolio? I invest 10% of my salary in dividend stocks and reinvest all the dividends to buy back the stocks. The best part of dividend stocks is the yearly increase of dividend $ amounts and reinvesting dividends to buy additional stocks of the company’s stock which generates more income from dividends yearly. A good dividend company increases at least 5% dividends a year; some companies with high growth may increase by 20% or more. So on average, a dividend investor can see approximately ~7% increase in income from dividends which must be higher than your 9 to 5 job. To identify a good company that will keep increasing dividends, you must go through the company’s financial health and business model.

Why dividend stocks:

There are several reasons that tell why one should invest in dividend stocks:

• Potential for long-term growth: Many dividend-paying stocks have a history of paying dividends for quite a long time. These companies have already established themselves as a stable and growing company. If one keeps reinvesting the dividends, one can benefit from compounding interest and long-term growth.
• Regular source of income: The potential long-term growth dividend stocks will generate a much higher income in dividends with time which will be an attractive option for investors who are retired or looking for passive income.
• Potential to outperform non-dividend-paying stocks: When we talk about investing for the longer term, it has been found that dividend-paying stocks outperformed non-dividend-paying stocks.

Identifying the stocks:

I follow a few simple steps to identify good dividend-paying stocks that will keep increasing their dividends yearly.

• Consistent in paying and increasing dividends: The first thing I look for in a dividend-paying stock is the company is consistent in paying dividends. A company that pays dividends consistently is more likely to continue paying dividends and keep increasing dividends in the future.
• The dividend yield and payout ratio: The dividend yield and the payout ratio is very important for dividend investors. The dividend yield is the annual dividend per share divided by the stock price and the payout ratio is the percentage of a company’s earnings that are paid out as dividends. I always look for companies that pay a reasonable dividend yield and a payout ratio not higher than 80%.
• PE ratio: Price to earning ratio is also another parameter to look into. It helps to identify if the stock price is fairly valued or not. For dividend investors, this is very important as if you buy at a lower PE ratio then you are buying at a higher yield and you are buying more stocks that will generate more dividend income.
• Company’s financial health: Every investor should read the company’s financial statements that they are invested in. Look for the company’s profitability, debt levels, and cash flow. A company’s financial strength will indicate if it will be able to sustain and increase its dividends over time.
• Company’s business model: Always look at the company’s business model and how it generates revenue. Also, understand the strength of the company’s competitive advantage and its potential for future growth.

The growth: Keep patience and hold your investment for long-term

There are several benefits of holding dividend-paying stocks for the longer term.

• Potential for higher return: This is true for all types of stock investors. Over the long term, the stock market has historically generated higher returns than other asset classes such as bonds and cash. by investing for the long term, the investor can take advantage of these higher potential returns. Picking an excellent growth stock is very important in this case.
• Time to weather market fluctuations: In the short term, the market can be volatile, but over the long term, it tends to go upward. By investing for the long term investors can ride out market fluctuations and potentially get a higher return. Most of the time it also beats inflations.
• The benefit of compounding: In long-term investing in dividend-paying stocks, investors can potentially see the miracle of compounding interest. This is the process where the dividend is reinvested so that the investment earns more dividends from both the original principal and the accumulated dividends. This will help to grow wealth faster over time.

This blog was originally written on Medium by the author.

Opened a new position in Medtronics (MDT)

Medtronics ($MDT)

    Yesterday I have opened a new position in Medtronics ($MDT). It is a dividend aristocrat, raising dividends for the last 45 years. They are down 32% from 52 weeks high with a PE ratio of 14. The payout ratio is only 23%. 

The company is a $109 billion dollar medical device company. It's a buy for me for longer term.

I have purchased 15 shares at $77.57. Each share gives $2.72 annually in dividends and I will receive $30 yearly in dividends from this purchase.

    Its 5 year CAGR is 8% which is pretty good and because of its low payout ratio there are plenty of rooms to increase the dividends in the future.

Dividend Income in April 2021

 Dividend Update April 2021

Hey guys, today I am sharing with you the amount of dividends I received in April 2021. Currently, I am maintaining three different portfolios. My main portfolio is only dividend stock portfolio. I also invest in Aggressive stocks and ETFs and a Roth IRA. In my blog you can see all the details of those portfolios. IN April, I have added Viatris (VTRS) which recently spin offed from Pfizer (PFE). They are going to initiate dividends from May 2021. They are down almost 30% from all time highs so I added them in my portfolio. The table below shows the dividends that I received in April 2021

       

I have received in total $68 in dividends and I did DRIP for all the positions. The highest amount of the dividends came from Kimberly Clark (KMB) and Merck (MRK). The following chart shows the dividends received monthly from my portfolio. The chart indicates how my dividends are growing with time.

        

The chart below compares my monthly dividends on a yearly basis. The dividends are growing every year in the same month

    

The next chart shows the total amount of dividends received in each quarter and compares the total amount of dividends with the previous years.

    

On yield basi, the current yield of my overall portfolio is 2.54% however, my yield on cost (YOC) is 3.8%. The YOC will continue to increase because the dividend paying stocks always increase their dividends yearly so the YOC will only increase with time. On the other hand, the current yield depends on the market. If the market is in bull mode then yield will drop and will increase if the market is in bear mode. The later condition will give you buying opportunity.

    

The following figure shows the YOC and the current yield comparison with time. MY YOC is gradually increasing as the companies are increasing their dividends annually. 

    

The chart below shows the average dividend income received monthly and the average amount of dividends received monthly. I am slowly increasing my passive income and if I continue to invest in the dividend paying stocks it will only grow with time.

The chart and the table below summarizes my dividend distribution in the portfolio. The most percentages of dividends I am receiving are from the Vanguard High Yield (VYM), Abbvie (ABBV), At&t (T), Kimberly Clark (KMB), The Home Depot (HD) etc. 

All the dividend sources in the table format

   

The next table shows my dividend growth performance in the year 2021. 

    

The next table shows my dividend growth performance in the year 2021. Last year, none of my holdings cut their dividends and this month AAPL and CVX increased their dividends.