Dividend Update: October 2015

October’s dividend payouts are in the books, and it never gets old.  There’s just nothing quite like seeing real cash hit my investment accounts like clockwork throughout the year.  I do this by owning small pieces of growing businesses that have lengthy track records of sharing their profits with me through dividend raises each year.  I’m building an ever rising stream of income that I can use to pay for real life expenses if I ever need to.  This is especially practical in my unpredictable line of work in the entertainment industry where I’m often unemployed and trying to find the next gig like I am right now.

In October, I received dividends from 8 of my investments for a total of $108.49.  I reinvested all of them which added $3.77 to my 12-month forward annual dividend income.  This month’s payouts were lower because my holding of medical device maker Baxter International (BAX) spun-off its biotechnology arm Baxalta (BXLT), and as a result the dividend was reduced.  These are two new businesses going forward and while I hated seeing a dividend cut, I still like the underlying companies and am choosing to hold on for now.  However, many investors are selling, and JC at Passive Income Pursuit recently made some very persuasive arguments on why it might be time to sell Baxter based on its valuation.  Shortly after he wrote that, he sold his position.  Here’s a snapshot of my dividend payout activity:2015_OCT_DRWith the Baxter / Baxalta dividend cut, October’s total dividends of $108.49 declined 8.72% from last quarter’s $118.85 in July.  Looking back further, dividend income was up 97.33% over last year’s $54.98.  Here’s my updated dividend payouts chart:2015_OCT_DPSo far in 2015, I’ve received $1,450.35 in dividends.  I have two more months to try and hit my goal of $2050 by the end of the year.  Since I’m without work at the moment and not able to invest fresh capital, I expect to barely miss this goal.2015_OCT_GDRThe biggest highlight in October’s numbers were all the dividend raises that were announced.  5 different businesses gave me a raise over the month, and together they added $18.84 to my forward annual income.  Based on my portfolio’s current 3.5% yield, it would have taken $646 in fresh invested capital to earn that much forward income.  Philip Morris (PM) stood out by having a very disappointing 2% raise.  Kinder Morgan (KMI) and Omega Healthcare Investors’ (OHI) raises seemed minimal, but only because they’ve been increasing their payout each quarter; KMI’s payout is up 15.91% and OHI is up 7.69% over a year ago.  That’s pretty phenomenal income growth for two stocks that have a starting dividend yield of more than 7%.  Here’s the full list:2015_OCT_DILast year in October, I had only received $593.81 in total lifetime dividends.  This year that number increased 284.75% to a new total of $2,284.69.  Here’s an updated chart:2015_OCT_LDWith all those dividend raises and reinvestment’s, I feel great about my portfolio over October.  My total annual dividend income is now $2,744.19 or an average of $228.68 a month.  Progress is progress and while my current capital contributions are limited at the moment, it’s relieving to know my portfolio is still working hard for me.

How were your October dividends?  What do you think about BAX and BXLT?

My Dividend Growth

http://www.mydividendgrowth.com

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39 thoughts on “Dividend Update: October 2015
  1. JC @ Passive-Income-Pursuit

    Looks like another solid month for you guys even though there was a slight decline. You’re almost at $250 per month and hopefully you can start working again and bump that up pretty quickly. But the great thing is that even if it takes longer than expected you’re reinvesting your dividends and consistently building up your future dividends in the process. And the dividend raises don’t hurt either!

    It was a solid but unspectacular month for my dividends as well. I had a slight decline due to the reduced dividend from BAX/BXLT but it’s nothing I’m concerned about.

    Thanks for mentioning my articles regarding BAX. There’s two things that would have kept me invested in BAX/BXLT, well three actually. 1. If the dividend wasn’t cut so drastically. I went from a 3%+ dividend to 1% on each position. 2. Tax decisions came into play since we’re finding ourselves in the a lower tax bracket this year so I wanted to take advantage of the 0% LTCG rate. 3. I needed some cash and with the change in dividends and company I got rid of both BAX and BXLT. I still like the companies and could see myself owning them again but for now I’ll sit on the sidelines and watch them to see what they do.

     
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    1. My Dividend Growth

      Hi JC! I love this strategy for all those reasons you mentioned in that awesome first paragraph. It’s a long road ahead and I like that I can go off the path every now and not have to worry about the portfolio or my dividend income.

      My pleasure mentioning those articles, I thought they were really well presented and they almost convinced me to sell BAX. I really like the prospects of BXLT more than BAX at this point and when you add the current overvaluation it makes even more sense. I think I’ll hold on and see what happens since it’s in the ROTH anyway and I’ve got so much time. Thanks again for sharing your thoughts and research, it’s very helpful!

      Best wishes my friend,
      Ryan

       
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      1. dividend duke

        I’m holding onto both stocks for a few reasons:

        – the dividend cuts werent due to inability to pay, just a policy change in connection with a major corporate event, so I’m willing to give the companies the benefit of the doubt to see how fast they raise from here

        – an activist investor is the biggest shareholder of BAX and recnetly put a director on the board

        – BAX has a new CEO who was previously with Covidien, where he delivered blockbuster returns for shareholders, http://www.bloomberg.com/news/articles/2015-10-28/baxter-names-former-covidien-chief-joe-almeida-as-its-new-ceo

        – I liked your article about BAX having a really good track record with spinoffs, http://www.mydividendgrowth.com/i-added-shares-to-this-successful-spin-off-company/

         
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        1. My Dividend Growth

          Hi Dividend Duke,

          So sorry for not seeing and approving this comment sooner, especially because you posted such great info. I completely agree with everything you said here and am holding for similar reasons. I’m thinking BAX itself is pretty overvalued currently, but BXLT has a good amount of growth in front of it and I’m excited to see where it goes from here. Take it easy and I appreciate the insightful words!

           
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  2. Jason Fieber

    Ryan,

    Man, almost 100% YOY growth. Pretty amazing stuff, my friend!

    Great group of companies up there. Almost $250 per month now. That’s real-life cash flow that can cover a serious chunk of real-life bills. 🙂

    Keep it up!!

    Cheers.

     
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    1. Joel

      Ryan – good job. I’m going to continue to follow your journey, but please please please don’t sell your blog. See what happened to Dividend Mantra?

      Jason – Dividend Mantra is not the same without you. Please start a new blog!!! Maybe one that picks up where you left off. We all miss your inspirational writing.

       
      Reply
      1. My Dividend Growth

        Thanks for reading Joel 🙂

        Haha, no one would ever want to buy this blog but thank you for the concern!

        Don’t forget to follow Jason on Facebook, Twitter, and Daily Trade Alert too. I’m sure he’ll get back to writing his journey one way or the other and those are the best ways to keep updated.

        Best,
        Ryan

         
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    2. My Dividend Growth

      Hope all is well with you Jason! The growth has been pretty intense because last year at this point I still hadn’t even crossed $100 in a month. I’m really enjoying the ride so far and can’t wait to keep it going. Thank you for all the support and you’ve been killing it with all the recent purchases!

       
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    1. My Dividend Growth

      Thanks DB. It’s not so bad actually. I thought this spin-off was a possibility when I first invested and this is one case where I don’t mind a dividend cut because I see them as two totally new businesses going forward with better rewards to unlock. I’m still hoping the dividend grows annually in each company going forward and if it doesn’t I’ll very likely consider selling at that point. Hope all is well with you and thanks for stopping by!

       
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  3. suredividendben

    I really like BXLT stock going forward. It has a really low yield, but turned down an acquisition at around $40 a share. I think you will see some really nice capital appreciation from BXLT over the next few years.

     
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    1. My Dividend Growth

      Me too, Ben. I completely agree and liked the write up you did on them a few months back. Their pipeline is stacked right now, it’s no wonder they rejected the takeover offer… cheers to better days ahead for this one my friend!

       
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  4. Tawcan

    Pretty amazing stuff Ryan. The BAX dividend cut is unfortunate, I experienced something similar with COS. Impressive growth, definitely showed how much you have been adding fresh capital. Almost $250 per month in dividend income, I’m sure you’ll be over that amount by early next year.

     
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    1. My Dividend Growth

      Great to hear from you, Tawcan. Dividend cuts are never good thing, but at least in this case it unlocks value by spinning off two companies that were struggling as one. I have high hopes going forward for BAX and BXLT (especially BXLT!). That’s a good point about my fresh capital, it’ll be interesting to see what pace things settle into if I can’t find a job through the rest of the year. Here’s hoping I can pick up a few side gigs at the very least so I can get to that coveted $250 a month average, hehe. Keep everything going over there my friend and thanks for the comment!

       
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  5. dividendniche

    That is some nice income for October Ryan! YoY growth of 97% is very impressive. It is nice to see that income stream growing on its own through dividend increases as well. Cheers DN

     
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    1. My Dividend Growth

      Thanks a ton, DN. Those dividend raises are by far my most favorite part of this investing strategy. That’s really all the proof I need that it works. I just wish knew about DGI when I was a kid, oh well! Hope all is well and thanks for the comment!

       
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    1. My Dividend Growth

      Thanks Vivianne. I just gotta land a new gig first, then we should be set. Meanwhile her income should pay the bills which is nice! Keep that foot on the gas pedal over there yourself, great work!

       
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  6. Dividend Gremlin

    Ryan,

    Even in an off month, things are looking up. I love seeing the raises. If every month you get a few extra dollars from raises you can really turn that around into useful passive income advancement so fast. Don’t worry too bad about missing this year’s goal, you still have marched a mile towards FI.

    – Gremlin

     
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    1. My Dividend Growth

      Great words there as usual, Gremlin. Even with just reinvestment and raises I’m moving forward and it feels great. There’s so much less pressure this time around in unemployment too because of all the work I’ve put in up to now. I hope all is well with you these days, glad to see you making purchases over there and keep at it!

       
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  7. Dividend Chimp

    Hi Ryan, Impressive growth! I had closed out my position in BAX just prior to the split based on fundamentals and because I thought there were better options to put the cash to use, but if I had still owned it I would have liquidated the positions. Often we end up with these situations where the spin off or the split no longer meets the requirements of when we initially bought the position. I’m looking at my HYH spin off from KMB as I write this and wondering how long I will actually hold onto it since it pays no dividend. I think a lot of the decision process involves the size of your position and whether you can put the cash to better use and as you stated – how you feel about the company moving forward.

     
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    1. My Dividend Growth

      Great points there Devin and thanks for sharing how you dealt with it. At this point I like BXLT’s potential way more than BAX, but I do like both underlying businesses. JC is right though that BAX is overvalued compared to the market and especially compared to its growth multiple. It made sense to collect a 3% dividend while waiting for that growth to be realized, but now at 1% I’m scratching my head a lot in confusion. I like your reminder that my money should be invested in businesses that will do the best and sometimes I think I just because I research them and know them so well that I need to stay invested, when really there are probably much better options out there. A lot to think about, thanks for the awesome comments!

       
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  8. Abdullah

    Hey Ryan,

    Great year to year growth. very exciting!! Hope you land a job you enjoy very soon so that you can go back to injecting fresh capital to your portflio.

    Good luck,
    Abdullah

     
    Reply
    1. My Dividend Growth

      Thank you much Abdullah. Hopefully I’ll figure out something soon, and if nothing else I’ll take some side gigs to throw at least a few hundred bucks into the portfolio here and there. Hope all is well with you and I appreciate the well wishes 🙂

       
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  9. Dividend Diplomats

    MDG,

    Great month, even with the cut. Still crushing prior year’s results and you had quite a few dividend increases last month (PM killed me haha). Pumped to round another year out, let’s finish strong!

    -Lanny

     
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  10. Dividend Shopper

    Hi Ryan. Good job with the dividends, that’s twice what you got last year!

    I also owned Baxter and decided to sell shortly after the spinoff. I figured their future growth potential didn’t justify such a low dividend, so it no longer fit in my portfolio. Would rather own something like Disney, with a similar dividend but much higher growth.

     
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    1. My Dividend Growth

      Hello! Thanks for the comment, it’s been a fun ride getting to this point but I have a long way to go. That’s a good point there on BAX to DIS and you definitely have to do what makes you sleep better at night 🙂 Thanks for stopping by!

       
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  11. incomerookie

    Great blog! Will definitely follow. As long as overall dividend increases are above inflation over the medium term (3-5 years), you’re winning and becoming wealthier year by year. Over the long term, stock market just crushes every single asset in terms of returns.

     
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    1. My Dividend Growth

      Thank you incomerookie,

      I completely agree, if there’s a better and safer investment strategy I’m not sure what it is. I love the idea of a long term sleep well at night plan. Wishing you all the best 🙂

       
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  12. sortingmylifeout

    My October Dividends were satisfactory and I’m also on the road to financial freedom. I exclusively buy Dividend Aristocrat Stocks and Dividend Kings so while the initial yield is low I hope that future dividend hikes will make up for less income at the beginning. I also bought positions in the Oil Companies which are yielding 7 to 8%, do you think these dividend increases will last/ Look forward to your insights.

     
    Reply
    1. My Dividend Growth

      Hi there,

      Great plan there with the Aristocrats and Kinds. They say that time in the market trumps timing the market. I personally sold out of a few energy names with limited damage because of the changing fundamentals in the industry. These commodity cycles are hard to predict and so are the balance sheets of the businesses. It’s hard to say if there will be cut dividends and by who, but in the short term things definitely seem extra risky in the oil and gas sector.

      Good luck with your investments!
      ~Ryan

       
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  13. Money Grower UK

    Dividend income of over $100 a month is great. A great 100% YOY increase.
    Having just started investing for passive income, I know the feeling when dividends hit your account. It sure is great to see money coming in then going out via bills!

     
    Reply

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