The first quarter of 2019 has passed and the stock markets have been quite generous lately. Despite the recession fears, ongoing Brexit talks and China trade conflict, the S&P 500 gained almost 15% year-to-date. Some of my positions, such as HD, AVGO, SBUX or ALV, experienced even higher gains. No doubt, it feels good to see the portfolio value growing. But things can change in an instant. Big market drops occurred several times in the past decades. That is not unusual. And there is nothing we can do about it.
The market can correct my portfolio value and I have no control over it. But the market can’t control my dividend cash flow. For that reason I focus on what I can control, which is income. And here lies the beauty of dividend growth investing. Prices might fluctuate but dividends of wonderful businesses tend to grow. Don’t you believe it? Take a look at my dividend income report for March 2019.
Dividend Income: March 2019
In March, 14 companies have rewarded me with a dividend payment:
- Enbridge (ENB): €16.59
- Visa (V): €1.87
- IBM (IBM): €9.47
- Lbrands (LB): €6.80
- Johnson & Johnson (JNJ): €16.94
- Dominion Energy (D): €15.74
- Unilever (UL): €15.61
- BlackRock (BLK): €9.82
- Royal Dutch Shell (RDS.B): €16.73
- Home Depot (HD): €13.35
- Broadcom (AVGO): €16.00
- PepsiCo (PEP): €14.01
- Union Pacific Corp. (UNP): €7.98
- Bank of America (BAC): €5.66
March’s dividend income total came in at €166.57 ($187.40). Compared to March 2018, this is a fantastic gain of 55%.
|Total||€ 354.24||€ 1,163.80|
|January||€ 97.98||€ 25.26||+ 288%|
|February||€ 89.69||€ 55.35||+ 62%|
|March||€ 166.57||€ 107.33||+ 55%|
With Dominion Energy (D) and Bank of America (BAC), I welcome two new dividend contributors this month. Lbrands (LB), on the other side, shows up for the last time, since I have exited my position in March. The money from LB has been invested in Home Depot (HD), boosting its cash flow by acquiring five additional shares of the home improvement giant.
Accumulated dividend income in Q1 2019 sums up to €354.24 ($398.52). That is a year-over-year increase of 88%, compared to the same period last year. In April 2019 I expect to collect about €110 ($124) in dividends. That would be another month with a triple-digit figure in monthly income.
The green bar in March (dividends received), which is above the blue line (projected dividends), shows that I’m right on target with my plan for the year. At the moment, the projected dividend for 2019 is €1,380 ($1,553). With the support of dividend growth and additional investments, I target to achieve €1,650 ($1,890) at the end of 2019.
I can’t stress this enough how powerful dividend growth investing can be. All we need to do is to keep on investing and let the power of compound interest wave its magic. The earlier we start the better. Markets are going to fall and raise as time goes by. We simply have no control over it. So why worry about something that lies outside of our influence anyway? It is far better to focus on those things that we can manage. Things like dividend cash flow.
Even though there will be one or two companies reducing the dividend, the overall income should be just fine. I had such a case with LB last year. Some of my fellow investors have experienced it with KHC this year. But guess what? They still kept posting growing dividend income streams. A well-diversified portfolio of dividend growth stocks can easily cover a few reductions. That’s why. We must not lose sight of the big picture by focusing on one or two companies that didn’t perform according to our expectations. As Warren Buffett beautifully expressed it in the latest Berkshire annual report: Focus on the forest – forget the trees.