In a matter of weeks, the temperature has gone from pleasant hoodie needed weather to ‘it burnsssssss us’. It’s actually rainy and dark today as I write this but if the last few weeks are any indication, this summer figures to be a real hot one. Hopefully my dividends will sizzle as well!
June is upon us – another strong dividend month ahead – but before that happens we have to visit May and see how that fared.
As you recall – I’m primarily an ETF/mutual fund investor with some individual securities sprinkled in and that means most of my dividends will fall quarterly instead of monthly. That means big months in March, June, September and December and light months the rest of the year.
May is one of those light months again as only my bond fund which pays monthly and my Apple shares saw dividends this month. These off months will generally be low as I don’t make income my sole target nor do I target securities that pay at specific dates so they’ll only go up if I happen to buy an individual security that happens to pay outside the quarterly schedule.
There was one piece of good news in May as Apple raised it’s quarterly dividend 10% to 57 cents per share. Apple’s performance lately hasn’t been anything special but the transition from a hot growth to a boring dividend growth payer isn’t always smooth. The market loves growth and loves to punish companies that fail to show it year over year. I still think Apple is an attractively valued company but expect performance to be pretty anemic in the near term due to lack of growth and a potential for an uninspiring phone refresh. I’ll happily take the increased dividend and reinvest it at a lower price point because I still thin the long term outlook is good.
The company also has a lot of room to expand its dividend in the next few years and I could easily see 10% growth in the payout every year due to their strong balance sheet, earnings potential and very low current payout ratio(27%). The stock currently yields 2.3% which is above the S&P 500 already but shows promise as a dividend grower. If they continue to grow their dividend by 10% every year which is very possible given their revenue and earnings, a purchase today would mean a future yield of 3.4% against today’s price. That’s not a bad deal for those seeking dividend growth potential alongside potential price appreciation.
With all that said, let’s take a look at what my portfolio generated for May.
The dividend income for May was $110.46 which is just a tad bit more than April but far below March which benefit from all those quarterly ETF/mutual fund payments. The split between tax-advantaged and taxable was about 50/50 again this month. It’s not a huge month by any means but the portfolio has gained $100 in dividends in two consecutive months which is nice. The upcoming month will also hopefully show some growth over the income achieved in March which was just shy of $1000.
I’ve added to some more quarterly dividend paying ETFs and mutual funds since then through my regular contributions. Most of those were in my tax-advantaged accounts which means tax-free growth on any dividends paid out through there!
I’m hoping to hit $1000+ for the first time in a non December month which might mean that March will be the last time I see less than $1000 in a quarterly payment month. It’s possible that the June payments will be lower than March and we still stay below $1000 despite owning more shares but I’m hoping that’s not the case!
Steve, my once hard working portfolio employee has slacked two months in a row as he only made .66/hr – right on top of his wage from last month. The work he does is pretty seasonal though and he can look towards a bigger pay month in June!
Adding that to our total for the year brings the overall hourly wage to $1.67/hr which is a bit far from the goal of $4.50/hr established earlier in the year.
I’ve projected my earnings based on what I’ve seen so far and that number might be hard to hit given my contributions in the last few months. We’re certainly far off right now with a 1.67/hr wage but we have to remember that December will be the biggest month in terms of dividends and Steve will see a huge bump in his wage for the year then. Last year, the monthly hourly wage in December was $19/hr so that’ll be a big boost to whatever Steve will be making before December.
Still – I think I’m going to be closer to $4/hr for the year than $4.50/hr at this point but I’ll keep pumping as much money as I can into the market to try to get as close to that number as I can.
Beyond the contributions I make each month, reinvesting dividends also helps dividend growth. It’s hard to see it in small months like this one but even this $110.46 reinvested at my annual yield of 2.5% will get me an extra $2.76 in dividends a year or $.23 per month.
That’s it for the May update. I’ll have the portfolio and budget updates up in the next two weeks and will hopefully have some time to do some other posts as well.
May Total : $110.46
2016 Total : $1393.39
Portfolio monthly hourly wage : .66/hr
Portfolio yearly hourly wage : 1.67/hr