It was a combination of some good and bad in May with regard to dividends.  While the dividends for May rolled in as expected, some dividend suspensions impacted my future dividend income.  In addition, I was shutout for the first time ever (since I began tracking in Jan 2017) in an important dividend category.  More on this later.

My Portfolio had done a good job of avoiding any dividend cuts or suspensions until early May, but it couldn’t hold out any longer.  Dividend suspensions by The Cheesecake Factory (CAKE), The Walt Disney Co. (DIS) and Kontoor Brands (KTB) wreaked some havoc in my Portfolio.

Many companies are still figuring out how to re-start their businesses after being forced to shutdown due to COVID-19.  Others are trying to shift their businesses to take advantage of what they think the world may look like after COVID-19 gets under control.

In any case, the landscape is still in flux, and months may need to pass before there’s any clarity.  That said, the market seems to think things are looking up, as May was the 2nd straight month of gains coming on the heels of the late March bottom.

As the markets turn up, I’m hoping that bodes well for fewer dividend cuts and suspensions in the near future, but we’ll have to wait and see.

Let’s get this report going, starting with May dividends for my Portfolio…

 

Dividend Income

 

This May, I collected $810.36 in dividend income.  YoY growth was a solid 13.1%, when compared to the $716.49 from May 2019.  The growth rate came up shy of 15%, which is the mark I like to cross on a monthly basis.  Still, it was a good month for dividends.

A total of 15 companies paid me a dividend in May, with a couple of them reaching the three-digit level.  Abbvie (ABBV) led my list of dividend payers this month, sending me an impressive $142.71.  This is the biggest single dividend payment I have received.  With the 5% yield ABBV is sporting, and reinvesting my dividends, it shouldn’t be long before that dividend payment eclipses the $150 mark.  Sweet!

Procter & Gamble (PG) was my other dividend coming in above $100.  This was the first time PG has done that for me, but it won’t be the last.  Perhaps I should begin a quest for $200 now.

In addition, this PG dividend made it such that I’ve now received more in PG dividends than I initially invested – 100% payback!  This of course was made easier by reinvesting my dividends along the way.  I’ve invested $3,507.16 in PG over the years, and have now received and reinvested $3.543.12 in dividends – for a cost basis of $7,050.28.

After trimming my Realty Income (O) position in recent months, O was my smallest dividend payer in May, delivering $16.51.  O is my largest REIT holding.

The increased dividend amounts from ABBV, Starbucks (SBUX), and General Dynamics (GD) were helped by additional purchases over the past year.  Increased amounts for the other companies were a result of dividend increases and reinvested dividends over the past year.

I had two dividend payout reductions this month, and both were due to trimming my position.  One I already mentioned – O.  The other is Hormel Foods (HRL).  O was trimmed as part of my effort to reduce my REIT exposure as well as their dividend weighting within my Portfolio.  As for HRL, I trimmed to take advantage of lower prices on other stocks I wanted to initiate positions in during the March downturn.

There was only 1 new dividend payer compared to last year… and that was Caterpillar (CAT).  I initiated a position in CAT last August.  I’ve made 5 small purchases in total already as I’ve built the position since then.  There’s room to add more.

A couple of stocks no longer paid me a dividend in May, as they were sold last year: Cognizant Technology Solutions (CTSH) and D.R. Horton (DHI).  DHI was sold thanks to a call option assignment, while CTSH was eliminated thanks to a dividend freeze at the time, and a changing business that appeared to forecast lower margins.

As usual, I reinvested all dividends into the stocks that paid them, resulting in an additional forward dividend income boost of $31.17.  As you will see, this was the only boost to my forward dividend income in May.

As a result of the reinvested dividends, I purchased nearly 12 new shares of stock in May.  I added over 1.5 shares of ABBV and Omega Healthcare Investors (OHI), and almost 2 shares of Fastenal (FAST).

 

Dividend Raises

I’m sad to report that for the first time since I began keeping track, I didn’t receive a single dividend raise for the month.  🙁

After Main Street Capital (MAIN) announced in April that they wouldn’t have a dividend raise in May, I needed Lowe’s Companies (LOW) to deliver a dividend raise in order to avoid a goose egg for May.

Despite reporting good earnings just a week or so prior, LOW announced they were holding the dividend steady, and would re-evaluate a raise in the future.  So, this meant no raises for me in May.

To make things even worse than hearing about those two dividend freezes and being shutout for the month, I had 3 companies announce dividend suspensions early in May (as noted in the introduction).

Therefore, I decided to change the heading in this month’s table (below) from Dividend Raises to Dividend Suspensions.

I ended up selling CAKE shortly after their dividend suspension.  Because of that, their reduction in dividend income doesn’t show in my table below, and instead will be reflected in the Dividends Due to New Investment section.

 

 

All totaled, the dividend suspensions reduced my forward dividend income by $69.45.  It’s one thing to have $0 due to being shutout, but going negative is quite another.  Let’s hope this is a one month occurrence and I can get back to seeing a positive number in June.

I’d have to invest $2,386.60 at my Portfolio’s current average yield of 2.91% in order to offset the hit that my forward dividend income took as a result of these dividend suspensions.

Looking forward to June, I’m expecting to hear from UnitedHealth Group (UNH), JPMorgan Chase & Co. (JPM), and CAT.  I also hope to see the typical fractional quarterly boosts from O and W.P. Carey (WPC).  In fact UNH already announced their raise in the first week of June (I’ll cover that next month).  So, this means no dividend raise shutout in June.  🙂

 

Dividends Due To New Investment

Investment activity was slow for me in May, once again.  I had 5 transactions, all occurring on the same day, about 1 week into May.

The CAKE sale kicked things off, and I then proceeded to add to four existing positions: GD, Automatic Data Processing (ADP), Wells Fargo & Co. (WFC) and Comcast (CMCSA).  You can read all about these transactions in this post:

 

Recent Transactions – CAKE, GD, ADP, WFC, CMCSA

 

Since I didn’t end up re-deploying all the CAKE proceeds, for May I effectively made a net withdrawal of $220.46 from my Portfolio.  These transactions decreased my forward dividend income by $61.88.

 

Tallying Up The Additional Forward Dividend Income

In 2020, I continue tracking my additional forward dividend income generated each month from the trifecta of sources: reinvested dividends, dividend raises, and new capital investment.

I’ll be showing 2019’s totals, too, so that we can compare as the year progresses.

 

 

The additional forward dividend income generated in May was a negative $100.16.  That’s triple digits of the wrong kind!

The additional forward dividend income trend for the last couple of months has been in decline after a hot start to the year.  Additional income has almost been a wash in Q2 thus far.

Thankfully, my ‘Reinvested Dividends’ delivered a positive contribution this month – the only category avoiding the red.  Sometimes I have months where ‘Investment of Capital’ shows a negative number, but seeing red in the ‘Dividend Raises’ is certainly unexpected.

If I can get back on track with positive additional forward dividend income in June, I can be on pace to deliver better additional forward dividend income totals than I managed in 2019.

 

Progress Charts

The following are progress charts, also available on my Dividends page.  Despite the recent dividend freezes and suspensions my Portfolio has suffered, dividend income is still on the rise.

 

 

On an annual basis, here’s what the dividend totals look like.  This month’s reduction in forward dividend income won’t help my quest for $12K in dividends collected in 2020.  I was behind pace coming into May, and those dividend reductions announced in May will put me further behind.

 

 

Summary

May was a mixed bag in my Portfolio, for sure.

I collected over $810 in dividends from 15 different dividend payers, notching 13.1% YoY growth.  A lot to like here.

Another positive… reinvested dividends continued to generate solid amounts of additional forward dividend income due to some still lower stock prices.  I recorded over $31 in new income from reinvestments in May.

However, I didn’t have a single dividend raise announcement this month.  Instead, I recorded two dividend freezes and three dividend suspensions, resulting in a drop of over $69 in forward dividend income.  Ouch.

I even ended up with a net Portfolio withdrawal over $220 on the investment front, too.  This dropped my forward dividend income nearly another $62.  More negative news!

After tallying up the damage on the additional forward dividend income front, the Portfolio took a step backward, showing over a $100 decline in future dividend income.

As for my Portfolio value, it continues to climb with the market.  I hope the market is right about brighter future prospects for companies in the coming months, and that we can avoid any significant pullbacks from here.

 

Does May feel like it will be the worst month we have for dividend cuts and suspensions?  Did you end up with an overall reduction in your forward dividend income at the close of May?  Please share in the Comments!

I have updated the Portfolio & Dividends pages in conjunction with this monthly update.