I welcome you to a new episode of my Dividend Diary on the TEV Blog. Is there anything better in the financial world than a dividend income? Well, I guess not. And so in October, I was again pleased to see a substantial increase in my dividends. I also used this month to add more shares and stocks to my portfolio. As always, in my monthly reports, I will give an update on my purchases. I document my monthly dividend income and the changes in my broadly diversified retirement portfolio. Here, I show you which companies have generated juicy cash flow for me each month and which stocks went into my basket. Besides, I analyze how the month has performed compared to the previous year. In the best case, my dividend income has increased.
As you know, I take care of my wealth management. To keep things simple, I have built three pillars:
- Active income.
- Passive income.
Dividends fall into the last two categories. They are passive because I no longer have to work to receive the payments. Furthermore, they also contribute to the conversion because I reinvest the dividends and thus increase my passive income through dividends for the future.
My monthly dividend income in October:
This month I have received payments (before taxes) from the following companies:
- Kimberly Clark (8.78 EUR)
- Iron Mountain (12.91 EUR)
- GlaxoSmithKline (13.22 EUR)
- Diageo (15.12 EUR)
- Altria (17.38 EUR)
- Leggett & Platt (9.80 EUR)
- Realty Income (3.09 EUR)
- Cisco (9.35 EUR)
- Simon Property Group (4.87 EUR).
The total dividend income in October was: EUR 94.52/appr. 111.65 USD
Dividend income check
Now let’s see how the performance was compared to the previous year. Last year, I received only EUR 71,05 in dividends in October, which represents an increase of almost one third.
Overall, I have received almost EUR 1,400 this year. That is far above the total dividend income of last year, which was slightly more than EUR 1,200. Let’s hope that this development continues in the last two months of the year. The overall development is as follows:
Stock purchases in October for more dividend income
In October, I bought more shares of great companies so that the dividends will continue to rise in the future:
- PepsiCo (7 shares)
- Snap-on Incorporated (8 shares)
- Apple (8 shares)
- Reckitt Benckiser (8 shares)
- AbbVie Inc. (9 shares)
In the following, I will briefly explain why I bought these companies. Please do not expect a fundamental analysis. I will only mention some aspects per company that might be of interest to the readers. Maybe you will find inspiration for your investment. In case you disagree, feel free to write your opinion about my purchases in the comments.
Why I bought Snap-on Incorporated
Snap-on is a new company in my widely diversified retirement portfolio. The company mainly produces and sells tools for professional applications, for instance, in the automotive and aerospace industries. Product lines include hand tools, power tools, automotive diagnostics, and shop equipment, tool storage products, automotive diagnostics software, and other solutions for the transportation service, industrial, government, education, agricultural, and other commercial applications, including construction and electrical. Products are sold through its franchise dealer van, company direct sales and distributor, and Internet channels.
Snap-on has been paying a dividend without interruption since 1939 and has not reduced it since then. The company also has a very strong dividend scoreboard:
- Dividend yield: 2.74 percent.
- Years of dividend growth: 10 Years.
- Payout ratio: 40.33 percent.
- 5 Year growth rate: 16.26 percent.
- 1 Year growth rate: 13.68 percent.
So recently the company has increased its dividends considerably. The payout ratio is also still within a very acceptable range, which gives hope for further increases. Snap-on is also currently still reasonably valued.
The last quarterly figures were not bad at all. Revenue grew by 4.4 percent (3.8 percent organic growth) on a year to year basis. The gross margin expanded by 17bps to 49.9 percent, and also the operating margin improved significantly by 133bps to 26.7percent. Well, and since I don’t have a company from this sector yet, I decided to start with a first position.
I had a stomach ache at Apple, but I bought some more shares. I don’t have to explain the company to you (here you can find an analysis if you want to read more). In fundamental terms, the company is massively overvalued. Based on the adjusted earnings, we have a downside potential of over 30 percent.
Nevertheless, I bought some more. Besides Logitech, Apple is one of the shares from my portfolio that performed best. The company is, therefore, one of my best horses. Of course, I could invest in rather lame crutches like Cisco or IBM (which I do), but why shouldn’t I increase my share in the best performers now and then? Diversification also includes making additional purchases not only in the weak but also in strong companies. If the Apple share price falls, that’s no problem for me. I’ll repurchase it. This is how the cost-average effect works.
Abbvie is a global pharmaceutical company that was spun off from Abbott Laboratories in 2013. The company reported excellent quarterly figures and, just like that, increased the dividend by 10 percent. I can’t remember exactly when I bought my first shares, but the value of my shares has risen by almost 30 percent in the meantime but has fallen steadily in recent weeks. The quarterly figures were better than the market expected, as the share price rose by almost 6 percent on the day of publication.
Fundamentally, the stock is still undervalued, which is why I bought additional shares on the last trading day of the month.
It remains critical whether AbbVie will manage to successfully replace the Humira USD 20 billion annual revenue in the following years. Although Humira’s revenue will not suddenly drop to zero, you should nevertheless expect a double-digit percentage drop in sales. However, the pipeline seems to me to be pretty well filled, and there are already some first promising blockbuster candidates, as the last quarterly announcements show:
- Imbruvica: USD 1,370M (+9.0 percent);
- Skyrizi: USD 435M (>100 percent);
- Venclexta: USD 352M (+59.0 percent);
- Rinvoq: USD 215M (>100 percent);
- Vraylar: USD 358M;
- Restasis: USD 299M.
Overall I am satisfied with October. I originally wanted to diversify my companies more widely. In the end, I took five companies from the Anglo-American region. I think that in November, I will therefore focus more on Central Europe again. At Mayr-Melnhof and SAP, I am about to hit the trigger.
I could also increase my shares in my Emerging Markets ETF. But who knows. If prices continue to fall, as they have recently, I might buy other shares like Microsoft or Salesforce, which are still a little too expensive for me at the moment.
Anyway, there will be five more purchases, and at the end of the month, I will report about it in my TEV Dividend Diary as usual.
Watchlist for November
Next month, there will be some additional purchases of shares. I am relatively flexible here. Either I buy new positions, or I increase my shares in existing investments.
The following companies are on my watchlist in particular:
- Microsoft (MSFT)
- Salesforce (CRM)
- Mayr-Melnhof Karton AG
- Sysco (SYY)
- AT&T (T)
If you look at my report from last month, you will see that none of the companies I bought were on my watchlist. Why is that? Is the watchlist nonsense, and in the end, I only do what I want anyway? Yeah, a little bit. I don’t have a fixed system for my stock purchases, and that’s one thing I have to consider changing.
However, I have an extensive overview of many companies that I look at from time to time. The companies on the watchlist are mostly companies that I have currently examined particularly carefully, where substantial changes are imminent or which are in my focus for other reasons.
They are present to me in some form, which is why I put them on the list and perhaps monitor them a little more closely than other companies. But it often happens that I invest in other companies, after all. And so it happens that I buy other companies because it seems convenient at that moment.
Have you received dividends this month? What’s on your watchlist? Let me know and write it in the comments.
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