Dividend income is part of our early retirement plan income and this report includes dividends received across both our regular and tax advantaged accounts. October is traditionally a slow dividend month coming off a much larger September but there was still some news in the portfolio and dividend payments received. Lets see what happened for the month:

Related: Disclosures

Total Dividends Paid in October: $1,397

Monthly Dividend Payers: Entertainment Properties Trust and Stag Industrial. These are two real estate investment trusts I’ve owned for many years and they consistently generate about 10% of our retirement budget monthly. I’m optimistic we’ll see some slow and steady dividend increases from these holdings each year.

Quarterly Dividend Payers: Three banks and two consumer goods companies made up our quarterly dividend payments. Three financial companies paid dividends in the month of October: Fifth Third Bank, Regions Bank, and JP Morgan Chase. In the consumer goods space, McCormick and Coca Cola paid out for the quarter.

Treasury Bond Funds: Dividends (Interest) were received from our intermediate and long-term treasury funds we held during the period. VGIT, VGLT, and TLT all paid out during the month of October.

Reducing Volatility (and hopefully risk): The long-term treasury bond funds and the bank stocks have been good to hold together to offset each other’s volatility. When interest rates go up, the banks go up and the long-term treasury funds go down. Alternatively, when rates go down the banks go down and the treasury funds go up. This has been a nice way to churn out 2-4% in interest & dividends without absorbing the larger price swings just owning one of the two assets would cause.

Related: Q3 2019 Investment Update

Dividend Increases This Month:

Bank of Hawaii. Increased from $0.65/share to $0.67/share. I started buying Bank of Hawaii for under $50/share in 2013. The Bank was one of the few to not cut their dividend in the Great Recession and has been steadily buying back stock while carrying a conservative balance sheet compared to its peers. They recently increased their dividend to $0.67/share, which represents a 3.05% yield. On the shares purchased in 2013, it now pays 5.6%/year on my original cost basis. These shares also represent 10% percent more in ownership in the company than they did in 2013 due to a consistent share buyback program.

Starbucks: Increased from $0.36 to $0.41 per share. Starbucks isn’t a large holding of ours and 1.95% isn’t going to send anyone into retirement, but this is a chain that has perfected selling a high margin, highly addictive product to consumers. Selling my Starbucks stock five years ago was a big regret and I eventually bought some more to hold for life. Its rarely a cheap stock, but I think its a great company with some nice growth ahead.

What I’m Watching for November:

WestRock: Will they increased their dividend this year? One of my larger income holdings is set to report earnings and a potential dividend increase on November 7th. Westrock is one of the largest manufacturers of cardboard in the world and the stock has traded for as low as $32/share. Most of our shares were purchased between $34-$36, implying a yield of 5% or better. A dividend increase may be coming in November, but I’m also closely watching how the company has been bringing down the debt on their balance sheet to ensure this dividend is sustainable.

Costco: Is a special dividend on the horizon? Costco is one of our largest holdings (although I recently sold some after October’s earnings) and the company is overdue for a special dividend. They issued three special dividends in the last decade, each happening around nine quarters after the last. Now it has been ten quarters since the last special dividend with cash is rising on its balance sheet while debt is declining. Their stock is trading for more than 30x earnings, so I don’t believe share buybacks would not make sense compared to a special dividend. I’ll continue to patiently wait and see what happens.

Total dividends should be higher in the month of November with a couple large holdings paying out early in the month. At the time of this writing, the market is trading at all time highs and I’m still happy to have some cash and long term treasury holdings. I’ll continue to have a watch list of companies to pickup a few extra shares if something falls to a good price. Until then, patience and sticking to our target asset allocation will be my focus.

Are you interested in seeing other dividend ideas/results? Check out the Dividend Diplomat’s Blog Roll Income Reports

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