Dividends and interest make up part of our portfolio’s total return and we rely on the portfolio to support our living expenses. While we ultimately care about the total investment return, dividends and interest come into our accounts monthly and help fund our expenses before having to sell any stock/bond/mutual fund holdings. We own a combination of individual dividend stocks in addition to index mutual fund, bond funds, and individual treasury bonds. Our overall investment goal is to have a lower volatility portfolio that can support our living expenses for the rest of our life and part of this comes through investing in lower volatility individual stocks.
Dividend Income: $1,804
Interest Income: $523
Monthly Dividend/Interest Payers:
Bond EFTs: The majority of the interest income came from my two long-dated treasury bond ETFs, VGLT and TLT. I tend to buy more of these ETFs when the yield on the 30 year treasury gets above 2.25% and sell some back when the 30 year yield gets below 2.1%. This has been providing me with some nice monthly income while picking up an extra 1-3% in price appreciation with the swings in rates. There is potential for poor returns with this strategy is if long term rates begin a steady climb upward, but for now its been nice insurance against a falling market.
REITs: $580. Stag Industrial and Entertainment Properties continue to churn out their monthly dividends and both companies should announce their increases in the next few months. I’m tempted to add more to Entertainment Properties if their price continues to pull back from its high of $80. Most of my holdings have a basis around $55 from 2017 with a yield on cost of just over 8%. It has been almost two years since the last time someone declared the movie business dead (which is only part of their portfolio), but I’m expecting those stories to start surfacing soon by declaring Frozen 2 and Star Wars “the last hurrah” for the business. The company owns more than just theaters and headline news has created opportunities for me to buy more in the past.
Quarterly Dividend Highlights
Cracker Barrel: Cracker Barrel paid out its quarterly dividend in November bringing us $660. This is one of my larger individual stock holdings that I continue to watching closely. The company reported earnings this month and much of the conference call revolved around larger than expected losses on their joint venture on Punch Bowl Social. They are less than six months into this joint venture and already announcing higher than projected losses on a significant commitment of money.
Why an interstate based southern cooking restaurant would go in this direction at the expense of reducing their special dividend or repurchasing stock is confusing. The primary business and another acquisition seem solid, so there may be some buying opportunities at a new lows (and a solid yield) if bad news continues about the joint venture. I might put a limit order or two in to see if I can pick up additional shares.
AT&T: This has been a pleasant surprise this year and I wish I owned more shares. Earlier this year all the discussion around AT&T was how much debt it had and if it could maintain its dividend at the pace people were reducing cable. The company still owns content and the pipeline that runs internet to people’s homes. Fast forward nine months later and interest rates have been cut twice lowering the debt concern and an activist investor got involved to focus management and protect shareholders. The result has been a 20%+ gain on stock this year while enjoying a 5%+ yield.
Other smaller dividend payers the quarter included Costco, Kinder Morgan, SunTrust, Starbucks, and Pinnacle Financial. My fingers are still crossed for that elusive special dividend from Costco last paid in May of 2017, but at this point I’d be happy to just see it at some point in 2020.
What To Expect In December:
December will be a big month for dividends and interest between quarterly distributions for mutual funds and dividend payments from my two biggest bank stocks, Bank of America and Bank of Hawaii. The run up in financial stocks over the last two months has been a big win for the portfolio. Most of the return of capital in this sector has been focused on buybacks, which it should have been when the stocks were trading below a 10x PE ratio and near their price to tangible book value. Now that the stock prices have increased and the economics of buybacks are not as attractive, we might see some nice dividend increases in 2020 out of the financials. Westrock also pays this quarter, this has been one of my favorite industrial stocks I’ve added over the last year.
Checkout the Dividend Diplomat’s latest dividend report.
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