Dividend Stock Purchase: Lanny’s February 2021 Summary

Welcome back to another month of Dividend Stock Purchases! Two months are now closed and the dividend stock purchase activity did not disappoint, despite the SIGNIFICANT volatility. There was volatility still from WallStreetBets, the tech decline as evident by the NASDAQ, the back/forth with the next round of stimulus and we are now 1 year into the global pandemic. Woof!

The journey to financial freedom does not take breaks and one must continue to persevere through uncertainty, put cash to work and push that forward dividend income forward. What did February 2021 activity show? You will have to dive in and see the dividend stock purchases!

dividend stock purchase and dividend income: Path to financial freedom

Investing consistently in Dividend Income Stocks allows you to create & build another income source. Dividend Income is our primary vehicle on the road to Financial Freedom, which you can see through my Dividend Portfolio, which continues to build and build. Further, I have written about every stock purchase and month of dividend income since we started this site, plenty of dividend history for you, the reader!

How do I make dividend stock purchases and screen for dividend stocks? I usually put the stocks through our Dividend Diplomat Stock Screener and trade on Ally Bank’s investment platform (one of our Financial Freedom Products).

Watch – Dividend Diplomat Stock Screener – Video Example

Related: Financial Freedom Products

Purchasing dividend stocks takes capital or money. How do I build the capital to make these stock purchases? I save anywhere from 60-85% of my take-home pay and strongly believe Financial Freedom does not happen by hitting a home run on an investment. Nothing matters more than your savings rate on your journey to Financial Freedom, plain and simple. Therefore, I work my butt off to make sure expenses remain in-check and that my savings rate is meeting our investment and financial independence goals! Then, you rinse and repeat.

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My dividend stock portfolio was burnt by dividend cuts in 2020 and lost over $800+ in forward dividend income. Therefore, I was ready to get back to basics and acquire more shares in the best quality dividend stocks out there.

In fact, I believe Dividend Stocks and Dividend Growth is BACK! I even wrote about this in my article related below and we have kicked off a fun dividend news series, going over the amazing dividend announcements we have seen recently.

Watch: Dividends are BACK!

Starting in June, I was really on my investment game, investing back to higher than normal levels, due to low investment levels in April & May. I was investing close to $3,500 to $5,000, in total with my wife, starting in June through November. Last month of December 2020, we invested almost $4,000, slightly lower than the previous months.

Therefore, it’s time to see if my December dividend stock investments finished strong. Time to see the dividend stock purchases below.

Vanguard HIgh Dividend Yield (VYM)

As discussed in the video above, and you’ll see in my stock purchase activity below, I invested quite a bit into a Vanguard Exchange Traded Fund (ETF). In fact, I perform exactly what I state in our video. I make a weekly purchase of 3 shares into Vanguard’s High Dividend Yield (VYM) ETF. There were no special opportunities/large drops in the market, therefore I only bought on Mondays throughout February, see the screen shot below:

What is Vanguard? They are a registered investment advisor with $6 trillion plus assets under their management. Many companies use Vanguard for their company-sponsored 401(k) plans and many use them for their retirement and/or investment accounts.

Why do so many individuals and businesses love Vanguard? First, they usually have the lowest or near the lowest expense ratios for individuals to choose from. In addition, John Bogle, the legendary founder of Vanguard Group, created the first index fund. The index fund is a tool that millions of people use and love every day.

Vanguard High Dividend Yield (VYM) has 410 different stocks and 3 of their top 10 holdings are dividend aristocrats, such as Johnson & Johnson (JNJ), Procter Gamble (PG) and AT&T (T). Yes, that’s 3 of our Top 5 Foundation Dividend Stocks!

This will be different than other dividend stock purchase summary posts and how I breakdown each investment. I usually like to use the Dividend Diplomat Stock Screener and I will do my best to use on the VYM ETF.

Price to Earnings: Based on the metrics below, the ETF shows signs of undervaluation at ~20x earnings. The stock market is well over 35x+ earnings, which is insanely overvalued. Therefore, VYM shows positive signs here.
Payout Ratio: The Dividend Payout Ratio is between 60% and 65%. This is right at the ceiling of where we like the dividend payout ratio to be and sure is higher than that perfect dividend payout ratio.
Dividend Growth Rate: Dividend growth rates of over 7%+ over the last 9 of 10 years, with consistent dividend increases, is excellent. There is no wonder why this is considered a high dividend yield fund.
*Bonus* Dividend Yield: Given the trailing 12 month dividend is $2.91 and the average share price that I acquired them of $94.54, the dividend yield averaged 3.08%. This is significantly higher than the S&P 500 index and is a dividend yield higher than my overall dividend stock portfolio.

In total, my dividend stock purchases of VYM totaled $1,134.46, acquiring 12 total shares. This added $34.92 in forward dividend income. I will continue this going forward, 3 shares per week. This will allow me to stay invested and have time in the stock market, versus timing the stock market.

Verizon Communications, Inc. (vz)

Verizon stays big on my list! One of the biggest telecommunications in the U.S.. They will be the global leader in 5G technology.

As noted last month – the oracle himself, Warren Buffett made a huge investment towards the end of 2020:

Yes, Warren Buffett acquired almost $9 billion worth of Verizon stock recently! I may be buying a few shares, but Warren Buffett just added a “cool” 147 million shares. I am just 146.999 million shares off! Warren wasn’t the only one busy buying Verizon (VZ) stock. You know I’ve been buying Verizon stock the last few months and February was no different!

Therefore, prior to purchasing, I ran Verizon through the Dividend Diplomats Stock Screener. Therefore, let’s see how VZ stacked up within the stock screener:

Price to Earnings: 24 analysts are projecting $5.08 for FY 2021 earnings. Therefore, based on an average purchase price of $54.91, the price to earnings on 2021 projection is 10.81. This is significantly below the S&P 500, currently, as well as other competitors. See the analyst projections below.
Dividend Payout Ratio: At a dividend per year of $2.51 and earning projections stated above for 2021 at $5.08, the dividend payout ratio is PERFECT, or at least what we consider to be a perfect dividend payout ratio. We love the dividend payout ratio in the 40%-60%, which we consider the perfect payout ratio sweet spot. Therefore, Verizon retains half of the earnings to continue development and growth, but still uses 49-50% of their earnings to pay back their shareholders!
Dividend Growth: Verizon is heading down the road of a dividend aristocrat. Verizon has increased their dividend for 16+ years, albeit at an average dividend growth rate of 2%.

Overall, I purchased 11 more shares of Verizon at an average price of $54.91 for a total capital deployment of $604. This added $27.61 to my forward dividend income projection.

I’d like to continue to add to this position, and reach 50 shares, as I do like the pairing to my AT&T (T) dividend stock position.

Kroger Co. (KR)

The dividend stock buying didn’t stop there! I also continued my investment into Kroger (KR), the large grocer based in Ohio!

In fact, I wasn’t the only one buying Kroger stock. Warren Buffett actually increased their ownership of the large grocery chain by the tune of approximately 8.5 million more shares, as evidenced in the article below and SEC filings.

Therefore, prior to purchasing, I ran Kroger through the Dividend Diplomats Stock Screener. Therefore, let’s see how KR stacked up within the stock screener:

Price to Earnings: 26 analysts are projecting $2.78 for FY 2021 earnings. Therefore, based on an average purchase price of $32.47, the price to earnings on 2021 projection is 11.68. This is significantly below the S&P 500, currently, as well as other competitors. See the analyst projections below.
Dividend Payout Ratio: At a dividend per year of $0.72 and earning projections stated above for 2022 at $2.78, the dividend payout ratio is insanely low at only 26%! No wonder Warren Buffett also was buying up Kroger as well.
Dividend Growth: Kroger is similar to Verizon. Kroger has increased their dividend for 14+ years, consecutively. The dividend growth rate, on average, over the last 5 years stands at 11.47%. In fact, the last increase was a solid 12.5% as well. Thank YOU Kroger!

Overall, I purchased 15 more shares of Kroger at an average price of $32.47 for a total capital deployment of $487. This added $10.80 to my forward dividend income projection.

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Now that most of us here in the U.S. have the access to buy stocks at zero cost, my stock purchases can be smaller than usual. The brokerages really have paved the way to make it “easier” or at least, less costly, for investors. Thank you Robinhood, Charles Schwab, E-Trade, you name it! I easily have saved hundreds of dollars this year alone in trading fees.

Given that, I don’t want to dive into so much detail on smaller purchases. Therefore, the remaining dividend stock purchases will be reflected in a screen shot below. The screen is directly from the brokerage that I use – Ally Investing.

Here are the screenshots from my December Dividend Stock purchases!

Taxable Account:

Roth IRA: No dividend stock purchase for the Roth IRA in October.

Sales for the month:

Yes, I sold another position. For those that didn’t know, couldn’t read the tweets, Peoples United Financial (PBCT) was is being acquired by M&T Bank (MTB). I bought PBCT as a great dividend growing community bank. Therefore, MTB did not fit my portfolio. I immediately sold once the price hit $18.00 with a limit order and immediately re-deployed the capital into Provident Financial Services (PFS), a New Jersey based community bank, which fit the goal of the PBCT position.

Lastly, I also picked up a whopping 1 share of AT&T (T) and also 3 more shares of Pfizer (PFE), as those positions are fairly full right now. If another low-priced, buying opportunity arrives, I will take a look again.

However, that doesn’t mean I am not looking at our 3 dividend stocks to buy now for March 2021. That video, is here:

In total, I deployed a total amount of $2,358.10 and added $80.09 to our forward dividend income, equating to an average dividend yield of 3.52%. The average dividend yield of 3.40% is above my portfolio, in total, and definitely adds to my forward passive income. Financial freedom, getting closer baby!

My Wife’s Dividend Stock Purchase summary

My wife has accounts where we also make dividend stock purchases. Though we are married, we are still running two separate, individual, taxable accounts. All is good, especially because we use the same platform, but just haven’t wanted to deal with the administrative tasks of combining. In actuality, I don’t think it’s even possible to combine on the retirement-based accounts.

Over the last few months, we definitely started to add more capital to my wife’s dividend investing account. The dividend income added from Dividend Aristocrats, including one of our TOP 5 Foundation Dividend Stocks for YOUR Portfolio, are in the mix. As stated earlier, we are also acquiring 3 shares of VYM per week, to stay invested in the market.

Taxable Account:

Roth IRA: No dividend stock purchase for the Roth IRA.

Slower month for sure! However, still managed the 12 total shares of Vanguard and 2 more shares of the Top 5 Foundation Dividend Stock in Consolidated Edison (ED)! ConEd’s dividend yield is swelling up fairly nicely, almost at 4.50%! In addition, we grabbed another share of Cardinal Health (CAH), they were on Bert’s watch list, and another 7 shares of Unilever (UL), which is evidenced in the video above!

My wife’s portfolio is typically full of safe and sound dividend investments and since we’ve been together, her portfolio has been blossoming into an extremely significant part of our family’s finances.

In total, $1,704.64 was put into investments, producing $57.37 in Dividend Income going forward. This is an average dividend yield of 3.36%.

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February was very similar to January, at $4,000. The stock market at all-time highs will make things a little more difficult/interesting here. Combined, my wife and I invested $4,062.74 for December and added $137.46 to our forward dividend income total (3.38% yield overall)!

I will maintain my main message. Stick to the strategy that works for you, but review if there is anything that may impact your strategy going forward. You are in control and the emotion button is hard to turn off. Persevere and stay consistent, if you are able to. Time to lock in and stay ready for further opportunities. This was one step closer to financial freedom and I hope to continue making strides. Lastly, my dividend portfolio has been updated to reflect all dividend stock purchases above (outside of my wife’s).

I am continually looking at my February Dividend Stock Watch List and always keeping an eye on the stocks on Bert’s expected dividend increases, as well. It is all about the road to financial freedom and I cannot wait to have that crossover point. That crossover point where the passive income, from dividends, overcomes the total expenses in a given month.

I know I’ve said it many times, but each and every month, we do make inches towards the financial freedom goal. We will get there and we are very excited you have joined us on the journey.

Thank you for stopping by, good luck and happy investing out there!

-Lanny

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