dividend stock purchase

May finished off another positive month in the stock market.  My dividend stock purchase activity was not as significant, given most companies I want have been rising in price!  The market is unpredictable, to say the least.  Time to look at my dividend stock purchase activity in May!

Investing consistently in Dividend Income Stocks allows you to create & build another income source.  This is my primary vehicle on my 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).

See – Dividend Diplomat Stock Screener

Watch – Dividend Diplomat Stock Screener – Video Example

See – 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 dividend cuts 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.

See – Dividend Cuts: Pandemic Impact on Lanny’s Portfolio

However, the stock market continued to rise and rise over the course of May.  Therefore, I did not pull any significant triggers on a dividend stock purchase.  I did, though, acquire more shares into high quality dividend stocks, that you will see below, but on a smaller scale.  Personally, I barely deployed $500 in capital during the month!  I am lucky to do that, but a low amount for me, no doubt.  Dividend stock purchases are below.

People’s United Financial, INC (PBCT)

People's United Financial, PBCT

People’s United Financial (PBCT) is becoming a regular dividend stock on my articles!  People’s United has over $50 billion in total assets and are a beloved dividend aristocrat!  PBCT was recently on my Dividend Stock Watch List for June.  Further details about PBCT are at that link.

PBCT’s metrics were definitely hard to pass up.  See the statistics below from the Dividend Diplomat Stock Screener:

  1. Price to Earnings: 7 analysts are projecting $1.05 in earnings for 2020.  Therefore, at price points that ranged from $10.15 to $12.27, that equates to p/e ratios of approximately 11.
  2. Dividend Growth: PBCT is a dividend aristocrat with 25+ years of consecutive dividend increases. Their 3 year dividend growth rate is only 1.44%, which is essentially a quarter of a cent increase per year, to their quarterly payout.
  3. Dividend Yield: At an annual dividend of $0.72 per year, the dividend yield at the purchase prices were approximately 6.5%.  The 5-year average yield is 4.41%.  Therefore, more signs of undervaluation.
  4. Payout Ratio:Given that PBCT pays $0.72 in dividends per year and their earnings is projected at $1.05, this equates to a payout ratio of 69%, which is slightly on the higher side.

Though the purchases weren’t > $500, they were a more active stock I purchased.  I purchased 22 shares during May for a total cost of $254.52. The 22 shares added $15.84 to my forward dividend income projection.  My position is almost full here.

Aflac (AFL)

Aflac, AFL

Aflac (AFL) was consistently on my dividend stock purchase list for the month.  First, they are a dividend aristocrat.  Second, their metrics (that you will see below) were on point.  Third, they are on my list of Stocks to Buy in a Post-Pandemic World.

See AFL’s statistics below from the Dividend Diplomat Stock Screener:

  1. Price to Earnings: At their price range of $31.25 to $36.72 and an earnings projection of $4.34, this equates to a price to earnings ratio of approximately 8, definitely signs of undervaluation.
  2. Dividend Growth: AFL has a 37+ year dividend growth streak going, at an average rate of 9% over the last 3 years, which is a solid growth rate at the yield you’ll see below.
  3. Dividend Yield: At a dividend of $1.12, this equates to a dividend yield of ~3.30%, higher than my portfolio and the market on average.
  4. Payout Ratio: AFL produces a dividend of $1.12.  Since the earnings per share estimate is $4.34, the payout ratio is 26%.  This payout ratio represents safety and room for future dividend growth.

I purchased 6 more shares during May for a total cost of $203.97. The 6 shares added $6.72 to my forward dividend income projection.  I now have approximately have 245 shares, producing $275 in dividends.

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Since the trading wars have heated up and fees now are $0 to trade, it’s easier to make lower dollar purchases.  I am going to list out the dividend stock purchase activity below.  That way – I’ll still go over significant results for the month above, but include all purchases below in one image.

Therefore, see my May Dividend Stock Purchase summary:

Taxable Account:

Roth IRA:

No new positions were added to my dividend portfolio.  However, all other dividend stock purchases were additions to current positions.  I love beefing up current positions in my portfolio at discounted prices!

In total, I deployed a total amount of $508.03 and added $25.36 to our forward dividend income, equating to an average dividend yield of 4.99%.

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, which I don’t think it’s even possible on the retirement-based accounts.

In May, we stayed moderately busy with a few dividend stock purchases for my wife’s account:

Taxable Account:

Roth IRA: No retirement stock purchases for the month of May

We continued to add to positions, specifically Travelers Companies (TRV) and ConEd (ED).  First, Traveler’s is part of the stocks to buy in a post-pandemic world.  Secondly, ConEd is one of the top 5 foundation dividend stocks.

See – Stocks to Buy in a Post-Pandemic World

See – Top 5 Foundation Dividend Stocks

Watch – Top 5 Foundation Dividend Stocks for YOUR Portfolio on YouTube

Lastly, we added a few shares to Walgreens (WBA), another dividend aristocrat that showed signs of undervaluation.  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, $940.02 was put into investments, producing $34.70 in Dividend Income going forward.  This is an average dividend yield of 3.69%.

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The dividend stock purchase activity was not as significant as other months, time to change that in June!  Combined, my wife and I invested $1,448.05 for May and added $60.06 to our forward dividend income total (4.15% 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 can and are able to.  I am locked in and 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.

I know it was a crazy month, again.  Unemployment is skyrocketing, millions are lining up, each and every week.  I know there are rumors of a second stimulus coming, still.  Protesting and uncertainties around a second outbreak are looming.  It’s strange, with the all of the negative items occurring, the market has continued to come back closer to where it was in early March.  Given all of the macroeconomic noise, were you able to make moves?  Are you waiting for the Q2 earnings to start purchasing stock?  Any one else that you picked up?  Please share your thoughts and comments!  Thanks again everyone, and, as always, good luck and happy investing!

-Lanny

The post Dividend Stock Purchase: Lanny’s May 2020 Summary appeared first on Dividend Diplomats.