December is over, the Christmas sales and harried shoppers are gone, and all the presents unwrapped. So how did I do for December? Not too bad, making it a good month for incoming dividends. In addition to the regular monthly payouts, two quarterly payouts arrived in December, giving the month’s dividend income a modest boost. For December’s dividend payouts, let’s do the numbers:
BGY $ 49.00*
CFP $ 77.30*
CIK $ 22.00*
DHY $ 42.00
DMF $ 10.50
DSM $ 22.83
EXG $121.95
HQL $ 47.00
HTR $ 28.50
?? $ 9.25**
NCV $ 63.00
OIA $ 4.10
PFN $ 30.00
VFL $ 10.08
TOTAL $537.51
* Includes Return of Capital.
** My employer’s stock, which shall remain anonymous.
In my six years of dividend investing, I’ve learned that December and January are when dividend cuts are most likely to occur, and this month didn’t elude the dividend cutter’s knife:
• BGY cut its dividend from 5.6 cents to 4.9 cents (a 12.5% reduction).
• DSM cut its dividend from 4.75 cents to 4.15 cents (a 12.6% reduction).
The cuts aren’t much, but will reduce my monthly dividend income by $10.30. A small, but very perceptable, hit to my overall dividend income.
This is a good example of how diversification can help mitigate the damage from dividend cuts. With a pre-cut weight of 4.82% (now 4.23%), my exposure to DSM was fairly low. But my exposure to BGY is almost twice as much, with a pre-cut weight of 10.39%, now 9.21% after the cut. BGY’s cut obviously had a bigger impact (a decline of 1.18 percentage points versus 0.59).
Unexpectedly, CFP completed a 4:1 reverse split. So I now have one fourth the number of shares I once had, but each share’s price and dividend quadrupled, so CFP’s monthly dividend payout is unchanged (for now). However, this split has changed CFP’s cost basis and price, so the result may be some capital gains or losses for CFP this tax year.
On the bright side, HQL increased its dividend from 45 cents to 47 cents and my employer’s stock increased its dividend from 16.5 cents to 18.5 cents, so these slight dividend payout increases helped to slightly offset the damage from the BGY and DSM dividend cuts.
The end of December also means the end of Q4, which means the quarter’s total dividend income was $1646.55, which is 18.5% higher than Q3 ($1388.99). However, the quarterly totals for Q3 and Q4 are slightly skewed because of BGY’s changeover from quarterly to monthly payments, with two payouts in October. Taking BGY’s second payout of $112.00 out of Q4 and putting it into Q3 (where it should have been), Q4 becomes $1534.55 and Q3 $1500.99, so to be accurate Q4 is only 2.2% higher than Q3.
For December, I added shares of PFN, RSO, and VFL to my portfolio, sold all but five of my employer’s granted stock shares, and got hit by some cuts to BGY and DSM dividend payouts. With these changes, December ends with a projected average monthly income is $532.65. Also changed is my projected average daily (24-hours) income of $17.51/day, average hourly income is 73.0 cents, and average minute income is 1.22 cents.
Image Credit: jarmoluk (pixabay.com)