January 2016 Dividend Update

Two Purchases for January 2016 (Amgen and 3M)

During the month, I made another purchase of Amgen (AMGN).  It seemed to be a good time to buy and it starts me on the way to expanding the number of holdings in the healthcare sector.  I discuss my original September purchase in this article, and my January purchase was made for the same basic reasons, though at a slightly higher price.

On 01/11/16, I purchased AMGN at $144.50 and 2.77% yield.  AMGN was brought up to 2.79% NAV weight and 1.89% dividend weight.  I want to cap this stock’s allocation at about 3%, so I don’t have room to add much more.  Should the price drop significantly, I will consider one more purchase.

My second purchase for the month, and one I have wanted for some time, was 3M Company (MMM).  On 1/20/16, I made an initial purchase of MMM at $137 and a 3% current yield.  This is a yield level not often seen with this stock.  It now has about a 2% NAV weight and 1.5% dividend income weight.  Ideally, I want to build this holding to represent a 6-8% NAV weight, so this purchase equates to a 1/3 position.

MMM at $137 seems to be a fair value in my view.  It is a dividend beast and buying at fair value is good enough for me.  The purchase was made for the sake of dividend dependability with some growth thrown in for good measure.

S&P rated MMM a hold with a target price of $160.  Quality is A+ and the credit rating is AA-.  Morningstar rated it a 4 star buy with a fair value of $160.  I don’t expect great things from this company by way of capital appreciation, nor will I be in a great hurry to add more.  Acquiring more of this stock at any kind of bargain price may well require a significant market correction.  If that happens, I’ll be waiting with open arms.  I’m about the income and MMM makes me feel warm and fuzzy.

Year over year dividend comparison for January 2016

  • Dividend income for January was a mere 3.52% above last year’s monthly total.
  • Not a very impressive increase, I know.  Of the stocks that pay out in January, not many offered up much in the way of increases last year.  I also noted that one of my larger income producers (and one of the few that I bought in 2015) (VTR) paid out in January of last year, but the most recent payout came in December 2015 rather  than January of this year.  This made my paltry increases look even more paltry.

Stock Sales For January 2016

  • None

Dividend Increases for January 2016  ( I love pay raises)

  • AT&T (T) bumped up their dividend by 2.1%, ex-div 1/6/16.  Pretty standard fare for AT&T.  Nice yield with slow growth.  No complaints.
  • Realty Income (O) added a 3.92% increase, ex-div 1/29/16.  Another slow div grower with a nice yield.  Again, can’t complain.

2016 YTD forward dividend income (through January)

  • Stock purchases have added 2.06% to our dividend income
  • Dividend increases have added .27% to our dividend income
  • Overall, our YTD forward dividend income increase is 2.33%.

Best wishes and happy investing!

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9 responses

  1. Great buys on both ends. I own MMM for many, many years and plan to keep it for the foreseeable future. AMGN and GILD are 2 biotech names on my watch list but still do not own. Their value and growing dividends look very enticing to me but the volatility is something I am not too keen on. I still may initiate a new position in AMGN or GILD sooner or later. Solid buys nonetheless. Keep that dividend income rolling in even if it’s a modest amount. An increase is an increase.

    1. DH,
      I can only wish that I had been holding MMM for many years, but that’s not the case. On the bright side, it’s in the portfolio now and will be added to over time. As DG stocks go, it doesn’t get much better than MMM. I hear you on AMGN. Volatility doesn’t make me very comfortable either, which is why I’m capping the allocation at 3%. Looking past the volatility, it seems like one of the more solid companies in the sector and will hopefully spice up dividend growth just a little. Yup, an increase is an increase and way better than a kick in the teeth. Take care and thanks for stopping by.

  2. I’m not a huge fan of biotech but, on the other hand, great risk will bring (you hope) greater return.
    Next months/years we will see very modest dividend growth, I think. If youy can keep them steady, you will be a winner.

    1. Hi Nuno,
      Certainly, biotech is one of the more volatile sectors out there. Hard to say with certainty what the dividend growth will be, but I’m certainly pleased with Amgen’s 26% increase earlier this month. I do want a little exposure to biotech as part of the healthcare sector, but not too much. That’s why I’m limiting Amgen to 3% weight. It can’t do too much damage but will hopefully spice up div growth just a little. Thanks for commenting.

      Steve

  3. AMGN is a great stock with lots of upside. In the biotech space I own AMGN and GILD.

    1. Hello Hunting,
      It does seem to have great potential and I love the div growth. I have it at 2.5% weight already though, and don’t want it to go much above 3%. Don’t have much room to add, so I’ll likely wait for a bit to buy more. Perhaps at the next correction, whenever that is, I’ll top it off. Thanks for commenting.

      Steve

  4. Will we be seeing another update soon?

    1. Hi DH,
      Thanks for asking. I’ve let the blog slide as of late…. for a couple reasons. First, I haven’t been very active on the investing front. No buys have taken place over the last few months, so not much to report or discuss. I view most everything as being too expensive at the moment. Dividend increases have been rather dismal as well. All things considered, I have little to write about.

      Second, I’ve been dealing with some health issues which at first was thought to possibly be some kind of cancer. Turns out that it is not (I am most thankful for that). The doc appointments and medical tests have taken up a fair amount of time.

      I do have an idea for an article and am currently trying to gather my thoughts in that regard. I may have something out in the next month or so. Thanks for stopping by.

      Steve

      1. Thanks for the update. Taking care of your health should always be a priority so I can understand the blog taking a back seat. I’ll look forward to your next article whenever that will be. No rush 🙂

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