Annual Dividend Income Update 2020

by Yoda

Dividend investing for me is a long-term strategy. I like to buy great companies at good value based on historical metrics,  dividend safety & future prospects. Hold them for a long time, re-invest dividends and wait for compounding to do its magic. 2020 was a crazy year! Market saw a 33% drop in March. Followed by a rally which saw S&P 500 return 18% for the year 2020. We saw so many stocks double or triple in space of 9 months! It is very difficult to keep on your dividends path when you see high growth/speculative stocks triple in 9 months. Here is my dividend income update for the year 2020 & what I did with my portfolio.

Dividend Income Update 2020

I made 3085 USD from my positions in 2020! It came from the following stocks:

Total Dividends in 2020 ($ 3085)

This represents a 46% increase in dividends from 2019. Here is a percentage breakdown of dividends from all stocks in my portfolio.

Dividend breakdown from all my stocks

As you can see, 3 stocks (NATI, T & MO) made up about 45% of my dividends in 2020. Even when I did my 2019 dividend income update, these 3 stocks did make about 45-47% of dividends that year. I have had the goal to bring down this percentage, however good value at various times throughout the year forced me to keep buying some of these stocks and so the percentage of their contributions remains the same.

If you are interested in these graphs and charts, please check out my post on how to create your own google sheet to track your portfolio across multiple accounts and create such graphs and chart.

My Buys in 2020

As I mentioned earlier it is very difficult to keep on your path when you see stocks doubling or tripling in a 9 month period. You always want to jump on the bandwagon in such cases but resisting is very hard. Keeping this in mind, I only bought INTC (Intel), MNR (Monmouth Real Estate) & HON (Honeywell) as new positions during the year. All were bought at good valuations as compared to their history. I wish to keep adding to these companies in future & I have no doubt they will help me grow my dividend portfolio.

Apart from the new positions, I kept adding new money to most of my existing positions through out the year except for TGT, QCOM, XOM, PEP, LW & BLK. All stocks did have dividends reinvested into them.

I also had the opportunity to keep adding to my VTI position which was a goal of mine at beginning of 2020.

My Sells in 2020

I sold out of GIS & TROW early in the year. They were relatively small positions in my portfolio & I wanted to focus on higher dividend growth rate companies and wanted to focus on lesser positions.

Apart from this, I also sold a bit of NATI, KTB to reduce position sizes whenever they got bigger than what I want them to be.

Dividend Cuts/Suspensions

Pandemic created havoc on people & businesses through most of 2020. It is natural to expect some of the companies to cut their dividends and come under a lot of un-natural stress. It doesn’t mean we cut those companies from our portfolio. I did have Disney Inc. (DIS) & KTB (Kontoor Brands) who cut their dividends in 2020. But I held on to both of them. Bought more of them at various price points. I am happy to report that both have more than doubled from my lowest purchase point during the year. KTB even brought back its dividend albeit at a lower level.

Not only this, but I also started selling covered calls for income on my KTB position which helped me make about 130$ on my position despite them paying dividends for only 2 quarters in 2020.

Performance for the year 2020

I ended the year at 22% as compared 18% from S&P 500 across my roth and traditional brokerage accounts. I did have a few non dividend income paying stocks that also helped me to beat S&P in those accounts. But point is by being consistent, having less rotation, mostly buying and holding & investing in great quality dividend paying companies it is possible to come out ahead and also create a good income stream.
Here is a neat timeline of dividends thrown by my DGI portfolio over the last few years which shows compounding of dividend income in action.

Plans for 2021

Buy more dividend growth stocks in our roth accounts. Currently, I get 45% dividends from 3 stocks in my portfolio. I will try to increase my existing positions in some holdings. I am also planning on consistently buying more VTI. As I have said before index investing is really my favorite type of investing and it also gives dividends. I also plan to start creating such reports only annually instead of a quarterly cadence before. I want to focus more on bringing quality content to this blog. Have more articles on investing philosophy, concepts and less on just stock ideas or my portfolio details. Hoping this becomes more useful to you in the long run.

Dividends stocks do come with some risk, but with precautions you can avoid the risky one’s and choose the best dividend paying/growing stocks for your portfolio. I prepared a guide where I discuss some key ratios, fundamentals, some important resources to look at while deciding to buy a dividend stock. Also find out how to get free access to Morningstar, Value Line, workaround paywall behind popular news sites like Seeking Alpha etc.  Consider signing up for free instant access to the pdf version of the insights into dividend investing.

How was 2020 for your portfolio? Please let me know in the comments.

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