Justin Sullivan is a news photographer.
The background.
If you’re interested in John and Jane’s full background, please click the link here for the last time I published it. The updated details are for the year 2022.
This is a real portfolio of shares.
I am not a financial advisor and only provide guidance based on a relationship that has existed for several years.
John retired in January of last year and now only collects Social Security income as his main source of income.
Jane retired at the beginning of the 21st century and is collecting Social Security as her only source of income.
John and Jane will be taking draws from the Taxable Account and John’s Traditional IRA to the tune of $1,000 per month. The draws are covered by the dividends generated in each account
John and Jane have other investments. These investments mostly consist of bonds and certificates.
John and Jane don’t have debt or monthly payments other than recurring bills such as water, power, property taxes and so on.
I started helping John and Jane with their retirement accounts because I was angry at the fees they were being charged by their previous financial advisor. I don’t charge John and Jane for anything that I do, and I have asked them to allow me to write about their portfolio in order to spread knowledge and make me a better investor in the process.
Capital appreciation is the least important characteristic of this portfolio, as the primary focus is on generating a stable and growing dividends. I wanted to give John and Jane as much certainty in their retirement as I possibly can because this has been a constant point of stress for them over the last decade.
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The dividend decreases.
There has been a bit of uncertainty leading up to the spinoff of Warner Brothers, but we were all aware of some turbulent times ahead for AT&T. The reality is that AT&T is now looking like the defensive stock that is worth holding which is a drastic shift from the criticisms that have plagued it in the past AT&T’s new dividend is half of the previous one but more safe and allows an appropriate amount of free cash flow. The previous dividend posed a threat to AT&T’s ability to buy more spectrum as it made it difficult for them to deleverage.
FastGraphs – AT&T.
The dividend was reduced from $.52/share to $.285/share. This is a decrease of 46.6% and a new full-year payouts of $1.11/share compared with the previous $2.08/share. The yield is based on the share price of $21.14.
The dividends increase
It’s Apple.
There is a real estate company named arbor REALTY.
Air Products and Chemicals are used in manufacturing.
Energy Transfer is a business.
Apple’s Board of Directors authorized an increase of $90 billion to the existing share repurchase program, which represents 3.74% of total outstanding shares. I’m not worried that this was the lightest increase shareholders have seen since Apple initiated its dividend in 2012 because I’m sure there are few people who hold AAPL stock for the dividend. With analysts pointing towards a slowdown in App Store revenue growth, investors may want to prepare for a further drop in price. We don’t plan to sell any shares because of the low-cost basis and the tax consequences. AAPL is a long-term buy-and-hold type of investment that is currently fully valued.
The image below shows that AAPL’s price has grown at a much higher rate than the rate of dividend growth.
YCharts has data.
The dividends was increased from quarter to quarter. The increase of 4.5% and the new full-year payouts of $.92/share is what this represents. The current yield is.63% based on the current share price.
It is a little bit surprising that the recent decline in price is related to the Q1-2020 earnings report. For the better part of the last decade, the ceiling yield has served as the benchmark because the current yield is below 9%. During the initial phase of COVID lockdowns, we saw the yield well above this. John and Jane have a full position in the stock and may need to buy more.
This tells me that the share price is appreciated at the same pace as the dividend increases. Even as we head toward challenging times, the earnings reports from ABR are positive.
Data from YCharts.
The dividend was increased to $.38 per share. The new full-yearPayout of $1.52/share is an increase of 2.5% and represents an increase over the previous full-yearPayout of $1.48/share. The yield is based on the share price of $16.20.
Air Products and Chemicals has been in John and Jane’s portfolios for a while, but they couldn’t justify holding the shares anymore due to the insane growth of its share price. At its peak, APD was trading at a P/E ratio of 33.8x whereas right now stock is sitting at a P/E ratio of 26.4x APD has a long history of increasing its dividends and has an average 10-year growth rate of over 10%. When shares fall below $240/share, we will continue to add to the position.
APD stands for Air Products and Chemicals.
The dividend was increased from the previous quarter. The new full-year payout is $6.48/share, an 8% increase and compared to the previous $6.00/share. Based on the current share price, this results in a yield of 2.48%.
After cutting the dividend in half after a rough earnings report in the summer of 2020, Energy Transfer increased its dividend for the first time back in February of 2022. The demand for pipeline infrastructure is high and now that the master limited partnership is on a stronger financial footing the dividend has grown at a rate of more than 14% in the last two quarters. We increased John and Jane’s exposure to the stock by 200 shares. The current demand for energy has been a useful tool for helping the companies overcome image issues that have plagued their stock prices.
John and Jane have a full position, but it would take a big price drop before we would consider adding more.
YCharts has data
The dividends was raised from $.175/share per quarter to $.20/share per quarter. The increase of 14.3% and the new full-year payout of $.80/share is what this represents. Based on the current share price of $12.31, this results in a yield of 6.50%.
There are positions for
There are 43 unique positions in the Taxable Account at market close on June 7th, 2022. Several purchases were made during the month of May.
May taxable transaction history
We closed out John and Jane’s position in the company due to its under performance. The impact on each company is shown in the graph.
Data from YCharts.
We will continue to work towards eliminating the rest of the holdings in Jane’s IRA. The impact of these sales are shown in the image below. Due to the fact that gains and losses taken in the Taxable Account will have a direct impact on John and Jane’s taxes, it is recommended that they be extremely conscientious of any gains or losses taken in the Taxable Account. Since John and Jane have retired, I’m more comfortable generating capital gains on their Taxable Account.
We took advantage of the drop in the share price for several companies. I think it’s interesting that all four of the stocks listed have seen improvements in their share prices since they were purchased.
The May income tracker is for the year of 2021. It’s 2022.
The Taxable Account is still in the red for the year and this is due to some massive special dividends paid by Old Republic International. The Taxable Account is expected to generate an average of $1,623.08/month of dividend income in the coming years. This is less than the average monthly income of $1,704.23 generated in 2021, but it is still higher than the performance of the year.
Draws on the Taxable Account began in January in the amount of $1,000/month. The portfolio has more monthly income from dividends and distributions than John and Jane will have. The challenge for me is that I am used to running an account with excess cash. I will need to be more aware of the cash balances that are available. The amount of cash on hand is tracked in the Cash Balance table in the images below.
The dividends collected on stocks that are no longer held in a portfolio are represented by SNLH. Even though it is non-recurring, we still count the dividends from stocks that are no longer in the portfolio. The images below were taken from Consistent Dividend Investor, LLC.
The taxable dividend breakdown is in May.
There is a graphical illustration of the dividends received on a monthly basis. I have begun updating the chart to reflect the dividends that were earned in January of last year.
The Taxable Monthly Dividend Graph is for May.
Taxable Monthly Dividend Line Graph (CDI) will be available in May.
The table shows all income generated in the year 2021.
There will be a taxable annual estimate in May.
When I first began writing these articles, I generated a lot of dividend income.
There will be a taxable dividends history in May.
The Taxable Account balances are taken from the end-of-month statement provided by Charles Schwab.
The taxable month end balance will be in May.
The only new table added to the report is the next one. This will be the first year that John and Jane will be taking withdrawals from their Taxable Account. I want to keep a record of these withdrawals because they will have an impact on the account balance in the cash balance table.
Taxable withdrawals can be made in May.
The next image shows how much money John and Jane had in their Taxable Account at the end of the month.
The taxable cash balance is in May.
There were large changes in cash at the end of the year and again in the year 2020, which is why the balance fluctuated so much. In March and April of 2020 there was a lot of cash deployed as the share prices plummeted. John and Jane won’t be able to take funds from the Taxable Account to cover their contributions to their Traditional orRoth IRAs because they no longer qualify to do so.
The history of the unrealized gain/loss at the end of each month goes back to the beginning of January of last year.
There will be a taxable Unrealized Gain-Loss (CDI) in May.
The main reason for including this is to help readers understand that the key to this strategy is to accept the risk and this table is an excellent representation of that. John and Jane are okay with additional risk because they are focused on generating income from these stocks
In order to be transparent about John and Jane’s Taxable Account, I like to include an unrealized gain/loss summary. The closing prices for June 8th, 2022, are used.
The taxable gain-loss update will be in May.
It is important to understand that the yield is dependent on whether or not we have received a full year of income, and this is the only way to keep it mostly accurate without requiring a lot of manual input or calculation. I have updated these for the beginning of the year so that the last column is accurate. The method will show the reduced yield of a position added partway through the year, which will reflect an accurate benefit and not an inflated benefit.
I wanted to show how the Taxable Account is performing.
May – Taxable Monthly Year-Over-Year Comparison.
Conclusion of work.
The month of May was going to be a rough one for the market, but the last week of the month saw a mini rally that ended just about even for the month in all three indexes.
Data from YCharts.
From April 1st to the end of May the big three indexes lost a lot of money.
YCharts has data
John and Jane’s Taxable Account portfolio is down by 1.5%. The portfolio is performing exactly as we would want it to during difficult times and the amount it is down during this time includes the loss of $2,000 in value from funds removed from the account If we add the funds back to the balance, the account is actually down by 1%.
May was a huge step up with regard to dividend income as we close the gap in the taxable account after 2021.
Readers will notice that we are trying to replenish the cash in the account by trimming non-core investments and collecting dividends. When the time is right to buy more shares, maintaining cash on hand is the best way to take advantage of the market turmoil.
In John and Jane’s Taxable Account, Apple, Air Products and Chemicals, and Carrier Global Corporation are all mentioned.