Monthly report: October 2024

Global Market Performance in October 2024

October brought varied results across major global indices, reflecting an uncertain but cautiously optimistic month for investors:

• AEXGR: The Dutch AEX Gross Return Index decreased by 1.5%, slipping from €3,557 to €3,502. This was driven by continued challenges in the European economy, including high inflation and slower-than-expected growth.
• IWDA: The iShares MSCI World Index (IWDA) recorded a solid gain of 2.9%, rising from €97 to €99, indicating resilient performance across global markets.
• DJITR: The Dow Jones Industrial Total Return Index (DJITR) inched up 0.6%, moving from $105,104 to $105,734. Steady performance from large-cap U.S. companies helped support this increase.
• S&P 500: The S&P 500 index showed stronger growth at 1.7%, rising from $5,709 to $5,808. Positive earnings reports from the tech and healthcare sectors, as well as resilient consumer spending, contributed to the index’s gains.

Overall, U.S. and global markets demonstrated cautious optimism, while European markets continued to face headwinds. This backdrop influenced individual stock performances within my portfolio, where some companies experienced gains while others declined.

Top 3 Gainers in My Portfolio

• KMI (Kinder Morgan): +10%
  Kinder Morgan’s stock was a top performer in my portfolio this month, likely benefiting from rising natural gas demand and steady dividend payouts, which bolstered investor confidence.
• APD (Air Products and Chemicals): +9%
  APD saw a significant increase in October, possibly due to its strong earnings in industrial gas and chemicals, which remain critical across sectors such as healthcare and energy.
• PM (Philip Morris International): +8%
  Philip Morris reported strong results, with its transition toward smoke-free products capturing market attention. The company’s high dividend yield continues to attract income-focused investors.

Top 3 Losers in My Portfolio

• AOS (A. O. Smith Corporation): -14%
  AOS experienced a double-digit drop, perhaps due to concerns over the housing and construction sectors. Rising interest rates are impacting housing demand, which directly affects AOS’s water heating products.
• ASML (ASML Holding): -10%
  ASML faced headwinds due to concerns over semiconductor demand and potential slowdowns in tech spending. Although ASML is a tech leader, the current economic uncertainties weighed on its stock price.
• BHP (BHP Group): -10%
  BHP, a major mining company, also faced a tough month. Falling commodity prices and fears of an economic slowdown impacted investor sentiment, leading to a drop in its stock price.

October 2024 Dividend Income: A Year-Over-Year Comparison

Examining my dividend income for October 2024 in comparison to last year reveals some interesting trends:

In October 2024, my U.S. dollar-denominated dividends grew slightly from $217 in October 2023 to $222, an increase of 2.3%. Noteworthy contributors included HASI (Hannon Armstrong) with a 5.1% increase, MRK (Merck & Co.) with 5.5%, and O (Realty Income), which provided a substantial 37.2% growth in dividend income, due to an additional purchase last year. These companies demonstrated stability in both payouts and growth, enhancing my overall income. ADP was a new dividend payer with a first payment of $11. MPW was a dissonant because of its dividend cut last quarter. We'll see how things develop in the coming months. Finally I sold my shares in BAX earlier this year so this will be a slight drag in the coming period. 

Despite the minor uptick in USD dividends, the after-tax total dividend income in October 2024 slightly decreased by 1.0%, from €175 to €173 after factoring in currency exchange fluctuations. 

Closing Thoughts: The Long View on Dividend Investing

October’s market performance and my portfolio’s dividend income are reminders of the importance of long-term thinking. Markets fluctuate and individual stocks can experience setbacks, but a diversified dividend growth portfolio can offer steady, compounding income over time.

As Benjamin Graham wisely put it:

"The individual investor should act consistently as an investor and not as a speculator.”

My focus remains on high-quality companies with reliable dividends, reinvesting income, and maintaining a balanced portfolio that can withstand market ups and downs. Each dividend payment brings me a step closer to financial independence, reinforcing the power of disciplined investing.

Recent buy: Canadian National Railway (CNI)

I recently added 20 shares of Canadian National Railway (CNI) to my dividend growth portfolio. CNI is one of North America's leading transportation companies, and I’ve been watching it for some time due to its solid fundamentals and consistent dividend growth history. I already own Union Pacific (UNP) and CNI is a nice addition since it operations in a different region.

CNI operates an extensive railway network, which is vital to the transport of goods across the U.S. and Canada. This gives it a defensive edge, even during economic downturns. What drew me to CNI, aside from its stable operations, is its impressive dividend growth track record. The company has been increasing its dividend for over two decades by roughly 10% per year, and with a current yield of around 2,2%, it provides a nice mix of income and future growth potential.

I also see long-term benefits as CNI continues to expand its operations and improve efficiency. Their commitment to innovation in logistics and sustainable operations positions them well for the future, especially with increasing demand for reliable transportation infrastructure.

For me, this investment is about more than just the dividend—it’s about owning a piece of a company that has a long history of delivering value to its shareholders. I’m excited to see how this addition performs over time and how it contributes to the overall growth of my portfolio’s dividend income.

This purchase will add about $60 to my annual forward dividend income.

Monthly report: September 2024

As September has passed, it’s time to reflect on how the markets performed, review the biggest movers in my portfolio, and assess the progress of my dividend income. Let’s break down the numbers and explore what they mean for the future.

Market Overview: Global Performance in September 2024

The global markets in September 2024 presented a mixed bag of performance, with different indices reflecting varying trends:

• AEXGR: The Dutch AEX Gross Return Index (AEXGR) saw a slight dip of -1.1%, falling from €3,597 to €3,556. The performance reflects a general weakness in European markets, driven partly by economic concerns such as inflation and energy prices.
• IWDA: The iShares World Index (IWDA), which offers exposure to global equities, showed modest growth of +0.7%, holding steady at €96. This indicates relatively stable performance in developed markets.
• DJITR: The Dow Jones Industrial Total Return Index (DJITR) surged +3.5%, increasing from $101,984 to $105,536. This gain was driven by strong earnings reports from key U.S. companies and a generally optimistic economic outlook.
• S&P 500: Meanwhile, the S&P 500 saw a notable increase of +4.2%, rising from $5,529 to $5,762. The U.S. stock market, fueled by tech and healthcare sectors, was one of the best-performing regions in September.
• Overall, U.S. markets outperformed their European counterparts during the month, showcasing the strength of the American economy, while European markets struggled under inflationary pressures.

Top 3 Gainers and Losers in My Portfolio

• MPW (Medical Properties Trust): +28%
  MPW was the top performer in my portfolio. They have bene beaten the last year but last month MPW announced that it reached a global settlement agreement with Steward and its secured lenders that restores MPW’s control over its real estate, severs its relationship with Steward and facilitates the immediate transition of operations to quality replacement operators at 15 hospitals around the country. This is good news since its the start of a new phase for the company.
  
  
• BHP (BHP Group): +19%
  The mining giant BHP benefited from rising commodity prices, particularly in iron ore and copper, both critical for global infrastructure and green energy projects.
  
  
• BEPC (Brookfield Renewable Partners): +18%
  BEPC's impressive gain highlights the increasing investor focus on renewable energy assets. With governments pushing for greener economies, renewable stocks like BEPC continue to attract attention.

Top Losers:

• Shell: -8%
  Shell faced a tough September, losing ground due to weakening oil prices and pressure from governments and investors to accelerate its transition to cleaner energy sources.

The prices of other companies only fell by 3% or less which is more or less noise. 

September 2024 Dividend Income: A Year-Over-Year Comparison

Looking at my dividend income for September 2024 compared to the same month in 2023, there has been a noticeable improvement, reflecting the growth of my portfolio and dividend reinvestments over time.

My Euro-denominated dividends increased modestly from €197 in September 2023 to €201 in September 2024, a growth of 2.1%. This is largely due to slight increases from companies like AD (+2%) and UNA (+4.8%), as well as Shell, which, despite price depreciation, delivered steady dividends.

My U.S. dollar-denominated dividends showed a much more robust increase, rising from $375 in September 2023 to $475 in September 2024, marking a 26.5% growth. Significant contributors include AFL (+19%), CMI (+56.3%), and BIPC and BEPC, which contributed nothing last year but provided more than $77 this year due to new purchases (BEPC: here and here, BIPC: here). JNJ (purchase in January 2024) and O (Realty Income) (last purchase in October 2023) in also delivered solid double-digit dividend increases.

Total Dividend Growth: On a constant foreign exchange basis, my total dividend income in September 2024 grew by 17.7% compared to September 2023. After factoring in exchange rate effects, my total after-tax dividend income stood at €539, up from €473 last year, representing a 14.0% year-over-year growth.

This continued growth is encouraging, especially as a long-term investor who relies on consistent and compounding dividend payments.

Conclusion: Long-Term Investing Pays Off

The mixed performance of global markets and individual stock fluctuations highlight the importance of focusing on the long term. Despite short-term volatility, my dividend income continues to grow steadily year after year, reaffirming my belief in a disciplined, dividend-focused investment strategy. As the legendary investor Peter Lynch once said:

"In the long run, it's not just how much money you make that will determine your future prosperity. It's how much of it you put to work by saving and investing."

I remain committed to reinvesting my dividends and focusing on quality, dividend-paying stocks to ensure that my portfolio continues to generate increasing income over time. The combination of stable dividend growth and strategic asset allocation continues to pay dividends — literally and figuratively!