Recent purchase: Johnson & Johnson (JNJ)

Last week I increased my position in Johnson & Johnson (JNJ). On August 18th I purchased 12 shares of JNJ for about $ 167 per share. This new purchase adds almost $ 55 to my annual forward dividend income. I now own 20 shares of JNJ.

Recent dividend increases

Back in February I wrote about various dividend increases. The pace continues in the last weeks with different raises! Of course I am happy with these raises, especially after a somewhat sobering 2020 in terms of dividend growth. So let's take a look at the raises.

Realty Income

On March 16th Realty Income (NYSE:O) declared a $0.235/share monthly dividend, which is a 0.2% increase from its prior dividend of $0.2345. I received 15 dividend raises since my purchase of O back in 2018. The annual dividend growth rate is just over 2%. It's not mindblowing. My return on investment is currently around 12% per annum so I am not complaining either.

Johnson & Johnson

On April 20th Johnson & Johnson (NYSE:JNJ) declared a $1.06/share quarterly dividend, which is a 5% increase from its prior dividend of $1.01. I received two dividend raises since my purchase of JNJ back in 2019. I guess my expectations with regards to the dividend growth rate were met, albeit slightly on the lower end. We'll see what happens next year with the dividend!

Kinder Morgan

On April 21th Kinder Morgan (NYSE:KMI) declared a $0.27/share quarterly dividend, which is a 2.9% increase from its prior dividend of $0.26. Since the infamous dividend cut back in early 2016, the dividend has more than doubled. However the return on my investment is still negative, around -5% on an annual basis. For now I just plan to hold and collect my dividends.

International Business Machines Corporation

On April 27th IBM (NYSE:IBM) declared a $1.64/share quarterly dividend, which is a 0.6% increase from its prior dividend of $1.63. I received seven dividend raises since my purchase of IBM back in 2014. The annual dividend growth rate is just over 6%. I guess I am disappointed with the performance of IBM which moved nowhere in the last 8 years. For now I plan to hold onto this position.

Royal Dutch Shell

On April 29th Shell (NYSE:RDS.A) declared a $0.347/ADS quarterly dividend, which is a 4.2% increase from its prior dividend of $0.333. Since the infamous dividend cut back in 2020, the dividend has risen slightly in $-terms, however because of the decline in the EUR.USD-rate it's basically steady. The return on my investment is still negative, around -2% on an annual basis. For now I just plan to hold and collect my dividends.

Baxter

On May 3th Baxter (NYSE:BAX) declared a $0.28/share quarterly dividend, which is a 14.3% increase from its prior dividend of $0.245. I received several dividend raises since my purchase of BAX back in 2013. The dividend was reduced after the Baxalta spin-off in 2015. After that moment BAX returned to a high dividend growth. And based on my return on investment (around 15% on constant FX-rate) I am quite satisfied! We'll see what happens next year with the dividend.

Summary

Together these raises increased my forward annual dividend income by roughly €7. 

Based on my portfolio's dividend yield of 3,7% I have to invest € 190 to get this kind of dividend income, but now I get it for free! Rock on!

Recent buy: JNJ

Recently I opened a new position in Johnson & Johnson (ticker: JNJ). I purchased 8 shares for around $ 132 per share. This purchase adds about € 30 to my annual dividend income which now stands at € 1.550.

I opened my position with the following things in mind:

• A solid dividend yield of 3%. Historically, this seems to be a decent entry point. 

• It  has been and still is a great dividend stock. JNJ increased its dividend for almost 60 years. During the last decade the dividend growth hovered around 7% per year.
• The payout ratio of 45% is more than safe.
• The balance sheet of JNJ is solid and the company still is one of the few companies in the world with a triple A credit rating.
• Obviously there are legal issues (J&J must pay $8B in a Risperdal case, but also cases around the U.S. opioid addiction epidemic.). However, this seems to be business as usual for JNJ as they have been in several lawsuits in their long history. Up until now, that has never stopped them from growing their revenues, profits and dividends, so I am not too worried about this now.

I don't expect this purchase to be a "big-hitter" in the sense that it will turn out to be a high growing dividend or share price. I see this purchase as a starter position in my quest to own shares in three dozens of the world's best companies. I believe JNJ is one of them. Depending on the future share price I will add shares on following occasions.

With this quarterly purchase I have completed my buys for this year. I wrote about my goals for 2019 earlier this year.

1. Quarter 1: AT&T
2. Quarter 2: Unilever
3. Quarter 3: Brookfield Renewable Partners
4. Quarter 4: Johnson & Johson

Finally, I will buy additional shares in the company where I work. I can buy shares once per year and I submitted a form to double my current position from around € 1.500 to € 3.000. This will add roughtly € 140 to my annual dividend income stream. I will write about this in a future post!

I hope I can increase the frequency of purchases next year (or increase the size of my purchases). I am still enthusiastic about my dividend growth portfolio and am motivated to keep working hard to fuel its growth.

What companies have you bought lately? Are you looking to invest JNJ at its current price?