Tuesday, October 6, 2020

Dividend Report: September 2020

We're done with September! Let's see how many companies sent me a dividend check for my ownership. These checks are the results of decisions I made earlier in life, sometimes years ago, where I decided to purchase shares in these companies. Nowaydays I still collect these checks but I have to do absolutely nothing to receive them. They just get deposited in my brokerage account, no questions asked. Isn't that great?!

Compared to last year my dividend income remained fairly in place, what isn't exactly a great thing to be honest. I received about € 180 after taxes, compared to € 190 last year. In total I got paid by 15 different companies. Most of my holdings showed some dividend growth albeit small. Too bad I had two nasty cuts earlier this year (RDS and BBL). But I am happy with my new dividend payers JNJ and BIP , and increased dividend payments by Unilever and Aflac because of purchases earlier this year

I am still ahead compared to the cumulative total I received last year till now. However the trend is not in the right direction. I still aim for an increase this year, but it won't be a growth of 40% as targeted but maybe something like 10%. We'll see what happens! In the meantime, I just keep grinding away, putting money to work and reap the rewards down the line.

How was your month? Do you see values in the current marketplace?

Sunday, October 4, 2020

Recent Buy: Cisco

Last week I purchased 35 shares of Cisco Systems Inc. (ticker: CSCO) for $ 39,11 per share. CSCO pays a quarterly dividend of $0,36 so this purchase adds roughly $50 per year before taxes and FX-change.

 The reasons of my purchase are as follows:
  • Cisco is quite cheap based on its forward PE-ratio: about 12,5x. In the past 5 years the PE-ratio hovered somewhere between 12 tot 20x so the current price seems relatively cheap.
  • I don't have a big exposure to tech in my portfolio, only IBM and Intel. 
  • Cisco's dividend yield is decent at about 3,7% and there is room for growth with a payout ratio less than 50%.
  • Dividend growth in the last 5 years has been really solid at 13%. I don't expect this growth to continue (although it would be nice) but a dividend growth of 6-8% coupled with a dividend yield of 3,7% and buybacks will deliver a solid total return.
  • Its balance sheet is rock-solid. Enough cash ($30 billion) to cover its entire debt-load. And if that's not enough, Cisco's annual free cashflow is enough to cover its debt load as well.
  • Total return in recent years has been less than the S&P500. I expect "reversion to the mean" works for Cisco as well.
  • The DGI community has been buying Cisco as well, so that counts for something :-)
Thanks for reading! What do you think of my purchase?