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Another month, another step towards financial freedom (it never gets old writing that down).
During July of 2022, my passive income increased by 22.87%.
Nick’s Dividend Data 
July’s 22.87% performance moves my year-to-date dividend growth rate down slightly, from 23.77% to 23.65%. But, I’m still incredibly pleased with these results. My long-term annual dividend growth target is 10%, so 2022 is shaping up to be a year which exceeds that threshold by a wide margin.
Overall, July’s results were great to see. July’s 22.87% dividend growth performance marked the 10th time out of the last 12 months that my y/y dividend growth rate was above 20%. It also marked a perfect 12/12 record during the trailing 12 months in terms of double-digit y/y dividend growth.
Capital inflows into my brokerage accounts are certainly factoring into the strong growth results here; however, I still love to see the compounding play out like this because my recent performance (related largely to disposable income being diverted to savings) is resulting in dividend growth that is above my long-term expectations.
Therefore, my roadmap to retirement is being accelerated here and that will remain the case with every month where 10%+ dividend growth is produced.
Time is the most precious resource that all mortals have and every accelerated step that I take towards financial freedom is buying me more of it.
In terms of peace of mind, it doesn’t get much better than that.
This is why I continue to focus primarily on my passive income stream (as my barometer of success in the markets).
During tough times in the market, this income-oriented strategy allows me to maintain a long-term mindset, hold onto my blue chips, and avoid falling into one of the deepest pitfalls that I see retail investors tumble into: allowing fear to inspire them to sell low.
Furthermore, during times like we’re seeing today, when the broad markets are experiencing a strong rally, this income-oriented focus allows me to comfortable hold onto my shares, avoiding the greedy impulse to lock in profits by selling…and that’s a good thing because history clearly shows that it’s time in the market that matters most when it comes to generating life changing return with equities, not timing the market.
Sure, right now I could sell just about all of the shares that I’ve bought in recent months, locking in 10%+ profits. But, those short-term profits would pale in comparison to the long-term gains that I will likely experience decades from now by simply buying and holding onto blue chips.
Furthermore, while it’s true that no one ever went broke taking a profit, locking in gains means a reduced share count and therefore, fewer dividends…which is the last thing that I want to occur.
Therefore, with all of that being said, I’m very happy with how 2022 has turned out thus far. I’ve allocated a significant amount of money into the weakness that we’ve experienced thus far, accumulating shares of absolutely wonderful companies. And, I’m very content to hold onto those shares, regardless of what the market does in the near-term, because I’m looking forward to the inorganic dividend growth that those purchases result in.
Nick’s Dividend Data 
Passive income focus aside…I also know that many readers of these monthly updates like to follow along from a capital gains/losses perspective as well…so with that being said, let’s transition to the performance of my holdings during July through that lens.
Total Returns
During July, my portfolio index posted gains of 9.07%. This was essentially in-line with the S&P 500’s 9.11% gains during the same period. And, being that my portfolio has a dividend yield higher than the S&P 500’s and this total doesn’t include dividends, this was another month of slight outperformance.
(My portfolio’s forward yield is approximately 2.00% right now, compared to the S&P 500’s yield of approximately 1.45%).
At the end of the year, I’ll total everything up nicely using time-weighted returns; however, in the meantime, since total returns aren’t my primary concern, I’m content to use these index results provided by Personal Capital.
July Trades
During July I made 17 trades; 14 purchases and 3 sales.
As always, on the first trading day of the month I put my June dividends to work via selective re-investment.
Here’s the post that I made at Dividend Kings, highlighting those trades:
“Howdy all – the market volatility continues, but my passive income is at an all-time high! June of 2022 was my best dividend month ever. My June divys were up 23.32% on a y/y basis. On a year-to-date basis, my passive income is now up 23.77%. This morning I put my June dividends to work, adding to existing positions in my portfolio via selective investment…I bought more shares of ENB at $42.37, PLD at $118.56, QCOM at $124.65, SHW at $230.82, SPGI at $337.57, ICE at $93.76, ECL at $154.86, and SWK at 106.62. Mostly undervalued blue chips here…with a couple of underweight wonderful companies near fair value (SHW, SPGI, ECL) that I wanted to increase my exposure to. Very pleased with this process…looking forward to tallying up the July totals and re-investing those dividends in a month to keep the compounding process going!”
Moving away from selective re-investments and into the purchases that I made with my monthly savings…I bought Blackstone (BX) a couple of times during July, taking advantage of the stock’s recent pullback.
On 7/13/2022, I bought BX at $91.98.
Here’s the trade alert I sent to Dividend Kings subscribers:
“I just put ~25% of my monthly savings to work, adding to my BX position at $91.98. Previously, my cost basis was $106.70. After this trade, my cost basis has been lowered to $100.81. BX is not necessarily a reliable dividend grower (in the sense that it pays a variable quarterly dividend). But, its dividend has trended higher nicely over the years and I like adding to asset managers like this into the macro sell-off…I suspect that Blackstone will take advantage of the weakness across a wide variety of sectors/industries and come out of the other side of this sell-off an even stronger company. I like the exposure to hard assets (primarily, real estate) that BX offers. And, I’m definitely happy to add shares with the yield (while unpredictable) nearing 5%.”
Then, a couple of weeks later, BX was still at the top of my watchlist and I went ahead and bought more shares, making sure to buy ahead of the stock’s recent ex-dividend date to maximize my passive income in the near-term.
On 7/26/2022 I bought BX at $95.71. This trade reduced my BX cost basis down to $99.54.
And lastly, with regard to my monthly savings, on 7/29/2022 I used the remainder of them to add to my Raytheon Technologies position at $92.61. After RTX’s recent earnings report I increased my fair value estimate for the stock to $98.00/share, so I was pleased to once again have the opportunity to accumulate shares of this well diversified defense/aerospace stock with an attractive margin of safety attached.
During July I also made a trade in my portfolio…after Intel’s (INTC) recent earnings report – which was frankly one of the worst that I’ve read through in recent memory – I decided to dump that position, locking in profits while I still had them. I immediately re-allocated the INTC trade proceeds into a combined high yield/dividend growth/growth basket of: Enbridge, British American Tobacco (BTI), Alphabet (GOOGL), and Raytheon (RTX).
These trades were also made on 7/29/2022…here are the trade reports that Dividend Kings members received:
“After reading through the INTC several times this morning…I decided to throw in the towel. I sold all of my shares this morning. I owned them in 3 separate accounts…so the prices were a bit different due to the time it took for me to log in/log out of various brokerages and make the trades. I exited one lot of shares at $35.98, one at $35.99, and one at $36.11. Overall, my exit basis here was $36.03. My cost basis on INTC was $32.26…so overall, I locked in profits of 11.7% (plus years and years of dividends). I used these proceeds to buy shares of ENB at $44.69 (I liked the ENB report this morning). Because ENB’s yield is quite a bit higher than INTC’s…I used ~69% of the INTC proceeds to buy enough ENB shares to slightly exceed the INTC breakeven (from a passive income perspective). Therefore, I still have 31% of the INTC proceeds left to re-allocate and any passive income that these funds generate will further accelerate my dividend growth. I’ll likely re-allocate those remaining proceeds, along with the rest of my July savings, before the market closes today. But, I wanted to get this trade alert out ASAP since I know we had INTC discussions last night and people were wondering what I’d decide to do.”
“I just put the remainder of the INTC proceeds from earlier today, alongside the rest of my July savings, to work. I added to my positions in GOOGL at $115.22, RTX at $92.61, and BTI at $39.13. A growth stock, a core-dividend growth type of holding, and a high yielder, making up a well-rounded basket. I like the valuations attached to each holding. The basket weightings are: GOOGL 41%, RTX 42%, and BTI 17%. I’ve definitely been bummed about the macro rally that we’ve seen in the last couple of weeks…a lot of the margins of safety that I saw a month or so ago are gone now. This limited my choices, in terms of the July savings, but overall, I’m happy to add to positions in these high-quality companies at prices below my FV estimates.”
Overall, when all the INTC-related dust cleared, I used active management to increase my passive income stream by 19.9% while also adding shares of an undervalued growth company (Alphabet) to my portfolio as well.
So, with these moves in mind, here’s where my portfolio currently sits (the cost basis and position weighting data below are accurate as of 8/18/2022).
Nicholas Ward’s Dividend Growth Portfolio
|
Core Dividend Growth |
56.81% | ||
| Company name | Ticker | Cost basis | Portfolio Weighting |
| Apple | AAPL | $24.26 | 15.21% |
| Microsoft | MSFT | $60.71 | 4.25% |
| Broadcom | AVGO | $234.30 | 3.03% |
| Qualcomm | QCOM | $76.14 | 2.61% |
| BlackRock | BLK | $413.84 | 2.16% |
| Johnson and Johnson | JNJ | $114.02 | 1.85% |
| Starbucks | SBUX | $48.10 | 1.81% |
| Cisco | CSCO | $32.67 | 1.71% |
| Cummins | CMI | $217.77 | 1.51% |
| Bristol Myers Squibb | BMY | $49.47 | 1.39% |
| PepsiCo | PEP | $94.75 | 1.34% |
| Raytheon Technologies | RTX | $80.05 | 1.29% |
| Merck | MRK | $73.71 | 1.27% |
| Brookfield Renewable | BEPC | $33.49 | 1.24% |
| Brookfield Asset Management | BAM | $35.66 | 1.17% |
| Lockheed Martin | LMT | $346.87 | 1.16% |
| Coca-Cola | KO | $40.25 | 1.09% |
| Honeywell | HON | $126.18 | 1.08% |
| Deere & Co. | DE | $347.85 | 1.07% |
| Amgen | AMGN | $136.07 | 0.98% |
| Parker-Hannifin | PH | $255.96 | 0.91% |
| Texas Instruments | TXN | $95.19 | 0.90% |
| Brookfield Infrastructure | BIPC | $39.19 | 0.89% |
| Pfizer | PFE | $30.48 | 0.79% |
| Illinois Tool Works | ITW | $130.90 | 0.79% |
| Northrop Grumman | NOC | $376.97 | 0.56% |
| Essex Property Trust | ESS | $228.98 | 0.52% |
| AvalonBay Communities | AVB | $156.60 | 0.49% |
| Alexandria Real Estate | ARE | $130.96 | 0.48% |
| Diageo | DEO | $107.91 | 0.45% |
| Digital Realty | DLR | $49.87 | 0.41% |
| Medtronic | MDT | $73.94 | 0.41% |
| Stanley Black & Decker | SWK | $139.75 | 0.40% |
| Hormel | HRL | $42.87 | 0.39% |
| Air Products and Chemicals | APD | $237.16 | 0.37% |
| Ecolab Inc. | ECL | $156.01 | 0.29% |
| McCormick | MKC | $35.71 | 0.28% |
| Prologis | PLD | $131.90 | 0.26% |
| Mid-America Apartments | MAA | $184.77 | <0.10% |
| High Yield | 14.42% | ||
| Realty Income | O | $62.24 | 2.17% |
| W. P. Carey | WPC | $65.23 | 1.60% |
| Altria | MO | $49.68 | 1.49% |
| Agree Realty | ADC | $65.85 | 1.41% |
| AT&T | T | $28.83 | 1.29% |
| AbbVie | ABBV | $79.08 | 1.20% |
| Enbridge | ENB | $38.57 | 1.02% |
| British American Tobacco | BTI | $38.01 | 0.72% |
| STORE Capital | STOR | $23.98 | 0.67% |
| Federal Realty Investment Trust | FRT | $115.13 | 0.66% |
| National Retail Properties | NNN | $36.57 | 0.60% |
| Philip Morris | PM | $96.12 | 0.56% |
| Prudential | PRU | $100.58 | 0.37% |
| Pinnacle West | PNW | $81.67 | 0.36% |
| Verizon | VZ | $45.20 | 0.30% |
|
High Dividend Growth |
12.44% | ||
| Visa | V | $74.29 | 2.23% |
| Lowe’s | LOW | $148.28 | 1.72% |
| Comcast | CMCSA | $38.54 | 1.62% |
| Nike | NKE | $59.52 | 1.44% |
| Home Depot | HD | $250.58 | 1.07% |
| MasterCard | MA | $81.40 | 0.99% |
| L3Harris Technologies | LHX | $185.82 | 0.66% |
| Domino’s Pizza | DPZ | $355.20 | 0.58% |
| Intercontinental Exchange | ICE | $99.04 | 0.54% |
| Booz Allen Hamilton | BAH | $75.49 | 0.41% |
| Sherwin Williams | SHW | $219.44 | 0.35% |
| Roper | ROP | $418.69 | 0.33% |
| S&P Global | SPGI | $336.57 | 0.29% |
| ASML Holding | ASML | $643.47 | 0.21% |
| Non-Dividend | 10.00% | ||
| Alphabet | GOOGL | $44.34 | 5.02% |
| Amazon | AMZN | $88.19 | 2.53% |
| Adobe | ADBE | $484.48 | 0.67% |
| Netflix | NFLX | $304.53 | 0.43% |
| META | $179.21 | 0.42% | |
| Salesforce | CRM | $213.13 | 0.33% |
| Chipotle | CMG | $1,298.41 | 0.22% |
| PayPal | PYPL | $201.72 | 0.21% |
| Block | SQ | $170.31 | 0.17% |
| Palantir | PLTR | $15.16 | <0.10% |
|
Special Circumstance |
5.06% | ||
| Walt Disney | DIS | $91.69 | 2.11% |
| NVIDIA | NVDA | $35.23 | 1.49% |
| Blackstone | BX | $99.54 | 0.54% |
| Constellation Brands | STZ | $172.19 | 0.38% |
| Owl Rock Capital | ORCC | $14.94 | 0.23% |
| Carrier | CARR | $20.97 | 0.11% |
| Scotts Miracle-Gro | SMG | $153.56 | 0.10% |
| Otis | OTIS | $58.65 | 0.10% |
| Crypto | Diversified Basket | n/a | 0.47% |
| Cash | 0.80%* | ||
| Most | Recent | Update: | 8/18 |
*I hold the vast majority of my cash position in my bank account; overall, my cash available to invest represents roughly 6.3% of my portfolio at the moment.
Conclusion
We’ve seen a broad market rebound throughout recent weeks, providing a nice sense of relief for investors who were worn down by the market weakness throughout the first half of the year.
I suppose that’s great.
I’m heavily overweight equities and therefore, when the markets rally, I do well. At the end of the day, I’m never going to complain about making money. That’s why we’re all here, isn’t it? But, I’d be lying if I said I wasn’t a bit bummed out about the margins of safety that I’ve seen shrink since mid-June.
There was a myriad of fantastic deals available in the market then. Today, that’s not the case.
But, as always, my focus remains on consistently accumulating high quality dividend growth stocks to ensure that I’m taking active steps to increase the size and strength of my passive income stream.
Therefore, I will continue to seek out deals in the stock market moving forward. I don’t have plans to begin rebuilding my cash position until we’re within 5% of all-time highs. Today, the S&P 500 is down roughly 10% from its all-time highs. So, the rally has more room to run before I plan to get a bit more conservative.
In the meantime, I’m looking forward to the ongoing opportunities that the market provides. Next month, I’ll provide everyone with an update on what those August bargains turn out to be.
Best wishes all!
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