Dividend Income – August 2014

plan on recording my monthly dividend payments on this blog for you all to see. I have a Goal for 2014 of producing more than £300 in Dividend payments. This post will collate all of the dividends I’ve received this month and how I’m tracking with the Goal. I will reveal which companies have paid, and how much they’ve contributed. 

I’m in the early stages of Dividend Growth Investing, yet I’m already witnessing the increased impact they are having on my monthly income. Over time the Dividends will continue grow and become more significant. My long term goal is to receive enough Dividend Income to surpass my monthly expenses. I need to remain patient in this early stage because success will not arrive overnight. I will continue to save large proportion of my monthly income (over 50% for 2014), invest as much money as I can afford, and re-invest all other income streams into Dividend Growth stocks. I will repeat this process consistently for several years to meet my goal of becoming Financially Independent by my 40th Birthday.


August Dividend Payments:

Monthly Dividends
Vodafone Group plc £37.13
Royal London Sterling Extra Yield Bond £2.93
Broker Loyalty Bonus £0.73
Total £40.79


August was my forth highest payment this year. I believe that at the close of 2014, £40 in a month will be classed as ‘Below Average’. With that said, it’s still nice to receive a passive income for doing next to nothing. 

I purchased Vodafone back in May 2014. They made a substantial payout this month which boosted my overall total. 

I didn’t receive any Dividends in August 2013, so I don’t have anything to compare this month. I received a dividend payment for September 2013, and it should be interesting to see how I compare year-on-year next month.

My 2014 Dividend total is now at £291.02 which is 97% of the target (£300). I’m on schedule to hit it this month, and I wold like to push on and get a figure over £500 for 2014 if I can. 

Thank you for reading!

How was August for you? Did you set any Personal Bests? Are you on track to hit your targets for the year?

0 Comments

  • Anonymous

    Reply Reply 2nd September 2014

    Hi Huw,

    Another good month, plus with National Grid this would be a £70+ month.

    Two main questions:

    What is your buying strategy to the end of the year now? Are you focusing on stocks that will pay a dividend this year to boost your 2014 dividend, or are you looking at a more long term view? Do you have a goal for forward 12-month dividends?

    What is your view on Tesco? Do you have any criteria for when you sell a stock?

    All the best
    Martin

  • Huw Davies

    Reply Reply 3rd September 2014

    Hi Martin,

    Nice to hear from you again. Thank you for the comment. Good questions!

    In response to your first question, I plan on buying the best value shares I can find. I would like to keep buying shares in companies I don't own to spread the risk of my portfolio, even though there are good 'value' options in my current portfolio. (Like Tesco). I won't necessarily buy shares that are due to payout in 2014, just as long as they represent good value. I have an idea of the dividend payments I would like to achieve at the end of 2015, but I don't have a forward 12 month target. I'll wait until the end of this year before committing to a goal. I want to make sure it pushes me next year.

    Tesco – It's been disappointing to see their share price plummet, but it's been harder to hear that they're slashing their dividends. I have to be honest, I don't have a criteria for when to sell stock. If I sell a chunk of the shares or even all of them, I will lose at least 25% of my investment, so that doesn't look like a great idea. I'm going to sit and watch what happens for now. I may even extend my position with them once they've displayed a bit more stability. I will only lose money if I sell my shares, so I plan on keeping them for the time being. I believe they will return to their former glory due to their size. It might take 18 months or 18 years, but I think they'll be worth more than they were when I purchased them, be it in 10, 15, 20 years. I'm a patient man! 🙂

    Thank you again for your questions. Have you purchased Tesco or were you considering it?

    Huw

  • Anonymous

    Reply Reply 4th September 2014

    Hi Huw,

    I'm glad to hear that your aiming for overall value rather than trying to boost your dividend received for 2014.

    No I'm not looking to buy any of Tesco. The analysts/commentators are saying that budget places such as Aldi/Lidl are gaining market share due to recession, but the peak of that was 2008-2010 so why has it taken this long for consumers to move? I don't think it is due to lack of consumer spending power, rather that budget places have matched the quality of Tesco/Asda/Morrisons but have a smaller margin on the product. I think a lot of consumers have realised that the bigger supermarkets squeeze their suppliers hard and charge customers a premium price, without really adding much value. Therefore moving to a budget store is virtually the same as the bigger supermarkets but with lower prices, unlike say a Marks & Spencer or Waitrose and possibly a Sainsbury's who are seen as higher quality/value.

    The problem I see with Tesco is how do they increase profit? They can't add more large stores as they have already got a store in every town. They can add the corner shop type stores, but how much profit do they make? The already have a very good presence online, but they other big supermarkets will start to compete there too.

    The main problem is that Tesco don't fit as a budget store or a premium store and it appears mid-band stores are not in as much demand. I have read that Tesco plan on changing stores into the 3 bands depending on the surrounding market ie premium in well-off area and budget in poor areas. On paper that seems good, but what happens if you pop into a store that is not usually yours and it is in a different band? There won't be a consistant brand of Tesco. Also would you be happy to shop at Tesco if you lived in a town that Tesco classed as the lowest band?

    As you have said you only recently bought Tesco so selling would materialise your paper loss. When you purchased back in April the big supermarkets were struggling and you had belief Tesco would turn it around, as long as you still believe that then you should hold them. But you may reach a point where you think Tesco might not do it and that is where you need to bail, it's better to have 75% of your money than 30%. Also the div cut would be a big issue for div investor. I would try and work out if selling a buying a higher yield stock would give me more dividends than what I think Tesco would give me in say a 5 year period. If there is a big discrepancy then I would ditch Tesco.

    Martin

  • weenie

    Reply Reply 4th September 2014

    I've only just dipped my toes into buying actual shares and my most recent purchase was…Tesco! Things don't look great for them at the moment but I think they will turn it around in the long term due to their 'fingers in many pies', ie I'm sure I read somewhere that they were going to move into property, ie building affordable housing on land that had been earmarked for future stores. Wherever these properties are going to be, they will be snapped up, or Tesco will add 'landlord' as part of their diverse portfolio of activities.

  • Huw Davies

    Reply Reply 4th September 2014

    Hi Martin,

    Thank you for getting back to me. I agree with your point on why consumers are using the budget stores. I think the gap of quality between them is more in question now. People are satisfied with what the Aldi/lidl stores offer.

    You make a very interesting point on Tesco's 3 band approach. I'm not sure how that would work either…..

    You've also summarised my situation perfectly. I'm stuck between a rock and a hard place at the moment. I feel compelled to sit it out for now and see what happens. The dividend cut is a real diappointment. I want to see what dividends Tesco end up paying, whether they reassure the shareholder that dividends will now continue to increase on an annual basis after the cut and make a call from there. They can still turn it around for me.

    Thank you once again for sharing your thoughts. I've found it interesting, and I'm sure other Tesco investors will too.

    All the best
    Huw

  • Huw Davies

    Reply Reply 4th September 2014

    Hi Weenie,

    How's it going?

    That must have been a bit deflating for you initially. I too hold faith that they will turn it around in the long run. I didn't know about their property investments into affordable housing. I'm aware that they hold a huge amount in property already.

    It's still early days as far as I'm concerned. I'm not going to reinvest in them just yet, as I don't have 100% confidence in them remaining stable, but I may reinvest whilst the price is below what I paid for them months ago. In the meantime, I'll continue to grow the companies I own and my portfolio as a whole.

    Thanks for sharing your thoughts!
    Huw

  • weenie

    Reply Reply 4th September 2014

    Hi Huw, am good thanks and yes, while it was a little deflating for me initially to see the price drop, it's not as if I'm trading and have 'lost' any money.

    Anyway, here's one of the articles I read about Tesco building houses – http://www.theguardian.com/business/2014/jul/18/tesco-unlocks-landbank-to-build-4000-new-homes

  • Anonymous

    Reply Reply 5th September 2014

    I think their next dividend will be very telling. If that is also cut that by 75% then that would be very troubling. Tesco would need to bring the dividend back up to 'normal' levels for the next year. It would be no good if they cut by 75% then promise 10% increases for 5 years from that as that would be a tiny yield from your purchase. Plus the share price will tumble some more.

    However this is making Tesco seem all doom and gloom. Morrison's ran their price cut promotion and gained YOY sales for the month of August, so promising green shoots there for Tesco.

    Incidentally I read weenie's link to Tesco building houses, and it's not actually a big plus for Tesco. They are developing land which they had earmarked for new stores into houses due to reduced demand for the stores. But at least they are making some profit out of the situation but not as much if the orginal plans had worked out. Plus as weenie says if they keep hold of some and lease them out then at least they can generate future cash flow with it rather than just a big one-off capital sale.

    Martin

  • Dividend Mantra

    Reply Reply 6th September 2014

    Huw,

    Great month there! Gotta love that Vodafone dividend. 🙂

    Keep up the great work. Looks like you're going to smash right through your goal for the year. That sets you up for a very rewarding 2015 and beyond.

    Onward and upward!

    Cheers.

  • Huw Davies

    Reply Reply 6th September 2014

    Hey DM,

    I hope you're well. Yes, I'm a big fan of Vodafone, and they really made the difference to my income this month.

    I'm well on pace to smash that target. I think I'm going to have to push the boat out for 2015 and REALLY challenge myself.

    Thanks as always for the support!

    Huw

  • Huw Davies

    Reply Reply 6th September 2014

    Hi Weenie,

    I'm glad to hear you're upbeat about it. The best way to be in my opinion. Thank you for linking the article, I'll check it out over breakfast!

    Have a great weekend.

    Huw

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