Monthly Income Report – May 2023

Dear Readers,

We are almost half way done with 2023. Summer is on us. Schools have closed for the summer break. Time is really flying by.

I was looking at our expenses and planning for the remainder of this year, my wife discovered that our AC was not really cooling as it should. I took a look at the condenser and sure enough it was dead. In the middle of the day, when temperatures are soaring around the 90 degree mark, this is not a fun time for your AC to give up on you. After some conversations with the repair technician, we were looking at an unplanned expense related to replacing both the condenser and the furnace unit. We did the math and we were looking at a cost of ~$11,000.

Luckily, while this expense was a surprise, this was something that we had budgeted for previously. So I had the cushion of paying for this expense in all cash, without it impacting my investment portfolio or getting into a financing plan (taking on debt) etc.

And this is an important lesson that I would like to share with you readers: Before you even invest a dime in the stock market, please please please setup an emergency fund for yourself and your family. Something that can take care of your family’s needs for atleast a period of 6 months at a minimum. Per a recent report from Forbes, around 57% of Americans cannot afford an emergency expense of more than $1000. I find this statistic quite shocking.

Anyhow, this episode gave me a chance to read up on some of the associated businesses, one of which is Carrier Global (ticker: CARR), which also happens to pay a dividend (although with a very low starting yield). But there are some characteristics that I really liked and so on it went into my watchlist.

The dividend portfolio is doing just fine. I did make some moves (setting up my buy orders) during the early part of this month after which I have had a chance to login to my brokerage account. Let us take a look at the numbers:

Dividend Income Received

Sl. No.Company / ETF (ticker)Amount
1.Apple (AAPL)$5.31
2.AbbVie (ABBV)$21.99
3.Albertsons (ACI)$3.26
4.A.O.Smith (AOS)$1.20
5.Caterpillar (CAT)$3.66
6.The Clorox Company (CLX)$53.73
7.Costco (COST)$5.13
8.Procter & Gamble (PG)$24.05
9.Texas Instruments (TXN)$96.73
10.Verizon (VZ)$66.99
11.Realty Income (O)$31.00
12.JP Morgan Equity Premium Income ETF (JEPI)$11.55
13.STAG Industrial (STAG)$4.07

So a total of 13 companies/ETFs contributing a total of $328.67. While the market was seeing a sudden upward trend during the later half of May, I was able to use this swing to my advantage my writing a covered call option contract and earn and additional premium of $129.31. This brings the grand total for the month to $457.98. At the same time last year, I had earned a total $239.19. So, this is still appreciable growth on a YoY basis.

Buys and Sells during this month

Most of my purchases were during the early part of the month while the market was still trading sideways.


Staying in the game purchases: These are purchases where I need to buy a stock after a pre-determined time threshold since last purchase has crossed. No questions. This helps in removing any emotion from the purchase and avoiding timing the market. For this category, I added to my AFL and SNA positions.

Portfolio outlook

As I head into the second half of the year, I want to continue focusing on building up my core positions. Unfortunately, I have not seen the best buying opportunities for some of my core stocks. JNJ is getting into the buying range, so I am going to be looking at that closely. But some of the consumer staples continue to be in the overvalued range (rather frustratingly).

I did some back-of-the-envelope math and while the portfolio is performing really well, I feel I might fall short of the $6000 PADI goal for the year. We shall see. 🙂

How is your portfolio doing? Let me know in the comments below.


Two Year Blog-a-ver-sa-ry

Dear Readers,

Today marks the day when this blog turns 2 years old!

This is a pretty huge deal from a personal standpoint. While I have maintained a blog at different junctures in my life, those blogs eventually died away because I simply lost interest OR some other project took precedence. The fact that I have been at this for two years is an achievement onto itself.

When I started this blog, I had my doubts as to whether this was the right medium to document my personal journey as an investor. The YouTube scene was pretty vibrant. Folks were (and still are) getting onto podcasts. But somehow these mediums never really fit the bill for my personal situation. I was pretty sure that I wanted to maintain an anonymous presence on the internet while documenting my journey. I was also pretty sure that this time spent should give me back some value in return as well. Not necessarily, monetarily. But atleast it should help me in my investing journey in some shape or form.

Blogging seemed to check a lot of boxes. Since my free time comes sporadically, I can think about what I want to write and start drafting my post mentally even before I am in front of my keyboard. Writing helps my thought process. It either reinforces my beliefs OR forces me to question my understanding. Either way, it makes me really think critically about my subject matter (in this case my investments).

But perhaps the biggest gains have been an opportunity to interact with you, the readers of my blog. I have also had to privilege of appearing as a guest on the following podcasts and interacting with some really smart folks. Do check these podcasts out, these folks are doing some amazing job!

I hope to continue with this blog for as long as I possibly can. While doing so, I hope that I can provide value to my readers and also learn from your collective experiences.



The Five Rules For Successful Stock Investing – Book Review

Dear Readers,

As I have stated multiple times in this blog, I have derived (and continue to derive) almost all of my knowledge about investing by reading books. I feel this is a far better medium of learning the tricks of the trade. It also comes as no surprise that the most successful investors of our times are also voracious book readers. This was perhaps my biggest motivation when I started my investing book review series on this blog. I do not want this to be a quantitative exercise where I mindlessly read dozens of books every year. I really want to discuss these books and my takeaways from them.

I picked up the “The Five Rules of Successful Stock investing” at a Half-Price-Books store when I wanted to kill some time one afternoon. I had not heard about this book previously. I also did not know who Pat Dorsey was. But the title “Director of Stock Analysis” at Morningstar stood out at me. Morningstar is a pretty reputable agency in the investing world. So clearly, this person knows a thing or two about stock investing. A quick glance at the table of contents and I was sold. It seemed like the author wanted to cover a wide array of topics related to successful stock picking, ranging from diving into the financial statements, to analyzing businesses, to stock valuation (discounted cash flow). What was impressive was a complete section (and subsections) dedicated to each sector to discuss nuances of that sector.

I am relatively younger in my investing journey and I certainly cannot claim to know the intricacies of each sector. But a whirlwind tutorial on these subjects would be incredibly useful. I am happy to say that the book did not disappoint one bit! In this review, I will cover the five rules (as stated in the book) superficially and then also discuss aspects of the book , beyond the rules, which I think would be useful to the reader. I also look at certain shortcomings of the book in order to complete a well-rounded review. Lets do this!

The five rules

The author sets the stage perfectly with the very first chapter titled “Picking Great Stocks is Tough”. This is followed by the first line in the chapter which reads “Successful investing is simple, but it is not easy”. These are profound statements and I am glad that the author starts the discussion with these statements.

The founding tenets of successful investing are simple to understand i.e. the what of successful investing is not particularly hard to grasp. The approach to successful investing i.e. the how, is reasonably hard to grasp for the layman but not impossible by any stretch of imagination. However, the discipline to stick with these learnings through all types of market gyrations is incredibly hard. And for that reason: Successful investing is simple, but it is not easy.

This background is important to understand the five rules that are laid out in the book. The five rules are:

  1. Doing your homework.
  2. Finding companies with strong competitive advantages (or economic moats)
  3. Having a margin of safety
  4. Holding for the long-term
  5. Knowing when to sell

Once again, the fives rules as stipulated are non-controversial. Almost all successful investors will agree with them. But how should one go about doing their homework? How can one identify companies with strong competitive moats? How can one have a margin of safety in their investments? It is these hows that the author spends considerable time over in this book.

Rule 1: Doing your homework

Dorsey wastes no time and dives straight into the financial statements, explaining how each of the three statements are constructed using first a hypothetical example and then a examples from real businesses. I particularly liked the explanation from a standpoint a hypothetical example. This brings readers from different backgrounds on the same level playing field and keeps the discussion simple to understand.

In addition to the financial statements, Dorsey also dedicates three more chapters towards analysis of businesses. This covers a wide range of topics ranging from analyzing growth, evaluating profitability, determining overall financial health, constructing a bear case as a part of the investment thesis etc. There is an entire chapter dedicated to analyzing the quality of management, a subject that is vastly under-discussed in the investing community.

Among these chapters, there is a chapter titled “Avoiding Financial Fakery” which I found to be particularly enjoyable and enlightening because it discusses various examples of financial engineering/aggressive accounting tactics that companies employ as a part of their financial statements. Dorsey discusses some of these tricks and also highlights some red flags to watch out for when studying businesses.

Rule 2: Economic Moats

Yes, we all love to invest in companies with a decent economic moat. But how does one identify a moat? Dorsey spends a chapter discussing this subject. The discussion is centered around finding answers to some key questions:

  • Is the company profitable? If yes, on what basis? Is it able to generate cash flow consistently? What are the firm’s net margins like? What about Return on Equity (ROE), Return on Assets (ROA) and Return on Invested Capital (ROIC)?
  • What is the source of the company’s profitability? How are they using it keep competition away? What is the basis of the moat? Is it through real product differentiation? Or through perceived product differentiation? Is the company exception at keeping costs down? Is the basis for the moat centered around locking in customers and/or locking out competitors?
  • What does the competitive advantage period like? Applicable for the next 5 years? 10 years? longer?
  • What is the nature of the sector itself? Highly competitive? Does it exhibit Monopoly/Duopoly-like characteristics?

Rule 3: Having a margin of safety

The discussion shifts into the second aspect of investing: now that we have identified a good business with a strong economic moat and high-quality characteristics, what is a reasonable price to pay to buy a piece of such a business i.e. how do we value businesses. Dorsey dedicates two chapters to this subject, with the first one discussing the importance of valuation and discussion around using price multiples for relative valuation.

The second chapter is solely focused on the subject of discounted cash flow model of valuation and finally winds up with a discussion of margin of safety. While the discussion around discounted cash flow is not as rigorous as that of Aswath Damodaran’s Little Book of Valuation, it is by no means a bad place to start for someone who has no background on the subject. In fact, an investor would do completely fine with the knowledge gained from reading this chapter and applying it in their valuation exercises.

Rules 4 and 5: Holding long-term and knowing when to sell

From what I could tell, I did not see dedicated chapters for these rules, however these rules are discussed implicitly throughout the book i.e. default stance is to always hold for the long run, but watch out for warning signals at every step and use this a criteria to sell if you are seeing red flags that are contrary to your investment thesis for the business.

The 10-minute quick test

Dorsey recommends the following question checklist to quick evaluate if a business is worth analyzing further:

  1. Does the firm pass a minimum quality hurdle? i.e. avoid penny stocks, recent IPOs and other speculative investments.
  2. Has the company every made an operating profit?
  3. Does the company generate consistent cash flow from operations?
  4. Are ROE consistently > 10%, with reasonable leverage?
  5. Is earnings growth consistent or erratic?
  6. How clean is the balance sheet?
    • Is the firm in a stable sector?
    • Has debt been going up or down as a % of the total assets?
    • Do you understand the nature of the debt?
  7. Does the firm generate free cash flow?
  8. How much “other” is there? i.e. does the company have dubious accounting practices, hidden details in footnotes that are hard to decipher etc.
  9. Has the number of shares outstanding increased markedly over the past few years?

A Guided Tour of the Market

The discussion then shifts into walking the reader through the various sectors in the market and includes details about the peculiarities regarding each sector. The book dedicates 12 chapters covering sectors such as Healthcare, Consumer services, Software, Energy, Utilities, Hardware, Industrials, Banks, Business services, Asset Management companies, Media, Telecom and Consumer Goods. IMO, this discussion in these chapters is what makes this book really special. While certain examples and associated data is dated, the fundamentals around what makes each sector different and how to analyze and value companies in each sector are still applicable today.

The one sector that I did not see being covered in this book is REITs and that is a minor criticism for what is otherwise a pretty exhaustive list. I have been frequently keeping this book and specifically these chapters at an arm’s length away from me on my desk, because I need to constantly revisit a particular chapter when I am doing a deep-dive on any business.


There is so much to like about this book. It does a very good job of covering a wide range of topics for the beginner investor, but also keeps the experienced investor hooked on with discussions of topics that are rarely discussed elsewhere. I think this book makes a great accompaniment to Peter Lynch’s One up on Wall Street in that it can motivate the average layman and make him/her confident in investing in individual stocks and doing so with a winning mindset i.e. as a long-term investor.

Have you read this book? Did you have any other takeaways from this? Please share your thoughts in the comments below!



Lets talk about – DLR

Dear Readers,

In investing, as with most things in life, we all have our winning moments and we also have our not-so-glorious moments. And while there is a strong human tendency to keep make bombastic remarks about our winning moments, there is usually very little commentary around our mistakes. Why so? Well, why would anyone want to admit that they were wrong. There is, of course, the optics of the situation. It is hard to look smart while talking about your mistakes. On the contrary, you appear to be a genius when talking about your winners. For content creators, there is also the risk of losing your subscriber-ship or viewership or followers etc.

I want to take a different stance. Investing is hard. Individual stock picking is even harder. And as an investor, you are bound to make mistakes. This is a fact and there is no way to circumvent this. And we need to learn from our mistakes in order to become better at investing. This adage is true about most things in life. And the only way to learn is to be open and frank about where you think you might have gone wrong with your decision making process. Refine your strategy and ensure you never repeat this mistake again.

So with background out of the way, let me talk about one of my biggest investing flops. Lets talk about Digital Realty Trust (ticker: DLR)

What is DLR?

Since I have not yet covered DLR in a deep-dive post on this blog, it is only fair that I spend a few sentences explaining what is this business all about. DLR is a leading provider of data center and interconnection solutions for customers. Its primary focus lies in owning, acquiring, developing and operating data centers. Per their latest 10-K report, as of Dec 2022, they own a total of 316 data centers around the world, of which 132 are in the USA, 114 in the Europe and the rest scattered across Asia, Africa and Australia.

The company boasts of attracting a high-quality and diversified mix of customers (over 4000) which includes names such as IBM, JPMorgan Chase, AT&T, Verizon, Oracle, Meta etc.

The data-center narrative

If you consider any major technological advancement in the last 5-10 years, or in the upcoming 5-10 years, it would be hard to disassociate this from some form of technology in data processing. This includes areas such as internet traffic, artificial intelligence, communication networks etc. the amount of data generated in each of these areas is vast. And enterprises that have an expertise in data management are considered to be the technological power-houses of today and are in an enviable position for the next decade.

Research indicates that cloud computing market is expected to grow at an astonishing CAGR of nearly 15.8% over the next 6-7 years. It is hard to argue against these numbers given the evidence today.

DLR, and DLR like businesses, have benefited from this narrative. If you are investor and you strongly believe in this narrative, you can play this in the real-estate sector through investing in REITs such as DLR and Equinix, two of the largest players in this industry.

The rationale is pretty straightforward. It is incredibly hard for a new player entering this market to steal market share away from the big-boys. Owning and maintaining such data centers is an expensive proposition so it becomes very hard for new players to compete.

The data-center business landscape

Lets first take a step back and explore the landscape of the data-center business. If you study the large software enterprise companies, there are three primary ways in which they can manage their data:

  • Manage your data in-house: Yes, software companies can choose to store and manage their data in-house on their own servers. This is the best-case scenario because such companies have full control over their data. There are no concerns regarding security, as the IT team that manages these servers, the servers themselves and everything else related to the data management are fully controlled by the company in question.
  • Relying on co-located data centers: The in-house solution, while great, is not a scalable solution. Obviously, once the data set grows to a large enough size, maintaining them on in-house servers becomes problematic. Then, the cost associated with maintaining these servers i.e. physical real-estate, cooling solutions, backups, recovery time, server maintenance etc. is a huge headache. Enter the co-located data centers i.e. players like DLR and Equinix. This option allows the enterprise firms to use the servers at a server farm maintained by the co-located data centers. The legacy data centers, in turn, collect a rent and are responsible for providing the high-bandwidth network connections, performing routine maintenance etc.
  • Hyperscalars or Cloud-solution providers: The third approach, and the one that is seeing massive growth especially in the last few years, are cloud-solution providers like Google (Google Cloud), Microsoft (Azure), Amazon (AWS) etc. This allows enterprises to host their data on the servers owned by these cloud-providers in exchange for a “rent”.

Per the recent trends, while the co-located data centers generated peak revenues around the 2016-2017 time frame, returns on invested capital since then have been very poor. On the contrary, the returns from hyperscalars such as AWS, Azure etc. have been extremely impressive. It is therefore clear that hyperscalars are gradually stealing market share from the co-located data centers.

There is an interesting dynamic here: While the cost associated with spinning up a new cloud-based data center is orders of magnitude cheaper than a brick-and-mortar co-located data center, there are situations where the hyperscalars would choose to use a physical data-center provided by a legacy data-center company because of the cost associated with ramping a new cloud data center vs the returns generated at a particular location, makes it more favorable to go with the physical co-located data center at that location.

This makes the hyperscalars some of the largest tenants of the co-located data centers. But when it comes to pricing power, it appears that the pricing power favors the hyperscalars, NOT the co-located data centers!

The bear case

Obviously, there is more to this story than meets the eye. And I was lucky to actually have a fellow member of the dividend community, and someone whom I respect immensely, @EuropeanDGI point this out. It all started with a comment from him on one of my posts here on this blog, where he asked me what I thought about DLR’s inability to grow their FFO/share over the last few years. He was right in asking a very pertinent question.

It got me thinking and revisiting my investment thesis in this company. I decided to look at the period between 2018-2022.

Indeed, if you look at the FFO growth for DLR, it has basically gone nowhere in the last few years, growing at a laughably slow rate.

Another useful metric to look at when evaluating REITs is NOI (Net Operating Income). The trends here are also not encouraging.

From a dividend safety point of view, I always want to consider the generated free-cash-flow from a business. All else being equal, this is a definitive indicator of the quality of a business. FCF/share has also gone nowhere during this period.

While a dividend investor can rely on the EPS payout ratio for a traditional business, REITs are a little different. REITs are expected to pay a large portion of their earnings out as distributions to their shareholders to (a) not be taxed on these earnings, and (b) be qualified as a REIT in the first place. So the EPS payout ratio is a little misleading on that front. That said, there are no such gotchas with the FCF payout ratio. As one would expect, the FCF based payout has been trending upwards and well above the range for where the dividend can be considered as safe.

If this was not concerning enough, I also read in the news that Jim Chanos has a short stake in the legacy data center business. Chanos is of course legendary for having first raised concerns about Enron before it collapsed completely. Most of what he saying seems to match up with my own research. But he also raised concerns about the CapEx being reported by DLR which I found very interesting. Per Jim, DLR is deliberately understating their maintenance CapEx in order to paint a false picture of economic profitability. I wanted to dig into this claim further, so I looked into the numbers.

Indeed, CapEx during this period has grown by an astonishing amount, but what is interesting is that DLR is claiming that over 80% of this CapEx is being directed towards “Developmental Projects”. Interestingly, only ~10% of this CapEx is directed towards maintenance of the existing data center farms. In my conversations with peers from the industry, maintenance for these data centers is a very capital intensive proposition. This involves expenses such as running the air-conditioners, the physical location i.e. geography of the data center itself and external climatic conditions etc. I find it hard to believe that DLR while growing the number of data center locations around the world, has managed to keep their maintenance CapEx nearly constant during this duration. Something just does not seem to add up here.

Indeed with revenue generation being as slow as it is, and DLR burning an astonishing amount of ~$2.5B in capital expenditure, this business is burning way more cash than what is being brought in. Given this run rate per data center location, with a growth in number of data centers around the world, the business is actually shrinking in size rather than growing. The return on invested capital here is far less than the cost of capital, a recipe for disaster as far as an investment.

To their credit, DLR has been able to secure debt at a lower fixed interest rate, but in an environment where interest rates are rising, and given the capital intensive nature of this business, I was having some serious concerns about the safety of the dividend. A growing dividend seems completely out of question for the next few years.

And so I bailed out…

I submit that it would be hard to imagine companies like DLR and Equinix going obsolete anytime soon. But I got into this business expecting that the secular growth trends in the data center business would propel businesses like DLR. Hence I had this business as one of my “growth like stocks” in the REIT space. What I am learning now is that this is more like a mature slow-growing business that will struggle in rocky times. There are far better quality businesses that I can invest in that fit that description instead of DLR.

I also do not want to invest in businesses which seem to be a direct competition to the likes Amazon, Microsoft and Google in the cloud business. That seems like a money-losing proposition any which way I look at it. If I want to invest in the cloud business, I am better off investing in these big-tech giants rather than the likes of DLR and Equinix.

For these reasons, I sold out of DLR completely. I made a loss on this investment, but I did not want to waste a minute after I realized what a jackass I had been for misunderstanding this business completely.

Lessons learned

  • Investing in individual stocks is hard as is. Investing in REITs is even more harder. Frankly, I had a migraine after reading through DLR’s 10-K because it is not a straightforward business to analyze.
  • Businesses evolve. DLR had a great run around the 2016-2017 time-frame. But it has been a terrible business to invest in since then. It is important to not be suckered into the narrative around a business, because that is only part of the entire picture. Numbers never lie.
  • DLR continues to be touted as a “great” dividend growth stock on #fintwit/#divtwit. However, I have yet to come across a cohesive and coherent bull thesis for DLR that can refute the findings of my own research or that of Jim Chanos.
  • Don’t get defensive when someone raises a pertinent question about your investment decision. In fact, welcome such questions, because they will force you to go back and deeply introspect and think about your investment. You will either come out with a stronger thesis OR change your mind completely and avert a potential disaster.


Investing is no different than life. You win some and you lose some. This was one in the latter category. And just like I love to discuss my winners, I should also discuss my losers because both are a part of my journey as an investor.



Monthly Income Update – April 2023

Dear Readers,

We are in the midst of yet another earnings season. And we are continuing to see news about bank failures and other regional banks struggling. Yet the market seems to be holding its course navigating through these troubled waters.

If I am incredibly honest, I have not paid any real attention to my portfolio during the majority of this month. Most of my mental bandwidth has been consumed by my day job, as it should be. During casual conversations with friends and peers in the tech industry, most of them seem to echo what I am seeing at my own workplace i.e. tech companies are in the strict cost-cutting mode, optimizing where possible, laying off workforce and canning ambitious projects that have poor risk/reward metrics. If I looked through the earnings reports for some of the semiconductor companies, my hypothesis regarding a slowdown in the broader semiconductor industry was confirmed.

One aspect that I can confirm is the migraine-inducing hype around ChatGPT and generative AI. I have been in several mindless meetings where execs are trying to figure out how they can shove the generative AI technology into the workflow of projects that are under their supervision. While I understand their motivation and desperation, I am beginning to get sick of this AI hype-train.

Coming to the portfolio itself, April was supposed to be a slow month for me. Lets take a look at how we fared in this month.

Dividend Income Received

Sl. No.Company / ETF (ticker)Amount
1JP Morgan Chase (JPM)$37.02
2Realty Income (O)$30.86
3CareTrust REIT (CTRE)$12.08
4JP Morgan Equity Premium Income ETF (JEPI)$12.06
5STAG Industrial (STAG)$4.06
6Toronto Dominion Bank (TD)$3.54

So a total of 6 companies/ETFs generated a total monthly income of $99.62. At this same time last year, my portfolio had generated a total of $33.65. As has been the trend so far, year-of-year growth for each month is still appreciably high. This is not surprising because I am continuing to deploy cash into my portfolio at every available opportunity. I did not write any new option contracts during this month, so no income through option premiums.

Among these dividend payers, I have turned OFF my DRIP re-investment into JPM. IMHO, JPM continues to trade at a premium valuation with a Price/ Tangible Book Value well above 1. Furthermore, I am yet to see concrete direction from Jamie Dimon and his management team regarding what they intend to do about their next dividend increase. I can understand them exercising caution with the current turmoil in the banking sector. So this is a wait and watch story for me.

I received dividends from one of the new additions in my portfolio, Toronto Dominion Bank (ticker: TD). This was an interesting pick for me and one where I have been waiting on the sidelines for a long time. TD, like the other major Canadian banks, are rock-solid dividend payers with a stellar dividend payment history. TD, for instance, has never missed a single dividend payment for close to 166 years!! Wow!

My opportunity to initiate a new position came with news reports stating that TD become the world’s most shorted bank stock. While it takes a lot of guts to initiate a position when it is one of the world’s most shorted stock, I was prepared to take the risk. Per my research, the basis for the short thesis was around two points:

  1. Concern around TD’s stake in Charles Schwab, who are sitting on a lot of unrealized bond losses, that has the potential of destroying the company’s equity if it ever had to sell them to cover outflows of deposits.
  2. At the time, pending merger deal with US regional bank called First Horizon.

IMO, Charles Schwab will do fine in the near-term as it has access to a lot of capital in terms of client assets. Regarding the deal with First Horizon, this deal has now been scrapped which has left TD with a lot of cash on hand. I am not sure what the bank will intend to with this excess cash. Two options seem likely: 1) Share buybacks, 2) Returning capital through a special dividend payment. Let us see how this story develops and what this means for shareholders.

The last news item of interest was around STAG Industrial which got recently added into the S&P Midcap 400. STAG has been a solid monthly dividend payer, similar to Realty Income. And while it does boast an attractive starting dividend yield of over 4% at the time of writing, the 5-year dividend CAGR is less than 1%, which is very poor. It was a stock that I added very early in the my dividend investing journey and have not sold out of since. But it is something that I will consider selling when the price is right.

Dividend Increases

As a dividend growth investor, one of the key things I keep an eye out for during earnings season is the news regarding dividend hikes. There are some dividend hike news that caught my attention from the recent earnings:

  • Costco (ticker: COST): hiked their quarterly dividend by ~13% to $1.02/share.
  • Microchip (ticker: MCHP): hiked their quarterly dividend by ~7% to $0.383/share.
  • Johnson & Johnson (ticker: JNJ) hiked their quarterly dividend by ~5.3% to $1.19/share.
  • The Southern Company (ticker: SO): hiked their quarterly dividend by ~3% to $0.70/share
  • Procter and Gamble (ticker: PG): hiked their quarterly dividend by ~3% to $0.9407/share
  • Apple (ticker: AAPL): hiked their quarterly dividend by ~4.3% to $0.24/share.

MCHP, a very recent addition to my portfolio, had a stellar quarterly earnings release and has been an absolute monster as far as dividend growth is concerned. I was obviously thrilled about the double-digit dividend hike from COST.

I am very disappointed with PG’s and AAPL’s dividend hikes. While I can understand PG’s caution to a certain extent given the nature of the business and the sector they are involved in, AAPL’s dividend hike was extremely paltry. AAPL’s earnings were pretty much textbook other than slow-down in sales in Macs and iPads. And they chose to authorize a fresh round of $90B share buyback program, instead of hiking the dividend by a meaningful amount.

While I do not have a problem with share buybacks in general, I think most companies do not use buybacks very effectively, choosing to buy their own shares often at lofty valuations. In such a scenario, I would much rather prefer that these companies return cash back to shareholders in the form of dividends, as this gives shareholders such as myself an opportunity to re-invest these dividends either in the same security or in a different security that is potentially undervalued.

With AAPL’s starting dividend yield being low, and the dividend hikes being paltry, I am left with counting on share price appreciation (in addition to the share buyback yield) for generating meaningful returns from this investment.

Buys and Sells during this month

Trading activity was at an all-time low for this month. So nothing special to report here.


Another month is in the books. I am really looking forward to the upcoming months and what they have in store for me as far as new investment opportunities.

Until next time… Cheers!


Misunderstandings about Dividend Growth Investing

I am building a decent follower base on Twitter and that gives me the opportunity to interact with investors from different backgrounds, with different mindsets with different set of questions. Some of these interactions are particularly interesting where questions center around whether dividend growth investing is a meaningful strategy towards reaching financial independence.

I know the personal finance community on social media can get very confrontational at times with their general discourse. A natural response that I see from folks who are questioned is to get defensive, start taking the questions as a personal attack and classify the questions as “hate” or “trolling” or whatever.

I take a slightly different approach. If the question that is posed has some sense of rational basis to it, I want to think about it and answer it. Investing can be a pretty lonely endeavor. And it is natural to question your approach and think about whether your strategy is right or not. And as an investor, it is easy to slip into an echo chamber and block out all arguments that are contrary to your way of investing. But IMHO, this is not healthy.

A solid investment strategy is one that can withstand the counter punches of critics. And so from that viewpoint, I value criticisms because they force me to deeply introspect about my investing strategy.

Note: These are actual questions/criticisms that have been posed to me either directly (through DMs/email) or indirectly (addressed to the dividend growth investing community at large, of which I am a part of).

So with background out of the way, lets get to the questions/criticisms…

Criticism #1: Most dividend growth investors are investing in a company simply because it is paying a dividend. Some of these companies are not even growing and are under-performing the broader market. Aren’t these investors having a myopic view, being blinded by the dividend income, but vastly under-performing the broader market in terms of total returns?

There is some merit to this question. Yes, dividend investors can be blind-sided by the dividend yield of a particular company and invest in that business solely for that reason. But there are similar parallels with other investing strategies as well. With the so-called “growth stocks” you are also investing in companies that are largely unprofitable at this moment and buying into the narrative of promised future growth. Same deal with real-estate. And don’t even get me started with cryptocurrency and other speculative investments!

So almost all strategies when not used correctly can lead the investors into making bad decisions. So where does the flaw lie in this reasoning?

The answer lies in “growth” aspect of the dividend growth investing strategy. Most dividend growth investors ought to be focused on not just the current dividend yield but the safety of that dividend in the near-future and the possibility of a growing dividend several years into the future. And to guarantee that, they need to consider the cash flows, revenues and the strength of the balance sheet for those businesses.

And not all dividend growth stocks will grow the same way, some grow slower but offer a higher starting yield, some grow faster but offer a lower starting yield. Some grow unevenly/cyclically because of the nature of the sector that the business belongs to. But all these stocks work together as a part of the cohesive portfolio to generate meaningful returns in all kinds of economic environments.

Criticism #2: You are using dividend growth investing as a strategy to generate passive income, that is because you are either not successful or simply don’t know how to generate passive income through other means. You can just as easily earn passive income through other means.

Ummm..sure. Yes, I could just as easily earn passive income through some other means. No disagreements there. It is just that dividend growth investing seems to fit the bill the best in-terms of being hands-off, offering meaningful growth and letting me sleep well at night and focus on my regular job during the day. If I have found this and it is working for me, why should I continue looking for something else??

Criticism #3: Dividend theory is nonsense and is a topic for newbies. Dividends are irrelevant because the stock drops by the same amount as the amount of dividend being paid.

Agree that act of a business paying the dividend is irrelevant as far the stock price action on the day the dividend is being paid. However, to extend that argument and then state that the dividend policy itself is irrelevant is fallacious. Dividends form a significant part of the total returns generated by any business and any argument that states otherwise is missing the point completely.

Criticism #4 :You individual stock pickers really think that you would be outperforming the broader market? Do you even know how many stock pickers have been able to achieve this? I am sure your portfolio under-performs the broader market index. You could have simply invested in a index and been better off.

Here is the thing: While my focus on this blog is about dividend growth investing and my dividend growth portfolio, a large portion of my net-worth is also tied with low-cost index funds. They both serve dedicated purposes. My dividend growth portfolio is something that I am using to build a reliable stream of passive income that will one day be used to pay my bills. The funds tied up with index funds form the bedrock of my retirement and can/will be used for other retirements needs.

My point is you can very well be both an index-fund investor and an individual stock picker at the same time!

Now, regarding the question on whether someone should be picking individual stocks. I invest in individual stocks for a specific reason: to generate dividend income. Investing in a index fund like VOO, Vanguard’s SP500 Index fund ETF, would only yield ~1.6%, at the time of writing this, a yield that is far below what my portfolio is generating currently.

One can make the case of investing in an dividend growth ETF instead of picking individual stocks. There is certainly merit in this argument and for this reason, I too hold some ETF investments in my portfolio. Having said that, I have explained a few drawbacks with investing with ETFs on this blog in the past.

On the question of performance w.r.t the broader market, we are really comparing apples to oranges because my goal is to generate passive income through dividends and not measure capital appreciation alone. That said, several stocks in my portfolio are also a part of the SP500 index as well.

Criticism #5: These dividend investors keep bragging about their monthly dividend income. It is more like a status symbol and/or means to build a social media following and clout.

This criticism and the next one came from a YouTuber called Brad Finn who owns a channel on YouTube to discuss personal finance topics, option trading, futures trading etc.. He has a decent following on that medium. Brad recently sold his dividend growth portfolio completely. Oddly, he says that this is the second time he is selling out of this dividend portfolio completely. This is not a personal attack on Brad or anything, because anyone can change their mind about what they want to do with their investments. But something that he said about this struct me as very odd.

“I know it makes for great videos, but if I was not a YouTuber, or a (air quotes) influencer….would I really need a dividend portfolio?”

I have seen similar comments from other critics as well. I don’t know where this is coming from, but I want to make one thing amply clear: I certainly am not doing this for gaining subscribers or gaining more social media followers. For the same reason, I do not have any affiliate marketing links here. I am genuinely not interested in making money from this blog or anything like that.

To the contrary, the primary purpose of this blog is to motivate you, the reader, in your journey towards financial independence, irrespective of whether the journey happens to be via dividend growth investing or some other investing strategy. Everyone’s situation and goals are slightly different and it would be naive of me to proclaim that dividend growth investing is the ONLY strategy that works for everyone.

Funnily enough, while you have one set of critics who think folks only like to talk about dividend growth investing because it is cool, there are a separate set of critics who like to think that dividend growth investing is the most boring thing in this world. Who is right here? Neither, of course.

Criticism #6: With dividends received, you are realizing forced income and paying taxes for it. Why even bother with that especially for income that you do not need right now? Couldn’t you instead invest in something that does not have this forced income, like an ETF like VTI, grow that unrealized and only begin investing in dividend stocks closer to retirement when you actually need this income.

Brad Finn brought up this question on a separate video and I think it is a good one because I have seen the same argument brought up by other critics. The rationale for the argument is sound (atleast on the face of it): if you do not need that passive income right now and you would only need it in the future, why realize it now and pay a forced tax on it. However, the argument has several flaws and let me attempt to debunk each of them.

So the first flaw in this argument is that even with investing those funds in an ETF like VTI, I would still realize some forced income because VTI also happens to pay dividends/distribution.

The second flaw is that when I would need those funds to invest in individual dividend stocks closer to retirement, I would need to sell some of my VTI stock to gain access to those funds. Depending on the gains, this could be a significant tax event. But more importantly, what is VTI were to drop like 20% closer to my planned sell date due to a recessionary economic environment and the stock market would never recover for the next decade. This would mean that the amount of capital available to me to deploy towards dividend stocks would be that much lesser, meaning my generated income would be lesser as well. Arguably, I might be able to buy stocks with higher dividend yields , but this depends on the stocks I am planning to purchase. My point being: it is not as straightforward as it sounds in theory.

Perhaps the biggest flaw in this argument is the lack of understanding of the concept of Yield-On-Cost. This is a subject that I covered during the early days of this blog. Simply put, with companies that grow their dividend at a decent clip, it is not the starting yield alone that matters, but rather the compounded yield available after several years that matters more to the investor. This highlights the value of a dollar spent 20-30 years prior to today i.e. what is the compounded yield that my capital deployed 20-30 years ago generates as of today. I had used Visa (ticker: V) as an example in that computation and showed how after 30 years of compounding the simple yield on cost amounts to 77%. It would be impossible to find that high of a starting yield.

I understand Brad’s frustration with the taxes on this forced income. But he is also big on earning passive income through option premiums on covered calls, wheel strategy etc. I find it odd that he is complaining about taxes on dividend income, when in fact taxes on option premiums are worse, they are treated as ordinary income and taxed higher.

IMHO, dividends are a tax-efficient form of passive income. Atleast in the US, at the time of writing this, qualified dividends are taxed as follows if you are married and filing jointly:

If you make under $89,250 in qualified dividends, you pay 0% tax! That’s right, 0%.

This becomes even more impressive if you add in standard deduction limit of $27,700 i.e. $89,250 + $27,700 = $116,950. So you pay 0% tax on ~$117,000 of qualified dividend income for the year.



Once again, I welcome counter-criticisms regarding this strategy, it has its nuances to grasp and it can be very misleading. But when you see the compounding in action, it finally “hits you”. Atleast that was what it was in my case.

As always, drop in your comments if you disagree/agree. But please do so respectfully without engaging in needless mud-slinging.



Monthly Income Update – March 2023

Dear Readers,

Three months have come and gone! Can’t believe how fast time is flying. And quite honestly, what a roller coaster this year has been so far. It somehow seems like there is plenty of action to come in the remainder of this year. While I have been a passive spectator to the events happening in the market, I am using every opportunity available to look for bargains to invest.

We will get into the details regarding how this month has gone shortly. But before that I wanted to give a shout out to a new content creator and fellow dividend growth investor, Harris Elliot who shares his investing journey through his podcast, appropriately called, One Penny at a time. I had the privilege of being a guest on his podcast and it turned out to be a great conversation where we talked about several topics ranging from dividend stocks such as JNJ, INTC and HD, to an investing mindset, to assessing the quality of management in businesses. Please do give him a follow and draw inspiration from his journey!

Lets get into the numbers for this month, shall we?

Dividend Income Received

Sl. No.Company / ETF (ticker)Amount
1Aflac (AFL)$17.72
2Duke Energy (DUK)$7.28
3The Home Depot (HD)$34.02
4Intel (INTC)$12.67
5Johnson & Johnson (JNJ)$51.76
6Lockheed Martin (LMT)$51.44
73M (MMM)$54.94
8Microsoft (MSFT)$37.60
9NextEra Energy (NEE)$3.34
10Pepsi (PEP)$13.06
11Snap-On (SNA)$17.96
12Southern Co. (SO)$12.78
13Target (TGT)$21.11
14T Rowe Price (TROW)$96.73
15UnitedHealth Group (UNH)$9.96
16Visa (V)$17.49
17Whirlpool (WHR)$66.94
18Waste Management (WM)$0.72
19Exxon Mobil (XOM)$2.87
20Schwab US Equity Dividend ETF (SCHD)$51.35
21Realty Income (O)$26.12
22JP Morgan Equity Premium Income ETF (JEPI)$6.6
23STAG Industrial (STAG)$4.03
24Digital Realty Trust (DLR)$37.5

So a total of 24 stocks contributing to a monthly total of $655.99, thus making it a record-breaking month for my portfolio. This was the first time my portfolio crossed the $600 mark. From a YoY growth perspective, I had earned $375.85 back in Mar 2022. I had earned $68.37 back in Mar 2021. So I am very happy with the way the portfolio is growing at this stage of the journey.

My biggest dividend payer this month was TROW, a stock that has been decimated in the last few months. My conviction here though is that this is a solid business with a strong balance sheet. Their recent acquisition of another fintech startup called Retiree is something that seems like an interesting move and smart use of their cash on hand. And while I still think the stock in the undervalued region, I am happy with my current position size and will not be adding more atleast until I learn from their next couple of quarterly earnings.

I did not earn any income through option premiums.

Buys and Sells during this month

In my last monthly update, I did mention that I was seriously looking into my existing position in DLR and considering what I needed to do with it. After a lot of analysis and research, I decided to sell out of this position completely. I ended up losing money in this investment. And while losing money on any investment sucks, it was worth it from a standpoint of teaching me some very valuable lessons. This business is not what it seems like from the outside. I made some very incorrect assumptions on this one and was suckered into the narrative rather than looking into the fundamentals of this business. There is so much more to say about what makes DLR a tricky business to analyze, but I will leave them for a future post.

I also started a couple of new positions: one of these is Microchip Technology (ticker: MCHP) and the second one is Toronto-Dominion Bank (ticker: TD) in my retirement account. Both deserve deep-dive posts of their own as well, so I will reserve my thoughts for now.

As far as other buys, I continued adding to my positions in JNJ as well as some smaller tranches in UNP. JNJ was in the news recently with its refiling of the bankruptcy protection and also a settlement to pay $9B to resolve the talc powder lawsuits. The market reacted positively to this news, but this is still a developing story and there is a long way to go before this one is settled.


The first quarter for 2023 is done and dusted. I am happy with the overall progress that my dividend portfolio has made thus far in the face of a some dividend cuts and some disappointing dividend increases.

Thank you for reading thus far and see you all in the next post.


Investing in Banks

Dear Readers,

I have been super busy between work and daily family activities leaving very little time to even look at my portfolio. Having said that, I have been watching the banking crisis unfold from the sidelines. This is a still a developing story and we do not know what lies ahead in this saga. My intention here is to not react but instead look for broad patterns and see how this story fits in my long-term picture as far as my portfolio.

Banks have been interesting investments ever since the GFC and the implosion of Lehman brothers in 2008. Having spoken to several investors who lost a lot of money during that period, I can understand when they are very wary while investing in banks. There is also the rise-and-rise of fintechs and online-only banks which has left the traditional brick-and-mortar bank branches to be rather useless. How often do you visit a bank branch in person? Once a year maybe? Yeah, you are not alone. There are very few reasons why you would want a in-person interaction at a bank: cashier’s check, money order etc.

But despite of the risk of several of these smaller banks, statistics show that the average retail customer would still prefer to hold their primary account at one of the larger traditional banks. This includes things like, say, a direct deposit for the bi-weekly paycheck. And there is a huge reason for this…..TRUST.

The whole SVB implosion saga underlines this perfectly. The general sense is that a bank-run like scenario could play out with a smaller bank, but would NOT happen with a more traditional bank like JP Morgan Chase or Wells Fargo.

I am invested in JP Morgan Chase (ticker: JPM), one of the largest banks in the US, if not the world. My investment thesis is that while traditional banking may not be disrupted by any major technological changes in the immediate future, I cannot see how a country’s economy would function without such banks altogether. But one part of me was always vary of a bank-run like scenario. Therefore, to safeguard my investment, I had to go to with a bank that was well managed, had a strong balance sheet AND, more importantly, a massive customer base. JPM was the one that checked all of these boxes.

Bank-run scenarios aside, I am also vary of the fact that banks are highly levered businesses with poor ROIC trends. JPM is hovering around the 6-7% ROIC ratio and trades at almost a 1.5 Price/Tangible Book Value ratio at the time of writing this. JPM has been a good dividend payer. However, since the last stress tests, JPM’s board decided to NOT raise the dividend last year citing “capital allocation challenges in the near term”, even though they had the clearance from the Fed to raise it if they wanted to. JPM is currently yielding near 3.1% with a 5-year dividend CAGR of nearly 13% and a dividend growth streak of 8 years.

So what is my stance with JPM after this episode? I am going to continue HOLDing this stock but will not be adding at current prices since I feel the stock is richly valued. I am, however, planning to downgrade this stock from a “Core” Holding to a “Bond-like” holding with maybe a smaller percentage allocation.

Monthly Income Update – February 2023

Dear Readers,

February has come and gone. I have been quiet on the blogging front as most of my family has been under the weather for a major part of this month. If you have lived in Texas, you would have heard a lot of the locals complain about allergies all the time. I didn’t think much of it for the first few years of my stay here. But since the last three years, I have observed the sudden onset of asthma-like symptoms typically around the February and March time frame. Some reading up and voila! Turns out my symptoms are due to pollen from oaks and certain types of grass. I think I and my family are past the worst phase of these allergies and are looking forward to some beautiful spring weather.

Of course, I have been keeping a close eye on the markets and the earnings reports that have been rolling in. 2023 has been a rather busy month as far as dividend hikes. Per a statistic that I read somewhere (sorry, forgot to bookmark the source), there have been almost 200 dividend hike announcements in 2023 in the US, with an average hike of 11.7%. Among these dividend hikes, 76 of these have been double-digit hikes! Wow! Not a bad time to be a dividend growth investor, eh?

I had my share of dividend hikes as well. I received 10% hikes from PEP, HD and NEE. I received a lousy 1.7% dividend hike from TROW. While disappointing, I completely understand the reasoning behind the low hike. Another not-so-surprising lousy hike came from MMM, another 1c dividend hike. O hiked their monthly dividend by 2.4%.

I also received a massive 65% dividend cut from INTC. There is so much to say on this subject, explaining what I intend to do with my position in INTC. I’ll reserve my thoughts for a near-term future post.

Lets get into the numbers for the portfolio did during this last month.

Dividend Income Received

Sl. No.Company / ETF (ticker)Amount
1Apple (AAPL)$5.08
2AbbVie (ABBV)$21.77
3Albertsons Companies (ACI)$2.54
4A.O.Smith (AOS)$1.20
5Caterpillar (CAT)$3.64
6Clorox (CLX)$53.32
7Costco (COST)$3.62
8Procter and Gamble (PG)$23.20
9Texas Instruments (TXN)$88.66
10Verizon (VZ)$47.96
11Realty Income (O)$25.41
12JP Morgan Equity Premium Income ETF (JEPI)$5.32
13STAG Industrial (STAG)$4.02

So a total of $285.74 in terms of monthly dividend income from 13 companies and/or ETFs. At the same time last year, I earned a total of $148.28 in monthly income. In Feb 2021, I earned a total of $12.86 in monthly income. So the YoY growth is appreciable, albeit expected at this stage of the dividend portfolio.

My largest dividend payer for this month has been TXN. TXN has also been in the news, with an announcement earlier this year than the existing CEO, Rich Templeton, will step down on April 1 after a 19-year tenure, and be replaced by Haviv Ilan, the current COO. I looked into the background for Haviv Ilan and was happy to see that he also comes from an engineering background and is also a straight talker, similar to Rich Templeton. It remains to be seen how Haviv will be able to steer this ship in the coming few months.

I also received from my first dividend payment from AOS, a relatively recent addition to my portfolio.

Buys and Sells during this month

No sells during this month.

As far as buys, I continued adding to my position in VZ. While I do not see huge revenue growth in the near future for VZ, the position is serving as a bond-proxy in my portfolio and I could use the output cash flows from this position to fund other positions.

I also added small tranches of JNJ and UNH to my portfolio. JNJ was trading around the $155 mark when I bought my tranche. I am cognizant of the impending litigation risk with JNJ, but there are a few things with JNJ that I need to look into beyond this. JNJ is now slated to be a pure pharma and medical devices company, and I am concerned with the relative softness in their pharma development pipeline. In addition, JNJ has also gone through a recent CEO change and the new CEO is a bit of unknown quantity to me. So I am in wait-and-watch mode on this one as I study their latest annual report and re-evaluate my thesis around this position.

Portfolio Thoughts

After selling out of CHD and DGRO last month, I have been looking at other positions in my portfolio and re-evaluating my investment thesis for these positions.

One such position is Digital Realty Trust (DLR). My bull-case around this position was centered around the growth in the data-center and cloud-computing business (expected CAGR growth of around 15.8% between 2022-2028). However, I was particularly concerned after reading the news item where legendary short seller Jim Chanos was shorting the data center REITs. Jim Chanos is famous for predicting the downfall of Enron. He is a no nonsense guy and generally makes a lot of sense with his arguments.

“This is our big short right now,” Chanos said in an interview with the Financial Times. “The story is that although the cloud is growing, the cloud is their enemy, not their business. Value is accruing to the cloud companies, not the bricks-and-mortar legacy data centers.”

This comment caused me to revisit my thesis and I have to admit that Chanos does have a very valid point. DLR’s FFO has not grown at all over the last few years. A similar trend is seen with Free Cash Flow as well. While the legacy data centers will not go obsolete immediately, this opened my eyes towards the reality that these data center REITs should be viewed as slow-growing mature businesses rather than fast-growers, as one might be led to believe looking at the cloud growth. I will continue doing my research into this business and determine what I need to do next with this holding.


Feb is in the books and I am looking forward to March which is expected to be a big dividend paying month for my portfolio. While I keep counting the dividend checks, I am also planning to read through a bunch of annual reports.

I recently read through PEP’s annual report and posted my findings in this twitter thread.

Before ending this post, I wanted to share an interesting passage I read from Berkshire Hathaway’s 2022 Annual Report. Quoting Warren Buffet on his investment in Coke:

“The cash dividend we received from Coke in 1994 was $75 million. By 2022, the dividend had increased to $704 million. Growth occurred every year, just as certain as birthdays.”

As a dividend growth investor, if you ever need reaffirmation regarding if dividends matter, I recommend you read this statement every once in a while 🙂


Monthly Income Report – January 2023

Dear Readers,

The first month of 2023 is already in the books! And amidst all of this talk of recession, the market has actually held up pretty well, up by almost a 7% in the last month. However, there was news circling around regarding layoffs in Big Tech. Layoffs are quite disruptive for the impacted workers. Having been through one myself, I know and feel for the affected workers. It can be especially challenging if you are an immigrant and working on a work visa in the US as the regulations for finding work within a stipulated time period are extremely tight. If you or your friends/family have been impacted in the recent layoffs, I send across my best wishes to you and hope that you can come out stronger from this experience.

As for me, my family and I are recovering from a terrible winter storm that hit Texas this last week. While this storm was not as bad as the one from 2020, it was bad nonetheless. Most of the trees around the city and the neighborhood have been wrecked by the storm, stores were low on supplies and major parts of the city were without power for pretty much the whole week. Thankfully, we are now past this and are looking forward to some warmer weather.

Alrighty, there is plenty to talk about as far as this month, so lets get down to the numbers for how the portfolio did in the first month of 2023.

Dividend Income Received

Sl No.Company / ETF (ticker)Amount
1Albertsons Co (ACI)$144.88 (special dividend)
2J P Morgan Chase (JPM)$36.76
3Pepsi Co (PEP)$12.98
4Realty Income (O)$24.57
5CareTrust REIT (CTRE)$6.82
6Digital Realty Trust (DLR)$46.72
7STAG Industrial (STAG)$3.99
8Orion Office REIT (ONL)$0.30
9JP Morgan Equity Premium Income ETF (JEPI)$6.82

So a total of $283.84 from 9 companies/ETFs. At the same time last year, I had earned a total of $145.60. And back in January 2021, I had earned a total of $13.25. So I am very happy with the YoY growth progress.

Obviously, the stand-out payment for this moment was from ACI. This special dividend was supposed to be paid out back in November last year. Unfortunately, the payment got stalled due to several state AGs appealing against the dividend payment, calling this payment as “illegal”. I have no idea as to what was the central argument for the state AG’s case. I simply cannot understand how a special dividend payment by a company to its shareholders can be illegal. Regardless, common sense has ultimately prevailed and the US courts have rightly thrown this case in the dustbin, exactly where it ought to belong.

Sells during in this month

While my typical holding period for stocks is forever, there are some exceptional cases where I might need to sell out of a given position. I made two such calls during the month of January.

Firstly, I completely sold out of Church and Dwight (ticker: CHD). CHD was an interesting call and one of my bets in the Consumer Staples space. Their brand portfolio is very solid with several strong brands that have withstood the test of time. The macro fundamentals are also sound. However, I had the following concerns:

  • While their brand portfolio is solid, most of their brands are still “second best” choices for consumers and at a comparable price point to the first choice brands. In this light, atleast over the next few years, I am not actually seeing a growth catalyst. I was hopeful that the management would be able to leverage their brand power and be able to somehow grab market share from the first-choice players. In the two years that I have followed this business, I am not seeing a great evidence of this phenomenon. I can understand that some of the macro-economic conditions have not helped them. But that is the nature of this landscape and unfortunately there are no prizes for runner-ups.
  • The starting yield is fairly low (1.31% at the time of writing). In order for this to be a meaningful investment, I would need to see some evidence of intent from management for dividend growth. It seems (to me atleast) that the management is not aligned with my objectives on this front, as is evident from the last two dividend increases (low single digit hikes).
  • I already own Procter & Gamble (ticker: PG) and Clorox (ticker: CLX) in my portfolio, both of whom rank so much higher in terms of a high-quality businesses. I do not need another similar business which is not as high-quality in my portfolio.

My second sell was iShares Dividend Growth ETF (ticker: DGRO). Dividend growth ETFs are interesting investment vehicles for a dividend growth investors. I certainly see the value add as far as a “set it and forget it” strategy. However, I am always skeptical about certain aspects with ETFs in general. At present, I own SCHD which is a very high-quality dividend growth ETF. I also own JEPI which is a good bet in markets that will either trade sideways or downwards. Given these investments, it was hard for me see what exactly was DGRO bringing to the table. Perhaps it gives me exposure to a far larger basket of stocks that both JEPI and SCHD. Also the overlap in weightage across different sectors is not as pronounced. However is this diversification really necessary? I already have enough of my capital invested in broad-market low-cost index funds and ETFs for this reason. Consequently, I decided to close my DGRO position, take my gains and look for better investment opportunities.

Buys during in this month

I initiated a new position in Union Pacific Corp (ticker: UNP). I have been researching this business since November last year and the price entered into an attractive range for me to initiate a position. I have a fairly popular twitter thread where I did a deep-dive on UNP. Take a look if you are interested.

As far as other buys, I continued adding a small tranche to my existing position in Verizon (ticker: VZ). VZ is doing the job of a bond-proxy in my portfolio and in an environment when the market is trading in upward direction due to some craziness, I want to sit on sidelines and keep investing in my bond-proxies.

Option trading

I did not write any new option contracts during this month. However, my existing covered call contract expired on the 20th of January in-the-money. This meant my shares got called away as the option was assigned. While this is not ideal, I am not at all disappointed with this outcome. This was a risk I was willing to take when writing this option contract and I also got to sell my shares at a price of my choosing.

When point that I would like to highlight is that with option trading, I am cultivating a bad habit of frequently checking the market for the stock prices, especially for the asset that is held under the option contract. This is one of the things that I could easily avoid doing with dividend growth investing. Perhaps it is something that I need to train myself to be better at.

Q4 earnings

We are in the midst of the earnings season and I have one eye on the few businesses that are on my “naughty list”. In particular, Intel (ticker: INTC) and 3M (ticker: MMM). Both these businesses reported quarterly results that were bad. INTC, actually, was not bad. It was horrendous!

With both these stocks, I am continuing the hold as these are bets were I have calibrated the percentage allocation based on my risk appetite. Atleast with INTC, I know for a fact that the turn-around story will take atleast until 2024-25 to play out. At that point, I will know if Pat Gelsinger and team have flopped or have managed to turn around this sinking ship. With MMM though, I was utterly disappointed with the tone and attitude of the management during the earnings conference call. And it looks like I am not alone in this regard. I read that one of the larger investors in 3M also fired a warning shot at Mike Roman, the 3M CEO, basically stopping short of asking him to resign.

If that were not enough, I read in the news that the bankruptcy court denied Johnson and Johnson’s (ticker: JNJ) move to offload the talc lawsuits by declaring that particular business unit under bankruptcy.

I am long in all these stocks and I will continue to hold and monitor each of these positions over the next few months.


If you thought dividend growth investing was easy, boring and mundane, well think again! There was so much happening during this month and we are barely getting started with 2023. I am excited about what is in store in the months ahead and hope to be on the lookout for new buying opportunities as and when they present themselves.

Thank you for reading thus far and keep investing with a margin of safety!