The Retirees’ Dividend Portfolio: John And Jane’s July Taxable Account Update

Carrier Global Corporation (CARR) emerged along with Otis Worldwide Corporation (OTIS) as two spin-offs from the merger of United Technologies (UTX) and Raytheon (RTX). So far I have been extremely pleased with the results of the spin-off and John and Jane decided that it made sense to keep these shares rather than eliminating the positions. One of the reasons they considered selling shares was that the dividend yield for both companies is on the low-side.

Data by YCharts

CARR currently offers a yield of 1.15% and its payout ratio for Q2-2020 was less than 25% of Non-GAAP EPS which came in at $.33/share.

OTIS currently offers a dividend yield of 1.27% and its payout ratio for Q2-2020 was just under 36% of Non-GAAP EPS which came in at $.56/share.

RTX currently offers a dividend yield of 3.17% and its payout ratio going forward is estimated to be just over 68%. (I did not use the Q2-2020 payout ratio because this would be over 100% and is impacted by the UTX/RTX merger).

CARR and OTIS are both relatively stable companies with strong prospects because they provide services/products that are necessary during COVID. Hopefully, everyone who owned shares of UTX held onto these spin-offs because they have definitely performed well during these turbulent times. I expect reasonable dividend growth from these companies going forward with greater growth potential from CARR (there are COVID-related growth opportunities while OTIS is depending on cost-savings and leverage in order to boost EPS growth).


For those who are interested in John and Jane’s full background please click the following link here for the last time I publish their full story. Here are the key details about John and Jane that readers should understand.

  • This is a real portfolio with actual shares being traded.
  • I am not a financial advisor and merely provide guidance based on a relationship that goes back several years.
  • John retired in January 2018 and is only collecting Social Security income at this point in time.
  • Jane is working part-time and will continue to do so for the remainder of 2020. Whether or not she continues to work will depend on whether or not her employer requests that she stays on in 2021.
  • John and Jane have no debt and no monthly payments other than water, power, property taxes, etc.

I started helping John and Jane with this because I was infuriated by the fees and gimmicky trades made by their previous financial advisor. I do not charge John and Jane for anything that I do and all I have asked of them is that they allow me to write about their portfolio anonymously in order to help spread knowledge and to make me a better investor in the process.

Generating a stable and growing dividend income is the primary focus of this portfolio and capital appreciation is the least important characteristic.

Dividend And Distribution Decreases

There was only one company that cut its dividend in the Taxable Account for July 2020.

Schlumberger – Citibank (C.PK) recently upgraded SLB moving its price target from $20/share to $26/share after the announcement that it would cut 20% of its workforce. Oil prices have started to make a recovery in recent months, however, we will need to wait and see if these are sustainable gains or simply a reaction to falling U.S. crude inventory. As of August 5th, WTI Crude was trading at a five-month high of $43.30/bbl.

ChartData by YCharts

The dividend was decreased from $.50/share per quarter to $.125/share per quarter. This represents a decrease of 75% and a new full-year payout of $.50/share compared with the previous $2.00/share. This results in a current yield of 2.56% based on a share price of $19.50.

Dividend And Distribution Increases

A total of six companies paid increased dividends/distributions or a special dividend during the month of July in the Taxable account. One of the companies described below issued its first dividend payment since being spun off from United Technologies (UTX).

  • Cardinal Health (CAH)
  • Carrier (CARR)
  • New Residential (NRZ)
  • Realty Income (O)
  • Simon Property Group (SPG)
  • WP Carey (WPC)

Cardinal Health – CAH has seen its share of struggles and it continues with its dividend growth streak even though it has provided minimal growth in recent years. The 3 Year Growth Rate (OTC:CAGR) is now 3.45% but there is some optimism from Baird that a $65 price target is possible. John and Jane’s current cost basis on the whole position is $65.11 so we will continue to let it ride but will consider cutting the position as it offers weak future dividend growth. Drug distributors have struggled with margins over the last few years and so we use a 5-year FastGraphs to show that shares are near fair value.

Cardinal Health - FastGraphs

The dividend was increased from $.4811/share per quarter to $.4859/share per quarter. This represents an increase of 1% and a new full-year payout of $1.94/share compared with the previous $1.92/share. This results in a current yield of 3.66% based on a share price of $53.11.

Carrier Global Corporation – There isn’t much to say about CARR that hasn’t already been said. Look for some solid growth prospects going forward and look for the dividend to follow.

ChartData by YCharts

The dividend was initiated at $.08/share. This represents a new full-year payout of $.32/share. This results in a current yield of 1.13% based on a share price of $28.27.

New Residential – One of the riskiest stocks in the Taxable Account saw its dividend slashed by 90% dropping the payout from $.50/share per quarter to $.05 cents/share per quarter. The cut was intended to increase liquidity and protect book value which was more than double the share price at that time (end of March). Since then, NRZ has changed aspects of its business model which makes it less risky than it was before but investors should understand that it is extremely unlikely they will ever see the company paying a huge dividend as they had previously. Shares are still trading at a modest discount to BV.

ChartData by YCharts

The dividend was increased from $.05/share per quarter to $.10/share per quarter. This represents an increase of 100% and a new full-year payout of $.40/share compared with the previous $.20/share. This results in a current yield of 5% based on a share price of $7.99.

Realty Income – The Monthly Dividend Company continues its streak of quarterly increases and has been weathering the current environment quite well. Realty Income has less exposure to many of the big industries that have been impacted by the COVID lockdowns. We are no longer in the market to add to the Realty Income position but if prices were to drop back into the low $50’s we definitely would start accumulating shares again.

Realty Income - FastGraphs The dividend was increased from $.233/share per month to $.2335/share per month. This represents an increase of .2% and a new full-year payout of $2.80/share compared with the previous $2.79/share. This results in a current yield of 4.48% based on a share price of $62.68.

Simon Property Group – SPG makes the dividend increase list because it went from skipping a dividend payment during the month of May to paying out a dividend in the month of July. In other words, SPG temporarily suspended its dividend (without actually announcing that it was temporarily suspending its dividend) which is why we did not see a dividend payout during the month of May. The new dividend is actually a -38.1% decrease from the last pay dividend of $2.10/share (but again I am including it because the resumption of a dividend is still an improvement over no dividend at all).

Simon Property Group - FastGraphs SPG resumed its dividend payments at a rate of $1.30/share per quarter. Although this was an increase from a lapse in payment it is still a decrease from the last dividend payout during the month of February. SPG currently yields 7.74% using a dividend payment of $1.30/share per quarter or $5.20/share annually.

WP Carey – WPC has exceeded expectations so far during this pandemic as they continue to collect above-average rent. Even more importantly, WPC is collecting rent from clients across the spectrum including fitness centers, theaters, and restaurants. Ironically, WPC’s office buildings have been able to collect 98% of rent during the month of April and 97% of rent during the month of May. WPC has moved out of the buy range and we would only look to add more under $65/share.

WP Carey - FastGraphs The dividend was increased from $1.04/share per quarter to $1.042/share per quarter. This represents an increase of .2% and a new full-year payout of $4.168/share compared with the previous $4.16/share. This results in a current yield of 5.72% based on a share price of $72.83.


The Taxable account currently consists of 47 unique positions as of the market close on August 11, 2020. There was only one purchase that took place in the Taxable Account during the month of July.

  • Iron Mountain (IRM) – Purchased 25 Shares @ $26.36/share.

We sold the following shares from the Taxable Account during the month of July.

  • Leggett & Platt (LEG) – Sold 25 Shares @ $37.18/share.
  • Cummins (CMI) – Sold 15 Shares @ $183.12/share.
  • Parker-Hannifin (PH) – Sold 15 Shares @ $184.47/share.
  • Archer Daniels Midland (ADM) – Sold 50 Shares @ $42.44/share.

Taxable Account - July Realized Gain-LossSource: Charles Schwab

We usually don’t sell shares out of the Taxable Account but we wanted to use this opportunity to eliminate the high-cost portion of these positions given that we used funds a few months ago to add to all of the positions shown. As a result, John and Jane still maintain modest or large positions in all of the stocks mentioned above.

July Income Tracker – 2019 Vs. 2020

Income for the month of July was up modestly year-over-year and we have seen quite a bit of resilience from stocks that have not already cut their dividends. As noted in the sections above, we have seen some companies begin paying dividends, resume their dividend, or increase their dividend.

SNLH = Stocks No Longer Held – Dividends in this row represent the dividends collected on stocks that are no longer held in that portfolio. We still count the dividend income that comes from stocks no longer held in the portfolio even though it is non-recurring. All images below come from Consistent Dividend Investor, LLC.

Taxable Account - July Dividend Year-Over-Year Comparison

Here is a graphical illustration of the dividends received on a monthly basis. I have begun updating the chart to also reflect the dividends earned in 2018, 2019, and 2020.

Taxable Account - July dividend income update The dividend charts are finally starting to take shape now that we have reached 2.5 years of data that shows how the portfolio has generated dividends over time.

Taxable Account - July dividend income We have not seen a major impact to the dividends generated by the Taxable Account. Part of this is due to the fact that John and Jane deposited additional funds and they have purchased new stocks and added to existing positions during the pandemic which means that John and Jane’s cash holdings decreased going into June. With the run-up in the market, we’ve used this opportunity to sell out of the high-cost shares and returned those funds to the cash stockpile which has nearly doubled in size over the last two months.

Based on the current knowledge I have regarding dividend payments and share count, the following table is a basic prediction of the income we expect the Taxable Portfolio to generate in 2020 compared with the actual results from 2019. This table will continue to be updated as the year goes on with the actual amount of dividends earned in a specific month which will also include any dividend raises that have not been announced (yet) and will also reflect the income generated by additional purchases.

Taxable Account - Estimated Annual Dividends

Below gives an extended look back at the dividend income generated from when I first began writing these articles. Taxable Account - Three Year Dividend History

Like many investors out there, John and Jane’s Taxable portfolio saw its account balance drop significantly over the last several months. As of the market close on August 11th, the Taxable Account had a balance of $399.4K.

Taxable Account - July Month End Balance

In an effort to be transparent about John and Jane’s Taxable account I like to include an unrealized Gain/Loss summary. The numbers used are based on the closing prices from August 11th, 2020.

Taxable Account - July 2020 Gain-Loss Lastly, I wanted to include the Monthly Year-Over-Year Income Comparison to show how the Taxable Account is trending. I believe this graph will become even more important in year number four since this will give us enough data points to really see how income is increasing by month year-over-year.

Taxable Account - 2020-7 - Monthly YoY Comparison Conclusion

As mentioned throughout the article, John and Jane’s cash balance in the Taxable Account has continued to increase as we liquidate certain positions (specifically those where we can eliminate high-cost portions of a position). The Taxable Account has seen the cash balance increase from $31,726.99 to $34,193.43.

Additionally, the first two weeks of August have been exceptionally good to us (and probably for anyone who is invested in the market) as we have seen the unrealized losses dropped from over $30,000 in the Taxable Account down to just over $10,600 as of market close on August 11.

What does your dividend growth portfolio look like? I’d love to hear feedback on your personal strategy and potential stocks you think I should consider.

In John and Jane’s Taxable account, they are currently long the following mentioned in this article: Apple (AAPL), Arbor Realty (ABR), Archer-Daniels-Midland (ADM), Apple REIT (APLE), BP (BP), Cardinal Health (CAH), Carrier Corporation (CARR), Clorox (CLX), Cummins (CMI), The Walt Disney Company (DIS), Dover Corporation (DOV), Eaton Vance Floating-Rate Advantage Fund A (EAFAX), Emerson Electric (EMR), Enterprise Product Partners (EPD), EPR Properties (EPR), Energy Transfer (ET), General Mills (GIS), Honeywell (HON), Helmerich & Payne (HP), Hormel (HRL), Iron Mountain (IRM), LTC Properties (LTC), Leggett & Platt (LEG), McDonald’s (MCD), Mitcham Industries Preferred Series A (MINDP), Altria (MO), Mesabi Trust (MSB), New Residential (NRZ), Realty Income (O), Old Republic International (ORI), OTIS Corporation (OTIS), Parker-Hannifin (PH), Phillips 66 Partners (PSXP), Ryder Corporation (R), Raytheon Technologies (RTX), Tanger Factory Outlet Centers (SKT), Schlumberger (SLB), Southern Corp. (SO), Simon Property Group (SPG), AT&T (T), Texas Instruments (TXN), VF Corporation (VFC), Verizon (VZ), Washington Trust (WASH), Westlake Chemical (WLKP), W. P. Carey (WPC), and Exxon Mobil (XOM).

Disclosure: I am/we are long AAPL, ADM, APLE, EMR, EPR, MCD, T, TXN, VFC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This article reflects my own personal views and I am not giving any specific or general advice. All advice that is given is done so without prejudice and it is highly recommended that you do your own research. This article was written on my own and does not reflect the views or opinions of my employer.

Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.

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