December 2013 Dividend Earnings

My December 2013 dividend earnings are in. It has been a busy month!

HoldingDividend/Shr# SharesDividend TotalReinvestedNew SharesAccount
$159.8
RDSA$0.9038$34.20NO0Brokerage
KO$0.2864.6496$18.10YES0.4624Brokerage
XOM$0.6330.215$19.04YES0.202ROTH IRA
INTC$0.225106.058$23.86YES1.010ROTH IRA
ADM$0.1975.395$14.33YES0.352ROTH IRA
MCD$0.8127$21.87YES0.2295Trad IRA
IBM$0.9514$13.31YES0.0752Trad IRA
CSX$0.15100.5681$15.09YES0.5413Trad IRA

I got my first full dividend for MCD, after the piecemeal purchases I made earlier this year. My Shell investment returned one last ‘funny’ dividend – I received $34.20 in cash, but immediately has $5.13 clawed back as a foreign dividend tax.  Hopefully this should be resolved next quarter now that my RDSA has been liquidated from my brokerage account and I have purchased RDSB in my Traditional IRA.

$159 of dividend income is not too bad.  Unfortunately January and February will not be as lucrative, my dividend paying investments in those months are rather sparse at this time.

 

September 2013 Dividend Earnings

It is time to document my earnings from my dividend stock portfolio for September 2013.  The way my portfolio has been chosen a lot of payouts dates happen to fall in September, so I have quite a few items to report.

HoldingDividend/Shr# SharesDividend TotalReinvestedNew SharesAccount
$108.55
ADM$0.1975$14.25YES0.395ROTH IRA
XOM$0.6330$18.90YES0.215ROTH IRA
INTC$0.225105$23.63YES1.058ROTH IRA
RDSA$0.9038$34.20NO0Brokerage
CSX$0.15100$15YES0.5681Trad IRA
MCD$0.7710$7.70NO0Trad IRA

For several of my newer positions I received my first dividend payout ever. Intel, Shell, Clorox and McDonalds I purchased too late to received their earlier June 2013 payouts.  The ADM and Exxon payouts were a repeat of last quarter, but this time I had dividend reinvestment enabled as opposed to getting a cash deposit – so the money was invested in  fractions of additional shares.

McDonalds was an aberration this month.  I had several buys and sell of MCD while finalizing its position in my portfolio, the end result being I only received dividends on 10 shares and it was not reinvested.  This issue should be resolved now and I expect a full payment in December 3013.

I had a signficant issue with my investment with Royal Dutch Shell.  I was under the impression I would receive my dividends thru Shells’ Scrip program, where you are paid in shares – rather than in cash which needs to be reinvested into shares.  This is supposed to exempt you from paying a Foreign Dividend Tax.  Unfortunately this did not work out for me, I received $34.20 in dividends but then has $5.13 deducted for ‘Fgn Div Tax’.

I am going to monitor this issue if there is an easy way to get this back at tax time.  I may end up changing the location and type of Shell investment in the future to optimize the situation, but for now I I’m not too concerned – it is only $20 a year after all.

$108 of dividend income if my first triple digit month so far.  Here is  hoping it is the first of many!

Purchase of CSX – Adding Rail to my Dividend Portfolio

CSX Logo

CSX Logo

Today I added CSX Corporation to my portfolio. I consider a ‘full position’ as $2500, which worked out well for this purchase as I was able to buy a round 100 lot at the securities current market price of just over twenty five dollars. While not as significant a purchase as Warren Buffetts’ BNSF takeover, it seems pretty substantial to me!

The idea of adding a Rail investment is something I have actively considered for a few months now. While I’m not convinced I got a screaming deal on CSX, both Morningstar and S&P currently rank CSX as a buy, which could not be said for its major competitors. I am satisfied I purchased at a reasonable valuation.

The Class I CSX rail network is entirely along the Eastern seaboard of North America, extending its tentacles up into part of Canada and as far West as New Orleans, St Louis, and Chicago. While this does – to a certain extent – make CSX a regional play, it is a very large region indeed.

The best feature of the railroad industry to me is the very wide moat to entry. If a new firm wishes to build a new railroad line, it is going to prove very difficult. Not only is the required capital immense, but obtaining the right of ways would be next to impossible – especially on the densely populated West Coast.

With limited competition on any given route, and much lower costs than alternatives like highway or air freight, I see the industry as having a pretty solid future.

One future development that intrigues me is the impending completion of the expansion of the Panama Canal. Associated port developments in Florida promise to result in a large increase of imports to the United States unloading in Miami (and also elsewhere along the Atlantic coast). A lot of these imports could potentially be placed aboard a CSX train in Jacksonville en route to their final destination. I’m hoping this serves as a tailwind for CSX results in years to come.

I am optimistic about the dividend story for CSX. At the time of purchase its Dividend payout ratio is below 35%, leaving plenty of room for future dividend growth. For the last ten years the dividend has averaged a hike of about a 20% increase per year, I am hoping these sizable increases continue for a few more years so as to quickly hike my dividend yield on cost up over what is admittedly a rather lukewarm initial dividend yield.

Purchase of 100 shares of CSX at $25.45, for a cost basis of 2,545.00. Dividend yield at time of purchase 2.36%. Dividend Reinvestment enabled. Initial dividend income $60.00 annually.