Another strong month in terms of dividend income.

Eight companies paid me around USD 800 in May (the Swiss Francs trades more or less at paritiy to the USD). Compared to the previous year that’s an increase of well over 10 % due to organic dividend growth (hikes) and reinvestments.

My projected dividend income for 2017 is around USD 4’500.

Refreshing dividends from Heineken 

Compared to May 2016, there is one additional position contributing to my passive income in that month: Heineken, the world second largest beer producer. In February 2017, I acquired 45 Shares at a price of EUR 73. It’s quite an attractive investment in my eyes. In addition to its core brand Heinken, the company has over 250 international and regional brands (Desperados, Sol, Tiger etc.). Heineken is well positioned for further growth and offers a broad economic moat and stable free cash flow. Heineken pays its dividends twice a year and for 2017 my dividend yield on cost (YoC) stands at around 2 %. I am looking forward to watching that relatively small amount resp. yield grow over the years.

Compelling growth from Bayer

Bayer operates in the segments pharmaceuticals, crop science, animal health and consumer health with well-known brands such as Aspirin, Alka Selzer, Bepanthen, Elevit, Supradyn, Rennie etc. Like in the previous years, the company increased dividends again quite nicely by 8 % and I expect it to do so in the future. My current YoC stands at 1.8 %.

LafargeHolcim set to reward its shareholders

After the acquisition of the French construction company Lafarge by its Swiss competitor Holcim, the new combined company LafargeHolcim pledged to realise significant synergies, optimise its cost structure, to deleverage and to provide attractive shareholder returns over the medium and long run. LafargeHolcim’s 2016 full year results looked quite promising to me. The company announced a  dividend increase of 33 % putting my YoC at around 3 %. The business also announced the start of a share repurchase program.

Small regional banks overtop their larger peers in terms of profitability and dividend growth

I have several bank stocks in my portfolio among them fincancial services giants such as HSBC, Banco Santander, UBS and Credit Suisse. Interestingly, my two investments in small regional banks have been doing particularily well in the past few years seeing substantial growth of profits, free cash flow and dividends.

Liechtensteinische Landesbank (LLB) and the Verwaltungs- und Privatbank (VPB) are small Liechtenstein banks with a very strong regional footprint both focusing on retail- and private banking. Over the last few years, LLB hiked its dividends by over 6 % annually, increasing my YoC to 3.7 %. LLB gives shareholders the possibility to reinvest dividends resp. to buy additional shares free of charges each year within one month upon the general annual meeting. Over the years due to the miraculous compound effect my stock count litterally mushroomed, making that position in LLB to one of my largest dividend contributors (after Royal Dutch Shell).

Dividend growth from VPB was even stronger in the past years (for 2016: 12.5 %), putting my YoC to 5.9 %.

Now let’s turn to the bank giants …

UBS is the largest Swiss bank and experienced a deep transformation since the financial crisis shifting the company’s focus on wealth management while downsizing its investment banking operations. The bank offers me a nice YoC of 3.9 %. Compared to the previous year, UBS held the ordinary dividend payment stable (last year my YoC was higher due to the payment of a special dividend).

In my view the Spanish lender Banco Santander has good growth prospects over the medium and long term. Three of the quarterly dividends are paid in cash and one payment is made in stocks if the shareholder chooses so. Given the latest solid dividend hike of 5 % I am quite optimistic that stock count and YoC will steadily rise over the years.

The second largest Swiss bank Credit Suisse has been a huge disappointment to shareholders in the last years. The bank manouvred quite well through the financial crisis but significantly failed to take profit of its strong position. Credit Suisse missed to strenghten its core capital, to improve its cost structure and increase profitability amid the global recovery from the financial crisis. In my view it was very late, when the company finally decided to raise its capital and implement a fundamental transformation process one and a half year ago. There is a lot of homework to do for that company and a lot to prove. I entered in my position in Credit Suisse eight years ago and – looking back – it is pretty clear to me, that I had overpaid at that time. My current YoC stands at 1.8 % .

 

How was your May in terms of dividend income? 

 

Disclaimer
You are responsible for your own investment and financial decisions. This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.