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

I recently wrote an article about New Residential (NRZ) and added shares of NRZ Preferred Series B (NRZ.PB) because they offered compelling value. Shortly after purchasing these shares NRZ announced a preferred stock buyback with authorization up to $100 million through the end of 2021. This is a pretty substantial amount considering there is a total of $813 million of outstanding preferred shares as of September 2020.

At this point, I am liking many of the larger MREITs because they have more ability to handle some of the crazy things that have happened in 2020. I still try to focus on preferred shares selling at some sort of a discount because I have a difficult time putting any more funds towards preferred shares from REITs like Digital Realty (DLR.PK) as all three of their preferred issuances are selling at a steep premium (especially when we consider their short time until the first call date).

I am definitely no expert when it comes to preferred shares and I am even less qualified to say which ones represent a great buying opportunity which is why I always look to SeekingAlpha contributor Colorado Wealth Management for his insight. Investors who are looking for ideas regarding which preferred shares they should research will find his article The Preferred Share Series Without A Name a great starting point for where to go next. Even if you aren’t interested in preferred shares this can be a great starting point for some higher-yielding common shares as well.


For those who are interested in John and Jane’s full background please click the following link here for the last time I published 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. Jane has officially decided that she will be retiring on December 31st, 2020.
  • 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 were no companies that paid a decreased dividend/distribution in the Taxable account during the month of October.

Dividend And Distribution Increases

Only one company paid increased dividends/distributions or a special dividend during the month of September in the taxable account.

  • Altria (MO)
  • New Residential (NRZ)
  • Realty Income (O)
  • WP Carey (WPC)

Altria – Dividend investors love MO even though it has done quite poorly over the last few years as major investments in Cronos (CRON) and Juul did not pan out and have received increased scrutiny from the FDA in the process. Q3-2020 earnings came in solid after the smokeable volume was near flat after an expected -4.0% decline was expected. Even with the Juul write-down, MO is still looking strong and the dividend looks well-covered with expected earnings of $4.30-$4.38 for FY-2020.

The dividend was increased from $.84/share per quarter to $.86/share per quarter. This represents an increase of 2.4% and a new full-year payout of $3.44/share compared with the previous $3.36/share. This results in a current yield of 9.23% based on a share price of $37.27.

New Residential – As I already mentioned previously in this article, NRZ recently announced a preferred stock buyback and has focused on returning dividend payments to a more attractive level (even though I believe it is unlikely to return to $.50 for a long time). NRZ is currently offering a dividend that is well-covered and is capable of comfortably paying out dividends at these levels. Investors should take note of the buyback authorization because it is rare to see any REIT use its cash to buy back shares because it is pretty uncommon that this would be the most efficient use of money. I recently wrote the article New Residential: MSRs Are The Potential Catalyst which takes a closer look at the investment potential offered by NRZ.

ChartData by YCharts

The dividend was increased from $.10/share per quarter to $.15/share per quarter. This represents an increase of 50% and a new full-year payout of $.60/share compared with the previous $.40/share. This results in a current yield of 7.7% based on a share price of $7.79.

Realty Income – Rent collections have been the main concern for many REITs since paying dividends depends on the ability to collect rent from tenants. Rent for October came in at 92.9% and Q3-2020 rent collections came in at 93.1%. Given the impact of COVID I am pleased with O’s performance in portfolio occupancy numbers remain strong sitting at 98.6% as of September 30, 2020. We will likely add to the Taxable account position if/when share prices fall into the low $50/share range.

Realty Income - FastGraphs The dividend was increased from $.2335/share per month to $.234/share per month. This represents an increase of .2% and a new full-year payout of $2.81/share compared with the previous $2.80/share. This results in a current yield of 4.84% based on a share price of $57.99.

WP Carey – We have been accumulating shares of WPC when it drops into the low $60/share price range and we will look to sell some of the high-cost portions if/when shares move into the $70 range again. WPC’s results have been solid and include an overall rent collection rate of 99% during the month of October (98% total for Q3-2020). Guidance has been reinstated now that WPC has officially resumed external investment activity and FFO guidance is expected to be between $4.65-$4.75.

WP Carey - FastGraphs The dividend was increased from $1.042/share per quarter to $1.044/share per quarter. This represents an increase of .2% and a new full-year payout of $4.176/share compared with the previous $4.168/share. This results in a current yield of 6.43% based on a share price of $64.95.


The Taxable account currently consists of 47 unique positions as of the market close on November 9th, 2020. There were three purchases in the Taxable account during the month of October.

  • Exxon Mobil (XOM) – Purchased 25 Shares @ $34.38/share.
  • AT&T (T) – Purchased 50 Shares @ $27.14/share.
  • WPC – Purchased 10 Shares @ 61.64/share.

Although we did not sell any shares during the month of October, we will be looking to make a few sales before the end of the year to bring the capital gains to a break-even point. John and Jane are currently sitting on $1,076 of realized gains from the Taxable Account and we will be looking to take advantage of selling some of the worst-performing positions and improve the overall quality of the portfolio.

October Income Tracker – 2019 Vs. 2020

Income for the month of October was up modestly year-over-year and the Taxable account has continued to perform well when it comes to the generation of dividend income.

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.

2020-10 - YoY 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.

2020-10 - Monthly Dividend Graph The dividend charts are finally starting to take shape now that we have reached 2.75 years of data that shows how the portfolio has generated dividends over time.

2020-10 - Monthly Dividend Line Graph 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.

2020-10 - Annual Estimate Below gives an extended look back at the dividend income generated from when I first began writing these articles.

2020-10 - Three Year Dividend History The Taxable account balances below are from October 30th and these numbers are always from the end of the month.

2020-10 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 November 10th, 2020. You will notice that there was a major increase in the value of the account which has a current value of $414.5K.

2020-10 Gain-Loss Update 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.

2020-10 - Monthly YoY Comparison


Cash balances in the Taxable account has remained steady even though there were several purchases made last month (we are using some of the cash dividends coming back in for purchasing shares). The cash balance in the Taxable account is $38.1K as of 11/10/2020. Unrealized capital losses swung to unrealized capital gains of $322.63 as of 11/10/2020 compared with an unrealized capital loss in September of -$14.7K.

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 Hospitality REIT, BP, Cardinal Health (CAH), Carrier Corporation (CARR), Clorox (CLX), Cummins (CMI), The Walt Disney Company, Dover Corporation, 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, Realty Income (O), Old Republic International, OTIS Corporation (OTIS), Parker-Hannifin (PH), Phillips 66 Partners (PSXP), Ryder Corporation, Raytheon Technologies (RTX), Tanger Factory Outlet Centers (SKT), Schlumberger (SLB), Southern Corp. (SO), Simon Property Group, AT&T (T), Texas Instruments (TXN), V.F. Corporation (VFC), Verizon (VZ), Washington Trust (WASH), Westlake Chemical (WLKP), W.P. Carey, and Exxon Mobil.

Disclosure: I am/we are long AAPL, ADM, APLE, EMR, EPR, HON, MCD, O, 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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