Categorized | Stock Trading Tips

John And Jane: May Dividend Income Tracker – Taxable Account

John And Jane: May Dividend Income Tracker - Taxable Account

Summary

This is the seventh month I have officially tracked the taxable account’s dividend income, and it was slightly below expectations with a total of $1,642.46 of dividends received.

Apple, Arbor Realty, Clorox, Spectra Energy Partners, Tanger Factory Outlet Centers, TransMontaigne Partners, and Westlake Chemical Partners all delivered increases in the month of May.

A brief overview and discussion of the current state of the stock market.

The taxable account has very few changes left to be made, but this doesn’t mean we set it on auto-pilot and forget it.

This article includes all payout updates for May as well as a brief overview of what we are expecting in June.

Investment Thesis

May marks the seventh month that John and Jane have had a well-established concentration of stocks in their taxable portfolio. A total of seven stocks in the taxable portfolio delivered increased dividend payments during the month of May.

As I continue to document John and Jane’s success, my long-term goal is to create a database that allows for year-over-year (YoY) comparisons that demonstrate the power and simplicity of dividend investing. In addition to documenting the past, I also like to forecast the upcoming month of dividends because I believe it helps keep expectations in check.

As always, I would like to include a disclaimer that states this article is based on an actual portfolio for clients of mine. The goal is to build a portfolio of dividend-paying stocks, bonds, etc. that will continue to produce a growing and long-lasting income stream with a minimal emphasis on capital appreciation.

Previous Comments & Suggestions

In my last monthly update, Tim McPartland offered up some interesting term preferred stock and baby bond candidates that I have mulled over for John and Jane’s portfolio. At first, I chose to not act on any of these largely because of their premium-to-par value. In the end, I found two term-preferred issues to be quite compelling. The remainder of this section will be used to examine the differences between the two and the logic I used to determine which issue presented a more compelling value. The two preferred issues are:

Eagle Point Credit (NYSE:ECCB) – 10/26/2026 Redemption
Oxford Lane (NASDAQ:OXLCM) – 6/30/2024 Redemption
Both of these funds have a term preferred that precedes them, and it is extremely likely that they would be called prior to ECCB or OXLCM (I am referring to ECCA and OXLCO. I am not a big fan of paying a premium over PAR value, but I believe that the call date protection and distant redemption date offered by these funds offer a reasonable reward for the risk assumed. Here are some of the other reasons why I find these funds attractive:

Both funds pay monthly distributions (on the last day of the month).
Many of the other preferred stocks John and Jane are invested in are called “perpetual” preferred stock, which means that there is no mandatory redemption date. Therefore (hypothetically), there is a risk that a company could choose to never redeem shares. Both ECCB and OXLCM provide an explicit guarantee that their principal will be returned by the dates mentioned above.
For readers who are interested in preferreds, there are quite a few “perpetual” preferreds currently available at a significant discount to PAR. I plan on writing a separate article to focus on these and this subject. While “perpetual” preferreds at a discount may appear extra attractive, it is important as an investor to consider the risk associated with these shares in the event that a company chooses to not redeem them (especially in a rising interest rate environment).

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