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2020 has been a brutal year for dividends in general, thanks to the economic slowdowns put in place to fight the COVID-19 virus. According to the research I did for this article: https://www.fool.com/investing/2020/09/28/how-we-beat-the-co... , global dividend income may very well drop somewhere in the neighborhood of 20% this year. That provides a good reason to take a look at the dividends and dividend-like(*) income received by the former iPIG portfolio to see whether its selection criteria helped its dividends hold up better than the market's as a whole.

As it turns out, the account's dividends have well outperformed the market's dividend meltdown trends, and it looks like it may very well remain on track for the portfolio's originally stated goal of dividend income increasing at least in line with inflation. The table below shows the quarterly breakout through 9/30.

Note that while no money has been added to or removed from the former iPIG portfolio since its inception, dividends within the portfolio have been collected as cash and can be used to reinvest. That means a portion of the year over year change can likely be attributed to reinvesting portfolio cash flow into dividend paying stocks instead of from pure dividend growth.

Quarter 2019 2020 Y/Y %Change
JFM $ 556.20 $ 628.13 +12.9%
AMJ $ 550.39 $ 623.34 +13.3%
JAS $ 583.90 $ 623.66 + 6.8%
Through 9/30 $1,690.49 $1,875.13 +10.9%


Based on the quarterly profile of dividend payments, it appears the former iPIG portfolio's dividends held up well in the AMJ quarter -- the first full quarter of COVID-19's US impact. From the look of the JAS quarter, it looks like dividend increases were somewhat muted vs. 2019, or quite possibly, increases in some companies' dividends were offset by cuts in others'. As you can probably tell from my lack of recent investment updates on this board, I haven't been paying as close attention to this account as I probably should have been. Still, the companies in the account have largely seen their dividends hold up remarkably well (a testament to their businesses and balance sheets, not to anything I was doing).

If a treatment, a vaccine, herd immunity, or fortuitous viral evolution enables us to get back to some semblance of normal in the not too distant future, there's a good chance their businesses can also find a path back to growth. Of course, on the flip side, the longer things stay restricted, the tougher it is to justify maintaining a dividend in the face of crazy uncertainty, so only time will tell what the future really does bring.

Regards,
-Chuck
Discovery/HR Home Fool

(*)Dividend-like income includes non-dividend income paid as part of a company's quarterly distribution. From a practical perspective, it generally looks a lot like a dividend until the company reports its financials and breaks out what portion is dividend vs. other payments, often around tax time.
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2020 has been a brutal year for dividends in general

I find the contrary. None of my dividend payers has cut the yield. While dripping adds more shares than before. And there have been some juicy yields available that were much harder to find in years prior.

Every now and then I’m enticed into buying something else, like a Fool SA rec. But more and more it’s looking like I should just stick to my own rules and do the due diligence. The share prices will take care themselves over time.

Mark
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Congratulations, Mark! I’m thrilled you’ve found and are following l a strategy that has worked and continues to work for you.

According to this link: https://finance.yahoo.com/quote/SPY/history?period1=15463008... , SPY distributions are down a bit over the past two quarters vs. the same period last year. That suggests that even S&P 500 dividends have been impacted by COVID. So great job of picking companies with dividend staying power and opportunistically reinvesting at attractive prices. Very cool, my friend.

Personally, I don’t think we’re really out of the woods yet. As the weather cools and people spend more time indoors, there’s a risk that case levels could spike again, leading to further shutdowns or an extended reopening timeline. In addition, the bond market remains propped up by the Fed. History suggests that easy money is easy to misallocate. Misallocated easy money is a good way to build up bubbles that eventually burst.

I don’t have a good answer. As a result, the path we’re taking is largely continuing to work the plan we put in place before the pandemic. The only somewhat major change we’ve made is that we opened a Home Equity Line of Credit (but have not tapped it) as something of an extended emergency fund. I am tempted to tap it to pay off our mortgage, which would lower our mandatory minimum payment substantially and our interest rate somewhat. There are two key reasons we haven’t. First is that it would convert a fixed rate loan to a variable rate one. Second is that it would burn through the line of credit, making it unavailable should a real extended emergency arise.

Best of luck to you, my friend.

Regards,
-Chuck
Discovery/HR Home Fool
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Personally, I don’t think we’re really out of the woods yet.

I know, still it’s hard to predict anything either way. But it always is. I think the trick is to have clear rules for yourself about when and what to buy. It can be frustrating at times when I have cash to invest but no clear candidates. Apart from the ones I already invested in. So I either wait, or add to my most promising positions.

There currently are still a few I add money to. They may get dragged down when there’s another bear market, but I’ve become less fearful of downturns. They happen. But the recovery usually doesn’t really take all that long, it’s just a matter of staying level-headed and patient.

2008-2009 was different. But even there I got back to 2007 levels pretty quickly by staying focused, taking advantage of some amazing deals that were presented. It was a nervous time, but now I feel much calmer at downturns.

Mark
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With regards to the Home Equity Line, that is a strategy I have put forward to people in the past to use as an emergency fund. Smart move. My advice would be not to use it on your mortgage. Keep it for emergencies. It gives you flexibility. And most importantly, it gives peace of mind.

Try refinancing your mortgage if you want to lock in a lower rate. But if that’s not worth it, using your equity line is probably not really worth it either.

Mark
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