2019-09 Dividend Income Report

Here is the dividend income report for September, 2019.

The monthly dividend income came out to $2112.65. The yearly income total for 2019 through the end of the month was $6485.69.

The income for September, 2018 was $506.44, and the yearly income for 2018 through the end of September was $3476.52.

The international stock dividend fund did not pay as much this quarter as last quarter.

The Vanguard Utilities ETF (VPU) did not pay this month. It paid a dividend on October 1. I know it’s a first-world problem, but I am thinking of replacing it with State Street’s Utilities Select Sector SPDR Fund (XLU). XLU is State Street’s only utility ETF, and BlackRock’s  iShares U.S. Utilities ETF (IDU) has a much higher expense ratio. VPU has the most holdings. I think for the time being I will stick with it.

I am a bit surprised that State Street does not have a broader utility ETF in addition to XLU. XLU has the dividend stocks that are in the S&P500.

Fidelity has the Fidelity MSCI Utilities Index ETF, FUTY. It has the lowest expense ratio, almost as many holdings as VPU, and a nice dividend. But as I stated, I think for now I will stay put. As Buffett has stated, returns decrease and trading increases. Or maybe it was Jack Bogle.

My brokerage money market account paid $6.03 in August, and $4.86 in September. Interest rates are low and getting lower. The only reason Dolt 45 wants lower interest rates is because he owes a LOT of money. I don’t think the economy really needs it. Granted, things are not great, but I don’t think the economy is slowing down yet. I don’t think the next recession will be as bad as the one we say in 2008-2011 (depending on what country we are talking about), but cutting rates at this stage is a bad idea. Rates are historically speaking low right now. In 2006, the federal funds rate (what the Fed says banks can charge each other) was 5.25%, and the discount rate (what the Fed charges banks) was 6.25%. Right now, those rates are 1.75% and 2.75%.

A lot of people think interest rates are too high right now. Perhaps things are a lot worse than they seem. Or perhaps the whole Rethuglican Party is abandoning its supposed rock-solid principles, and just following Dolt 45’s lead. When conservatives seem inconsistent, they are really not. They are lying (whether to themselves as well as others I do not know) about what they are consistent about. It’s not about freedom, or balanced budgets. It’s about being in charge and staying in charge.

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each September from 2011 through 2019:

Month YTD Amount 3MMA 12MMA
2019-09 $6485.69 $2112.65 $744.85 $831.74
2018-09 $3476.52 $506.44 $430.49 $518.06
2017-09 $4796.80 $775.50 $562.76 $551.05
2016-09 $4260.70 $720.86 $505.47 $499.02
2015-09 $3744.49 $659.59 $443.06 $432.46
2014-09 $2993.02 $536.75 $353.04 $335.39
2013-09 $2374.05 $395.65 $293.78 $294.44
2012-09 $2425.78 $315.21 $283.66 $283.00
2011-09 $2121.78 $243.26 $256.81 $233.01

Here are the securities and the income amounts for September, 2019:

  • Vanguard Total Bond Market ETF: $39.47
  • Vanguard Total International Bond ETF: $11.22
  • RLI Corp: $23.25
  • SPDR S&P Dividend ETF: $694.60
  • SPDR Dow Jones REIT ETF: $264.32
  • SPDR Dow Jones REIT ETF (second account): $436.67
  • SPDR S&P Global Dividend ETF: $630.07
  • Brokerage Money Market: $4.86
  • Brokerage Treasury Account: $8.19

Big Jim pays attention to details and remembers the big picture.

 German painting from about 1518 in a museum in Austria. Image from Wikimedia, assumed allowed under Fair Use.

Thoughts On Startups And Cisco

I know a couple of guys at Cisco who were brought in as part of an acquisition. They are members of a couple of meetups I attend. Their ranting about corporate culture sparked some thoughts about corporations and startups. I think there are a lot of things about the world that are the result of choices that were made before us, and not immutable laws of nature. Innovation can only happen in startups and corporations must be inflexible behemoths are two of those ideas.

This made me think of an article on Wolf Street: Cisco Buys 45th Company in 5 Years, Revenues Still Stagnate.  The title gives the basic idea of the article. From 2012 to 2017, Cisco bought 45 companies. Cisco has not disclosed the prices for all of those acquisitions. For 19 of them, it spent $18.2 billion.

We do not have an alternative reality to compare to ours. Perhaps the acquisitions are the only thing that prevented Cisco’s revenue from declining. Nevertheless, here is a table with revenue and income from 2010 to 2019 (in millions):

FY Revenue Net Income
2019 51,904 11,621
2018 49,330 110
2017 48,005 9,609
2016 49,247 10,739
2015 49,161 8,981
2014 47,142 7,853
2013 48,607 9,983
2012 46,061 8,041
2011 43,218 6,490
2010 40,040 7,767

I don’t know why income took a dive in 2018. It has gone up over the decade. But as the Wolf man says, it does not look like they got a great rate of return on their investments in acquisitions. Cisco spent billions on startups, and really has nothing to show for it.

Why not just hire people to expand? It might have cost less.

In my understanding of the VC world, not every investment makes a profit. An exit must cover the cost of the failed startups as well as cost of successful startups, in addition to a profit. And a new car or boat for the jackass VCs. Maybe the cost of the failed companies is not a line item in an acquisition agreement or IPO prospectus, but those costs are still embedded in an exit.

Instead of a big corporation acquiring one profitable startup from a VC that also has to make up for nine failed startups, why can’t big corporations start a dozen or so project teams, and shift people into the ones that are successful? When a corporation acquires a startup or a startup has an IPO, a lot of the upside has already happened. Why not keep some for yourself?

I think that like needing a car outside of a big city in the USA (and even in some big cities), a lot of people think that this is some immutable law of nature. I think this is the result of many, many choices, even some that were made for us that we do not know about. Maybe changing it would be next to impossible. Maybe Texas will never get mass transit. (Because nothing says “freedom!!” like spending an hour every day going 10 MPH when the speed limit is 60.) Just because things are this way does not mean things have to be this way. I think this is an example of the Is-ought fallacy.

My Meetup acquaintance have said things like, “Cisco would not have let us do this in language X or with library Y if the project started there.” If that were true, then that would be a choice. There is no reason that an internal team cannot try something in a new programming language. There might be people in the company who would like to try new technology. If a corporation is willing to buy a team that uses a new language, they should be willing to let internal teams have the same freedom.

Except Scala. It really is vile.

Some big corporations used to have research labs: PARC is still a part of Xerox. It may not be much now, but Xerox was one of the biggest companies in the world. (Carl Icahn got a hold of Xerox, so things are not going too well.)  Bell Labs is now part of Nokia. A lot of groundbreaking technology came out of those organizations. Real innovation, not the bogus innovation we get from Silicon Valley today, like Uber (combining taxis, phones and indentured servitude) or WeWork (“We are the middleman, and do NOT pass the saving on to you, because frankly we are losing money”). All Silicon Valley has given us in the past decade is advertising, mass surveillance, and more ways of losing money.

And who pushes the line that innovation can only come from startups and VCs? People in the startup/VC ecosystem. Ecosystem and “echo chamber” are synonymous here.

Big Jim wants us to make great things again.

Image  from Wikimedia, assumed allowed under Fair Use. Painting of the Annunciation by Duccio di Buoninsegna (c. 1255–1260 – c. 1318–1319), aka “The Duce”. Finally, this site takes a Duce.

2019-08 Dividend Income Report

Here is the dividend income report for August, 2019.

The monthly dividend income came out to $63.10. The yearly income total for 2019 through the end of the month was $4373.04.

The income for August, 2018 was $549.51, and the yearly income for 2018 through the end of August was $2970.08.

I am considering not putting money into any REITs and going with a bank ETF. Let’s face it, the banks always win no matter what happens. I thought about going with insurance, but there are two issues. One is I am not sure how each individual insurance firm makes their money to pay the dividend. I know a lot of them invest the float. If ABC Insurance pays for their dividend by buying XYZ Oil Company, maybe I should cut out the middleman? (Granted, finance is nothing but middlemen.)

For all the shady things banks do, in some ways insurance companies are worse. One of the big stories out of Hurricane Katrina was that they tried to tell people who were covered for wind damage that they had flood damage. Granted, that was almost 15 years ago, but it is pretty shady. When someone files a claim, their back is against the wall. Not a good time for a wealthy corporation to be playing games. I read somewhere that an insurance company’s business model is basically to deny as many claims as possible.

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each August from 2011 through 2019:

Month YTD Amount 3MMA 12MMA
2019-08 $4373.04 $63.10 $788.78 $697.89
2018-08 $2970.08 $48.14 $549.51 $540.48
2017-08 $4021.30 $581.69 $558.23 $546.50
2016-08 $3539.84 $522.20 $493.44 $493.92
2015-08 $3084.90 $406.45 $427.26 $422.22
2014-08 $2456.27 $323.94 $348.41 $323.64
2013-08 $1978.40 $305.11 $279.05 $287.74
2012-08 $2110.57 $316.04 $280.53 $277.00
2011-08 $1878.52 $322.35 $254.56 $225.45

Here are the securities and the income amounts for August, 2019:

  • Vanguard Total Bond Market: $40.47
  • Vanguard Total International Bond: $11.33
  • Brokerage Money Market: $6.03
  • Brokerage Treasury Account: $5.27

Big Jim is banking on dividends.

“Radha Pining for Her Beloved”, 1634, at the Brooklyn Museum, assumed allowed under Fair Use.

2019-07 Dividend Income Report

Here is the dividend income report for July, 2019.

The monthly dividend income came out to $58.79. The yearly income total for 2019 through the end of the month was $4309.94.

The income for July, 2018 was $736.90, and the yearly income for 2018 through the end of July was $2921.94.

I maxed out my 401(k) with my employer, so I have more money coming in every paycheck. I transferred the extra money to my broker to keep it separate from my checking account until I put it in my Roth IRA next year, and to hopefully earn a small bit of interest. And so far, it is very small. $0.72 to be precise. For some reason the money was put in a new account at my broker, so now I have two cash accounts. I thought it would go into the money market account. I just hit the “Submit” button thinking it would go into the same account. Hopefully this will not be a big deal. I hope the shares of RWR I bought bring in enough to make up for the $100 or so I am not getting anymore.

I am still thinking about putting money into REITs. Realty Income will announce their quarterly results tomorrow. I might decide to take the plunge with them. I mentioned a few other REITs a few months ago. I looked at their financial statements, and a lot of them have wide fluctuations in net income from year to year, sometimes from quarter to quarter. I want income, not drama. Realty Income has been increasing their income for 26 years. Granted, sometimes you have to go to the fourth decimal place to see the increase; in 2013 they increased from $0.1812292 in May to $0.1815417 in June. On the other hand, they pay monthly and have more than one increase in a year.

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each July from 2011 through 2019:

Month YTD Amount 3MMA 12MMA
2019-07 $4309.94 $58.79 $818.06 $696.65
2018-07 $2921.94 $736.90 $548.35 $584.94
2017-07 $3439.61 $331.08 $541.56 $541.54
2016-07 $3017.64 $273.36 $464.99 $484.27
2015-07 $2678.45 $263.13 $412.44 $415.35
2014-07 $2132.33 $198.43 $333.77 $322.07
2013-07 $1673.29 $180.57 $258.23 $288.65
2012-07 $1794.53 $219.72 $261.24 $277.53
2011-07 $1556.17 $204.83 $235.96 $211.69

Here are the securities and the income amounts for July, 2019:

  • Vanguard Total Bond Market ETF: $40.59
  • Vanguard Total International Bond ETF: $11.43
  • Brokerage Money Market: $6.05
  • Brokerage Treasury Account: $0.72

Big Jim prefers dividend increases of at least $0.01. Is that too much to ask?

“The Purification of the Temple” by El Greco (1541 – 7 April 1614), at the El Greco Foundation site, assumed allowed under Fair Use.

2019-06 Dividend Income Report

Here is the dividend income report for June, 2019.

The monthly dividend income came out to $2244.44. The yearly income total for 2019 through the end of the month was $4251.15.

The income for June, 2018 was $863.49, and the yearly income for 2018 through the end of June was $2185.04.

This is the first month with income from the State Street ETFs. So far, it was a pretty bug haul. WDIV paid over $1000. I usually do not get to $4000 in income until September. This ETF has bigger payouts in June and December, and smaller ones in March and September, so I do not expect to have such a nice haul every single time.

Dividend growth ETFs in general do not always have increasing payouts every quarter. That is one disadvantage relative to investing in the individual stocks. I think this is because people are buying and selling the fund all the time, and not buying and holding. I do not know if it is hedge funds doing the trading, or if people are continually seduced by the deceptive siren song of capital gains.

I also used some of my money market fund at one of my brokerage accounts to by additional shares of RWR. I did not buy the shares in time to get the dividend. I guess I bought on the ex-record date, or something. Still, waiting three months for the first payout is not the end of the world.

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each June from 2011 through 2019:

Month YTD Amount 3MMA 12MMA
2019-06 $4251.15 $2244.44 $959.55 $753.16
2018-06 $2185.04 $863.49 $319.68 $551.12
2017-06 $3108.53 $761.91 $539.42 $536.73
2016-06 $2744.28 $684.76 $464.00 $483.42
2015-06 $2415.32 $612.21 $411.83 $409.95
2014-06 $1933.90 $522.86 $333.10 $320.58
2013-06 $1492.72 $351.48 $257.79 $291.91
2012-06 $1574.81 $305.84 $260.85 $276.29
2011-06 $1351.34 $236.50 $235.38 $203.23

Here are the securities and the income amounts for June, 2019:

  • Vanguard Total Bond Market ETF: $40.29
  • Vanguard Total International Bond ETF: $11.37
  • RLI Corp: $23.19
  • SPDR S&P Dividend ETF: $626.86
  • Vanguard Utilities ETF: $204.89
  • SPDR Dow Jones REIT ETF: $260.03
  • SPDR S&P Global Dividend ETF: $1006.00
  • Money Market: $71.81

Big Jim likes the big payouts, and he likes them better when they are more predictable.

Painting of the Flight To Egypt by Guido of Siena (13th Century), assumed allowed under Fair Use.

I May Add More Short Posts

I may start adding more shorter posts soon.

I would like to write longer posts. It makes me look smart. But I do not have as much time to devote to this as I would like. Or watching television. Or lots of other things.

But the urge for self-expression remains. I have a lot of small comments in text files that have been piling up for years. I would like to clean up some part of my life. I do sometimes read articles online at work and jot down notes and thoughts; sometimes they are enough for an entire post. But I do have a backlog that I would like to clear up.

Also I could react to things more quickly. However, there still might be some posts about events from a few years ago.

Also it would be a chance to look at more artwork. I try to find a painting or illustration for each post (usually they have nothing to do with the content). I have been doing some research into art from centuries ago, and I would like to keep looking into it.

Plus, I can’t let Joshua Spodek use up all the good words.

Big Jim has a lot of stuff to talk about.

Image from the Syriac Bible of Paris, dated to the 6th or 7th century, file on Wikimedia, assumed allowed under Fair Use.

2019-05 Dividend Income Report

Here is the dividend income report for May, 2019.

The monthly dividend income came out to $150.95. The yearly income total for 2019 through the end of the month was $2006.71.

The income for May, 2018 was $44.66, and the yearly income for 2018 through the end of May was $1321.55.

I have sold some of my Vanguard ETFs and replaced them with State Street ETFs. I sold six and bought three. I hope they will all pay in C months and make my income more predictable.

As I was looking, I took a look at some of the iShares ETFs. I thought their expenses were rather high, considering how big they are. Then again, some of the State Street ETFs have high expense ratios as well. Higher than the unpredictable Vanguard. I wonder how expense ratios are calculated. Real Estate Select Sector SPDR Fund has an expense ratio of 0.13%, 33 holdings, $2.927 billion in assets, and 80.3 M shares. State Street’s other US real estate fund, SPDR Dow Jones REIT ETF has an expense ratio of 0.25%, 96 holdings, $2.373.3 billion in assets, and 24.1 M shares. (RWR has a higher dividend, so I think the higher expense ratio is worth it.) So their assets are not that far off, the more expensive one has more holdings, but the cheaper one has more than three times as many shares. Does a high share count lower the expense ratio?

I am looking at putting some REITs into my brokerage account. A couple that I am looking at pay monthly dividends. STAG Industrial has a lot of warehouses, which are becoming more important with online delivery. Blackstone just bought a logistics and warehouse company. LTC Properties, Inc. has a lot of seniors housing and health care properties, but their dividend has not increased since October 2016. Welltower is also into senior housing and health care, but they pay quarterly and they have also frozen their dividend. Ventas is also into senior housing and health care, they pay quarterly, and they have been increasing their dividend for nine years.

Another REIT that I am looking at is Easterly Government Properties, Inc. They buy buildings that are leased to federal agencies. They seem to like law enforcement. Rethuglicans always talk about cutting spending, but they never do it.

I am also looking at Gladstone Land Corporation. I am a bit on the fence about this one; I will have to look more into it. They buy farmland across the US, and they say they are still in acquisition mode. I hope so, because frankly it looks like they are doing it wrong. Their site says, “All our farms have abundant water sources”, yet they have a lot of farms in California, and two in Arizona, which are very dry, and a lot in Florida, which is Hurricane Central. They have only two in Michigan, and no others in the Midwest. For all the years I lived in Illinois, there were not that many tornadoes, and it has a lot of water. Right now I cannot access their investor relations page, so I cannot look at filings or listen to conference calls. I will try again later.

But seriously, farming in Arizona? Are you crazy?

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each May from 2011 through 2019:

Month YTD Amount 3MMA 12MMA
2019-05 $2006.71 $150.95 $592.51 $638.08
2018-05 $1321.55 $44.66 $398.51 $542.66
2017-05 $2346.62 $531.68 $553.90 $530.30
2016-05 $2059.52 $436.85 $479.79 $477.37
2015-05 $1803.11 $361.99 $411.92 $402.51
2014-05 $1411.19 $280.01 $304.77 $306.30
2013-05 $1141.24 $242.65 $260.91 $288.11
2012-05 $1268.97 $258.15 $257.13 $270.51
2011-05 $1114.84 $266.55 $233.03 $194.61

Here are the securities and the income amounts for May, 2019:

  • Vanguard Total Bond Market ETF: $40.47
  • Vanguard Total International Bond ETF: $10.71
  • Money Market: $99.77

Big Jim likes predictable income.

“Adoration of the Magi” by El Greco (1541 – 1614), file on Wikimedia, assumed allowed under Fair Use.

A Look At Global Aristocrats Index

The international index that I have picked is the S&P Global Dividend Aristocrats Index. Its ETF is the SPDR S&P Global Dividend ETF, WDIV.

The Global Dividend Aristocrats Index is based on the S&P Global BMI (Broad Market Index). Stocks in the Global BMI must have a market cap of at least USD $100 million, must meet liquidity standards (at least 20% of a stock’s market cap should be traded in a twelve-month period for stocks based in developed markets, 10% for emerging markets), be in a developed or emerging market, have at least 50% of their shares available for public trading, and it only includes common stocks (no fixed-dividend shares, closed-end funds, investment trusts, convertible bonds, unit trusts, equity warrants, mutual fund shares, limited partnerships, business development companies (BDCs) and no preferred stock with a guaranteed fixed return).

The S&P Global Dividend Aristocrats Index is weighted by yield. The criteria are:
– The stocks are taken from the S&P Global BMI (Broad Market Index)
– It includes stocks with market caps of at least USD $1 billion.
– Stocks have a maximum payout ratio of 100%, or not have a negative EPS
– Max yield of 10%
– The goal is for the index to contain 100 stocks (there are rules for what happens if less that 100 meet the criteria)
– No more than 20 stocks can come from one country (right now, US and Canada each have 20)
– Stocks must have increased or at least maintained their dividend for at least 10 years (since the index is weighted by yield, I do not know if a dividend grower would take priority over a dividend maintainer)

I assume one reason they include dividend maintainers is that raising dividends may not be as common in some countries. In many countries, companies do not pay a set amount every quarter like American companies do.

There is an S&P International Dividend Aristocrats Index. It is the Global Aristocrats Index without any US stocks. Its ETF, FID, has a high expense ratio of 0.60%. I find it odd that the ETF page on ETFDB does not have a link to the actual ETF. Even though it has a high ratio, the website looks cheap and does not inspire confidence. I find it odd that index providers do not license their indexes (or at least related indexes) to one firm. Or at least reputable firms. Frankly, I don’t trust anybody from Wheaton.

“S&P”, “Dividend Aristocrats”, and possibly a few other terms are trademarks of S&P Dow Jones Indices LLC.

Big Jim will invest his money with companies he thinks he can trust.

“Behold The Bridegroom” by Γύζης Νικόλαος (Nikolaos Gyzis) (1842 -1901), on exhibit at the National Gallery in Athens, assumed allowed under Fair Use.

2019-04 Dividend Income Report

Here is the dividend income report for April, 2019.

The monthly dividend income came out to $483.26. The yearly income total for 2019 through the end of the month was $1855.76.

The income for April, 2018 was $50.88, and the yearly income for 2018 through the end of April was $1276.89.

I have looked at the indexes used by some of the funds I invest in, and I am selling some of my funds. I am moving my domestic funds to the SPDR S&P Dividend ETF, SDY, which follows the S&P High Yield Dividend Aristocrats Index I might put the money that was in international ETFs into SPDR S&P Global Dividend ETF, WDIV, which follows the S&P Global Dividend Aristocrats Index It has some of its assets in US firms, but most of it is in other countries.

These funds have their assets in fewer firms than the ETFs that I am selling, but they still have money in more companies than I owned when I had my money in individual stocks.

I am also thinking about moving my money market fund into Realty Income, the Monthly Dividend Company Getting monthly dividends sounds nice. They are part of the S&P High Yield Dividend Aristocrats Index (1.45% of SDY). I know Wolf Street has been blogging about the retail apocalypse (remember kids, it’s not just because of Amazon; private equity is also a big factor), but Realty Income has their quarterly calls available on their site. If I keep track of it, things might work out okay; as Andrew Carnegie said, the way to get rich is to put all your eggs in one basket and watch that basket carefully. They still increased payouts during the Great Recession, so I am sure they will do fine during the next downturn.

Besides, a lot of people who predict disaster all the time never see any good news anywhere, and never seem to reflect that they might be wrong when they see their predictions not coming true.

I find it a bit odd that index providers will license their indexes to different firms. It is pretty frustrating that many of the providers do not provide a list of constituents on their index pages. Some of them give the top ten, but not the whole list.

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each April from 2011 through 2019:

Month YTD Amount 3MMA 12MMA
2019-04 $1855.76 $483.26 $588.35 $629.22
2018-04 $1276.89 $50.88 $405.77 $583.24
2017-04 $1814.94 $324.66 $532.02 $522.40
2016-04 $1622.67 $270.38 $461.86 $471.14
2015-04 $1441.12 $261.30 $409.21 $395.68
2014-04 $1130.58 $196.43 $323.64 $303.18
2013-04 $898.59 $179.23 $262.82 $289.40
2012-04 $1010.82 $218.56 $274.05 $271.21
2011-04 $848.29 $203.10 $216.30 $179.46

Here are the securities and the income amounts for April, 2019:

  • Vanguard Dividend Appreciation ETF: $208.52
  • Vanguard REIT ETF: $130.79
  • Vanguard Total Bond Market ETF: $41.37
  • Vanguard Total International Bond ETF: $11.08
  • Money Market: $91.50

Big Jim prepares for the future, but not at the expense of awareness.

Painting of the Annunciation by Guido of Siena (13th Century), assumed allowed under Fair Use.

A Look At Dividend Aristocrats

My look at dividend indexes brings me to the Grandaddies of all dividend indexes: The S&P Dividend Aristocrats and the S&P High-Yield Dividend Aristocrats.

The S&P Dividend Aristocrats is a subset of the S&P 500, and the S&P High-Yield Dividend Aristocrats of the S&P Composite 1500, which is a combination of the large-cap S&P 500 (stocks with market capitalization of $6.1 billion or more), the mid-cap S&P 400 (stocks with market caps between $1.6 billion to $6.1 billion) and the small-cap S&P 600 (stocks with market caps between $450 million and $1.6 billion).

The S&P Composite 1500 index has the following criteria:
– The stock must be for a US-based company (filing a 10-K, having a plurality of its assets in the US, or traded on a US exchange
– The stock must be traded on one of the following exchanges: NYSE, NASDAQ, Investors Exchange (IEX), a Cboe exchange (BZX, BYX, EDGA, E)
– Only common stocks and REITs are eligible
– At least 50% of the shares outstanding must be available for trading (not held by insiders, private equity or venture capital firms or sovereign wealth funds; presumably they would buy and sell on private markets)
– The stocks should have positive GAAP earnings for the most recent quarter, or averaged over the most recent four quarters
– The stocks should have adequate liquidity (such as trading 250,000 shares a month)

The Dividend Aristocrats Index has the following criteria:
– Stocks must be part of the S&P 500.
– Each stock must have a history of increasing dividends for at least 25 consecutive years.
– Each stock must have a market cap of at least $3 billion as of the rebalancing reference date. The S&P 500 has a minimum cap of $6.1 billion; I am not sure why there is a discrepancy.
– Each stock should have a daily trading volume of at least $5 million for the three months prior to the rebalancing reference date.
– The index should have at least 40 members. Hands will be waived if the number is below 40.
– No sector should constitute more than 30% of the index.

The Dividend Aristocrats Index is an equally weighted index. It currently has 57 stocks.

The High Yield Dividend Aristocrats Index has the following criteria:
– It includes stocks that are part of the S&P Composite 1500.
– Stocks must have raised their dividend every year for at least 20 years.
– Stocks should have a market cap of at least $2 billion on the rebalancing reference date.
– Each stock should have a daily trading volume of at least $5 million for the three months prior to the rebalancing reference date.
– No stock should make up more than 4% of the index.

The High Yield Dividend Aristocrats Index is weighed by yield, so higher yielding stocks make up a greater proportion of the index. It could have stocks with low yields, they just wouldn’t make up much of the index. Perhaps “High Yield” is a misnomer. It currently has 111 stocks.

Out of all of the indexes I have looked at, I think I like these two the best. There are no proprietary eligibility criteria, there are no analysts estimates or consensus; it is all data and rules driven. Yes, it looks backwards, but I prefer that over someone’s guess about the future. We cannot argue about whether the past happened, just about what it tells us. And no buybacks. It is all about the payouts, baby.

The Morningstar US Dividend Growth Index eliminates stocks whose yield puts them in the top decile, I do not think it is a necessary step for a dividend growth index. I think a couple of decades of dividend increases will make disaster less likely to happen.

The fund for the Dividend Aristocrats, NOBL, has an expense ratio of 0.35%. The fund for the S&P High Yield Dividend Aristocrats Index, SDY, also has an expense ratio of 0.35%. SDY has a nice yield. I will read the prospectus and perhaps sell my shares in VIG and VYM and get SDY.

“S&P”, “Dividend Aristocrats”, and possibly a few other terms are trademarks of S&P Dow Jones Indices LLC.

Big Jim is looking at the tried and true.

Painting of the Visitation by Giotto di Bondone (1267 – 1337), assumed allowed under Fair Use.