The final dividend in 2019 has been recorded and it is time to review the lean, mean, dividend machine for the year. December was the month this year with the lowest dividend received, and I only received the monthly dividend from Transalta Renewables. I did not receive a dividend in December last year, hence 2019 is the first year with dividends every single month.

Dividends received per year

Quick facts about my dividend machine:

  • Average dividend per month: 1.733 NOK
  • Dividend received per day: 57 NOK
  • Current dividend yield: 3.3%
  • Current yield on cost: 3.8 %
  • Dividend increase compared to last year: 89%
  • Total dividend paid in 2019: 20.794 NOK
  • Received dividend from 26 companies in 2019 compared to 12 companies in 2018.
  • Expected organic dividend growth in 2020 is 7.9 %
  • Estimated dividend received in 2020: 28.262 NOK (based on status quo)
  • Withheld tax on dividends in 2019: 1.626 NOK

In December I’ve bought shares in:

  • Biotage AB – increased position to full size
  • Visa Inc – future dividend aristocrat?
  • Bakkafrost – participated in subsequent offering

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Not overlooked, nor undervalued. This is not a case for value investors, but a perfect match for dividend growth investors. I purchased my first shares in the company on 2 December 2019 for USD 184.15 per share.

About the company:

Visa, Inc. is a global payments technology company working to enable consumers, businesses, banks and governments to use digital currency. Visa operates in a four party model, which includes card issuing financial institutions, acquirers and merchants. We are not a bank and do not issue cards, extend credit or set rates and fees for account holders on Visa products (Source: Visa Inc. 10-K filing 2018).

Visa has a current market cap of USD 394 billion and is traded on NYSE. In the latest quarter released on 24 October 2019 the growth in underlying business drivers remained strong, primarly driven by growth in payment volumes and processed transactions. The company’s growth prospects are good in the coming years and the expected growth in EPS per share in 2020 is in the mid-teens.

Source: Visa Inc company presentation 24 October 2019

Megatrend:

The company benefits from the ongoing shift away from cash payments and over to digital payments. Digital payments continue to grow as a percentage of all payments world-wide and Visa is one of the key beneficiaries. Societies become more and more cashless and with an increasing standard of living the growth in years to come will be substantial.

Hard to use cash when shopping online
Shift from cash to digital payments is ongoing

Dividend:

Visa has increased its dividend since the IPO in 2008 making it a Dividend Contender. The current dividend yield is 0.65%, but the latest dividend hike was 20 % and it is expected that the dividend will increase by double digits in the coming years. Current pay-out ratio of ~20 % and strong growth in earnings per share will eventually materialise in future dividend hikes.

Source: The Motley Fool

Valuation:

Both Visa and its closest peer, Mastercard Inc, has experienced a strong share price performance the past five years, with Mastercard leading the way. Because of the strong share price performance, the company trades at a premium relative to its historical multiples. During the past decade, the highest EV / EBITDA of Visa was 27, the lowest was 8.8 and the median was 17.1. The current EV / EBITDA is around 26. I believe the valuation is justified due to the strong track-record of the company

Comparing Visa and Mastercard share price performace
Both Visa Inc and Mastercard Inc has solid share price performance the past five years

Risks:

  • When profitability is high in a industry with few competitors it attracts unwanted attention from others who want a piece of the action. New competition will press volume and margins down until the superprofit is gone. Cryptocurrencies and e.g. ApplePay has entered the market and tries to shift volumes from traditional payment methods to the digital sphere. This shift will in the years to come be faster and the continuous evolution of new technologies and business models may pose a risk to the company.
  • Regulatory risk: Regulatory risk is the first risk factor presented by the company in their annual report and the increased focus on compliance, anti-money laundering and regulation may pose a threat to the company. Lack of competition in the industry (i.e. duopoly with MasterCard) may pose a risk to the company due to increased oversight and regulation of the global payments industry.

Disclaimer: I am long Visa Inc

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November has been a cold and rainy month and the dividends has poured into my account. This month has only been surpassed by April and May, which in the Nordic countries are the main period for capital distribution from listed companies, and I’ve recorded in total 2.397NOK from seven companies. Last year I received dividends in November from three companies, and again this is a sign that the lean, mean, dividend machine is on track.

I received the monthly dividend from TransAlta Renewables, quarterly dividend from AbbVie, AkerBP, Mowi, Ocean Yield and Equinor as well as the semi-annual dividend from Investor AB.

Current dividend yield for my portfolio is 3.3 % compared to 3.7% last month and the downward yield trend in my portfolio is starting to be more apparent. The reason why the yield is curving downwards is because share prices of my holdings has been positive, but I’ve also sold my shares in Hemfosa due to a takeover bid on the company and Ocean Yield with a very high dividend yield. These are now cash positions and I’m contemplating how to reinvest the funds going forward. I’ve also purchased shares in Biotage AB with a low yield, but a high expected dividend growth the coming years.

Above you can find what I expect to receive in dividends in 2020. I’ve estimated that my dividends will increase to ~27.600 NOK, which is an increase of 37% compared to my expected dividend for 2019. This increase is due to dividend growth from my companies, but mostly due to purchase of new companies.

In November I’ve bought shares in:

  • Biotage AB
  • Lerøy Seafood – ~ discount to peers
  • Sparebanken Vest – a no-brainer investment with low P/B, high ROE, 5% bonus shares the next two years

The offloaded positions this month is:

  • Nekkar ASA – sold at 3.19 NOK per share due to a more attractive investment option
  • Hemfosa – due to takeover bid
  • Ocean Yield

Every month I will post an update on my monthly dividends. Here you can find last the update for September.

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It’s time to sum up this month’s dividends, even though October is not over yet. I will not receive any more dividends this month and for October I recorded 791 NOK. This is down from last year, but last year I only received dividends from ABG Sundal Collier (which I offloaded during the year). This year I received dividends from three companies, which may be an indication that my portfolio is more diversified compared to last year.

I received the monthly dividend from TransAlta Renewables, quarterly dividend from Hemfosa and semi-annual dividends from Beijer Ref. If we include the witholding tax subtracted from the dividends my dividends this month is actually 902 NOK.

Current dividend yield for my portfolio is 3.7 % compared to 4.1%. The reason why my yield is lower since last month is because I’ve purchased some shares in Nekkar , with no dividend payouts, because I sold some shares in Eolus and because the yield in Tomra and NIBE is lower than my previous dividend yield. The dividend yield is also lower because the share price of my holdings has increased.

If you want to know why I decided to purchase shares in Nekkar you should read my write – up here: Nekkar – time to unveild value.

Above you can find what I expect to receive in dividends in 2020. I’ve estimated that my dividends will increase to ~27.000 NOK, which is an increase of 40%. This increase is due to dividend growth from my companies, but mostly due to purchase of new companies. In October I’ve bought shares in:

Every month I will post an update on my monthly dividends. Here you can find last the update for September.

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9 out of 12 months are over and it’s time to sum up the dividends for September. Last year the dividens for September ended on 312 NOK, while this year I recorded dividends of in total 1 340 NOK.

I received the monthly dividend from TransAlta Renewables, quarterly dividend from Mowi and semi-annual dividends from Castellum and Wärtsilä.

The current dividend yield for my portfolio is 4.1%.

I purchased Equinor last month, and subsequent to my buy the company announced a program for repurchase of own shares, which is another way to distribute cash to its shareholders. Read the journal entry here!

I added some shares in Castellum AB after the real estate sector was downgraded by Pareto Securities. The company has increased their dividends the past 22 years, and I expect them to announce a dividend increase for 2019 as well, since their property management income is up 9% as per end of Q2. Read more here

I bought my first shares in Securitas at 147 SEK on the 10 September 2019. The share price reacted very negative on Q2 2019 – figures. I believe the company is well managed, has a stabile growth outlook due to increased urbanisation, promising acquisitions and necessary investments in security technology. Read more here.

On the 11 September I almost doubled my post in TransAlta Renewables, which is a monthly dividend payer.

Finally, I decided to sell 25 % of my holdings in Eolus Vind, find out why I violated my own rules for when to sell a stock.

Every month I will post an update on my monthly dividends. Here you can find last the update for August. Subscribe below to receive a notification when a new post is out.

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An introduction to my investment journal has now been uploaded. Here you can track all my investment decisions!

If you want to be updated on a periodic basis, feel free to submit your email below:

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