March's Dividend Portfolio Update Sets New All-Time Record - 100 Holdings, 21 Buys (2024)

The upward market trajectory continued in March, with global stock indices recording their longest positive monthly streak since 2021. Both U.S. and non-U.S. stocks rose by 3% in March, and the S&P 500 index notched its best start to a year since 2019, positioning itself for further gains. Closing the month at 5,137 points, it confidently surpassed the psychologically significant 5,000-point mark. The DJIA maintained its mediocre stride, recording a modest uptick of 0.1%. It tantalizingly approached the 40,000-point milestone, capturing attention across trading floors.

The Federal Reserve remained on the sidelines, again opting not to make any moves in March. Inflation data continues to paint a sticky picture as price levels remained elevated compared to pre-pandemic levels, leaving investors wary. Personally, I see no reason for any interest rate cuts whatsoever, and I personally also don't expect any anytime soon, and I embrace that if that were to become reality.

Nvidia's (NVDA) unparalleled ascent towards the stratosphere continued with its hotly anticipated GTC 2024 where it unveiled the groundbreaking Blackwell chip, significantly more powerful than Grasshopper with technical specs unheard of before.

Nvidia CEO Jensen Huang's proclamation echoed:

Generative AI is the defining technology of our time. Blackwell is the engine to power this new industrial revolution."

In my view, Blackwell's arrival not only ushers in a new way of computing, but it ultimately heralds the last era of civilization. From hereon, until the end of days, AI's influence will inexorably expand - more powerful, more crucial, and more pervasive and hopefully enriching across every facet of life.

While the future holds immense promise, in the present moment, analysts have raised their price targets for NVIDIA. However, the stock's response has been subdued, and that is actually a good thing to shake out some of the ecstatic euphoria. I never think or even worry about short-term fluctuations, and I am only interested in the long term. And if Nvidia can dominate the AI software space, to a moderate degree, akin to tis hardware dominance, I have no doubt to be able to witness Nvidia becoming the first $5T company latest by the end of this decade.

Portfolio Changes in March

March saw robust investment activity as I managed to put around $1,700 into the market, mostly focusing on my go-to favorite, BDCs, despite net investments only totaling around $700 as I trimmed a share of Nvidia in order to take some profits. I remain super confident in Nvidia in the long run, but it looks like the stock has lost its momentum for now, which is actually healthy, and I rather invest more into BDCs as I am hungry for cash.

My main picks were Ares Capital (ARCC), the Goldman Sachs BDC (GSBD) and Hercules Capital (HTGC), all big players in the sector alongside the leader, Main Street Capital (MAIN). They have been building up some hefty spillover dividends over the past year, which as a financial cushion. When net investment income faces headwinds due to declining interest rates, these accumulated reserves act as a safety net. While immediate dividend hikes are not on the horizon, the stability provided by these spillover dividends remains intact.

The interest rate environment is expected to change this year, but I continue to believe that interest rates will come down slower than expected, and I personally don't expect any rate cut this year. The economy's vitality and persistent inflation-particularly in housing, food, and travel-temper the pace of decline. The market and the Fed seem to have realized that as well, with the odds of a June rate cut dropping every day and a September rate cut appearing the most likely option. However, I don't agree with that and see no reason whatsoever for the Fed to cut rates anytime soon. Companies can healthily operate with current interest rates, and the Fed needs to avoid at all cost the return of market euphoria, inflation and the next leg of the housing bubble. I personally would love them to keep rates at 5% for the rest of the decade!

BDCs won't dazzle with sudden capital appreciation. However, for investors seeking a steady stream of income, this lack of fireworks is inconsequential.

In March alone, my investments added $137 to my yearly dividend income, continuing the year on a positive note. My aim is to lift my dividend income by about $100 each month, mostly doable thanks to the high yields from BDCs, even though those are declining right now.

Overall, the average yield on cost of my new investments in March averaged around 8.2%, reinforcing my belief in BDCs as a core part of my portfolio. I'm banking on their dividends staying steady-that's what I'm all about when it comes to generating income. Time will tell if I'm on the money or just overly optimistic.

All these purchases break down as follows:

Recognizing the significance of BDCs in my investment strategy, I've opted to categorize my purchases into BDCs and non-BDCs. Below, you'll find a summary of all net purchases made in March:

Dividend Income March 2024

Dividend income hit a new all-time record of $1,214 which marks the second time that I crossed the magic $1,000 barrier. This represents growth of 27% Y/Y and 32% sequentially. These numbers are exceptionally strong, but quarterly comparisons benefit from two special effects: (1) the semi-annual dividend payment of the Commonwealth Bank of Australia (OTCPK:CBAUF) and (2) Hercules Capital's odd dividend payment schedule distorts quarterly comparisons.

Excluding those effects, sequential growth falls to around 6% which is still very impressive in my view and mostly the direct consequence of my ongoing and heavy investments into BDCs, of which many pay dividends at the end of the quarter.

Beyond that, on an annual basis, the biggest income driver is by far Ares Capital Corporation, a stock I am running at minimum on a bi-weekly savings plan (but most of the time I am buying stock at least once per week and sometimes daily) and where my contributions quickly translated into meaningful dividend income. Dividends from Ares have now cleared the next big psychological milestone of $200 as this quarter's dividend income already amounts to $210. Dividend income from MFIC is also rising quickly - although not on the same level as that from ARCC - and has now passed $75. Dividend income from Hercules Capital is on a roll and also cleared a psychological milestone of $100 coming in at almost $125 already.

Similarly striking is that net dividends from monthly dividend payers have again comfortably cleared the $100 level thanks to the big supplemental dividend from Main Street Capital. That number is significantly below December 2023 which benefitted from a massive special dividend from Gladstone Investment Corporation (GAIN) but up strongly on a Y/Y basis as income in March 2023 "only" amounted to $113 compared to $143 this year.

I am buying more shares of MAIN, GAIN, GLAD and O every month and thus that monthly dividend income level will continue to rise month after month, although the months when the big supplemental dividends hit are truly something special.

In alignment with my investment strategy, I've incorporated a BDC/Non-BDC breakdown into my dividend income charts. This addition allows for more precise monitoring of this critical development.

Additionally, I have created a new visualization that dissects dividend income into two distinct categories: BDCs and Non-BDCs. These categories in turn are separated by dividend payment frequency into Monthly (blue) and Quarterly (orange) in absolute and relative terms. In March 2024, 41% of my total dividends stem from BDCs, which brings the share to 26% for the first quarter.

This metric is telling and will further guide me as it develops over time.

The dividend income from my top-3 regular dividend payers in March continues to grow quickly and has reached a whopping $416 average in 2024, which is up significantly compared to the full-year 2023 average of $324. If dividends continue to develop like that, the full-year 2024 average might get very close to $500 or even eclipse that.

All this is depicted below:

Here is a chart that shows the development of my net dividend income by month over time between 2015 and 2024. You can see the growth of my dividend income and the average annual dividend for each year:

This chart is my favorite because it illustrates the progression of my dividend income over time and allows me to easily see the average annual dividend for each year.

Next, I have plotted all of the individual dividend payments I have received, coloring them by year and arranging the years side by side instead of horizontally as in previous updates. This visualization allows for a more comprehensive analysis of the distribution of my dividend payments over time.

By visualizing the data in this manner, we get a clear picture of how dividend payments are spread out over different years, offering valuable insights into the overall growth of my dividend income over the years.

This visualization is initially quite cluttered, but it contains a wealth of information. It shows every individual dividend payment I have received since I began my investment journey in 2015, represented as a circle that is colored and sized according to its contribution.

The view is organized by month and year, allowing for a more comprehensive analysis of the development of my dividend income over time. For each year and month, a white rectangle indicates the average monthly dividend. The area where dividends fall below the average is filled in dark red, while the area above the average is colored dark green.

This type of data visualization allows for a detailed examination of the distribution of my dividend payments over time and enables me to easily identify trends and patterns in my income growth.

Now, zooming in on March, we can immediately see a number of big green circles in a sea of black. The bigger the circle and the bigger the distance to the previous circle for the same stock, the bigger is the change in dividend income compared to the prior years.

The importance of Ares Capital Corporation is clear, with a reddish circle indicating the massive jump in dividend income over the last 12 months due to heavy ongoing monthly investments, and I have no plans to stop these monthly savings plans. Similarly, the big year-over-year increases in dividend income from MAIN, MFIC and GAIN also clearly stand out visually in that chart.

Apart from that, when it comes to the dividends for 2024, I notice mostly orange circles at the top of the scale, which is exactly what I want to see. These big orange circles represent a rising dividend income, and my goal is to have as many of them as possible at the top of the chart.

Overall, my aim is to observe numerous large orange circles positioned at the highest point on the scale. This signifies a positive trend of increasing dividend income, which is precisely what I'm striving for.

Another way to express the monthly dividend income is in terms of Gifted Working Time (GWT). Assuming an average hourly rate of $36.25 for 2024, my GWT and annual net dividends have been as follows:

• 2018: 121 hours GWT, $3,000 in annual net dividends
• 2019: 142 hours GWT, $3,600 in annual net dividends
• 2020: 152 hours GWT, $3,800 in annual net dividends
• 2021: 180 hours GWT, $5,050 in annual net dividends
• 2022: 229 hours GWT, $6,400 in annual net dividends
• 2023: 272 hours GWT, $8,800 in annual net dividends
• 2024: Targeting at least 248 hours GWT, $9,000 in annual net dividends

The overall target for the year with $9,000 in annual net dividends is very conservative, but I expect that I will have to take out some risk from my portfolio as I am eyeing to raise capital for real estate investments if I encounter the right deal. Still, as the year unfolds, I do expect to be able to pass that target and potentially even reach my next milestone of $10,000 as well. That would be a great achievement, but nothing I am banking on to reach this year - it would be the icing on the cake.

Across the years, my YTD Dividend Race has been as follows:

• 2018: Disappointing
• 2019: Phenomenal, benefiting from a low baseline in the prior year
• 2020: Fairly disappointing
• 2021: Phenomenal
• 2022: Much better than expected, fueled by the very weak euro
• 2023: Breathtaking
• 2024: Currently standing at 17% YTD and has increased tremendously from the 7% YTD level by the end of February thanks to a record dividend month in March.

I have updated the YTD Dividend Race chart to show the development of YTD dividend income on a daily basis, allowing us to see that most of my dividend income is generated mid-month and towards the end of the month. The chart also breaks down the development by month for the current year, making it easy to identify significant jumps in income.

Expressed in GWT, it presents itself as follows:

What this shows is as follows:

1. All time (blue area) - Around 1,273 hours, or 159 days, of active work have been replaced with passive income since the start of my dividend journey. Assuming a five-day workweek, this translates into almost half a year in total.
2. Full-year 2024 (green bars) - Around 64 hours, or 8 days, of active work have been replaced with passive income in 2024, which is basically equivalent to more than one entire working week funded with dividends. That is great progress, and I can't wait to add another month to that statistic.
3. Highlighted in pink is the accumulated total at the end of the current reporting month (March).

This visualization allows us to see the overall impact of my dividend income on the amount of active work I am able to replace with passive income. It also enables us to see the progress made year-to-date, as well as the accumulated total at the end of the current reporting month.

Upcoming April Dividends

As every month, April is packed with dividend payments heavily concentrated around the 15th and at month-end when the dividend checks from Canada's big banks as well as JPMorgan will be arriving over a period of just 3-4 days.

Given the majority of my savings plans feature companies that pay dividends in January such as W. P. Carey (WPC), Altria (MO), Cisco Systems (CSCO), JPMorgan, Toronto-Dominion Bank, Bank of Nova Scotia, Stryker (SYK), Medtronic (MDT) as well as ongoing investments into stocks like Rithm Capital (RITM) and Annaly Capital (NLY), it surely is going to be a big month that should easily set a new all-time dividend record for the month of April.

Overall, I am expecting more than $500 in dividend income and can't wait to see how the numbers will stack up in around 3 weeks.

At the end of March, my dividend portfolio is composed as follows:

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Stefan Redlich