The last dividend of the month rolled into my account this noon.
January 2018 dividend income
Philip Morris: 48.14EUR
General Electric: 2.84EUR
In total that adds up to 82.07EUR of after-tax dividend income, which is a bit less than the 86.05EUR I received one year ago. The main reason here is the weakened US dollar and the GE dividend income.
Diageo: interim dividend: +5%
Omega Healthcare Investors: +1.54%
I added more Pandora A/S and Vestas shares.
Overall, a pretty uneventful month. How was your dividend income this month?
The new year is almost here and I just received my last dividend for 2017.
December 2017 dividend income
YUM! Brands: 2.24EUR
United Technologies: 3.14EUR
Coca Cola: 9.27EUR
Royal Dutch Shell: 67.92EUR
YUM! China: 1.00EUR
In total that’s 133.73EUR from the ten companies that paid me a dividend this month. As usual, the figure I list is after all applicable taxes.
Total dividend in 2017
My total dividend income in 2017 came in at 1,495.34EUR. Just a couple of euros short of 1500EUR!
2018 dividend income to get a boost from tax refunds
Next year my dividend income will get a nice boost from the Belgian government. After several tax increases on investing, there’s now finally a nice treat for dividend investors.
It’s a bit schizophrenic to be honest, but in this case it’s good. Over the last couple of years, the Belgian government significantly increased both the stock transaction tax as well as the dividend tax. They even implemented a speculation tax, which got cancelled after one year because it actually hurt tax revenue.
The silly Belgian tax on portfolios
The budget agreement for 2018 contains two major items that affect stock investors. First up, the government implemented a tax on stock portfolios. Basically, anyone who owns over 500 000EUR (1 million EUR for a couple) worth of securities will need to pay a tax of 0.15 percent. The goal here is to supposedly tax the rich but I think this will be another failed tax. The truly rich have more than enough methods to circumvent it so the tax base will be really small.
Furthermore, the tax is also very unfair. Someone with 499,999EUR in stocks pays 0EUR, while someone with 500,000EUR in his or her portfolio pays 750EUR. It’s total lunacy.
Tax-free dividends in Belgium!
The funny, and positive thing, is that there are also factions in the government that want to promote investing. They managed to negotiate a nice treat for dividend investors. Belgians are notorious for keeping large cash balances on savings account so some parties are pushing folks to invest more.
To keep it short, Belgian investors will be able to receive 627EUR in dividends tax-free in 2018. The plan is to increase this exemption to 800EUR from 2019. At the current dividend tax rate, this means my 2018 dividend income will increase by 188.1EUR in 2018 and 240EUR in 2019.
Unfortunately, the tax-free dividend income will need to be reclaimed via the tax return. So there will be a significant delay, I will need to pay tax on the first 627EUR in dividends first and I won’t get the money back until late 2019.
Reclaiming dividend tax from the Danish
Speaking about dividend taxes, I’m also planning to reclaim some cash from the Danish government in 2018. As I mentioned earlier on this blog, the dividend income I receive from Novo Nordisk is subject to a 27 percent dividend withholding tax. But there’s a tax treaty between Denmark and Belgium that reduces the rate to 15 percent so I should be able to reclaim the excess 12 percent.
Of course, I live in bureaucratic Europe so these things aren’t processed automatically. Governments want to charge as much tax as possible and make you jump through hoops to get back what is yours. There’s quite a bit of work, and a trip to the tax office, involved with this so I’m waiting until the figure I can reclaim gets a bit bigger. There’s a period of limitation of three years so just to be safe I’ll probably to this before autumn 2018.
Besides Novo Nordisk, I now also have two more Danish dividend-paying companies in my portfolio so it’s starting to become worth the hassle.
I just received the final dividend for this month so here’s my dividend income report.
November 2017 dividend income:
Bristol-Myers Squibb: 4.52EUR
Kinder Morgan: 3.85EUR
Omega Healthcare Investors: 8.12EUR
AB InBev: 41.44EUR
All figures are after taxes. In total it adds up to 61.11EUR, which makes it one of my lower dividend income months. Not a lot of my companies pay dividends in November or February, so those months are always a lot poorer than average.
General Electric: -50%
Nike: Added more shares
Vestas: Doubled my position on the recent drop
Weight loss progress!
Four months ago, I briefly touched on my health and weight loss efforts. I revealed how I cut back my Coca Cola consumption. Since the start of the summer, I added regular exercise to my life and made various tweaks to my diet.
The result has been spectacular, to say the least. For the first time in my life, I can now run 5 kilometers without a lot of effort. I still remember we had to do 5km runs in high school, I was always really slow and was barely able to finish the task. These days I can run 5km at a pace of about 10.5 kilometers per hour without getting the feeling that I’ve pushed myself to the max.
I think my initial goal was to live a healthier lifestyle and reduce my visceral fat. I went a lot further than that. Fast forward half a year or so and all the pants in my wardrobe are way too large. I’ve dropped about 16kg versus half a year ago and a little over 20kg in total. When I look in the mirror I get the feeling that I haven’t looked this good since I was 14 years old. Pretty amazing feeling and it surprises me how easy it was once I set my mind to it.
September marks the return of the months with dividend income in excess of 100EUR.
I received the following dividends in September 2017:
Royal Dutch Shell: 65.62EUR
In total that’s 127.32EUR in after-taxes dividend income for September 2017.
Philip Morris: +2.9%
Nice increase from McDonald’s while the Philip Morris increase remains relatively tiny.
I initiated a position in United Technologies (UTX). This is a diversified industrial that makes aircraft engines, aerospace products, elevators and escalators, and climate control solutions.
The Little Book That Still Beats The Market – Joel Greenblatt
Earlier this month I finally finished reading Greenblatt’s magic formula book. I started reading it quite a while ago but put the book down as it didn’t really peak my interest. Perhaps a decent book for (younger) beginners who know absolutely nothing about investing but I don’t think it’s suitable for more experienced investors.
The book is geared towards young teens and primarily centers around how the stock market works and how you can beat the market by using Greenblatt’s magic formula. It’s short and cheesy, and feels too much like a promotional piece.
I didn’t enjoy this book and think you can probably learn more about magic formula investing by reading a couple of articles about this investing style. Wikipedia boils down the basics of the book’s magic formula in nine sentences:
Invest in 20–30 highest ranked companies, accumulating 2–3 positions per month over a 12-month period.
Re-balance portfolio once per year, selling losers one week before the year-mark and winners one week after the year mark.
Continue over a long-term (5–10+ year) period.
Stocks for the Long Run – Jeremy Siegel
Another book I finally finished reading! This is another of the investing book classics, it was originally published in 1994 but the book has received several revisions over the years so it doesn’t feel dated.
This is a book I definitely recommend to beginners, it gives you perspective about the history of the stock market and what kind of returns you can expect in the long run. Data from this book is commonly cited and the book is full of interesting nuggets.
Don’t expect to learn any ground-breaking investment strategies or anything like that, the main message here is that stocks are something for the long run. This is basically the “buy and hold” bible and it can help a lot when you’re nervous about getting your feet wet in the stock market.
How was your month? Lots of dividend income or some exciting new purchases?
Since my last post I’ve read The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success. This is a book that explores the strategy of eight unconventional CEOs that significantly outperformed their peers and the S&P500 over long stretches of time. The Outsiders provides eight case studies of CEOs that operated (or still operate) in very different markets, including cable TV, newspapers, cinema, pet food, and the defense industry.
As a group, these eight exceptional CEOs stand out because they all made very rational and independent decisions, without giving in to peer pressure. They didn’t spend a lot of time on investor relations, rarely went to conferences and stayed out of the public spotlight. They ran very decentralized operations with low HQ headcounts and generally focused more on capital allocation decisions rather than day-to-day operations.
The book argues that capital allocation is one of the areas where most CEOs are not good at and that this is exacerbated by an urge to look at what peers are doing or what Wall Street is prescribing. Capital allocation includes making decisions about reinvesting earnings in the business, acquiring companies, selling or spinning off assets, doing share buybacks, and issuing dividends. The Outsiders offers evidence that mastery of capital allocation is what resulted in the big outperformance of the “Outsider” CEOs.
Each of these eight CEOs excelled at this game and usually did things completely different than their peers. They focused on creating long-term per-share value and largely ignored short-term metrics like quarterly revenue and earnings.
A general theme throughout the book is that many of these Outsider CEOs did not go with the flow but waited until the right time to make large and daring acquisitions. They also performed very large share buybacks, but they were not continuously buying back shares like a lot of companies are doing these days. Instead, the Outsider CEOs waited until valuations were attractive enough to buy back huge amounts of shares.
Additionally, the Outsider CEO does not believe that bigger is better and is not afraid to sell a large part of his business for the right price. The book describes how most of these eight CEOs paid little dividends and often made no large moves for long stretches of time. But when an opportunity finally presented itself, they weren’t afraid to pounce very fast and with high determination. The manner in which these CEOs did acquisitions was interesting to read. There are several examples in the book of how these exceptional CEOs made huge deals, sometimes in mere hours or days, and with minimal help.
The Outsiders is a very interesting book as it provides a unique look at how these eight CEOs delivered outstanding performance for their shareholders by very smart allocation of the company’s capital. I wholeheartedly recommend this book to any investor.
The end of another month of dividends has arrived so here’s a brief summary of my monthly dividend income:
August 2017 dividend income:
Bristol-Myers Squibb: 4.49EUR
YUM! Brands: 2.21EUR
Omega Healthcare Investors: 8.04EUR
Kinder Morgan: 3.89EUR
Novo Nordisk: 29.15EUR
Overall that’s just 50.97EUR in after-taxes dividend income this month, making it one of my lowest dividend income months of the year.
BHP: +7.5% sequentially
Warehouses De Pauw: Increased its dividend target by another 1.12%
South32: +640% year-over-year (not a typo!)
There are still several companies I’d like to own a piece of but this month I added more shares of Gilead (GILD).
One Up On Wall Street – Peter Lych
So I finally finished my copy of One Up On Wall Street. I started reading this book about a year ago, it’s one of those investing books that’s often high on everyone’s recommendation list. Overall it offers some nice insights and tips but I’m not particularly fond of it. The first edition of this book was released in 1989 and it’s really showing its age.
It could really use an update as a lot of the examples and ideas he shares are now dated. I guess the fact that I didn’t read it in one go is a good indicator that I don’t think this is a must-read book. It’s too dated, too repetitive and I feel like most of the interesting things in this book can be condensed into an article of a few thousands of words.
It’s the end of the month so here’s my latest dividend income report!
June 2017 dividend income
Moury Construct: 36.40EUR
Royal Dutch Shell: 68.79EUR
In total that adds up to 138.82EUR in dividend income this month. As always, the figures I list are after all taxes and applicable fees. This is the fourth month in a row this year of triple-digit dividend income.
Since my last report I added shares of Nike as well as AB InBev.
Actelion spin-off Idorsia off to a good start
As I wrote a couple of months ago, I bought shares of Actelion as a merger play. The company got acquired by Johnson & Johnson and shareholders got $280 in cash per share plus one share of the new spin-off R&D company called Idorsia. At the time I bought the shares it seemed like a good way to earn some cash plus get some free shares of a new company.
The offer was in US dollars so unfortunately the cash part worked out less favorable than expected due to the rising euro. Instead of a minor gain of a couple of percentages, I ended up with a 35.67EUR less than my original investment in Actelion.
Fortunately, it seems the new Idorsia spin-off is worth a lot more than expected. The company went public for 10CHF per share two weeks ago and is now trading at 17CHF! That’s a 70 percent gain in less than two weeks which tips the balance to a total gain of 4.3% for my four-month investment in Actelion.
Part of the astronomical rise is attributed to some large purchases. Actelion co-founder Jean-Paul Clozel (who now leads Idorsia) started with a 15.12 percent stake on the day of the IPO and has been using the cash he received from Johnson & Johnson to steadily increase his stake. According to the latest disclosure, Clozel and his wife now own 22.84 percent of Idorsia. Talk about a great vote of confidence!
Anyway, I now own 8 shares of Idorsia which I plan to hold for a long time. They’re not worth much at the moment but hopefully the company strikes gold with its R&D pipeline.
How much dividend income did you receive this month?
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