SavyFox May 2021 Dividend Roundup

Welcome to our very first monthly Dividend Roundup!

On our website, we share our real investor SavyFox portfolio which consists of

  • Dividend Paying Shareholdings and
  • Tech Growth Stocks

The purpose is to generate over time substantial book gains plus passive income in form of shareholder distributions from the dividend paying stocks. You can find on the SavyFox portfolio page many information about the holding positions, our current book gains (since inception of each position), the holding period etc.

What we want is to share with you information that is of value for you so that you can see

  • how you could yourself construct a diversified stock portfolio and
  • see examples of investments, especially how these behave over time in terms of book gains and dividend income.

Allright. Let’s get into the details with regards to the dividend paying stocks in the SavyFox portfolio, shall we?

In May, following seven businesses made their shareholder distributions:

  • Apple
  • Lonza
  • Allianz
  • Swisslife
  • Admiral
  • Danone
  • Aurelius

Apple is a so-called Dividend Challenger, a term being used for businesses that show at least 5 to 9 years of dividend growth. For seven years, Apple has hiked its shareholder payouts on average by 10 % annually. Apple recently hiked its shareholder payout by 7 % and also increased its stock repurchase program. Apple is one of the very few tech growth stocks in the SavyFox stock holding portfolio that pays out dividends, together with Microsoft and NVIDIA. With Free Cash Flow having increased massiveley in the past two years, Apple has plenty of room to hike its payout further for several years to come. The payout ratio is comfortably below 50 %, furthermore, Apple is sitting on almost USD 200 Bn in cash which can be used for acquisitions and reinvestments into the business while at the same time Apple’s dividend growth story can be continued. Yeld on Cost on our Apple positon (entry price roughly USD 110) is slighlty below 1 %.

Lonza is a Swiss chemical and pharma company that is also very strong in the production of vaccines. Lonza for instance is involved in the production of Moderna COVID-19 vaccines. Lonza is committed to pay out roughly 25 % of its net income to shareholders. As the dividend payment history of Lonza shows, the company started making shareholder distribitions in 2008, at that time Swiss francs (CHF) 1.75 per share, which increased to CHF 3 in 10 years. Lonza clearly shows aspects of the best of two worlds: it has a lot of room to grow, is more agile and profitable than its much larger Swiss peers Novartis and Roche while at the same time you have an interesting dividend play in Lonza. Yield on Cost on our postion is very moderate with 0.75 % but there is certainly a lot of room for organic dividend growth.

The strongest May dividend contributions in the SavyFox portfolio come from three insurance businesses, Allianz, Swisslife and British car insurer Admiral which due to their capital light business models and strong market position can afford higher dividend payout ratios (roughly 60 – 70 %) which results in Yield on Cost of approximately 5 %.

Danone slightly reduced its dividend payout by 7 % compared to the previous years and faces growth challenges. But Danone shows good signs of recovery from the pandemic hit and should be able to come back to dividend growth in the near future, boosting the current Yield on Cost of almost 3.5 % substantially.

Aurelius is a German hedge-fund that as well was hit very hard in 2020 but is now on the path towards recovery which is reflected by the dividend payments which have been resumed. Aurelius’ cash flow depends on succesfully selling acquired and streamlined businesses. With the pandemic recovery on the way, chances are very good, that Aurelius can make very nice profits and distribute excess cash to shareholders which would increase the current Yield on Cost of 5 % substantially.

Disclaimer
You are responsible for your own investment and financial decisions. This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

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6 comments

  1. Thank you SavyFox for sharing your first Dividend Roundup ! 👍😀 Apple is a great stock to keep forever ! It will be probably my next US purchase, I like that it’s paying on these months where the dividend is low (February/May/August/November). I don’t know if you made it on purpose, but I don’t see how much you got in dividends. It’s the basic in the community to share this amount, unless it’s private and you wanna keep it for you. Anyhow, happy investments ! 🙏📈💰

    • Hi Dividendes & FNB
      Indeed, Apple is the perfect long term investment, that company will grow stronger and stronger due to its amazing ecosystem. Whenever Apple’s stock price dips 10 % to 15 %, it’s worth considering a buy.
      With regards to dividend income, yes, for the time being I’ll show it as a percentage (Yield on Cost) of my investments in my dividend roundups and also add this information to the template where I present my stock portfolio in order to show then the total return (performance + dividends).
      Appreciatie you stopping by aand commenting!
      Happy investing you too, and all the best!

  2. Thanks for the roundup, SavyFox! Apple is one of my favourite dividend stocks for sure. Based on their earnings and low payout ratio, they should be able to raise the dividend for years to come. I’m up a lot on my position, so I keep wondering if I should add to it or not. My split-adjusted cost basis on AAPL is around $41 per share. I would like to own Microsoft as well. Thanks for sharing the other positions. I will have to look into some of those. An insurance business would be a nice add for the portfolio.

    • Hi Graham
      Wow, a cost basis on AAPL of USD 41 is amazing! Very nice book gains but equally important: your Yield on Cost will be already very attractive. And it will keep growing as AAPL is committed to increase its distributions annually. And there is plenty of room to go.
      Microsoft is equally interesting in my view. What I like in particular is the cloud business, Microsoft Azure will continue to play its leading role together with AWS.
      2020 was a once in a decade opportunity to acquire pieces of wonderful businesses at very attractive prices. I am glad to have collected some of them, amongst others some very interesting insurance positions. Swiss Re is number two of reinsurance businesses, after German Munich Re. Then Swisslife is interesting because they are very diversified, they offer life insurances etc. but also asset management services. German giant Allianz is another position I added early in 2020 and last but not least, I acquired shares of British car insurer Admiral. I came of the idea through a very interesting blog article on the site UK Value Investor (https://www.ukvalueinvestor.com/2020/01/admiral-dividend-growth-stock.html/). All my insurance investments had a very nice run-up since I acquired them and will provide the SavyFox stock portfolio with nice cash dividends, ready to reinvest.
      Thanks for stopping by, Graham, and all the best.
      Cheers

  3. Nice overview SavyFox, we share no companies this month which is interesting! I might be looking into some of your payers to boost my May! 🙂

    • Hi Mr. Robot
      Thanks! Glad you find my portfolio holdings interesting. At the core, I take a strong focus on Tech Businesses with exposure to European insurance payers (Allianz, Admiral, Swiss Re, Swisslife) which provide me strong dividend income. My favorites at the moment though are the consumer staples, like Fevertree, Campari, Berry Callebaut and L’Oreal.

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