Dividends Premium: May 2025

Strong portfolio Q1 results augur bigger stock market gains.

Editor’s Note: Welcome to the May issue of Dividends Premium!

My focus this month is the operating and financial results for the 17 companies in the portfolio. I highlight the key news and numbers in this report, along with the mostly unchanged advice for each stock.

This portfolio by design holds dividend-paying companies across a wide range of sectors. That plus portfolio balancing protects overall value from unexpected developments at individual companies and sectors. But it also means each stock we own faces unique opportunities and challenges we need to assess whenever they report results.

The good news is Q1 turned out pretty well for these 17 companies. And those that faced stronger headwinds like Kraft Heinz (NYSE: KHC) nonetheless demonstrated they’re sticking to plan, while still comfortably supporting balance sheets and dividend policies.

As for stock price performance, the past month was more of a mixed bag. And not surprisingly, that tracked the ups and downs of what’s been a politics-driven stock market on multiple days.

But the important thing is these companies are becoming more valuable as businesses. And as a group, they’re paying us a generous and rising stream of income as they steadily build wealth.

So long as they’re doing that, we’re going to stick with them. And the next big moves you see in this portfolio will be adding to current positions and even establishing some new ones.

Have questions on my stocks and strategy? Then please make plans to attend this month’s live webchat, Thursday May 29 starting at 2 pm. We keep going until we’ve fielded every question our readers throw at us. So they tend to go on for a while!

Thanks for your trust. And here’s to your wealth.--RC

Strong Q1 Results Augur Outsized Stock Market Gains

Year to date, our 18 portfolio stocks are ahead by an average of 8.77 percent. That compares to 0.99 percent for the iShares Select Dividend ETF (DVY), which yields a full 2 percentage points less.

Since inception, our model income and growth portfolio is ahead by 43.66 percent. And it continues to meet our dividend growth objective, with 16 of the 18 companies raising their payouts at least once over the last 12 months.

I follow a simple four-part strategy for conservative wealth building and collecting superior income:

· Sell companies that are weakening as businesses, even if that means taking a loss.

· Maintain a cash reserve against the possibility of a broad correction. My favorite parking place for cash is still the Vanguard Federal Money Market (VMFXX), which currently has a 7-day SEC yield of about 4.21 percent.

· Have a watch list of high quality companies to buy when they hit designated entry points, or preferably our “Dream Buy” prices listed in the attached table.

· Make fresh investments incrementally.

Over the past several weeks, all of our portfolio companies except oil pipeline company South Bow (NYSE: SOBO) has released calendar Q1 results and updated their guidance. That company is slated to announce numbers in the next week.

As a result, it’s an ideal time to assess our companies’ strengths and weaknesses with one absolutely fundamental question in mind: Are their underlying businesses still becoming more valuable?

This portfolio focuses on companies that are substantial. First and foremost, they have established they have real earnings from operating their businesses-- and have done so in most cases for decades.

Second, they’re financially strong. Almost all of them have investment grade credit ratings. And those that don’t like Arrow Financial (NYSE: AROW) are highly rated at the operating level, in the case of the upstate New York bank by superior regulated “Capital Ratios.”

Admittedly, investment grade ratings are not an infallible measure of strength. Raters tend to be more careful these days, sometimes cutting ratings only to raise them later when the reason for doing so was no longer valid. But I still remember a quarter century ago, when both Enron and Worldcom held investment grade ratings right up to the time they imploded and vanished from the Earth.