Two new DGI purchases were made this month:
First I loaded up 8 more shares of Warehouses De Pauw (EBR:WDP), a REIT primarily focused on Belgian and Dutch logistics properties. This REIT has a high historical average occupancy rate and earns an impressively high yield on its portfolio.
I thought they were getting a bit expensive but the company’s latest interim report peaked my interest as the company’s expansion plans are progressing faster than anticipated. WDP estimates its 2015 earnings per share will hit 4.85EUR, up 18 percent versus 2014.
Belgian REITs must pay out at least 80 percent of earnings to shareholders and thanks to the strong increase in earnings WDP has increased its dividend forecast for 2015 to 3.90EUR per share, a nearly 15 percent increase versus 2014’s 3.40EUR dividend. After 27% dividend tax this results in a net dividend yield of 3.75%, adding 22.78EUR to my 2016 dividend income.
Next I bought 33 shares of Diageo (LON:DGE), one of world’s largest spirits makers. Since the company’s formation in 1997, it has never cut or frozen its dividend and the long-term annualized dividend growth rate is 6.95 percent. After taxes, this purchase adds £13.59 to my 2016 dividend income, but it will probably be higher as I expect Diageo will continue to grow its dividend.
Adding it all together, my DGI portfolio is now on track to return 1240.8EUR in dividends next year, or about 103.40EUR a month! The actual figure will depend on dividend raises (or cuts) as well as currency fluctuations. The snowball is still small but even at this level the dividend income provides a noticeable boost to the number of shares I can buy per month.
Earlier this week I published an article about the dividend history of L’Oréal and I was quite surprised this high-quality French company has such a good track record as well as a long-term annualized dividend growth rate in the low double digits! It’s kinda expensive right now, so I’m adding it to my watch list as I hope I will be able to pick it up one day at a more attractive price.
Similarly, Nestlé is quite impressive as well but the high valuation and the extremely high 35% dividend withholding tax make it a no-go for me. US investors buying the Nestlé ADR can easily get the 15% treaty rate but for Belgian investors it’s one big mess if you’re a relatively small shareholder.