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Buying dividend stocks and dividend-focused ETFs is the name of the game. The stock market continues to twist and turn with each new earnings release and inflation report. This can create opportunities for us to buy and add to the positions in our dividend stock portfolios. Learn about the purchases we made, the amount invested, and most importantly, how much dividend income we added to our dividend stock portfolios this week.

The S&P 500 once again finished the week at about 5,000. This is an incredible milestone, especially in a market that continues to surprise analysts and investors. Inflation is cooling, but still reporting higher-than-expected numbers in several economic reports. Further, despite record-setting markets, companies continue to announce layoffs and reduce expenses.

These mixed signals have created some buying opportunities. When looking to buy stocks this year, I’ve raised the bar for what it will take to add a new stock to my portfolio. I already have too many positions, so I don’t want to add a new position unless the company is a Dividend King, Dividend Aristocrat, or a rock star company. To date, I’ve only found one such company this year.

We’re putting our cash to work by buying these undervalued dividend stocks while using our dividend stock screener. The dividend stock screener focuses on 3 simple metrics (and a bonus metric):

1. A price to earnings ratio less than the S&P 500
2. A payout ratio less than 60%
3. A history of increasing dividends
4. As a bonus, the dividend yield

We run our investment purchases through our screener, and then make our final investing decision after.

Dividend Stock Purchases

Let’s have some fun now. In this section, we are going to feature the dividend stocks that we purchased this past week.

Stock Purchase #1: Weekly Dividend ETF Purchases (SCHD and VIG)

My wife purchases 4 shares of Schwab’s High-Dividend Yield ETF (SCHD), and I grab a share of Vanguard’s Dividend Appreciation ETF (VIG) when the market opens every Monday. The goal is to automate our investing; set it, and forget it.

In total, these purchases added ~$14 in annual dividend income. Our VIG position is closing in on 10 shares, and my wife’s SCHD position is at almost 160 shares.

Stock Purchases #2: American Tower (AMT)

American Tower is a position I started building for my wife last year when REITs were taking a beating. We love this real estate investment trust because of its strong position in the cell tower industry. AMT invests worldwide, and it is a critical player in a sector that continues to grow. After all, how many people want slower WiFi or cell service?

Typically, REITs have higher dividend yields. That isn’t the case with American Tower. AMT is a low-yielding REIT with a high dividend growth rate. AMT looks more like a dividend stock than a dividend REIT. Further, AMT is not the cheapest REIT either, with a P/FFO ratio over 18.2.

So, why did we invest in AMT? Quality. AMT is a great dividend stock with great metrics and a growing dividend. We continue to focus on quality, especially as we continue to experience dividend cuts with companies that are struggling in this high-interest rate environment.

This week, we added a share of American Tower when the stock price dropped below $190 per share. We paused investing in AMT when the stock price crossed $200 per share. Now that it is lower again, we are back to buying small amounts at a time. This investment added $6.80 to our forward dividend income. We now own 17 shares of AMT. I would love to get this total up to at least 20.

Stock Purchases #3: Realty Income (O)

Our next big purchase is everyone’s favorite monthly dividend-paying REIT. We are talking about none other than Realty Income (O). Like American Tower, Realty Income’s price retreated this week due to fears that an interest rate cut may not arrive as quickly as everyone hoped.

The metrics look great for Realty Income. The Price to FFO Ratio is below 13x, and the company has a very manageable payout rate for the REIT sector (75%). The company often announces its quarterly dividend increases. The increases may not be large, but they certainly add up over time.

With a dividend yield approaching 6%, it was impossible to pass on investing in Realty Income and adding another $6 to our forward dividend income. The average stock price for our purchase was just $51.58 per share.

On top of that, we reached a milestone with Realty Income. Our position is now over 200 shares, and we are now earning well over $50 per month in dividend income from this REIT.

Stock Purchase #4: Starbucks (SBUX)

This stock purchase was another “lets round out our position and cross a milestone” purchase. We’ve added nearly 10 shares to my wife’s Starbucks position, now that the coffee giant is below $100 per share again. Prior to this week, our position was 98.38 shares. It was time to push it over 100 shares.

We aren’t investing in Starbucks for the fun of it, however. We also love the business model and the brand loyalty for Starbucks. Costs are rising everywhere, including Starbucks. But, has that stopped consumers from lining up in the store or the drive-through? Not a chance. People still want their luxury coffee drinks and refuse to break the habit.

Further, the metrics look great compared to SBUX’s historical standards. The 23x P/E Ratio is below the S&P 500 and below the company’s average P/E Ratio. Great stocks aren’t cheap. The payout ratio is strong (56%), and the company’s dividend growth is impressive (10%), even if it will be lower this year.

We decided to add 1.741 shares to cross the 100 total. This added $3.97 in annual dividend income to our portfolio now that the dividend yield is approaching 2.45%.

Stock Purchase #5: Air Products & Chemical, Inc. (APD)

Our last dividend stock purchase for the week is a Dividend Aristocrat that I have been loving after the share price was beaten down after earnings. This stock dropped 10% after the company missed on sales and lowered its earnings guidance.

Air Products & Chemical is a major play in the industrial gasses, helium, and hydrogen sectors. It is a tough, behind-the-scenes company that powers the world. It's just the kind of stock I like to purchase.

The metrics are looking solid, even with the new, lower EPS guidance. The P/E Ratio is below 19x, and the payout ratio is still below our 60% threshold. Sure, the company’s 1% dividend increase in 2024 is well below the five-year average dividend growth rate (9.73%), but APD has demonstrated its ability to grow its dividend through good times or bad. When times are great, the dividend growth will be as well.

This week, we purchased 2 more shares of APD, adding $14.16 to our annual dividend income. Our total position is now 7 shares of the Dividend Aristocrat. I would love to continue adding more and at least build this position to 10 shares in the short-term. 25 shares would be a great long-term goal.

Summary

In total, we invested almost $1,400 in the stock market this week. We added $45 in annual dividend income. Our yield on cost was 3.27%. We were very pumped to add this much to our dividend stock portfolio, and we are feeling fortunate that we can add some fuel to the fire early in 2024.

What dividend stocks did you purchase this week, and what stocks have you been adding lately? How much dividend income did you add to your portfolio?

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