STOCK DIVIDEND FUND, INC.
SEMI-ANNUAL REPORT
JUNE 30, 2023
Stock Dividend Fund, Inc.
8150 N. Central Expressway #M1120
1-800-704-6072
Fund Symbol: SDIVX
Dear shareholders of Stock Dividend Fund, Inc.,
The Fund ended the first six months of 2023 with a Net Asset Value per
share of $23.12 after paying total distributions of $2.8397 ($25.96 if added together), down from a Net Asset Value per share of $26.67 at the beginning of the year.
For the period December 31, 2022 through June 30, 2023 the Fund's total
return was down 2.40% versus the SPDR S&P 500 ETF up 16.79% and the SPDR S&P 500 High Dividend ETF down 4.12%.
In the first half of 2023, S&P 500 High Dividend stocks underperformed technology growth stocks, a handful of which are large components and drivers of the S&P 500 Index. The opposite happened in 2022 when that same handful of technology stocks drove the S&P 500 down 18%. We expect a rotation back into large cap value and high dividend paying stocks that are consistent with the strategy of the Fund.
The Fund’s portfolio continues to be mostly weighted toward large companies that on average have very little relative debt, low pension and post-retirement liabilities, high dividend income, strong dividend coverage and stable cash flows. If interest rates head back to relatively low levels as we expect, this should be a rewarding combination as investment allocation decisions will be forced back into this category for income and growth.
The Fund has experienced higher turnover at 39.48% annualized year to date as we have taken advantage of certain opportunities to increase income. Our top holdings and industry group exposures, as of June 30, 2023, are listed below.
Regardless of general market volatility in the short term, we are encouraged with the valuation levels, dividend income and appreciation potential of our portfolio relative to general market indices.
Sincerely,
Steven Adams
Portfolio Manager
STOCK DIVIDEND FUND,
INC.
Top Ten Holdings and
Asset Allocation
June 30, 2023
Top Ten Holdings*
(% of Net Assets)
IBM 5.58%
Chevron Corp 5.54%
HF Sinclair Corp 5.38%
Apple Inc. 4.99%
AT&T Inc 4.95%
The Kraft Heinz Co 4.94%
Pfizer 4.92%
Intel Corp 4.89%
Altria Group Inc. 4.82%
Valero Energy Corp 4.81%
------
50.82%%
Asset Allocation
(% of Net Assets)
Petroleum Refining 10.35%
Telephone Communications, Except Radiotelephone 9.62%
National Commercial Banks 9.50%
Pharmaceutical Preparations 9.25%
Computer and Office Equipment 5.58%
Pipe Lines 5.38%
Electronic Computers 4.99%
Canned, Frozen & Preserved Fruit, Veg & Food 4.94%
Semiconductors and Related Devices 4.89%
Cigarettes 4.82%
Paper Prods 4.71%
Engines & Turbines 4.61%
Biolog Prod 4.48%
Computer Communications Equipment 4.48%
Retail Drug Store 4.04%
Gold and Silver Ores 3.93%
Raw Farm Products 3.71%
Other Assets, Less Liabilities, Net 0.72%
-------
100.00%
*Portfolio holdings are subject to change and are not recommendations of individual stocks
STOCK DIVIDEND FUND, INC.
EXPENSES
JUNE 30, 2023
As a shareholder of the Fund you incur ongoing costs including
management fees. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. This example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six month period of December 31, 2022 to June 30, 2023.
Actual Expenses
The first line of the table below provides information about actual
account values and actual expenses. You may use the information in
this line, together with the amount you invested at the beginning of
the period, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,500
account value divided by $1,000 equals 8.5), then multiply this result
by the number in the first line under the heading "Expenses Paid During
Period" to estimate the expenses you paid on your account during the
period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about
hypothetical account values and hypothetical expenses based on the
Fund's actual expense ratio and an assumed rate of return of 5% per
year before expenses, which is not the Fund's actual return. The
hypothetical account values and expenses may not be used to estimate
the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing
in the Fund to other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the
shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight
your ongoing costs only and do not reflect any transactional costs such
as sales charges (loads), redemption fees, or exchange fees.
Therefore, the second line of the table is useful in comparing ongoing
costs only.
Expenses Paid
Beginning Ending During Period*
Account Value Account Value December 31, 2022
December 31, 2022 June 30, 2023 to June 30, 2023
----------------- ------------- -----------------
Actual $ 1,000 $ 974.40 $ 4.16
Hypothetical** $ 1,000 $ 1,041.50 $ 4.30
*Expenses are equal to the Fund's annualized expense ratio of 0.85%,
multiplied by the average account value over the period, multiplied by
181 days/365 days to reflect the one-half year period.
** Hypothetical return assumes 5% return before expenses.
STOCK DIVIDEND FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited)
JUNE 30, 2023
ASSETS
Investment securities, at
fair value(cost $23,408,067) $ 26,691,970
Cash 173,953
Dividends Earned 37,729
Interest receivable 31
-----------
Total assets 26,903,683
-----------
LABILITIES
Advisory fees payable 19,061
-----------
Total liabilities 19,061
-----------
NET ASSETS -
(Equivalent to $23.12 per
share based on 1,162,835 shares
of common stock issued and outstanding;
100,000,000 shares authorized,
$0.001 par value $ 26,884,622
============
NET ASSETS CONSIST OF:
Common stock $ 1,163
Paid-in capital 23,556,045
Net unrealized appreciation
of investments 3,283,903
Undistributed net investment income 43,511
Undistributed net realized gain on
Investments 0
------------
Net assets $ 26,884,622
============
See accompanying notes to these financial statements.
STOCK DIVIDEND FUND, INC.
SCHEDULE OF INVESTMENTS (Unaudited)
JUNE 30, 2023
DESCRIPTION SHARES MARKET VALUE
----------- ------ -------
COMMON STOCKS – 99.28%
Petroleum Refining-10.35%
Chevron Corp. 9,466 $ 1,489,475
Valero Energy Corp 11,028 1,293,584
---------
2,783,059
Telephone Communications, Except
Radiotelephone-9.62%
AT&T 83,429 1,330,693
Verizon 33,788 1,256,576
---------
2,587,269
National Commercial Banks-9.50%
Bank of America 44,380 1,273,262
Citigroup Inc. 15,300
704,412
Wells Fargo 13,500 576,180
---------
2,553,854
Pharmaceutical Preps-9.25%
AbbVie Inc. 8,637 1,163,663
Pfizer Inc. 36,025 1,321,397
---------
2,485,060
Computer and Office Equipment-5.58%
International Business Machines Corp. 11,216 1,500,813
Pipe Lines-5.38%
HF Sinclair Corp 32,395 1,445,141
Electronic Computers-4.99%
Apple Inc. 6,917 1,341,690
Canned, Frozen & Preserved Fruit, Veg-4.94%
Kraft Heinz Company 37,437 1,329,014
Semi-Conductors and Related Devices-4.89%
Intel Corp 39,326 1,315,061
Cigarettes-4.82%
Altria Group 28,623 1,296,622
Paper Prods-4.71%
Kimberly-Clark Corp 9,172 1,266,286
- Continued -
STOCK
DIVIDEND FUND, INC.
SCHEDULE
OF INVESTMENTS, continued
(Unaudited)
JUNE
30, 2023
DESCRIPTION SHARES MARKET VALUE
----------- ------ ------------
Engine/Turbine-4.61%
British American Tobacco Industries 37,343 1,239,788
Biolog Prod-4.48%
Amgen Inc. 5,422 1,203,792
Computer Communications Equipment-4.48%
Cisco Systems Inc. 23,296 1,205,335
Retail Drug Store-4.04%
Walgreens Boots Alliance 38,085 1,085,042
Gold and Silver Ores-3.93%
Newmont Corp. 24,790 1,057,541
Raw Farm Food-3.71%
Universal Corp. 19,956 996,603
Total common stocks (cost $23,408,067) $ 26,691,970
----------
SHORT-TERM INVESTMENTS – 0.65%
Schwab Money Market Fund (Single Class Fund)
-current interest at 0.45% 173,953 $ 173,953
---------
Total short-term investments (cost $ 173,953) 173,953
---------
Total investment securities – 99.93% (cost $23,582,020) 26,865,923
Other assets less liabilities – 0.07% 18,699
--------
Net assets - 100.00% $ 26,884,622
============
See accompanying notes to these financial statements.
STOCK DIVIDEND FUND, INC.
STATEMENT OF OPERATIONS (Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2023
INVESTMENT INCOME:
Dividends $ 583,406
Interest 800
Accrued Interest 31
------------
Total investment income 584,237
EXPENSES -
Advisory fees 126,192
Misc expenses 0
--------
126,192
Net investment income 458,045
------------
GAINS ON INVESTMENTS -
Net realized gain on investments 2,542,147
Net change in unrealized appreciation of securities (3,709,047)
------------
Net realized and unrealized gain on investments (1,166,900)
------------
Net increase in
net assets resulting from operations $ (708,855)
============
See accompanying notes to these financial statements.
STOCK DIVIDEND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (Unaudited)
Six Months Ended Year Ended
June 30, 2023 Dec. 31, 2022
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 458,045 $ 969,113
Net realized gain on investments 2,542,147 650,326
Net change in unrealized appreciation
of securities (3,709,047) (1,370,282)
----------- ------------
Net increase(decrease) in net assets
resulting from operations (708,855) 249,157
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income (414,503) (969,113)
Net realized gains (2,542,147) (650,326)
----------- ------------
Total Distributions (2,956,650) (1,619,439)
CAPITAL SHARE TRANSACTIONS-NET (1,396,083) 278,992
----------- ------------
TOTAL INCREASE(DECREASE) IN NET ASSETS (5,061,588) (1,091,290)
NET ASSETS, beginning of period 31,946,210 33,037,500
----------- ------------
NET ASSETS, end of period 26,884,622 $ 31,946,210
=========== ============
See accompanying notes to these financial statements.
STOCK DIVIDEND FUND, INC.
FINANCIAL HIGHLIGHTS (Unaudited)
PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH
PERIOD ENDING:
PERIOD YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/23 2022 2021 2020 2019 2018
----- ------ ------ ------ ------ -----
Net asset value,
beginning of period $26.67 $27.92 $27.67 $28.98 $26.01 $29.93
------ ------- ------- ------ ------ ------
Income from investment
operations:
Net investment income 0.40 0.84 0.86 0.83 0.76 0.71
Net realized and
unrealized gains
(losses)on investments(1.11) (0.67) 5.41 (1.28) 3.46 (2.51)
---- ------ ------ ----- ----- -----
Total income(loss)from
investment operations (0.71) 0.71 0.17 6.27 (0.45) 4.22
---- ------ ------ ------ ----- -----
Less distributions from:
Net investment income (0.40) (0.85) (0.86) (0.83) (0.76) (0.71)
Net realized gains (2.44) (0.57) (5.16) (0.03) (0.49) (1.41)
---- ------ ------ ------ ------ ------
Total distributions (2.84) (1.42) (6.02) (0.86) (1.25) (2.12)
---- ------ ------ ------ ------ ------
Net asset value,
end of period $23.12 $26.67 $27.92 $27.67 $28.98 $26.01
------ ------ ------ ------ ------ ------
Total Return (2.40)% 0.67% 22.78% (1.51)% 16.92% (5.77)%
Net assets, end of
period(in 1000's) $26,885 $31,846 $33,037 $28,482 $33,105 $28,273
Ratio of expenses to
average net
asset(a) 0.87% 0.86% 0.85% 0.87% 0.85 0.86%
Ratio of net investment
income to average net
assets (annualized) 2.16% 2.97% 2.63% 3.15% 2.74% 2.24%
Portfolio turnover
rate (annualized) 39.48% 28.97% 38.45% 34.06% 14.41% 28.64%
(a) The Fund's actual expenses are calculated daily at 0.85% of net
asset value (NAV).
See accompanying notes to these financial statements.
STOCK DIVIDEND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Stock Dividend Fund, Inc. (the "Fund") was incorporated in the
State of
Investment Company Act of 1940 as a non-diversified, open-end
management investment company. The investment objective of the
Fund is to achieve growth and income by investing primarily in
dividend paying common stocks. The effective date of the Fund's
registration with the SEC was November 29, 2004.
2. SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity
with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of increases and decreases in net assets from
operations during the reporting period. Actual results could
differ from these estimates.
Security Valuation
Securities listed on a national securities exchange or in the over-
the-counter market are valued at the last quoted sales price on the
day of valuation, or if no quoted sales price was reported on that
date, the last quoted bid price. Short-term investments are valued
at cost which approximates fair value. Securities for which
quotations are not readily available are valued at their estimated
fair value as determined in good faith by the Fund's Board of
Directors.
Securities Transactions and Investment Income
Securities transactions are recorded on a trade-date basis.
Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Realized gains and losses
are determined on a specific identification basis of the securities
sold. Unrealized gains and losses resulting from the appreciation
and depreciation of securities carrying values are included in the
statements of operations.
Distribution of Income and Gains
The Fund generally declares and pays dividends annually from net investment
income and from net realized gains, if any. Distributions from
realized gains for book purposes may include short-term capital
gains, which are included in ordinary income for tax purposes.
Dividends are paid upon Board approval by the end of each calendar year.
STOCK DIVIDEND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Federal Income Taxes
The Fund's policy is to continue to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment
companies and to distribute all of its taxable income, including
any realized gains on investments, to its shareholders. The Fund also intends to distribute sufficient net investment income and net capital gains, if any, so that it will not be subject to excise tax on undistributed income and gains. Therefore, no federal income tax or excise provision is required.
Net investment income (loss), net realized gains (losses) and the
cost of investments in securities may differ for financial
statement and income tax purposes. The character of distributions
from net investment income (loss) or net realized gains (losses) may differ from
their ultimate characterization for income tax purposes. At June
30, 2023, there were no material differences. Also, due to the
timing of dividend distributions, the fiscal year in which amounts
are distributed may differ from the year that the income or
realized gains were recorded by the Fund.