Dave Van Knapp's Dividend Growth Portfolio

Updated June 1, 2018.

June Highlights

• Altria (MO) was added to the portfolio in May, bringing the total companies to 23. The purchase was made by using dividends collected from other companies.
• The portfolio received $327 in dividends from 7 companies. That is 11% less than last May, due to changes that have been made to the portfolio in the past year.
• Year-to-date, incoming dividends have totaled $1557. That’s 8% more than last year through May.
• The portfolio’s current yield is 3.7%, up 0.1% from last month. Small changes from month to month are not significant.
• The portfolio’s yield on cost increased to 8.2% from 8.0% last month. That’s mostly due to the new dividend stream from the addition of Altria to the portfolio.
• The portfolio ended May worth $104,100, down slightly from last month. It is up 122% over its lifetime (10.0 years).
• The portfolio’s original 10-year demonstration term was to have expired at the end of May. However, Daily Trade Alert and I have agreed to keep the DGP going beyond its original term. The Business Plan has been updated for the next years of the portfolio’s life.

Transactions in May

Altria was added to the portfolio and dividends were received, as shown on this display from E-Trade. The purchase of Altria is marked.

The purchase of Altria is discussed more fully in the section on Dividend Reinvestment.

The portfolio received $327 in dividends from 7 companies. That is 11% less than May, 2017, due to changes that I made to the portfolio.

For the year, dividends are up 8% from the same time last year.

Dividends Expected in June

This display shows that payments will come from 12 companies totaling $406 in June.

Because of the idiosyncrasies of each company’s payment schedule, June is a heavy month for dividends in this portfolio.

The cash balance on June 1 is just $67. The pot of accumulating dividends was depleted by the purchase of Altria. However, dividends continue to flow in. The $1000 threshold for reinvesting dividends and buying new shares should be reached again in August.

Dividend Increase Calendar for 2018

The following table shows the dividend increases that have already been declared plus the increases that are still expected for the rest of 2018.

One increase was announced in May: PepsiCo (PEP) raised its dividend by 15.2%.

Year-to-date, 19 increases have been announced by the portfolio’s 23 companies. Eight more increases are expected by the end of the year.

Next 12 Months’ Anticipated Dividends

The next 12 months’ projected dividends show the rate at which the portfolio is currently generating dividends per year.

At the moment, the annual rate of dividend production is $3848 per year. That’s up from $3671 at the end of May last year.

This display by E-Trade shows expected dividends over the next 12 months.

The chart does not, of course, include dividend increases that have yet to be declared, nor dividends from stocks that will be purchased over the next 12 months. It is a projection based on current information.

Yield on Cost and Current Yield

Yield on cost is the portfolio’s yield calculated as a percentage of the original money invested when I started the portfolio. The projected 12-month total from above is used to calculate yield on cost.

Formula for Yield on Cost
Projected 12-months dividends / Original cost of portfolio
$3848 / $46,783 = 8.2%.

That is up from 8.0% last month. What Yield on Cost means is that the portfolio is now delivering dividends at the rate of 8.2% of the original investment each year in cash.

A year ago, the Yield on Cost was 7.8%. It’s gone up 0.4 percentage points since then. Yield on Cost goes up as more increases are declared and new shares are added to the portfolio via the reinvestment of dividends.

Current yield is the portfolio’s yield calculated as a percentage of the current value of the portfolio.

Formula for Current Yield
Projected 12-months dividends / Current value of portfolio
$3848 / $104,100 = 3.7%

That is up 0.1% from last month. Small changes in current yield from month to month are not significant.
For comparison to this portfolio’s 3.7% yield, the S&P 500’s current yield is 1.8%. The 10-year Treasury yield (fixed income) is 2.8%. [Source]

Reinvesting Dividends

Per the portfolio’s Business Plan, dividends are collected in cash and reinvested when they accumulate to $1000.

The portfolio currently has $67 in cash waiting to be reinvested. As more dividends flow in monthly, the $1000 threshold should be reached in August.

In May, I added a new company using dividends exactly as just described. The purchase of Altria brought in a classic dividend growth stock whose price had finally fallen into well-valued territory after years of being too expensive.

To read the full story of this purchase, see I Just Bought Shares of this Iconic, High-Yield Dividend Growth Stock. The purchase added $53 per year to the portfolio’s dividend stream, helping raise the Yield on Cost to 8.2%.

Consistent Dividend Growth

The stocks for the Dividend Growth Portfolio are picked for their ability to generate a steady stream of growing dividends. I eventually intend to live off the dividends in retirement (whereas now I reinvest them).
Increases in the portfolio’s dividend stream come from 3 sources.

• Companies raise their dividends.
• New shares are added through dividend reinvestment. The new shares generate dividends of their own, thus increasing the total income flow. This month’s addition of Altria is a perfect example of that.
• Occasionally I make changes to the portfolio that impact its dividend stream.

The graph below shows the dividends that I have received each year since the portfolio was started.

The rising green bars illustrate the core goal of this portfolio: To build a reliable, steadily increasing stream of dividends over many years.

The blue dot on the 2018 bar shows the dividends received so far this year ($1557). The dot moves up each month as more dividends flow in.

I derive the 2018 estimate by adding the dividends received so far this year to E-Trade’s estimate of dividends for the rest of the year. The full-year estimate, if accurate, would be an 8% increase over 2017’s actual.

It is too early to forecast 2019’s dividends. I will make the first 2019 projection later in the year.

Total Returns

The value of the portfolio has grown 122% from its original size in June, 2008. It started at $46,783. It is now worth $104,100.

If the same money had been invested in the S&P 500 Index via the ETF called SPY, with dividends reinvested, it would have increased 138% to a total value of $111,344. That investment would be yielding 1.8% compared to the DGP’s 3.7%.

Background: What is the Dividend Growth Portfolio?

• To see the Business Plan for this portfolio, click here.
• To learn more about the origins of the portfolio and its life extension on Daily Trade Alert, see Re-Introducing my Dividend Growth Portfolio.
• To see a list of all the articles about the DGP, see the section below.

Remember, the DGP is not presented as best or a model. Rather, its purpose is to provide a live demonstration of what you can accomplish with dividend growth investing, and what it is like to run a real stock portfolio.

–Dave Van Knapp

For a list of all of my articles about my portfolio, see below.

Dividend Growth Portfolio Articles

Re-Introducing My Dividend Growth Portfolio– May 12, 2018
I Just Bought Shares of Atria (MO)- An Iconic, High-Yield Dividend Growth Stock– May 17, 2018
I Just Bought Verizon (VZ) for My Dividend Growth Portfolio– March 12, 2018
I Just Sold HCP (HCP) and Omega Healthcare Investors (OHI)– March 8, 2018
I Just Bought Amgen (AMGN) For My Dividend Growth Portfolio
– February 26, 2018

I Just Bought Another $1,000 of Cisco (CSCO) for My Dividend Growth Portfolio
– December 6, 2017
I Just Bought Realty Income (O) and Smucker (SJM) for My Dividend Growth Portfolio
– November 4, 2017
I Just Bought Lowe’s (LOW) for My Dividend Growth Portfolio
– August 28, 2017
I Just Bought Another 18 Shares of Qualcomm (QCOM)– May 18, 2017
I Just Bought 18 Shares of Qualcomm (QCOM) for My Dividend Growth Portfolio
– February 21, 2017

I Just Bought Another $1,000 Worth of Cisco (CSCO)
– November 3, 2016
I Just Bought Boeing (BA) For My Dividend Stock Portfolio
– August 10, 2016
I Just Bought 45 Shares of Southern Company (SO)
– May 6, 2016
I Just Bought 47 Shares of Ventas (VTR)
– April 14, 2016
I Just Bought 60 Shares of Cisco (CSCO)
– February 16, 2016

I Just Sold My Shares of Kinder Morgan (KMI)
– December 14, 2015
I Just Bought Another 30 Shares of AT&T (T)
 – November 23, 2015
My Dividend Growth Portfolio Delivers a 7%-Plus Yield on Cost Already
 – October 17, 2015
I Just Reinvested $1,000 in Philip Morris International (PM) – August 27, 2015
I Just Bought Another 24 Shares of Coca-Cola (KO)
– May 26, 2015
Why I Decided to Hold All 19 Stocks in My Dividend Growth Portfolio
– April 15, 2015
Why I Sold Some Johnson & Johnson (JNJ) and Pepsi (PEP) – January 24, 2015
I Just Bought Another 30 Shares of AT&T (T) – January 14, 2015

This Portfolio Generates Dividend Income That Rises 15% Per Year – November 10, 2014
I Just Bought More Shares Of Procter & Gamble (PG) – October 1, 2014
I Just Sold Lorillard (LO) and Bought HCP Inc. (HCP) – July 16, 2014
This Real-Money Portfolio is a Cash Machine – July 10, 2014
I Just Bought Ventas (VTR) for My Real-Money Portfolio – May 28, 2014
I Just Sold Darden Restaurants (DRI) – April 11, 2014
Why I Sold All of My Shares of Intel (INTC) – March 31, 2014
An Introduction to My Real-Money Dividend Growth Portfolio – March 15, 2014