Dave Van Knapp's Dividend Growth Portfolio

 

 

 

 

What Happened in May, 2017

  • The portfolio received $369 in dividends from 7 companies.
  • That makes 34 dividend payments totaling $1442 so far this year from the 20 companies in the portfolio. That is about 8% more than the same time last year.
  • I purchased 18 more shares of Qualcomm (QCOM) using accumulated dividends. That doubled the size of a position begun earlier this year. That is the second purchase this year funded by incoming dividends. Two more are expected by the end of the year.
  • The portfolio’s current yield is 3.5%, down 0.1% from last month. Minor monthly yield variations don’t mean much. The income measured in dollars continues to rise.
  • The portfolio’s yield on cost – meaning the annual dividend flow divided by the portfolio’s original value in 2008 – reached a new all-time high of 7.8%. That means that the portfolio is now generating income at the rate of 7.8% of the original invested amount per year.
  • The portfolio ended May worth $104,120, which is its all-time high. It was up > 2% in May. It is up about 10% for 2017 and +123% over its lifetime (9 years). That is total return, including reinvested dividends throughout its lifetime.

Holdings in the Dividend Growth Portfolio

Updated June 1, 2017:

CaptureTransactions in May

The portfolio received dividends from AT&T (T), Alliant Energy (LNT), Hasbro (HAS), Omega Healthcare Investors (OHI), Procter & Gamble (PG), Realty Income (O), and HCP (HCP).

Those payments totaled $369.

I purchased 18 more shares of Qualcomm (QCOM) with accumulated dividends as part of the ongoing re-investment program. This is discussed in more detail below.

Upcoming Dividend Payments in June

This display from E-Trade shows the dividends anticipated in May.

Capture

As you can see, 11 payments from the 20 stocks in the portfolio are expected. The total amount coming in should be $406.

Dividend Reinvestments

I collect and accumulate dividends in cash. I reinvest them when they hit $1000.

That trigger was hit and I reinvested dividends in May, purchasing 18 more shares of Qualcomm (QCOM). That doubled the size of a position begun earlier this year with reinvested dividends.

That illustrates one of the things I like about accumulating dividends and reinvesting them: It allows me to start new positions without selling anything. The position in Qualcomm is the result of 2 reinvestments this year utilizing dividends received from other companies.

The purchase of Qualcomm drained the cash balance in the portfolio. So dividend accumulation begins again. I expect the $1000 trigger will be reached again in August, when I hope to make my 3d dividend reinvestment of the year.

Capture

Two raises were announced in May: Johnson & Johnson (5.0%) and PepsiCo (7.0%). Both raises will be payable in June.

That makes 16 raises so far this year for the portfolio’s 20 stocks.

HCP has paid 2 dividends at the same rate this year without an increase, after last year’s dividend cut. At the May earnings conference call, the dividend was not asked about or mentioned. However, in the financial slides, I noted that the projected dividend for full-year 2017 suggests no raise for this year, whereas I had been expecting an increase. So I will be looking into whether to sell HCP and replace it with a more reliable dividend-raising company. Prior to last year’s cut, HCP had been a Dividend Champion with more than 25 consecutive yearly increases. Simply Safe Dividends rates the safety of HCP’s dividend at 66 out of 100 points, which is “safe.”

12-Month Anticipated Dividends

Here is the display by E-Trade of expected dividends over the next 12 months. Estimated amounts (shown in purple) are extensions of current payout rates. Payments that have already been announced are shown in black. No as-yet-unannounced dividend increases are included.

Capture
This end-of-May estimate is about 9% higher than at the same time a year ago.

Yield on Cost and Current Yield

Yield on cost is the portfolio’s yield on the original money invested when I started the portfolio. I use the projected 12-month total to calculate yield on cost: $3671 / $46,783 = 7.8%. That is a new all-time high for this portfolio.

What it means in a nutshell is that the portfolio is now sending me 7.8% of the original investment each year in the form of dividend income.

I also use the 12-month dividend projection to calculate current yield: $3671 / $104,120 = 3.5%. In other words, the portfolio is projected to yield 3.5% on its current value over the coming 12 months.

The current yield varies month-to-month, as dividend increases are announced and the portfolio’s total value fluctuates.

However, as dividend increases kick in and new shares are purchased with accumulated dividends, the actual flow of dollars will continue to increase. That’s why the yield on cost goes up over time.

For comparison, the S&P 500’s current yield is 1.9%. The 10-year Treasury rate is 2.2%.

Consistent Dividend Growth

The Dividend Growth Portfolio is designed to generate a steady stream of growing dividends. I eventually intend to live off the income in retirement (whereas now I reinvest the income).

Increases in the portfolio’s dividend stream come from two sources.

  • Companies raise their dividends regularly. See the Dividend Increase Calendar above.
  • New shares are added through dividend reinvestment, as illustrated by February’s and May’s purchases of Qualcomm. The new shares generate dividends of their own, thus increasing the total income flow.

The bar 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 dividend growth investing: Growing income. The 2017 and 2018 green bars are estimates. I have bumped up the estimates a little to show 8% growth per year (instead of 7%). This is based on the results so far in 2017.

The red dot on the 2017 bar shows the actual dividends received thus far (through May) in 2017.

CaptureTotal Returns

Dividend growth investors get good total returns too. Collecting shares of quality companies, reinvesting dividends, and purchasing at good valuations tends to produce good total returns as well as a healthy income stream.

The value of the portfolio has grown 123% from its original size in June, 2008. It started with $46,783. It is now worth $104,120.

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 108% to a total value of $97,309.

Background: What is the Dividend Growth Portfolio?

CaptureTo see the Business Plan for this portfolio, click here. To learn more about the origins of the portfolio, see An Introduction to My Real-Money Dividend Growth Portfolio.

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 portfolio.

– Dave Van Knapp

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

Dividend Growth Portfolio Articles

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



Advertisement