Dave Van Knapp’s Dividend Growth Portfolio

What Happened in July, 2017

  • The portfolio received $143 in dividends from 4 companies. July is a slow month for dividends in this portfolio (simply a result of the companies’ payment schedules).
  • 49 dividend payments totaling $1991 have been received so far this year from the 20 companies in the portfolio. About 10% more dollars have been received year-to-date than during the first 7 months of last year.
  • The portfolio’s current yield is 3.5%, unchanged from last month.
  • The portfolio’s yield on cost – meaning the annual dividend cash flow divided by the portfolio’s original value in 2008 – ticked up to 7.9%, a new all-time high. That means that the portfolio is now sending me income at the rate of 7.9% of the original investment per year.
  • The portfolio ended July worth $106,017, which is a new all-time month-end high total value. It was up > 1% in June. It is up almost 13% for 2017 and +126% over its lifetime (9.2 years). The portfolio’s total return includes the compounding impact of dividend reinvestments throughout its lifetime.

Holdings in the Dividend Growth Portfolio

Updated July 31, 2017:

Transactions in July

Last month, the portfolio received dividends from 4 of its 20 stocks. Payments came in from Coca-Cola (KO), Philip Morris (PM), Realty Income (O), and Cisco Systems (CSCO).

July is a slow month for dividends in this portfolio. That is just an accident of the payment schedules of the individual companies. Dividends received in July totaled $143.

No stocks were bought or sold in July.

Dividend Payments for August

This display from E-Trade shows the dividends to be received in August + the first day of September.

As you can see, August is a heavier dividend month than July. Payments from 7 of the 20 stocks in the portfolio are expected. Including the first payment in September, the total amount coming in should be $380.

Dividend Reinvestments

I collect dividends in cash. I reinvest them when they total $1000. The last reinvestment was in May (when I bought more Qualcomm).

More dividends have been flowing in since then. Currently there is $625 cash in the account. With $380 coming in August + September 1, I will hit the $1000 trigger at the beginning of September.

That means I can go shopping! During August I will be evaluating candidates for my 3d dividend reinvestment of the year. The purchase will be made shortly after the full $1000 is in the account.

Dividend Increase Calendar

The table below shows the schedule of dividend increases for 2017. The right-hand column shows 2016’s increases for comparison.

There were 2 increases announced in July. That makes 19 raises so far this year for the portfolio’s 20 stocks.

HCP announced its 3rd dividend for 2017, payable in August. The amount will be unchanged, which will make it the 4th consecutive payment without a raise after last year’s dividend cut. The company’s 2nd quarter conference call to discuss earnings should take place in August. I will be monitoring it for news about the dividend.

At the May call, the dividend was not mentioned. In the financial slides for that call, the projected dividend for full-year 2017 suggested no raise for this year. I have been riding the position, even in the face of no increases, because (1) I expect at some time they will resume annual increases, (2) it is such a small position in the portfolio, and (3) its yield is quite high.

Simply Safe Dividends rates the safety of HCP’s dividend at 65 out of 100 points, which is “safe.”

12-Month Anticipated Dividends

Here is the display by E-Trade of expected dividends over the next year. Payments that have already been announced are shown in black, and they include dividend increases already declared. Estimated amounts (shown in purple) simply assume repetition of current payout rates without increases. This is the standard way to project dividends for a stock portfolio.

This 12-month 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. The projected 12-month total is used to calculate yield on cost: $3676 / $46,783 = 7.9%. That is a new all-time high for the Dividend Growth Portfolio.

What it means in a nutshell is that the portfolio is now sending me dividends at the rate of 7.9% of the original investment each year.

I also use the 12-month dividend projection to calculate current yield: $3676 / $106,017 = 3.5%. In other words, the portfolio is projected to yield 3.5% on its current value over the coming 12 months.

The 3.5% current yield is unchanged from last month. It often often varies month-to-month, as dividend increases are announced and the portfolio’s total value fluctuates. Minor variations have no long-term significance.

However, even if the current yield stays unchanged, the actual flow of dollars will continue to increase as dividend increases kick in and new shares are purchased.

For comparison, the S&P 500’s current yield is 1.9%. The 10-year Treasury rate is 2.3%.

Consistent Dividend Growth

The stocks for the Dividend Growth Portfolio have been picked for their ability 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, each figured as an 8% increase over the year before.

The red dot on the 2017 bar shows the actual dividends received thus far in 2017 ($1991).

Total Returns

Dividend growth investors get good total returns too. Not surprisingly, the consistent practice of 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 126% from its original size in June, 2008. It started with $46,783. It is now worth $106,017.

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 114% to a total value of $99,882.

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

SaveSave

SaveSave