Dave Van Knapp's Dividend Growth Portfolio

 

 

 

 

What Happened in January 2017

  • Received $178 in dividends.
  • The portfolio’s current yield is 3.8%, up 0.1% from last month. The yield varies a little month-to-month as dividend payouts and stock prices change. Minor variations don’t mean much.
  • The portfolio’s yield on cost – the annual projected dividend divided by the portfolio’s original value in 2008 – reached an all-time high of 7.7%. The original amount invested is now generating income at the rate of 7.7% per year.
  • The portfolio ended the month worth $95,350. It is up 1% for the month and for 2017. It is up +104% over its lifetime (8.7 years). That includes reinvested dividends.

Holdings in the Dividend Growth Portfolio

Updated January 31, 2017:

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Transactions in January

No buys or sells. There has been no turnover this year.

The next buy will be this month when dividends are reinvested.

The portfolio received dividends from PepsiCo, Phillip Morris, Realty Income, Digital Realty Trust, and Cisco in January.

Dividends are uneven from month-to-month, since they are dependent on each company’s payment schedule. January is a slow month. The pace will pick up in February and March.

Dividend Reinvestments

I allow incoming dividends to accumulate in cash. I reinvest them when they hit $1000. The cash is currently at $852, representing dividends received since the last reinvestment in 2016.

The next dividend reinvestment will be this month. The cash has accumulated to $852, and I will receive more than $300 in February. That will put me over the $1000 threshold for reinvestment.

I have not decided what stock I will buy. When I make the decision, I will write an article about the selection, the reasons, and its impact on the portfolio.

Last year, I made 4 dividend reinvestments. They allowed me to start 3 new positions that you see in the portfolio: Cisco, Southern, and Boeing.

By starting new positions like that, collecting dividends and reinvesting them in chunks allows me to diversify the portfolio over time and to change the relative sizes of positions.

Dividend Increase Calendar for 2017

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

CaptureFive increases have already been announced for 2017, including a big 30% increase for Boeing payable in March.

I am keeping my eye on HCP, which cut its dividend last year when it spun off its skilled nursing facilities. (I received shares in the spun-off company, which I sold.) HCP is scheduled to report its 4th-quarter and full-year 2016 results on February 13. There should be clear information about the dividend at that time.

12-Month Anticipated Dividends

Here is how the next 12 months of dividends for this portfolio are portrayed at E-Trade. Please note that this chart reflects no anticipated dividend increases, so the actual income for the next 12 months should be higher. The estimated amounts (shown in purple) are simply extensions of current payout rates.
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I use the projected 12-month total to calculate the portfolio’s current yield on cost: $3625 / $46,783 = 7.7%. That shows me what the yield is on the original money invested when I started the portfolio. The portfolio is now sending me 7.7% of its original value each year in the form of dividend income.

I also use it to calculate the current yield: $3625 / $95,350 = 3.8%. In other words, the portoflio is yielding 3.8% on its current value, based on the latest numbers available.

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. The new shares generate dividends of their own, thus increasing the total income cash flow.

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

The 2017 and 2018 green bars are estimates. The red dot shows actual dividends received so far in 2017 ($178).
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The rising green bars illustrate the core goal of dividend growth investing: Growing income.

Total Return

Dividend growth investors get good total returns too. The focus on quality companies, dividend reinvestment, 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 104% from its original size in June, 2008. It started with $46,783. It is now worth $95,350.

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 95% to a total value of $91,227. SPY’s current yield is about 2.0% compared to my portfolio’s 3.8%.

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 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



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