Dave Van Knapp's Dividend Growth Portfolio

Updated February 1, 2018.

January 2018 Highlights

  • The portfolio received $252 in dividends from 6 companies. That is 41% more than in January, 2017, but there was a late payment from one company, rolled over from December, 2017, that distorts the month-to-month comparison. Absent that payment, this year’s January dividends were 14% more than last year.
  • The portfolio’s current yield is 3.5%, same as last month.
  • The portfolio’s yield on cost reached a new all-time high of 8.3%.
  • The portfolio ended January worth $110,812, down slightly from last month. It is up 137%% over its lifetime (9.7 years).

Transactions in January

There were no purchases or sales in January.

The portfolio received $252 in dividends from 6 companies during January.

The payment from Ventas was really its 4th-quarter payment from last year, which slipped out of December into this year.

Dividends Expected in February

This display from E-Trade shows that payments will come from 8 companies totaling $393 in February.

Reinvesting Dividends

I reinvest dividends in this portfolio. First I collect them in cash, then I reinvest the cash when it totals $1000.

Right now the kitty’s at $626. The expected dividends in February should build it back up to $1000. So the next reinvestment will come near the end of February.

I made 4 reinvestments in 2017, purchasing shares of Qualcomm (twice), Lowe’s, and Cisco.

Dividend Increase Calendar

The new calendar for 2018 is below. The first 2 columns after the company names show dividend increases that have already been declared. The 3rd column shows months when increases are expected to be paid, but have not been declared yet.

You will note that 8 increases have already been announced for 2018.

On the last day of January, Chevron surprised with a 3.7% increase declaration, payable in March. After the oil-price crash in 2015, Chevron had slowed their increases to a crawl. It’s too soon to tell whether they will have a new increase calendar; they used to increase in December.

Also note that Realty Income surprised with a 3.1% increase payable in February, after they had just increased a tiny bit in January. Obviously, both of these surprises are good news.

HCP did not discuss raising its dividend during its most recent earnings conference call. They did state that “we will continue to have a solid cash flow base to cover our dividend.”

I continue to hold HCP despite its frozen dividend, 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. Before the cut in 2016, HCP had been a Dividend Champion with 31 straight years of increases.

Simply Safe Dividends rates the safety of HCP’s dividend at 55 out of 100 points, same as last month. That puts it into a “semi-safe” zone. If it drops much further, I will sell the position and get a stock with better dividend safety.

Next 12 Month’s Anticipated Dividends

The next 12 month’s projected dividends show how much money the portfolio is currently generating per year, based on information known now.

Here is the display by E-trade of expected dividends over the next year. Amounts already declared are shown in black. Purple shows payments that are expected but that haven’t been declared. The exact amounts of the purple payments will become known as dividend declarations and increases are announced.

The actual dividends to be paid should exceed the amount shown, because only a few companies have declared increases for 2018, plus I will be adding shares when I reinvest dividends.

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: $3870 / $46,783 = 8.3%.

That is up 0.1% from last month, and it is a new all-time high for  this portfolio. That’s how this portfolio is designed to work: The dividend income – and thus the yield on cost – go up regularly as the portfolio builds its income stream.

This portfolio is now rendering dividends at the rate of 8.3% of the original investment each year in cash.

Current yield is also calculated from the annual dividend run-rate: $3870 / $110,812 = 3.5%. The divisor is the current value of the portfolio rather than its original value. So the portfolio is projected to yield 3.5% on its current value over the coming 12 months.

For comparison to this portfolio’s 3.5% yield, the S&P 500’s current yield is 1.7%. The 10-year Treasury yield is 2.7%. [Source]

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 dividends in retirement (whereas now I reinvest them).

Increases in the portfolio’s dividend stream come from 3 sources.

  • Companies raise their dividends regularly.
  • New shares are added through dividend reinvestment. The new shares generate dividends of their own, thus increasing the total income flow.
  • Occasionally I make changes to the portfolio that impact its dividend stream. For example, in November I trimmed McDonald’s and used the proceeds to buy more Realty Income and open a new position in Smucker. The net effect was to increase the dividend flow from the portfolio.

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: Reliable growing income.

The red dot on the 2018 bar shows the dividends received so far this year. The dot will move up each month as more dividends flow in.

Total Returns

For the first time in several years, the total value of the Dividend Growth Portfolio was surpassed by the value of the S&P 500 if the same amount had been invested in 2008 with dividends reinvested along the way.

The value of the portfolio has grown 137% from its original size in June, 2008. It started at $46,783. It is now worth $110,812.

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 146% to a total value of $115,086. That portfolio would be yielding 1.7% compared to the DGP’s 3.5%.

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, 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 $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