Dave Van Knapp's Dividend Growth Portfolio

Updated August 1, 2018.

July Highlights

  • No purchases or sales in July. I will make the next dividend reinvestment in August.
  • Received $233 in dividends from 6 companies.
  • Year-to-date, incoming dividends have totaled $2197. That’s 10% more than last year through July.
  • One holding announced a dividend increase, bringing the total to 22 increases announced this year by the portfolio’s 23 companies. Four more increases are expected by the end of the year.
  • Current yield is 3.5%, down 0.2% from last month. Small monthly changes in current yield are insignificant. They usually reflect price changes in the stocks. They do not denote declining dividends.
  • Yield on cost stayed the same at 8.3%.
  • The portfolio ended July worth $110,965, up 4% from last month. It is up 137% over its lifetime (10.2 years).

Transactions in July

There were no purchases or sales.

Dividends were received from 6 of the portfolio’s 23 companies, as shown in this display from E-Trade.

Those receipts totaled $233. In this portfolio, dividends are collected in cash, then used to buy new shares when the total reaches $1000.

Year-to-date, dividends are up 10% from the same time last year.

Dividends Expected in August

This display shows that payments will come from 7 companies totaling $328 in August.

The portfolio’s cash balance on August 1 is $706. The $328 to arrive in August will put the cash kitty above $1000, meaning that the threshold for reinvesting dividends and buying new shares will be reached this month.

Dividend Increase Calendar for 2018

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

One increase was announced in July:

  • Smucker (SJM) increased its dividend by 9.0%, payable in September.

Year-to-date, 22 increases have been announced by the portfolio’s 23 companies. Four more are expected by the end of the year.

Next 12 Months’ Anticipated Dividends

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

This display from E-Trade shows how many dividend dollars are expected over the next 12 months.

At the moment, the annual rate of dividend production is $3871 per year. That’s up about 5% from the rate at the end of July last year.

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.

Whatever stock I purchase in August will push that rate up, as will the remaining dividend increases to be declared this year by companies already in the portfolio.

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

$3871 / $46,783 = 8.3%

That is unchanged from last month. What Yield on Cost means is that the portfolio is now delivering dividends at the rate of 8.3% of the original investment each year in cash.

A year ago, the portfolio’s Yield on Cost was 7.9%. Yield on Cost goes up steadily 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

$3871 / $110,965 = 3.5%

That is down 0.2% from last month. The decline is not due to declining dividends. Rather it is because the portfolio’s value went up in July. That raised the denominator in the equation above, lowering the yield.

For comparison to this portfolio’s 3.5% yield, the S&P 500’s current yield is 1.8%. The 10-year Treasury yield (fixed income) is 3.0%. (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 $706 in cash waiting to be reinvested. As August’s dividends flow in, the $1000 threshold will be reached this month. That means that I get to go shopping. I always enjoy shopping for a new addition to the portfolio.

So far this year, I have made 2 dividend reinvestments to start new positions using dividends from other companies.

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.
  • 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, along with projections for full-year 2018 and 2019.

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 ($2197). 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 due to come in by the end of the year.

This month I am adding a 2019 estimate for the first time. It is simply the 2018 estimate + 8%.

Total Returns

The value of the portfolio has grown 137% from its original size in June, 2008. It started at $46,783. It is now worth $110,965.

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 148% to a total value of $116,022. That investment would be yielding 1.8% compared to the DGP’s 3.5%.

Background: What is the 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 stock portfolio.

–Dave Van Knapp

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

Dividend Growth Portfolio Articles

2018
I Just Bought Procter & Gamble (PG) for My Dividend Growth Portfolio– August 17, 2018
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

2017
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

2016
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

2015
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

2014
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