Dave Van Knapp's Dividend Growth Portfolio

 

 

 

 

What Happened in March, 2017

• Received $401 in dividends. These came via 12 distributions from the 20 companies in the portfolio. March is a heavy month for distributions, which is just a coincidence resulting from the dividend schedules of the companies in the portfolio.
• The year to date total rose to $929 dividends received.
• Besides the incoming dividends, there were no other transactions this month. I expect to make my next stock purchase (using accumulated dividends) in May.
• The portfolio’s current yield is 3.5%, down 0.1% from last month. The yield varies month-to-month as dividend payouts and stock prices change. Minor variations don’t mean much.
• The portfolio’s yield on cost – the annual dividend flow divided by the portfolio’s original value in 2008 – remains at its all-time high of 7.7%. That is, the portfolio is now generating income at the rate of 7.7% of the original amount per year.
• The portfolio ended March worth $101,051, which is also the all-time high for the end of a month. It was up about 1% in March. It is up over 7% for 2017 to date and +116% over its lifetime (8.8 years). That is total return, including reinvested dividends.

Holdings in the Dividend Growth Portfolio

Updated April 1, 2017:

 

CaptureTransactions in March

The portfolio received dividends from HCP, Boeing, Southern, Microsoft, Chevron, Johnson & Johnson, McDonald’s, Realty Income, Qualcomm, Digital Realty Trust, PepsiCo, and Ventas.

Their payments totaled $401. That brings the cash total in the portfolio to $572.

The payment from Qualcomm was the first ever into this portfolio. I added the stock in February, using dividends from other companies to buy it. The company has already announced a 7.6% dividend increase for its next payment in June.

Dividend Reinvestments

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

Right now, the cash in the portfolio sits at $572. As dividends continue to flow in, I expect the cash total will exceed $1000 in May. I will use it then to make the next dividend reinvestment.

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.
CaptureTwo raises were announced in March: Digital Realty Trust (5.7%) and Qualcomm (7.6%). That makes a total of 11 raises announced so far this year for the portfolio’s 20 stocks.

I continue to keep my eye on HCP, which cut its quarterly dividend last November in connection with a spinoff of some assets. HCP paid its March dividend this year without an increase. The first quarterly payment used to be when HCP made its increase each year. The dividend was not mentioned at the quarterly conference call on February 13. I do expect the company to announce an increase some time in 2017.

12-Month Anticipated Dividends

Here is the display by E-Trade of expected dividends over the next 12 months. Because the chart reflects no unannounced dividend increases, the actual income for the next 12 months should be higher. The estimated amounts (shown in purple) are simply extensions of current payout rates. Payments that have already been announced are shown in black.

As you can see, April is a slow month for dividends in this portfolio.

CaptureYield 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: $3587 / $46,783 = 7.7%. That is the same percentage yield as last month, and it is the all-time high for this portfolio.

What it means in a nutshell is that the portfolio is now sending me 7.7% of the original investment each year in the form of dividend income.

I also use the 12-month dividend projection to calculate current yield: $3587 / $101,051 = 3.5%. In other words, the portfolio is yielding 3.5% on its current value. As dividend increases are announced, 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 2.4%.

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 purchase of Qualcomm. The new shares generate dividends of their own, as Qualcomm did in March, 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. The red dots on the 2017 bar show the actual dividends received so far in the first three months of 2017.

Capture
Total Return

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 116% from its original size in June, 2008. It started with $46,783. It is now worth $101,051.

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 103% to a total value of $94,969.

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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