Dave Van Knapp's Dividend Growth Portfolio

Updated April 1, 2018.

The companies are listed by their weight in the portfolio. Verizon is new to the portfolio in March, and Amgen was increased. HCP and Omega Healthcare Investors were sold.

March, 2018 Highlights

• The portfolio received $385 in dividends from 12 companies. That is 6% less than last March, due to changes that were made in the portfolio.
• Year-to-date, dividends have been $1016. That’s 9% more than last year.
• The year’s first dividend reinvestment was made: Amgen was added to the portfolio as a new position. Four reinvestments will be made in 2018.
• Two stocks – HCP and Omega Healthcare Investors – were sold. With the proceeds from those sales, the position in Amgen was increased, and a new position in Verizon was created.
• The portfolio’s current yield is 3.6%, down 0.1 percentage point from last month. Minor monthly variations in current yield are not significant.
• The portfolio’s yield on cost dropped from 8.4% to 8.0%. That is the result of the changes that were made to the portfolio.
• The portfolio ended March worth $104,789, down slightly from last month. It is up 124% over its lifetime (9.8 years).

Transactions in March

This display of March’s transactions is from E-Trade:

The portfolio received $385 in dividends from 12 companies. That is 6% less than March, 2017, due to changes that have been made in the portfolio. For the year, dividends are up 9% from last year.

I apologize for the green marks on the display, but the Easter weekend delayed E-Trade’s posting of the Pepsico and Digital Realty Trust dividends into April. They are properly counted as March dividends. (The dividend crossed out is an actual April dividend, from Coca-Cola; it will be displayed next month.)

The 2 buys and 2 sells are bracketed in red. I sold 2 troubled REITs – HCP and Omega Healthcare Investors – and replaced them with more shares in Amgen and a new position in Verizon. See this article for a complete description of these transactions and their effect on the portfolio.

Dividends Expected in April

This display shows that payments will come from 5 companies totaling $216 in April.

Because of the vagaries of each company’s payment schedule, April is a slow month for dividends in this portfolio. The pace will pick back up in May and June.

Dividend Increase Calendar for 2018

The following table shows dividend increases that have already been declared plus increases that are expected later in the year.

There were 2 increases announced in March. They are noted in red.

Year-to-date, 14 increases have been announced among the portfolio’s 22 stocks.

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. At the moment, the run-rate of dividend production is $3725 per year.

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

The actual dividends to be paid should exceed the amount shown, because more companies will declare increases in the next 12 months, 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: $3725 / $46,783 = 8.0%.

That is down 0.4% from last month. The decline is the result of the 2 REITs that were sold and replaced. The REITs were high-yielding, but they were troubled companies whose dividends had fallen into danger.

I replaced them with higher-quality but lower-yielding companies (Amgen and Verizon). Long-term, the portfolio is better off, but short-term, the rate of income production fell back a little. I expect that later in the year, the annual rate of income production will rise back to where it was (and then beyond), with a lot more safety.

This portfolio is now rendering dividends at the rate of 8.0% of the original investment each year in cash. A year ago, the yield on cost of this portfolio was 7.7%. It’s gone up 4% in a year, even with the setback described above.

Current yield is also calculated from the annual dividend run-rate: $3725 / $104,789 = 3.6%. The divisor is the current value of the portfolio rather than its original value. So the portfolio is projected to yield 3.6% on its current value over the coming 12 months.

The current yield fell 0.1% in March, which is the combined result of several factors: The portfolio’s change in value; dividend increases that were announced; and the 2 sales and 2 purchases that happened during the month. Small monthly changes to current yield are generally insignificant in the long-term scheme of things.

For comparison to this portfolio’s 3.6% yield, the S&P 500’s current yield is 1.9%. The 10-year Treasury yield (fixed income) 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.

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 decline in the portfolio’s dividend run-rate this month should be made up by the end of the year. I have adjusted 2018’s full-year estimated dividends downward by 3% to account for the stock swaps. There should still be growth in 2018 over 2017.

The red dot on the 2018 bar shows the dividends received so far this year ($1016). The dot moves up each month as more dividends flow in.

Total Returns

The value of the portfolio has grown 124% from its original size in June, 2008. It started at $46,783. It is now worth $104,789.

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 131% to a total value of $108,069. That investment would be yielding 1.9% compared to the DGP’s 3.6%.

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

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

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