Dave Van Knapp's Dividend Growth Portfolio

Updated October 1, 2018.

Highlight of the Month

In September, 4 of the portfolio’s 23 companies announced dividend increases, led by a 14.9% increase from McDonald’s and a 9.5% increase from Microsoft, both payable in December.

That makes 28 dividend increases this year.

September, 2018 Highlights

  • Received $408 in dividends from 12 companies. Year-to-date, incoming dividends have totaled $2933. That’s 6% more than last year through September.
  • Four dividend increases were announced. That concludes the increases expected for dividends payable in 2018. Before long, the first announcements for 2019 increases will begin to appear.
  • Current yield is 3.5%, same as last month.
  • Yield on cost moved up to 8.5%, which is the highest YOC ever for the portfolio.
  • The portfolio ended September worth $114,282, which is a new month-end high. It is up 144% over its lifetime (10.3 years).

Transactions in September

No stocks were bought or sold.

Dividends were received from 12 of the portfolio’s 23 companies, totaling $408, as shown on this display from E-Trade of September’s transactions.

Year-to-date, the portfolio’s total dividends are up 6% from the same time last year.

Dividends Expected in October

October is a light month for dividends in this portfolio. Payments will come from 6 companies totaling $235, as shown in this table from E-Trade.

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.

Four increases were announced in September:

  • McDonald’s announced an increase of 14.9% payable in December.
  • Microsoft announced an increase of 9.5% payable in December.
  • Realty Income announced its 5th increase of the year, 0.2% payable in October. Total increases for the year are 3.9%.
  • Verizon announced an increase of 2.1% payable in October.

Year-to-date, 28 increases have been announced by the portfolio’s 23 companies.

I don’t expect any more increases payable this year. When the first increases payable in 2019 are announced, I’ll start a new calendar to track them.

Next 12 Months’ Anticipated Dividends

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

This display from E-Trade shows how many dividend dollars are expected over the next 12 months by month. The annual total is $3960.

At the moment, the portfolio is producing dividends 6% faster than at the same time last year.

The projection, of course, does not include dividend increases that will be declared over the next 12 months, nor dividends from stocks that will be purchased when I reinvest dividends. It is a projection based on current information.

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.

Formula for Yield on Cost

Projected 12-months dividends / Original cost of portfolio

$3960 / $46,783 = 8.5%

That is up 0.1% from last month and is the highest Yield on Cost that this portfolio has achieved.

What Yield on Cost means is that the portfolio is now delivering dividends at the rate of 8.5% of the original investment each year in cash. That kind of income-generating power was the original inspiration for the portfolio back in 2008.

A year ago, the portfolio’s Yield on Cost was 8.0%. Yield on Cost goes up steadily as 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

$3960/ $114,282 = 3.5%

That is unchanged from last month. Even though the rate of dividend production (in dollars) increased in September, so did the portfolio’s total value, keeping the current yield ratio the same.

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 3.1%. (Source)

Reinvesting Dividends

As described in the portfolio’s Business Plan, dividends are collected in cash and reinvested when they accumulate to $1000.

So far this year, the $1000 trigger point has been reached 3 times, most recently in August. These reinvestments have been made in 2018:

  • Verizon (Article – bought 43 shares)
  • Altria (Article – bought 19 shares)
  • Procter & Gamble (Article – added 12 shares to existing position)

I expect to make one more reinvestment this year, when incoming dividends grow the cash kitty back up to $1000 near the end of the year.

Consistent Dividend Growth

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 ($2933). 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.

The 2019 estimate is simply a SWAG at this time, equal to the 2018 estimate + 8%.

Total Returns

The value of the portfolio has grown 144% from its original size in June, 2008. It started at $46,783. It is now worth $114,282.

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 157% to a total value of $120,232. 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

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

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