Updated December 1, 2018.
Highlight of the Month
In November, I initiated the portfolio’s 24th position.
Ten shares of Texas Instruments (TXN) were purchased with dividends collected from other companies.
This illustrates how a dividend-growth portfolio funds itself to generate growth.
November, 2018 Highlights
- Received $337 in dividends from 7 companies.
- Year-to-date, dividends have totaled $3506. That’s 6% more than last year through the same month.
- Current yield is 3.4%, down 0.1% from last month. Small monthly changes in current yield are not significant.
- Yield on cost is 8.5%, same as last month. That’s the highest YOC ever for the portfolio.
- Initiated new position in Texas Instruments by reinvesting dividends.
- Portfolio ended November worth $119,005. That’s its highest month-end value ever. It is up 154% over its lifetime (10.5 years).
Transactions in November
A new position was initiated with the purchase of 10 shares of Texas Instruments. The purchase is marked by red dots in the table below.
Dividends were received from 7 of the portfolio’s 24 companies, totaling $337, as shown on this display from E-Trade of the month’s transactions.
Year-to-date, the portfolio’s total dividends are $3506, up 6% from the same time last year.
Dividends Expected in December
Dividends will arrive from 11 companies totaling $366. These dividends will be allowed to accumulate to $1000 for the next dividend reinvestment purchase, which will happen in February or March.
Summary of Dividend Increases for 2018
There are no more increases scheduled in 2018 for the portfolio’s 24 companies. A total of 28 increases were paid during the year.
The portfolio experienced no dividend cuts in 2018.
Dividend Increase Calendar for 2019
Here is the dividend increase calendar for 2019. No increases have been declared yet for 2019, so everything is in the “Anticipated” column at the moment.
Next 12 Months’ Anticipated Dividends
This display from E-Trade shows how many dividend dollars are expected over the next 12 months. The annual run-rate is currently $3991. That projection is 5% higher 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 shares that will be purchased when I reinvest dividends. It is a 12-month projection based on current payout rates and holdings only.
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. YOC is a backward-looking metric that shows what has been achieved so far with the original money invested. It’s like the scoreboard in a football game.
Formula for Yield on Cost
Projected 12-months dividends / Original cost of portfolio
$3991 / $46,783 = 8.5%
That is fractionally higher than last month (because of the addition of Texas Instruments). It is the highest Yield on Cost that this portfolio has attained.
What it means is that the DGP is now returning 8.5% of the original investment each year in cash dividends. That kind of income power was the original inspiration for the portfolio back in 2008.
A year ago, the portfolio’s YOC was 8.1%. YOC goes up 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
$3991/ $119,005 = 3.4%
That is down from 3.5% last month. The decrease is not meaningful to the dividend-growth goals of the portfolio. It’s the result of the market value of the stocks having risen quite a bit during November.
Current yield is a forward-looking metric that forecasts what the percentage payout will be in the next 12 months assuming that no dividends are increased or cut. (Of course, with dividend-growth stocks, it is expected that the actual dollars collected in the next 12 months will be more than the current forecast.)
For comparison to this portfolio’s 3.4% yield, the S&P 500’s current yield is 1.9%. The 10-year Treasury yield (fixed income) is 3.0%. (Source)
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 4 times.
In November, I used accumulated dividends to open a 10-share position in Texas Instruments. The complete story of this purchase, and its impact on the portfolio’s income generation, can be found in I Just Bought this Stock for My Dividend Growth Portfolio.
These other 3 reinvestments were made earlier in 2018:
- Verizon (Article – initiated position with 43 shares)
- Altria (Article – initiated position with 19 shares)
- Procter & Gamble (Article – added 12 shares to existing position)
I expect to make 4 reinvestments again in 2019.
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.
In addition to dividend increases, the DGP’s dividend stream increases whenever I reinvest dividends. The shares purchased generate dividends themselves, which are new to the portfolio and cause the income stream to rise.
The next graph shows the dividends that I have collected each year since the portfolio was started, along with a conservative projection for 2019.
The rising green bars illustrate the core goal of this portfolio: Build a reliable, steadily increasing stream of dividends over many years.
The red dot on the 2018 bar shows the dividends received so far this year ($3506). The dot moves up each month as more dividends flow in.
The 2018 estimate of $3872 is solid at this point. It’s the sum of the dividends received so far this year plus E-Trade’s estimate of dividends for December. (Last month, I gave a higher estimate for 2018’s total due to an arithmetic error. I apologize for that error.)
The 2019 estimate is simply equal to the 2018 estimate +7%. That’s meant to be a conservative estimate based on 5% in dividend increases plus 2% from the purchase of new shares.
The value of the portfolio has grown 154% from its original size in June, 2008. It started at $46,783. It is now worth $119,005. The value rose almost 5% in November.
That value increase has no impact on the dividend flow. (See DGI Lesson 7: Dividends Are Independent from the Market.) In fact, the value increase is the reason the portfolio’s current yield slipped by 0.1% since last month’s report.
If the DGP’s original money had been invested in the S&P 500 Index via the tracking ETF called SPY, with dividends reinvested, it would have increased 144% to a total value of $114,151. That investment would be yielding 1.9% compared to the DGP’s 3.4%.
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, click here.
- To see a list of all the articles about the DGP, see the section below.
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
Dividend Growth Portfolio Articles
I Just Bought Texas Instruments (TXN) For My Dividend Growth Portfolio– November 21, 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
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