Updated August 1, 2019
Highlight of the Month
Coming this month: The third dividend reinvestment of the year.
In August, the cash kitty of accumulating dividends will exceed $1000 again, which means that I’ll go shopping for another addition to the portfolio.
Stay tuned for a report on that purchase.
The portfolio is sorted alphabetically. Buys and sells in 2019 are highlighted in yellow.
July, 2019 Highlights
- Received $279 in dividend payments from 6 companies.
- Yield on cost stays at 9.3%, the highest value ever.
- Current yield is 3.3%, same as last month.
- The portfolio’s month-end total value attained its highest level ever.
Main Goal: Grow Dividends Each Year
Here’s my favorite chart.
The whole idea behind the DGP is to generate a reliable, steady stream of growing dividends over many years. That’s exactly what has happened, and it continues to happen now, more than 11 years after the portfolio was created.
The DGP’s dividend stream goes up for three reasons:
- Dividend increases. The companies themselves announce regular raises.
- Dividend reinvestments. I use accumulated dividends to buy new shares. The new shares generate more dividends.
- Portfolio management. I occasionally make swaps to get higher-yielding shares, as I did in May (see this article).
All three factors occur without the need for additional outside money. With no new money coming from me, all growth in the DGP is organic. It is fueled entirely by what’s already in the portfolio.
I have never added an additional dollar to the DGP since its inception. The companies themselves, of course, have added many dollars by sending me dividends, and I have occasionally generated other dollars by selling or trimming positions.
The estimated income for 2019 is now $4304. That’s based on dividends already received + projected dividends for the rest of the year. It’s a conservative estimate, because it excludes:
- 7-8 dividend increases that I still expect in 2019 from stocks already in the portfolio;
- additional dividends that will come from shares to be purchased via two more dividend reinvestments in 2019.
Looking ahead to 2020, I’ve made a conservative forecast: 2019’s projected dividends + 8%. I think that’s conservative, because 2019’s total is projecting to be 10-11% higher than last year’s actual.
Each month, I refine my estimates as more facts become known.
DGP Activities in July
There were no buys or sells in July. Dividends continued to roll in and accumulate in cash for the next purchase, which will come this month (August).
In July, the DGP received $279 in dividends from 6 companies, just as expected. They brought the total cash kitty up to $851.
Dividends Expected in August
August will be a more lucrative month for dividends. I expect to receive $354 from 8 companies.
August’s dividends will push the cash kitty back up over $1000, which means that this month I will buy more shares to add to the portfolio’s collection of stocks.
Dividends Expected in Next 12 Months
This display shows how many dividend dollars are expected over the next 12 months.
The DGP’s annual dividend run-rate is currently $4349. That is about 12% higher than at the same time last year.
The projection, of course, does not include dividend increases yet to be announced, nor does it include dividends from shares that I will purchase when I reinvest dividends, including the purchase coming up this month.
Therefore, the actual 12-month dollar total will probably be more than shown. The projection is based on current payout rates and shares held.
Dividend Increases in 2019
This year, 21 increases have already been declared by the portfolio’s 25 companies. There have been no cuts. Last year, the portfolio got 28 increases and no cuts.
An additional 7-8 increases are expected by the end of the year for stocks currently held.
- I have moved Philip Morris’ expected increase month to October, in keeping with its annual schedule prior to 2018. Last year they increased their dividend in July, but that now appears to have been a one-time shift.
- Qualcomm failed to increase its dividend as expected in June, and it has already declared an unchanged dividend for September. QCOM’s dividend still might be raised in December, but there has been no indication of that from the company. This chart shows Qualcomm’s payments over the past 4 years. I circled the un-increased dividend payments for June and September.
The table below shows the full calendar of dividend increases for 2019. The stocks are listed alphabetically. The single dividend increase announced in June is highlighted.
Yield on Cost Is Now Much Greater than Current Yield
Yield on cost is the portfolio’s yield calculated as a percentage of the original money invested when I started the portfolio in 2008.
YOC shows what has been achieved so far, based on events that have already happened.
Formula for Yield on Cost
Projected 12-months’ dividends / Original cost of portfolio
$4349 / $46,783 = 9.3%
The 9.3% YOC is a record high for the DGP, unchanged from last month. A year ago it was 8.3%, so it’s gone up 12% since then. YOC goes up when stocks announce dividend increases as well as when I add new shares through dividend reinvestments.
YOC is a scoreboard. For the DGP, it shows that the portfolio is now returning 9.3% of the original investment annually in cash dividends.
That kind of cash-generating power was the original inspiration for the portfolio in 2008. My mental goal is to reach 10% YOC, and it’s getting closer and closer.
Current yield is the portfolio’s yield calculated as a percentage of the current value of the portfolio. It’s the yield you would receive if you dupicated the portfolio today, purchasing the same stocks at today’s prices.
Formula for Current Yield
Projected 12-months’ dividends / Current value of portfolio
$4349/ $130,317 = 3.3%
It’s important to remember the difference between yield and the amount of dividend payouts. Yield is a percentage, while dividend payouts are in dollars.
So the current yield of your portfolio can go up and down even though the dollar payouts always go up. That happens because of the fluctuating market value of your holdings. While their prices are volatile, the dividend payments are not.
Current yield is a forward-looking estimate of the percentage payout over 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. As discussed earlier, I expect 7-8 more dividend increases this year in the DGP.
I also expect to make two more dividend reinvestments, including one this month (August). Those will purchase new shares, which will generate their own dividends, upping the annual total.
During its history, the DGP’s current yield has ranged from 3.3% to 4.2%. Over the long haul, variations in current yield within the DGP’s normal range are not very meaningful. What is important is that the income measured in dollars goes up steadily.
For comparison to this portfolio’s 3.5% yield, the S&P 500’s current yield is 1.9%. The benchmark 10-year Treasury (fixed income) is yielding 2.0%. [Source]
As described in DGI Lesson 10: Two Ways to Reinvest Your Dividends to Enhance Your Returns, dividends can be reinvested either by dripping them or by letting them pile up in cash and then making larger targeted purchases.
As described in the portfolio’s Business Plan, I use the second method. I reinvest dividends when they accumulate to $1000.
The cash in the portfolio will top $1000 in August, so I will make a purchase this month. I haven’t decided yet whether I will add more shares of some company that I already own or buy a new company. In any event, I love to go shopping, and I’ll report on what I do shortly after I do it.
Secondary Goal: Total Returns
The value of the portfolio has grown +179% from its inception in June 2008. It started at $46,783. It is now worth $130,317. That is the highest month-end total ever for the DGP.
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 +167% to a total value of $124,910. [Source]
That investment would be yielding only 1.9% compared to the DGP’s 3.3%.
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. I show what I do and explain why I do it.
–Dave Van Knapp
Dividend Growth Portfolio Articles
I Just Bought This Stock For My Dividend Growth Portfolio (DGP)– August 6, 2019
I Just Bought More Verizon (VZ) Stock– May 21, 2019
I Just Bought Shares of Altria (MO) and Dominion (D) For My Dividend Growth Portfolio (DGP)– May 20, 2019
I’m Seriously Considering Dominion (D) Stock as a New Position in My Dividend Growth Portfolio– May 8, 2019
These 3 Popular Dividend Growth Stocks Appear Way Overvalued Right Now– April 27, 2019
I Just Bought More Verizon (VZ) for My Dividend Growth Portfolio– February 20, 2019
Dividend Growth Portfolio – 2018 Review and 2019 Preview– January 7, 2019
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