Dave Van Knapp’s Dividend Growth Portfolio

Dave Van Knapp's Dividend Growth Portfolio

 

 

 

 

What Happened in June, 2017

  • The portfolio received $406 in dividends from 11 companies. More than half the companies in the portfolio paid dividends in June.
  • 45 dividend payments totaling $1848 have been received so far this year from the 20 companies in the portfolio. About 9% more dollars have been received than during the same months last year.
  • The portfolio’s current yield is 3.5%, unchanged from last month.
  • The portfolio’s yield on cost – meaning the annual dividend cash flow divided by the portfolio’s original value in 2008 – remains at its all-time high of 7.8%. In other words, the portfolio is now sending me income at the rate of 7.8% of the original investment per year.
  • The portfolio ended May worth $104,702, which is its all-time month-end high. It was up < 1% in June. It is up about 11% for 2017 and +124% over its lifetime (9.1 years). The portfolio’s value reflects total return, including the reinvestment of dividends throughout its lifetime.

Holdings in the Dividend Growth Portfolio

Updated July 1, 2017:

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Last month, the portfolio received dividends from 11 of its 20 stocks. Payments came in from Boeing (BA), Southern (SO), Microsoft (MSFT), Chevron (CVX), Johnson & Johnson (JNJ), Realty Income (O), McDonald’s (MCD), Qualcomm (QCOM), Digital Realty Trust (DLR), PepsiCo (PEP), and Ventas (VTR).

Those payments totaled $406. June is a heavy month for dividends in this portfolio. That’s just a vagary of the particular companies owned and their payment schedules.

Dividend Payments for July

This display from E-Trade shows the dividends to be received in July.

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As you can see, July is a light month compared to June. Payments from 5 of the 20 stocks in the portfolio are expected. The total amount coming in should be $257.

Dividend Reinvestments

I collect dividends in cash. I reinvest them when the total up to $1000.

The last reinvestment was in May (when I bought more Qualcomm), and the dividends have been flowing in since then. I expect the $1000 trigger will be reached in August, when I will make my 3rd dividend reinvestment of the year.

Right now, there is $482 accumulated on the way to the $1000 target.

Dividend Increase Calendar

The table below shows the schedule of dividend increases for 2017. The right-hand column shows 2016’s increases for comparison.

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There was just a single increase announced in June. That makes 17 raises so far this year for the portfolio’s 20 stocks.

HCP has paid its first 2 dividends this year without an increase after last year’s dividend cut. At the May earnings conference call, the dividend was not mentioned. However, in the financial slides, the projected dividend for full-year 2017 suggests no raise for this year. I have decided to wait until the August conference call to decide whether to drop HCP from the portfolio.

Prior to last year’s cut, HCP had been a Dividend Champion with more than 25 consecutive yearly increases. Simply Safe Dividends rates the safety of HCP’s dividend at 65 out of 100 points, which is “safe.” HCP is a very small position, so I am letting it go for now.

12-Month Anticipated Dividends

Here is the display by E-Trade of expected dividends over the next 12 months. Estimated amounts (shown in purple) simply assume repetition of current payout rates without increases. Payments that have already been announced are shown in black, and they include dividend increases already declared.

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This end-of-June estimate is about 9% higher than at the same time a year ago.

Yield on Cost and Current Yield

Yield 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: $3671 / $46,783 = 7.8%. That remains at the all-time high for this portfolio.

What it means in a nutshell is that the portfolio is now sending me 7.8% of the original investment each year in the form of dividend income.

I also use the 12-month dividend projection to calculate current yield: $3671 / $104,702 = 3.5%. In other words, the portfolio is projected to yield 3.5% on its current value over the coming 12 months.

The current yield often varies month-to-month, as dividend increases are announced and the portfolio’s total value fluctuates. Minor variations have no long-term significance.

However, even though the current yield stays unchanged, as dividend increases kick in and new shares are purchased, 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 2.3%.

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 and May’s purchases of Qualcomm. The new shares generate dividends of their own, 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, each figured as an 8% increase over the year before.

The red dot on the 2017 bar shows the actual dividends received thus far (through June) in 2017 ($1848).

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Total Returns

Dividend growth investors get good total returns too. Not surprisingly, 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 124% from its original size in June, 2008. It started with $46,783. It is now worth $104,702.

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 109% to a total value of $97,776.

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 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