September 2016 Portfolio Summary

The purpose of this portfolio is income replacement. I hope to use the passive income I receive every month from my investments to cover my rent, utilities, entertainment, transportation and food. The crossover point is when all of the expenses necessary for me to survive and enjoy life can be covered without having to work at all. I want my investments to grow consistently and be less cyclical. I want my dividends from my portfolio to grow by themselves every year without me having to contribute more. The strategy I am employing here is dividend growth investing. I am more concerned with the dividend and the protection of that dividend. Share price is a secondary thought to me after I have purchased shares of a company. As long as the payout ratio is healthy and the company's underlying fundamentals are intact, I will continue to hold and deposit those quarterly dividend checks.

Markets were shaky in the early of September but overall nothing really happened. There were no changes to the Fed reserve's interest rate. The dollar is still strong. Oil prices have rebounded up to $50 from the low 40s.

I have noticed that dividend paying stocks have lately been out of favor. REITs, consumer staples, telecom, and utilities are all correcting very nicely recently. Clearly, these names were all overpriced to begin with during the flight to yield. When the 10 year treasury yield rises these names all move in the opposite direction. Take a look at the graphs below of some of my favorite high yielders, nothing fundamentally has changed with their businesses in the last month yet they're selling like hotcakes.

Before the fall of these high yielders I thankfully shed off some shares in some of my high yielding slow growth names for lower yielding faster growth companies. See my article last week regarding my decision making process http://www.youngdividend.com/2016/10/recent-buy-mo-nke-sbux-pep.html#more  . In this exchange, slower growers with higher yields like AT&T (T), Abbott (ABT), Procter (PG), Verizon (VZ), Exxon (XOM), Southern (SO), and Dominion (D) were swapped for faster growers like Altria (MO), Home Depot (HD), and lower yielding super growers like Nike (NKE), MasterCard (MA), Ross (ROST), Visa (V), TJX, Starbucks (SBUX). Other names that I will eventually add to that are my favorite low yielding super growers are Church and Dwight (CHD), Becton Dickinson (BDX), Hormel (HRL), McCormick (MKC), and C.R Bard (BCR).

APD (Air Products) has also finished spinning off their VSM (Versum Materials) which provides materials for the semiconductor industry. I am not a big fan of VSM but will keep the shares for now.

I have completely existed my positions in Praxair (PX), United Tech (UTX), and Exxon (XOM).

I have gone big on Altria (MO). Right now it's 13% of my portfolio but in the coming years I expect this to eventually diminish to 6% as my periodic contributions cause the weighting to dilute. MO has given me incredible returns so far in my 3 years of holding it. I added around $19k to it during the recent 12% pullback.

Name	Ticker	Sector	Value	Weight	Divies	Yield	S&P Fin	VL Fin	VL Safety
Altria Group Inc	MO	Staples	$31,473.21	12.73%	$1,243.03	3.9495%	A-	B+	2
Home Depot Inc	HD	Discret	$12,315.80	4.98%	$261.09	2.1200%	A	A++	1
Johnson & Johnson	JNJ	Health	$11,581.52	4.69%	$312.09	2.6947%	AAA	A++	1
Philip Morris International Inc	PM	Staples	$9,871.21	3.99%	$429.36	4.3496%	A	B++	2
Realty Income Corp	O	REIT	$9,742.31	3.94%	$382.80	3.9292%	BBB+	A	2
Visa Inc	V	Financial	$9,289.13	3.76%	$62.40	0.6718%	A+	A++	1
PepsiCo	PEP	Staples	$8,124.34	3.29%	$229.83	2.8289%	A	A++	1
Kraft Heinz Co	KHC	Staples	$7,983.79	3.23%	$219.01	2.7432%	BBB-	A	2
Ross Stores Inc	ROST	Discret	$7,744.23	3.13%	$64.97	0.8389%	A-	A	2
General Mills, Inc.	GIS	Staples	$7,740.81	3.13%	$238.10	3.0759%	BBB+	A+	1
Kimberly-Clark	KMB	Staples	$7,677.92	3.11%	$229.28	2.9863%	A	A++	1
Nike Inc	NKE	Discret	$6,638.34	2.69%	$81.66	1.2301%	AA-	A++	1
3M Co	MMM	Industrial	$5,971.65	2.42%	$154.48	2.5868%	AA-	A++	1
Mastercard Inc	MA	Financial	$5,851.44	2.37%	$43.20	0.7383%	A	A++	1
Becton Dickinson and Co	BDX	Health	$5,292.28	2.14%	$78.89	1.4906%	BBB+	A++	1
Church & Dwight	CHD	Staples	$5,271.12	2.13%	$80.64	1.5298%	BBB+	A+	1
The Coca-Cola Co	KO	Staples	$5,065.50	2.05%	$170.02	3.3565%	AA-	A++	1
Medtronic, Inc.	MDT	Health	$4,856.39	1.96%	$97.18	2.0012%	A	A++	1
Hormel Foods Corporation	HRL	Staples	$4,797.77	1.94%	$74.44	1.5516%	A	A	1
Starbucks Corporation	SBUX	Discret	$4,725.83	1.91%	$71.15	1.5055%	A-	A++	1
Reynolds American Inc	RAI	Staples	$4,624.25	1.87%	$182.55	3.9477%	BBB	A	2
Dominion Resources, Inc	D	Utilities	$4,230.93	1.71%	$164.74	3.8938%	A-	B++	2
TJX Companies Inc	TJX	Discret	$3,996.45	1.62%	$56.00	1.4012%	A	A++	1
McCormick & Company	MKC	Staples	$3,904.43	1.58%	$70.52	1.8062%	A-	A+	1
Automatic Data Proc, Inc	ADP	Tech	$3,736.91	1.51%	$90.48	2.4212%	AA	A++	1
McDonald's Corporation	MCD	Discret	$3,655.67	1.48%	$114.24	3.1250%	BBB+	A++	1
Air Products & Chemicals, Inc	APD	Materials	$3,639.48	1.47%	$91.37	2.5104%	A	A+	1
NextEra Energy Inc	NEE	Utilities	$3,544.62	1.43%	$104.51	2.9484%	A-	A	2
Xcel Energy Inc	XEL	Utilities	$3,533.52	1.43%	$121.29	3.4326%	A-	A+	1
Stryker Corporation	SYK	Health	$3,070.18	1.24%	$40.01	1.3030%	A	A++	1
AT&T Inc	T	Telecom	$2,835.96	1.15%	$139.22	4.9092%	BBB+	A++	1
Southern Co	SO	Utilities	$2,785.94	1.13%	$126.25	4.5317%	A-	A	2
Colgate-Palmolive Co	CL	Staples	$2,582.39	1.04%	$54.97	2.1288%	AA-	A++	1
Abbott Laboratories	ABT	Health	$2,553.28	1.03%	$61.80	2.4203%	A+	A++	1
Procter & Gamble Co	PG	Staples	$2,355.20	0.95%	$70.75	3.0038%	AA-	A++	1
Verizon Communications Inc	VZ	Telecom	$2,183.34	0.88%	$100.35	4.5961%	BBB+	A++	1
Clorox Co	CLX	Staples	$1,715.16	0.69%	$44.72	2.6073%	A-	B++	2
C R Bard Inc	BCR	Health	$1,604.60	0.65%	$7.51	0.4679%	A	A+	1
WEC Energy Group, Inc.	WEC	Utilities	$1,379.96	0.56%	$47.68	3.4549%	A-	A+	1
The J. M. Smucker Company	SJM	Staples	$1,008.40	0.41%	$22.73	2.2543%	BBB	A++	1
Aqua America Inc	WTR	Utilities	$912.15	0.37%	$23.92	2.6226%	A+	A+	2
Misc	Type	………..	Partial Totals	Weight	Yrly Dividends	Avg Yield	…..832	…..9	…..82
Equity	Stocks		$231,867.40	93.81%	$6,259.23	2.6995%
Liquid	US Dollars		$12,860.77	5.20%
Non-Liquid	Assets		$2,452.00	0.99%
.	..	…	Equity + Misc	Weight	…..2	…..	…..222	…..2222	…..223
Total			$247,180.17	100.00%

My portfolio looks much different today than it did in the past. For one I am more heavily invested in specific companies and have put more into low yielding high growth companies like Visa, Nike, Ross, and Starbucks. My largest weightings now are in Altria (MO), Home Depot (HD), Johnson & Johnson (JNJ), Philip Morris (PM), Realty Income (O), and Visa (V).

In terms of sector, I am still heavily invested in consumer staples. I also have a lot of companies in Healthcare, and Discretionary. The Staples + Healthcare + Utilities offer me stable growth and dividends in non-cyclical industries. My Discretionary category has grown since I am placing a several investments in high growth companies like Nike, Ross, Starbucks, and TJX. Even Home Depot despite its size and larger dividend still grows extremely well as long as there isn't a recession. For financials, I do not hold any banks since I do not find them as attractive businesses (too uncertain and the lending industry isn't for me). As a result, I only invest in "middleman" financials such as Visa and MasterCard which have high margins and make their money everytime someone swipes their card. These companies do not have the "risk" associated with lending money to someone who might never pay you back.

My net worth has been rather stagnant lately. The market seems to want to make sure I stay beneath the quarter million mark :) I have hit over $250,000 one week but now sit at $247,000. I'm confident that eventually I will be able to solidly break past this quarter million mark. My next goal would be the 1/3 million mark.

In terms of forward looking annual dividends, my yearly figure has dropped from $6515 to $6259 after I re-balanced my portfolio from higher yielding slower growth names to lower yielding high growth companies. This wasn't too big of a hit and I expect future growth going forward.