Thursday, January 5, 2017

December 2016 Portfolio Summary (Year End)

Happy new years fellow investors. A few days ago marked the beginning of 2017. I took a few days to look over what happened in 2016 and how I did. This post will summarize what my results were and what my future plans for 2017 are.

The S&P500 surprisingly rallied very hard towards the end of the year. This year we had a lot of action from the crash in oil prices to Brexit to Trump becoming the president elect. After the Brexit event, markets took a tumble as seen in the notch around the end of June 2016. The markets however quickly recovered to new highs. After the Trump victory, world markets including the US took a nose dive. However that dip was short lived, similar to Brexit and the market continued to make new highs.

After Trump got elected, the dollar climbed to new highs. Interest rates rose. The Federal Reserve raised rates in December and suggested more to come in 2017. All in all, a lot of action. Below are graphs of several indices.

What all these events indicate is that one needs to stay the course and tune out the noise. If one sold on the lows after Brexit fears or Trump fears, then one would have missed on a lot of potential gains (plus dividends). It's all about the dividend and dividend safety. As long as the payout can be maintained, one should be worried more about how that dividend can increase in the future. Daily market price fluctuations should be tuned out. At the end of the day, companies that can generate cash to pay dividend checks and have the earnings growth to increase such dividends year after year will experience increases in share price. One must be patient as the increase in dividends are not normally instantly followed by an increase in share price. However, in the long run investors will eventually push the price up of companies that steadily maintain and increase their payouts with good financial credit ratings to back the dividend up.

As of 1/5/2017 my portfolio stands at the following:
Name Ticker Sector       Value   Weight        Divies      Yield S&P Fin VL Fin VL Safety
Altria Group Inc MO Staples $38,519.09 13.88% $1,383.58 3.5919% A- B+ 2
Home Depot Inc HD Discret $12,682.79 4.57% $261.42 2.0612% A A++ 1
Realty Income Corp O REIT $11,676.25 4.21% $473.52 4.0554% BBB+ A 2
Johnson & Johnson JNJ Health $11,478.67 4.14% $314.32 2.7383% AAA A++ 1
Ross Stores Inc ROST Discret $10,750.92 3.87% $88.38 0.8220% A- A 2
Starbucks Corporation SBUX Discret $10,407.88 3.75% $184.34 1.7712% A A++ 1
Philip Morris International Inc PM Staples $10,287.34 3.71% $469.61 4.5649% A B++ 2
Visa Inc V Financial $10,247.33 3.69% $83.40 0.8139% A+ A++ 1
Kraft Heinz Co KHC Staples $8,006.22 2.88% $222.06 2.7736% BBB- A 2
PepsiCo PEP Staples $7,995.30 2.88% $229.83 2.8746% A A++ 1
General Mills, Inc. GIS Staples $7,980.96 2.88% $246.16 3.0843% BBB+ A+ 1
Kimberly-Clark KMB Staples $7,286.08 2.63% $231.12 3.1721% A A++ 1
Becton Dickinson and Co BDX Health $7,211.09 2.60% $127.77 1.7718% BBB+ A++ 1
McCormick & Company MKC Staples $6,725.73 2.42% $138.21 2.0549% A- A+ 1
Church & Dwight CHD Staples $6,320.28 2.28% $99.96 1.5816% BBB+ A+ 1
3M Co MMM Industrial $6,221.29 2.24% $155.44 2.4985% AA- A++ 1
Mastercard Inc MA Financial $6,092.75 2.20% $50.11 0.8225% A A++ 1
Reynolds American Inc RAI Staples $5,501.63 1.98% $183.42 3.3339% BBB A 2
The Coca-Cola Co KO Staples $5,113.42 1.84% $171.47 3.3533% AA- A++ 1
Dominion Resources, Inc D Utilities $4,530.16 1.63% $179.35 3.9591% A- B++ 2
Automatic Data Proc, Inc ADP Tech $4,421.96 1.59% $97.85 2.2127% AA A++ 1
TJX Companies Inc TJX Discret $4,113.98 1.48% $56.19 1.3657% A A++ 1
Air Products & Chemicals, Inc APD Materials $4,037.24 1.45% $96.97 2.4019% A A+ 1
McDonald's Corporation MCD Discret $3,870.54 1.39% $121.58 3.1412% BBB+ A++ 1
Xcel Energy Inc XEL Utilities $3,669.44 1.32% $122.31 3.3333% A- A+ 1
NextEra Energy Inc NEE Utilities $3,600.55 1.30% $105.29 2.9244% A- A 2
Stryker Corporation SYK Health $3,133.08 1.13% $44.84 1.4312% A A++ 1
AT&T Inc T Telecom $3,133.01 1.13% $143.98 4.5955% BBB+ A++ 1
Southern Co SO Utilities $2,802.69 1.01% $127.76 4.5584% A- A 2
Verizon Communications Inc VZ Telecom $2,402.03 0.87% $101.55 4.2277% BBB+ A++ 1
Abbott Laboratories ABT Health $2,374.62 0.86% $63.40 2.6700% A+ A++ 1
Colgate-Palmolive Co CL Staples $2,369.60 0.85% $55.30 2.3336% AA- A++ 1
Procter & Gamble Co PG Staples $2,263.50 0.82% $71.32 3.1507% AA- A++ 1
Medtronic, Inc. MDT Health $1,993.50 0.72% $48.41 2.4283% A A++ 1
The J. M. Smucker Company SJM Staples $1,781.44 0.64% $41.37 2.3223% BBB A++ 1
Clorox Co CLX Staples $1,758.27 0.63% $45.86 2.6080% A- B++ 2
C R Bard Inc BCR Health $1,656.34 0.60% $7.52 0.4539% A A+ 1
WEC Energy Group, Inc. WEC Utilities $1,433.69 0.52% $50.53 3.5242% A- A+ 1
Aqua America Inc WTR Utilities $950.22 0.34% $24.08 2.5337% A+ A+ 2
Misc Type ……….. Partial Totals Weight Yrly Dividends  Avg Yield …..832 …..9 …..82
Equity Stocks $246,800.87 88.93% $6,719.57 2.7227%
Investable US Dollars $6,985.04 2.52%
House Fund US Dollars $19,223.00 6.93%
Miscellaneous Assets $4,505.25 1.62%
. .. Equity + Misc Weight …..2 ….. …..222 …..2222 …..223
Total $277,514.16 100.00%

I finally crossed the 1/4 million mark with decent margins now. I am expecting myself to propel closer to $300k after the coming tax return by the end of February. My portfolio right now is heavily weighted towards consumer staples, discretionary, health, and now a House Fund. The House Fund was setup as a savings account with 1.05% annual interest rate for me to accumulate cash for my upcoming down payment in late 2017. Depending on the price of the house I plan to buy, I may need to sell additional shares of stock to add on to whatever cash I accumulate by the end of 2017 in the savings account. Since interest rates are rising, I do hope housing prices do subside from their pricey levels. I estimate by the end of 2017 that the House Fund will be a very large position in my portfolio since I am contributing the majority of my paycheck to it every month.

I try to balance my portfolio with 25% very high growth, 50% moderately high to moderate growth, and 25% slow growth super stable. Very high growth include names like ROST, V, SBUX. Middle growers include higher growth names like BDX and CHD to more normal growers like MKC, MMM, CLX, and ADP. The slow growth names include names like PG, ABT, VZ, KO, KMB, or SO. Usually the higher growth names have lower yields while the slower growing more established names have higher yields. There are a few exceptions like Altria (MO) and Reynolds (RAI) which have experienced very high growth while maintaining a high yield. Whether that growth can be sustained into the future is still to be determined.

My current progress for 2016 was beyond my original plan. I was originally shooting for $250k. My take home earnings and lower cost of living helped increase the amount I could invest in stocks. I don't expect my income to be this high all the time and I don't want to take my job security for granted, so I am appreciating the effort that I am taking to accumulate a large cash pile for my mortgage and emergency fund this year in 2017.

In 2016, I was able to increase my net worth from $150k to almost $280k. There was a spike towards the end of the year when I got reimbursed for a lot of my travel expenses and the end of year bonuses were done. The orange plots show what I hope to do in 2017, assuming no price increases or depreciation on my stocks. The majority of the orange plot will be deposited right towards my House Fund, and I hope to accumulate a bit over $100k by 2017's year end. If the house I want to buy costs over $500k then I will have to (sadly) sell some stocks to fund the 20% down payment. I will also have to take into account the closing costs associated with home buyer's fees like mortgage origination fees, inspection fees, and title insurance fees...

Although the down payment will take away money I can invest in stocks, it is still money that is put into equity. Each month when I pay the bill to the bank, I will trickle a bit of additional equity into the property. This equity can count towards one's net worth. Granted, tanking housing prices like in 2008 can harm one's equity position in a house similar to one using 5 to 1 leverage in stocks. On the contrary, a 2% appreciation in home value will have a 10% increase on one's equity since the mortgage is leveraged 5 to 1 with a 20% down payment. At the end of the day, I will track my equity progress if I purchase a house and assume that my home value has no appreciation or depreciation in value for several years until I get it reappraised.

I feel that although my progress was good in 2016, hitting the $1M mark in the timeframe shown below will be ambitious given that I want to spend the rest of 2017 accumulating cash for my down payment. Whether or not I can achieve the $1M goal in the time below, I will still shoot for it. I will perhaps move the goals later in the year after I better understand my situation. A year or two in my lifetime is not a big deal. Setting money as cash for a down payment really hinders any possibility of growth since the funds are sitting as cash.

In 2016 I in total received $5234 in dividends. My future annual dividends grew from $4006 in Dec 2015 to $6804 in Dec 2016. My dividends growth in 2017 will slow down compared to previous years since my contributions to dividend stocks will decrease. I am expecting a total of $1100 growth in dividends for 2017 from my 401k contributions and the dividend companies each increasing their own dividends, which is not too bad (this is a 16% growth out of the $6804 Dec 2016 forward dividend figure). I will be reinvesting all of the dividends I receive in 2017 back into the companies that paid them.

With a 2.7% average portfolio yield, I am hoping for my average portfolio to experience an 8% increase in dividends on their own which will allow for my portfolio to have a 10-11% increase in annual dividends without any of my own contribution. I plan to contribute around $16,000 in 2017 to dividend stocks and am planning to do my purchases once every two months.


  1. YD,

    Great thorough recap of 2016 and what your plans are for 2017.

  2. YD,

    what program do you use to generate these awesome charts, would love to do the same. I'm new to the dividend investing. :)


    1. The table is just Excel, any version really.
      The rectangular Treemap is Excel 2016.
      The pie charts and graphs are Excel, any version.

      The charts of the market indices are from popular finance webpages.