Friday, July 7, 2017

June 2017 Portfolio Summary

The report will be summarized using data up to July 7, 2017.

Not much excitement in June. The portfolio stayed relatively flat however my forecasted annual income from my investments climbed higher since I added to several positions.

I recently added a new position in Federal Realty (FRT). It's a dividend aristocrat REIT company. Together with Realty Income (O), these two companies will provide me decent dividends in the real estate category.

The purpose of this portfolio is income replacement. I have a desire to one day live off these dividends. The dividends must be completely safe even during economic recessions. The companies I invest in must have products that have strong demand and are not at the whims of "fads" that come in and out. The portfolio chart below highlights companies that I consider Core positions as Green. Yellow positions are Supporting positions and Red are Speculative. My dividend investing philosophy holds strong with the Core names but the Speculative names are purely for capital gain alpha.

Positions can only be labeled as Core by me if the companies have demonstrated that they can withstand the test of time, they offer products or services that the economy uses no matter what, and have a proven track record of dividend safety and dividend increases.

At this time, my portfolio is spitting out $9290 in dividend per year. The highest dividend paying month is January which is $1026. My portfolio is heavily weighted into Consumer Staples companies. These types of companies offer products we use every day such as water and beverages, shampoo, toothpaste, toilet paper, electric utilties, food, cleaning products, or nonprescription medicine. Consumer Staples tend to have less alpha than more volatile industries like Energy, Technology, and Discretionary. However, my goal is income predictability and safety and Consumer Staples offer the best return for the associated risk to me. Many of the companies I invest in are dividend aristocrats with over 25 continuous years of dividend increases.

My goal in the future is to increase my holdings in the Healthcare and Utilities space. Right now I am a bit too heavy in the Consumer Staples, however I like each of the companies I am holding now in the Consumer Staples sector. For Healthcare, I am looking to add more to JNJ and BDX. And for Utilities I am waiting to add more to NEE.

If Industrials ever pull back, I will be looking to add to names like MMM, ITW, and a military defense name like GD. However, industrials are way too hot right now. I do hope to increase my weight in Industrials eventually since my weighting is way too light at this time. Industrial companies will always pull back as their betas are rather high. When the economy slows down that will be my chance to add into high quality companies at an low price. Industrials tend to overshoot downwards when the economy slows down.

In terms of Financials, I do not like investing in banks. They are too risky for my taste and I do not know how to read their financial statements. It's far too complicated and I do not know who they are lending money to. I tend to prefer financial middlemen companies. These include payment transaction companiesl ike Visa and MasterCard. They offer "tollroad" type operation and have no lending risk. I believe the future will be cashless especially for the rest of the world. Many of the developed nations in the world still use cash and Visa + MasterCard is the future, hence my extremely long stance on V and MA.

Technology companies have enjoyed a very strong run. I have unfortunately been left out. I never chase price gain as I am always about the income from dividends. If the technology companies ever pull back I will open my eyes to high quality dividend paying technology companies like MSFT, ACN and ORCL. Although I view Amazon, Facebook, and Google as leaders in their respective industries I just cannot get myself to invest in anything that pays no dividend so I will watch those giants on the sidelines.

My annual dividend is almost hitting $10,000. I think by the time summer ends I will be able to cross the $10k a year mark in passive dividend income :)  Took me a long time to get here, and it's great to see my money generating more money. The reason my dividend has been rising faster than expected is because I accumulated a large cash position around January 2017 through May 2017. I eventually deployed all the cash to earn more dividends since I eventually decided I will not be using the cash for anything else within a 3 year period. If the cash is not needed, I will invest it automatically even if the market is high low or flat. I always keep around $7000-10000 in emergency cash just in case something bad happens.

The graph below shows my current progress to $1MM. Not much happened in the last month. Many of the companies I hold became cheaper in June which helps boost the dividends I can acquire for each purchase I perform. I don't forecast any surprise cash increase into my portfolio, my income will be quite the ordinary for the rest of the year. I may have a slight bump down in a few weeks when I move into a new rental apartment (curse the living costs in the bay area).

Happy Investing


  1. Awesome job YD. Thanks for sharing. I don't think I'll be making any individual stock purchases anytime soon.

  2. Well done, keep up the excellent work.