Tuesday, November 14, 2017

October 2017 Portfolio Summary

Last month's portfolio summary can be summed up as "business as usual".

Investing like this is boring, it isn't for everyone but the long term reward is great. Nothing spectacular happened in October. I cashed in checks that came in from my job. And I also cashed in checks that came in from my companies' dividend payments. Buys and sells have been quite slow recently. I have been quite content with holding a lot of cash. I think that as my portfolio gets larger and larger, I have a less motivation to spend my cash position immediately. The cash position even if it's in the 5-digits is not such a large percentage of my assets anymore. So I just tend to hold it and keep the "rainy day fund" untouched.

The S&P500 continues to climb to higher levels. The growth in 2017 has been excellent, although sometimes I start to worry about valuations. The price levels of a lot of companies makes purchasing high quality companies challenging.

The goal of this portfolio is income replacement. The dividends are extremely important to my investing strategy. All companies I invest in pay dividends. And all the companies increase the dividends every year. The goal is to eventually live off of the dividends alone. On average I expect the dividend income to grow around 10% every year with the dividends reinvested (a 8% average raise with a 2% average yield).

The portfolio currently sits over $400,000. I think I have comfortably crossed my 4th $100k and my next goal is to hit $500,000. Barring any market correction I think this goal can be reached sometime in 2018 if I continue saving my money and buying assets. I get the feeling each additional $100k becomes easier to reach. The first $100k was the hardest. And to me the first $1MM is still extremely hard. Growing the portfolio has become easier over time. I find this is due to two factors. One is the growth of my income over time as my career grows in my industry. And second is the growth of the portfolio by itself increases as the amount of assets becomes larger and larger, in effect money generates more money.

Looking back, it's quite amazing how much money one can accrue by diligently saving over several years. When I started 5 figure positions were something I didn't think about as something readily achievable. I was so busy diversifying all my positions were very small. $2k was already a large position back then. I now have 14 companies that are worth over 5 figures. I have found that starting early to be extremely powerful. The snowball will start rolling sooner and you will thank yourself in the future.

Name Ticker Sector       Value   Weight        Divies      Yield S&P Fin VL Fin VL Safety
Altria Group Inc MO Staples $34,906.01 8.60% $1,401.98 4.0164% A- B+ 2
Philip Morris International Inc PM Staples $32,079.20 7.90% $1,336.63 4.1667% A B++ 2
Johnson & Johnson JNJ Health $25,715.00 6.33% $619.42 2.4088% AAA A++ 1
Visa Inc V Financial $22,140.43 5.45% $154.22 0.6966% A+ A++ 1
Home Depot Inc HD Discret $21,049.15 5.18% $445.88 2.1183% A A++ 1
Becton Dickinson and Co BDX Health $17,101.92 4.21% $226.52 1.3245% BBB+ A++ 1
PepsiCo PEP Staples $15,670.84 3.86% $435.90 2.7816% A A++ 1
NextEra Energy Inc NEE Utilities $15,117.36 3.72% $375.07 2.4811% A- A 2
Realty Income Corp O REIT $14,435.75 3.56% $644.41 4.4640% BBB+ A 2
3M Co MMM Industrial $12,480.92 3.07% $255.79 2.0494% AA- A++ 1
Mastercard Inc MA Financial $11,906.15 2.93% $69.87 0.5869% A A++ 1
Ross Stores Inc ROST Discret $11,727.33 2.89% $116.42 0.9927% A- A 2
McCormick & Company MKC Staples $11,670.45 2.87% $222.56 1.9071% A- A+ 1
AT&T Inc T Telecom $10,079.35 2.48% $585.87 5.8126% BBB+ A++ 1
Procter & Gamble Co PG Staples $9,042.98 2.23% $280.84 3.1057% AA- A++ 1
Dominion Resources, Inc D Utilities $8,941.04 2.20% $332.43 3.7180% BBB+ B++ 2
The Coca-Cola Co KO Staples $8,602.36 2.12% $268.43 3.1204% AA- A++ 1
Xcel Energy Inc XEL Utilities $8,416.17 2.07% $233.96 2.7799% A- A+ 1
Illinois Tool Works Inc. ITW Industrial $7,943.93 1.96% $156.33 1.9680% A+ A++ 1
Automatic Data Proc, Inc ADP Tech $7,930.11 1.95% $161.32 2.0343% AA A++ 1
Medtronic plc MDT Health $7,582.03 1.87% $176.24 2.3244% A A++ 1
Starbucks Corporation SBUX Discret $7,149.43 1.76% $150.70 2.1079% A A++ 1
Kimberly-Clark KMB Staples $6,913.04 1.70% $234.16 3.3872% A A++ 1
Church & Dwight CHD Staples $6,850.06 1.69% $113.82 1.6616% BBB+ A+ 1
Clorox Co CLX Staples $5,854.67 1.44% $145.38 2.4832% A- B++ 2
Air Products & Chemicals, Inc APD Materials $5,712.06 1.41% $133.86 2.3435% A A+ 1
TJX Companies Inc TJX Discret $5,542.24 1.37% $101.97 1.8399% A+ A++ 1
McDonald's Corporation MCD Discret $5,444.56 1.34% $130.84 2.4032% BBB+ A++ 1
Kraft Heinz Co KHC Staples $5,107.71 1.26% $160.86 3.1494% BBB- A 2
Colgate-Palmolive Co CL Staples $4,579.08 1.13% $99.73 2.1781% AA- A+ 1
Stryker Corporation SYK Health $4,539.45 1.12% $49.48 1.0901% A A++ 1
WEC Energy Group, Inc. WEC Utilities $4,218.83 1.04% $126.21 2.9915% A- A+ 1
General Mills, Inc. GIS Staples $3,524.40 0.87% $127.64 3.6216% BBB+ A+ 1
Abbott Laboratories ABT Health $3,318.43 0.82% $63.94 1.9269% BBB A++ 1
General Dynamics Corporation GD Industrial $3,203.52 0.79% $53.76 1.6782% A+ A++ 1
Southern Co SO Utilities $3,051.12 0.75% $135.32 4.4351% A- A 2
Misc Type ……….. Partial Totals Weight Yr Dividends  Avg Yield …..832 …..9 …..82
Equity Stocks $389,547.07 95.95% $10,327.78 2.6512%
Investable US Dollars $11,052.62 2.72%
Miscellaneous Assets $5,399.00 1.33%
. .. Equity + Misc Weight …..2 ….. …..222 …22 …..223
Total $405,998.69 100.00%
Most of my investments are held in consumer staples companies. Although the sector recently is not as sexy as industrials or technology, the companies in this sector are defensive and their dividends are higher. I prefer these types of businesses as they are less cyclical during recessions. The tides seem to recently turn in favor of consumer staples. I have noticed recently a lot of my staple stocks are rising back up in value. The price of the holdings are not of priority to me. My concern is the safety of the dividend and most of my holdings in this sector have conservative payout ratios.

The graph below shows my growth over time. There will likely be a sharp increase after the new year if I decide to take a new job offer. I also expect that some time in March when I pay my taxes, there will be a slight dip. After reaching half a million, the portfolio needs to grow by itself more instead of relying on my income if I want to reach $1MM in the time frame shown below.

My dividend income has steadily followed the rise of my portfolio's value. There has not been a severe enough market correction yet to noticeably ding the portfolio's total value yet. If there is a correction, I would expect all of the companies I have invested in to continue paying their dividends. The dividend curve is going to be a much more consistent and predictable curve than the portfolio price curve. I focus more on the dividend as that is something that I can materially collect. I do not plan on selling the portfolio as I intend to live off the dividend, so the price is only important during new share purchases.


  1. Hi YD, General Mills has been a disappointment in my portfolio over the past 18 months and I see you hold it as well. What are your thoughts on GIS? Do you plan on holding or maybe even adding to your position? Tom

    1. It's a good company. Don't look at the price. Focus on the dividends it pays you. It has a safe payout ratio and it's a defensive company. The market's fashion nowadays is to hate on packaged food companies but I still like the sector. When fashion falls back, GIS will be fine as it has always been for the 100+ years it's been paying dividends. I will add more to GIS at a 3.85-4.00% yield. I'm not in a rush as I am already very heavy on consumer staples.

    2. Sounds good. Thanks for your thoughts. Tom

  2. Do you have any thoughts on SJM's spike today? I see you have already sold it to free some capital to purchase more MDT. Do you wish you could have held onto it? Your honest thoughts?

  3. Hi. What has your long term return been compared to the sp 500?