Friday, January 19, 2018

December 2017 Portfolio Summary (Year End)

I'm a little late with my 2017 year end portfolio summary post. So I will post using data as of today. My portfolio is growing and 2017 was a very healthy year for the market. New policies from the new Trump administration have benefited businesses. From lower regulation, repatriation, and lower corporate taxes, the stock market is surging to all time highs. The cyclical business names are on fire and rising every day, it is nearly impossible to buy these types of companies at fair prices anymore. The more defensive sectors have not run as quickly but have benefited no doubt. Due to the growth in 2017 of all sectors, my portfolio has reached all time highs. Buying companies at previous old price target numbers is now impossible. Almost everything is expensive and I have to now re-calibrate my price targets with future outlook in mind, since most American companies are now having huge tailwinds from the tax cut. The economy of the world has also grown very nicely in 2017 and the outlook for 2018 is positive, which fuels the growth.

For 2018 I am expecting higher dividend raises due to the lower tax rates and repatriation and more buybacks to fuel earnings per share growth. Also for 2018, I am expecting rates to go up as the Fed is going to have to start hiking due to all the growth in the economy. As rates go up, I expect high yielders and debt heavy industries like Utilities and REITs will see their prices fall (although utilities I have to say will benefit a lot from the reduced tax rate from high 30%s to low 20%s), presenting good buying opportunities. In 2018, I am expecting my portfolio's average yield to go down. It has already moved from an average of 3.0% yield when I started to 2.5% right now. As prices rise above the rate of dividend payout increases, the yields start to fall which makes me sad because each of my stock purchases in 2018 won't be able to contribute so much dollar in income as they used to.

I will start off with a chart of the S&P500 this year. The chart is quite incredible. Although I am more after the income stream my investments can generate for me, I cannot lie and say I am not enjoying the large rise of my assets on paper. From the chart above (Jan 20 2017 to  Jan 19 2018), the S&P500 has gained a massive 24% and this does not even include the dividends.

For new readers, the goal of this blog is to document my investing progress. This portfolio is based off the dividend growth investing philosophy. My goal is to achieve a high level of passive income from corporate stock. I want the companies to grow their dividends each and every year, at a rate healthy to their rate of growth. I want my companies to have a healthy payout ratio and be financially secure. The health of the dividend and the growth of the dividend is of highest priority. Capital gains is icing on the cake for me. 2017 had quite a lot of icing in addition to good dividend growth. All of my portfolio holdings pay a dividend to a degree, some large some small.

My net worth has increased from $280,000 in the beginning of 2017 to around $440,000 as of today (January 19, 2018). A large part of this is from my income and savings. But another significant portion is from the portfolio doing work on its own. I have a large goal milestone in 2018, the 1/2 million dollar mark. It is starting to seem that each next $100,000 is becoming easier to achieve than the previous one. The first $100,000 was definitely for me the hardest.

When I began investing, large percentage increases in the market did not really affect me since my portfolio value was small relative to how much I was adding every week (see the Jan 2014-Jan 2016 period, the portfolio basically moved up predictably as my contributions were so large relative to market gains). Since my portfolio is a chunky 6-figure size right now, market moves that are high (like the S&P500's 24% gain mentioned earlier) make huge impacts on my net worth. A 24% gain on $440,000 will be $105,600 which is visible.

In terms of dividends, the trend is more predictable. Dividends are based off what a company is capable of paying its shareholders so this trend tends to be more stable and predictable. As of 2017 I have increased my dividend output from $6800 a year to now $10,800 a year. All of the companies that I held in 2017 increased their dividend. On average in 2017, my dividends were increased (average of whole portfolio) by 9.49% and the average yield of my portfolio was 2.62%. All dividend cash received was reinvested back into the portfolio. In total my portfolio was able to increase its income by 9.49+2.62% which is around 12% which is exceptional.

To summarize this year's dividend growth performance with my earlier years I summarized my performance in this table:
Year Dividend Growth Dividend Yield Total Income Growth
2014 10.30% 2.81% 13.11%
2015 9.68% 2.94% 12.62%
2016 10.11% 2.76% 12.87%
2017 9.49% 2.62% 12.10%

For the portfolio, here are my holdings as of 1/19/2018:

Name Ticker Sector       Value   Weight        Divies      Yield S&P Fin VL Fin VL Safety
Altria Group Inc MO Staples $38,690.84 8.80% $1,436.22 3.7120% A- B+ 2
Philip Morris International Inc PM Staples $35,699.13 8.12% $1,402.79 3.9295% A B++ 2
Johnson & Johnson JNJ Health $27,326.07 6.21% $623.07 2.2801% AAA A++ 1
Home Depot Inc HD Discret $25,540.16 5.81% $451.61 1.7682% A A++ 1
Visa Inc V Financial $24,303.16 5.53% $154.49 0.6357% A+ A++ 1
Becton Dickinson and Co BDX Health $18,254.00 4.15% $233.52 1.2793% BBB+ A++ 1
NextEra Energy Inc NEE Utilities $16,972.60 3.86% $444.21 2.6172% A- A 2
PepsiCo PEP Staples $16,378.69 3.72% $438.87 2.6795% A A++ 1
Ross Stores Inc ROST Discret $15,266.48 3.47% $116.65 0.7641% A- A 2
3M Co MMM Industrial $13,821.96 3.14% $261.76 1.8938% AA- A++ 1
AT&T Inc T Telecom $13,801.68 3.14% $741.83 5.3749% BBB+ A++ 1
Realty Income Corp O REIT $13,637.13 3.10% $674.93 4.9492% BBB+ A 2
Mastercard Inc MA Financial $13,424.83 3.05% $80.47 0.5994% A A++ 1
McCormick & Company MKC Staples $11,880.57 2.70% $249.13 2.0970% A- A+ 1
Procter & Gamble Co PG Staples $9,338.12 2.12% $283.00 3.0306% AA- A++ 1
Kimberly-Clark KMB Staples $8,990.05 2.04% $302.03 3.3596% A A++ 1
Illinois Tool Works Inc. ITW Industrial $8,852.09 2.01% $160.18 1.8095% A+ A++ 1
Dominion Resources, Inc D Utilities $8,844.07 2.01% $363.25 4.1072% BBB+ B++ 2
Automatic Data Proc, Inc ADP Tech $8,760.40 1.99% $181.79 2.0751% AA A++ 1
The Coca-Cola Co KO Staples $8,621.89 1.96% $270.58 3.1383% AA- A++ 1
Medtronic plc MDT Health $8,302.31 1.89% $176.24 2.1228% A A++ 1
Xcel Energy Inc XEL Utilities $7,874.03 1.79% $251.24 3.1908% A- A+ 1
Starbucks Corporation SBUX Discret $7,733.36 1.76% $151.49 1.9589% A A++ 1
Church & Dwight CHD Staples $7,504.68 1.71% $114.28 1.5227% BBB+ A+ 1
Clorox Co CLX Staples $6,982.66 1.59% $163.09 2.3356% A- B++ 2
TJX Companies Inc TJX Discret $6,619.98 1.51% $104.89 1.5845% A+ A++ 1
Air Products & Chemicals, Inc APD Materials $5,911.09 1.34% $133.86 2.2646% A A+ 1
McDonald's Corporation MCD Discret $5,736.88 1.30% $131.60 2.2939% BBB+ A++ 1
WEC Energy Group, Inc. WEC Utilities $5,625.02 1.28% $196.98 3.5018% A- A+ 1
Kraft Heinz Co KHC Staples $5,165.78 1.17% $162.12 3.1383% BBB- A 2
Colgate-Palmolive Co CL Staples $4,857.44 1.10% $100.28 2.0645% AA- A+ 1
Stryker Corporation SYK Health $4,694.60 1.07% $54.72 1.1657% A A++ 1
General Mills, Inc. GIS Staples $3,849.36 0.88% $127.64 3.3159% BBB+ A+ 1
Abbott Laboratories ABT Health $3,577.83 0.81% $67.56 1.8884% BBB A++ 1
General Dynamics Corporation GD Industrial $3,345.60 0.76% $53.76 1.6069% A+ A++ 1
Southern Co SO Utilities $44.22 0.01% $2.31 5.2205% A- A 2
Misc Type ……….. Partial Totals Weight Yr Dividends  Avg Yield …..832 …..9 …..82
Equity Stocks $426,228.77 96.91% $10,862.43 2.5485%
Investable US Dollars $8,170.60 1.86%
Miscellaneous Assets $5,400.00 1.23%
. .. Equity + Misc Weight …..2 ….. …..222 …22 …..223
Total $439,799.37 100.00%

I now have a lot of 5-figure portfolio positions. Some of them are getting quite large. For example, MO and PM are over $30k. JNJ, HD, and Visa are all over $20k. I have not really expanded into many new companies in 2017. I have mostly already found which companies I like best to invest in and tend to stick to those. I did add General Dynamics to my industrials in 2017. Overall, most of the portfolio was business as usual. Dump extra money into whatever looks like a good buy and reinvest the dividends. Rinse and repeat.

Most of my portfolio is saturated in consumer staples companies. Since the 2017 rally was predominantly technology, industrials, materials, and discretionary, I did not participate as fully in the rally due to my over weighting in staples. However, my portfolio's focus is not on capital gains but in the growth of the income. All the consumer staples companies I held increased their payouts handsomely in 2017 and they all have good yields compared to the more cyclical companies. I also want to invest with the long term outlook. A good year is a good year, but I do not have to chase growth in order to achieve my goals. As long as the income stream flows in every month, I am content. The sector distribution of my portfolio will not have such a large alpha during cyclical good years; however, it ensures a less volatile price trend when things do go bad. And on good years, this portfolio sector balance still benefits with a healthy dividend payout ratio. It is a balance between volatility and reward that I have decidedly settled on when I began investing.

Best wishes to all investors in 2018. I will post my recent buys for January 2017 soon.


  1. Good Looking Portfolio YD. Did you recently sell some of your SO? For some reason I was thinking you owned more. I'm hoping to make a decision on a Utility buy within the next few weeks.

    1. Money Hungry, yes I did sell SO and replaced it with T. SO had a 5.22% yield an T a 5.37% yield when I swapped and both are at depressed levels.

      I added to XEL, D, WEC, and NEE last week (small amounts). Note WEC announced a dividend increase of 6.25% from 52 cents to 55.25 cents a quarter.