November 2018 Portfolio Summary

The market has been volatile recently. It has been range bound for several weeks primarily on fears of the escalating trade war with China and the slight slow down of the American economy. There rae discussions about the rise in interest rates slowing things down, and talk about how the boost from this year's tax cut will not be so evident next year.

The S&P500 looks like it's testing its lows again. Dollar is relatively strong. And oil is very cheap, appearing to bottom at around $50. Overall things look quite unpredictable right now in terms of where the index will head. There are too many outside variables that happen on the news day to day. For example, the American government arrested the CFO of Huawei today in Vancouver for violating Iranian sanctions. This increased uncertainty due to escalating tensions between China and the US. This type of event happened with Chinese ZTE in the past and it did not help the market calm down.

Since it is impossible for me to predict the market, my objective is very simple. Acquire high quality companies that pay dividends with very safe payout ratios. For every dollar that I earn from my vocation, I save a good percentage and allocate them to income producing stock. I don't time the market but instead deploy capital periodically (i.e. every 2 weeks to every month). The graph I focus most on is the growth of the forward annual dividends my portfolio will generate, not the net worth of my portfolio. I expect the net worth of my portfolio to climb steadily over time as the shares I own will continuously increase their dividend year after year. Net worth is secondary to income growth. If an asset generates more income, the more valuable it will become.

Additionally, any dividend income I get I reallocate back into the stocks that paid them. Since I am young and in the accumulation stage of my life, my goal is to collect as many shares as possible and then let the shares compound on their own. I expect each of the shares I purchase will be able to increase their dividend year after year, further amplifying the income compounding effect.

The SPY S&P500 index has peaked at $293 this year and dropped down to around $263 twice, it looks like it will hit it a third time soon. I deployed around $44,000 at the midpoint of the high and low when the SPY was around $279 this week. The market has recently fallen further and I am collecting additional cash to deploy. I estimate by Christmas to New Years I can have around $7000 to invest. My goal is not timing the market but acquiring more shares to increase my income. Regardless if the market is low or high that $7000 will be put to work. My plan is to continuously deploy several thousands of dollars per month and over time the money will dollar cost average since sometimes I purchase at the lowest valuations and sometimes at the highest.

Name	Ticker	Sector	Value	Weight	Divies	Yield	S&P Fin	VL Fin	VL Safety
Johnson & Johnson	JNJ	Health	$37,511.67	6.31%	$938.90	2.5030%	AAA	A++	1
Altria Group Inc	MO	Staples	$32,111.11	5.40%	$1,918.87	5.9757%	A-	B+	2
Philip Morris International Inc	PM	Staples	$31,725.78	5.33%	$1,716.74	5.4112%	A	B++	2
Visa Inc	V	Financial	$31,601.18	5.31%	$227.04	0.7184%	A+	A++	1
PepsiCo	PEP	Staples	$24,973.19	4.20%	$801.61	3.2099%	A	A++	1
Home Depot Inc	HD	Discret	$24,614.31	4.14%	$584.57	2.3749%	A	A++	1
NextEra Energy Inc	NEE	Utilities	$24,275.10	4.08%	$596.76	2.4583%	A-	A	2
Becton Dickinson and Co	BDX	Health	$21,898.23	3.68%	$283.57	1.2949%	BBB	A++	1
Realty Income Corp	O	REIT	$19,095.22	3.21%	$780.17	4.0857%	BBB+	A	2
Mastercard Inc	MA	Financial	$18,967.11	3.19%	$125.27	0.6605%	A	A++	1
McCormick & Company	MKC	Staples	$18,822.06	3.16%	$284.01	1.5089%	BBB	A+	1
3M Co	MMM	Industrial	$18,578.82	3.12%	$506.61	2.7268%	AA-	A++	1
Xcel Energy Inc	XEL	Utilities	$16,069.99	2.70%	$462.88	2.8804%	A-	A+	1
Ross Stores Inc	ROST	Discret	$15,897.48	2.67%	$177.93	1.1193%	A-	A	2
Air Products & Chemicals, Inc	APD	Materials	$15,864.61	2.67%	$437.89	2.7602%	A	A+	1
Clorox Co	CLX	Staples	$15,660.48	2.63%	$369.82	2.3615%	A-	B++	2
Procter & Gamble Co	PG	Staples	$15,279.70	2.57%	$473.75	3.1005%	AA-	A++	1
Illinois Tool Works Inc.	ITW	Industrial	$13,839.40	2.33%	$422.32	3.0516%	A+	A++	1
Automatic Data Proc, Inc	ADP	Tech	$13,647.39	2.29%	$304.24	2.2293%	AA	A++	1
Kimberly-Clark	KMB	Staples	$13,609.78	2.29%	$488.77	3.5913%	A	A++	1
WEC Energy Group, Inc.	WEC	Utilities	$13,523.48	2.27%	$410.51	3.0355%	A-	A+	1
AT&T Inc	T	Telecom	$13,248.20	2.23%	$880.57	6.6467%	BBB+	A++	1
The Coca-Cola Co	KO	Staples	$13,009.21	2.19%	$414.85	3.1889%	AA-	A++	1
Dominion Resources, Inc	D	Utilities	$10,844.70	1.82%	$488.55	4.5050%	BBB	B++	2
Church & Dwight	CHD	Staples	$10,840.20	1.82%	$143.29	1.3218%	BBB+	A+	1
Colgate-Palmolive Co	CL	Staples	$10,059.17	1.69%	$269.40	2.6781%	AA-	A+	1
Microsoft Corporation	MSFT	Tech	$9,961.98	1.67%	$170.10	1.7075%	AAA	A++	1
Starbucks Corporation	SBUX	Discret	$9,432.28	1.59%	$205.11	2.1746%	A	A++	1
TJX Companies Inc	TJX	Discret	$9,305.62	1.56%	$157.38	1.6912%	A+	A++	1
Stryker Corporation	SYK	Health	$8,902.29	1.50%	$109.17	1.2263%	A	A++	1
McDonald's Corporation	MCD	Discret	$7,198.78	1.21%	$181.98	2.5279%	BBB+	A++	1
Medtronic plc	MDT	Health	$6,972.49	1.17%	$146.98	2.1079%	A	A++	1
Abbott Laboratories	ABT	Health	$6,876.13	1.16%	$109.38	1.5907%	BBB	A++	1
General Dynamics Corporation	GD	Industrial	$6,825.17	1.15%	$150.12	2.1995%	A+	A++	1
Honeywell International Inc.	HON	Industrial	$6,562.98	1.10%	$154.58	2.3553%	A	A++	1
General Mills, Inc.	GIS	Staples	$6,286.90	1.06%	$311.64	4.9570%	BBB+	A+	1
Kraft Heinz Co	KHC	Staples	$3,427.03	0.58%	$174.88	5.1031%	BBB-	A	2
Resideo Technologies Inc	REZI	Industrial	$101.83	0.02%	$0.00	0.0000%
Garrett Motion Inc	GTX	Industrial	$34.34	0.01%	$0.00	0.0000%
Misc	Type	………..	Partial Totals	Weight	Yr Dividends	Avg Yield	…..832	…..9	…..82
Equity	Stocks		$577,455.40	97.08%	$16,380.21	2.8366%
Investable	US Dollars		$10,847.42	1.82%
Miscellaneous	Assets		$6,503.00	1.09%
.	..	…	Equity + Misc	Weight	…..2	…..	…..222	…22	…..223
Total			$594,805.82	100.00%

My portfolio peaked at $612,000 and with recent volatility dropped to $595,000. Due to the increasing size of the portfolio, small single digit percentage swings in the market can make appreciable fluctuations in the portfolio's net worth. However, dividends have remained relatively unchanged comparing dividend output the portfolio is at now to compared to dividends when the portfolio was at its highs. Price fluctuations are totally random and unpredictable but dividend payout is more easily determined. One can read the annual report 10-K or quarterly 10-Q filings of a company to calculate if the cash flows or earnings are sufficient to pay the dividend, or calculate how much debt the company has to see how safe the balance sheet is. The focus of the portfolio is on the dividend payout, the growth of the dividend, and the safety of the dividend.

In terms of end of the year goals, it may be challenging to hit $600,000 by end of year depending on market volatility. I am not too focused on the absolute dollar amount goals. In terms of income growth, I am quite happy with how much dividend income my portfolio now generates after I increased my shares this week. The portfolio produces around $1360 in dividend income every month on average. I want this dividend number to surpass $20,000 per year in dividends sometime in 2019 which is around $1,670 a month in dividends.

The portfolio is heavily concentrated into defensive names as they produce high income consistently. They also usually have a good track record as well, as I like to invest primarily in dividend aristocrats with 25 years plus of consecutive dividend increases. Since I am more weighted in defensive names, the recent declines in the broad indices have not hit my portfolio as hard.

Happy investing
-YD