Friday, January 11, 2019

December 2018 Portfolio Summary (Year End)

This summary will be for data up to January 12, 2019.

The latter part of 2018 was very volatile. My portfolio experienced drops as large as $50K and some daily movements were $10K. The dollar remains strong. There were several Fed rate hikes in the year and this has put downward pressure on stocks and increased demand for the US dollar. Strong dollar and high rates are not good for dividend paying stocks, a lot of which do business internationally. Fed Powell's prospect of future rate hikes in 2019 also created unease as the economy in the USA and China were already showing signs of cooling. Oil prices remained severely depressed which is a positive for many of my investments as oil is an input resource. I am not invested in oil companies due to the volatility and dependency on oil prices.

Recently the market has recovered moderately from the lows after Powell suggested that the Fed will take a more observatory approach to see if future rate hikes are needed. Things on investors minds include what will materialize from the China and USA trade negotiations, Powell's view on future rate hikes, and the recent government shutdown due to disagreement between the President and the government on the border wall.

As of today my portfolio sits at $580K. Tobacco has been big losers in my portfolio ($MO and $PM). They now yield over 6%. Recent drops can be attributed to the US government's crackdown on Menthol smokes. The rising interest rates are also not helping. And Altria has recently spent a fortune acquiring stakes in other businesses.

Altria has recently acquired a large $1.8B stake in Cronos, a marijuana company. And then shortly thereafter Altria invested $13B, a huge amount, into Juul. The Juul stake price was hard for me to swallow but I can see why Altria are becoming more aggressive to diversify away from the decline in their primary smoking business. Juul is incredibly successful and a hit for youngsters. Marijuana will surely be the same once it's fully legalized in the states. I feel better about the Cronos deal as they have a path to majority ownership and control and the amount is easy for Altria to swallow. The Juul deal has no clear path for Altria to own the reins on the business. They will own 1/3 of the business but if it remains a separate entity, then Altria cannot really have full control on the money generated from the business. If Juul becomes very core to Altria I want to see that profit be usable as dividends to us shareholders.

Right now I am not so happy with Altria's balance sheet but I still believe their dividend is very safe, more safe than $PM. I am looking forward to add more to $MO and $PM to complement my other dividend purchases. $MO and $PM have always offered a high yield and this helps offset my lower yield fast growing purchases. My favorite companies usually have yields in the 0.5%-1.5% range and this is too low for the overall portfolio so high yielding companies offer an important role for me to diversify. I expect the dividend increases from $MO to slow dramatically from their usual clockwork 8% a year. I have little expectation on any growth from $PM's dividend at this point, I see it more as a bond like AT&T. To me, buying $MO now and getting paid 6.5% a year just to hold it is a good deal. Historically $MO has done very well because the dividends were high and the valuations were depressed (since it is a hated company). Reinvesting the high dividend at very depressed prices is what made $MO's returns so profitable. $MO has experienced 50% drops in the past when regulators and lawsuits came after the company, and the recent decline is nothing out of ordinary.

Right now my portfolio overall yields 3%. This is a good conservative and high payout yield. Historically I have been in the 2.6-2.8% range. This shows how much my portfolio's value has declined over the recent months.

Regarding portfolio dividend increase performance in 2018 compared to previous years, I summarized that in a post in November here: Link.  The 2018 dividend hikes were massive largely due to tax cuts from the new President's policies. The total income growth with reinvestment was a huge 16% in my portfolio. Compare this to the usual average portfolio 10% hikes in dividend a year and 2018 was an impressive year. I do not expect this type of growth to continue in the future as now companies are used to the new taxes. My average dividend growth will probably be in the 10-11% range for 2019 I think.

YearDividend GrowthDividend YieldTotal Income Growth

Corporation Name Ticker Sector       Value   Weight        Divies      Yield S&P Fin VL Fin VL Safety
Johnson & Johnson JNJ Health $34,038.12 5.87% $944.41 2.7746% AAA A++ 1
Visa Inc V Financial $31,399.84 5.41% $227.44 0.7243% A+ A++ 1
Altria Group Inc MO Staples $29,322.75 5.05% $1,918.87 6.5440% BBB B+ 2
Philip Morris International Inc PM Staples $26,165.21 4.51% $1,716.74 6.5612% A B++ 2
Home Depot Inc HD Discret $25,603.80 4.41% $587.97 2.2964% A A++ 1
NextEra Energy Inc NEE Utilities $23,758.61 4.09% $600.35 2.5269% A- A 2
PepsiCo PEP Staples $23,369.96 4.03% $801.61 3.4301% A A++ 1
Becton Dickinson and Co BDX Health $21,071.47 3.63% $283.57 1.3457% BBB A++ 1
Realty Income Corp O REIT $19,035.51 3.28% $785.23 4.1251% BBB+ A 2
Mastercard Inc MA Financial $18,591.30 3.20% $125.27 0.6738% A A++ 1
Ross Stores Inc ROST Discret $18,032.70 3.11% $177.93 0.9867% A- A 2
3M Co MMM Industrial $18,014.67 3.10% $509.86 2.8302% AA- A++ 1
McCormick & Company MKC Staples $17,454.31 3.01% $284.01 1.6272% BBB A+ 1
Air Products & Chemicals, Inc APD Materials $15,603.87 2.69% $437.89 2.8063% A A+ 1
Procter & Gamble Co PG Staples $15,170.32 2.61% $474.10 3.1252% AA- A++ 1
Xcel Energy Inc XEL Utilities $15,010.23 2.59% $462.88 3.0838% A- A+ 1
Clorox Co CLX Staples $14,768.68 2.55% $369.82 2.5041% A- B++ 2
Kimberly-Clark KMB Staples $14,320.94 2.47% $488.77 3.4130% A A++ 1
Illinois Tool Works Inc. ITW Industrial $13,758.10 2.37% $422.32 3.0696% A+ A++ 1
AT&T Inc T Telecom $13,591.62 2.34% $898.18 6.6084% BBB+ A++ 1
WEC Energy Group, Inc. WEC Utilities $12,970.66 2.24% $440.82 3.3986% A- A+ 1
The Coca-Cola Co KO Staples $12,681.05 2.19% $417.88 3.2953% AA- A++ 1
Automatic Data Proc, Inc ADP Tech $12,674.99 2.18% $304.24 2.4003% AA A++ 1
Church & Dwight CHD Staples $11,067.99 1.91% $143.73 1.2986% BBB+ A+ 1
Dominion Resources, Inc D Utilities $10,330.97 1.78% $493.99 4.7817% BBB B++ 2
Colgate-Palmolive Co CL Staples $9,958.14 1.72% $269.40 2.7053% AA- A+ 1
TJX Companies Inc TJX Discret $9,611.87 1.66% $157.97 1.6435% A+ A++ 1
Microsoft Corporation MSFT Tech $9,540.88 1.64% $170.77 1.7899% AAA A++ 1
Starbucks Corporation SBUX Discret $9,121.69 1.57% $206.11 2.2595% A A++ 1
Stryker Corporation SYK Health $8,370.63 1.44% $109.17 1.3042% A A++ 1
McDonald's Corporation MCD Discret $7,194.53 1.24% $183.05 2.5443% BBB+ A++ 1
Abbott Laboratories ABT Health $6,770.66 1.17% $125.00 1.8462% BBB A++ 1
General Mills, Inc. GIS Staples $6,646.24 1.15% $311.64 4.6890% BBB+ A+ 1
General Dynamics Corporation GD Industrial $6,610.49 1.14% $150.12 2.2709% A+ A++ 1
Honeywell International Inc. HON Industrial $6,509.27 1.12% $155.43 2.3879% A A++ 1
Medtronic plc MDT Health $6,234.68 1.07% $146.98 2.3574% A A++ 1
Kraft Heinz Co KHC Staples $3,232.56 0.56% $177.19 5.4813% BBB- A 2
Resideo Technologies Inc REZI Industrial $109.56 0.02% $0.00 0.0000%
Garrett Motion Inc GTX Industrial $39.92 0.01% $0.00 0.0000%
Misc Type ……….. Partial Totals Weight Yr Dividends  Avg Yield …..832 …..9 …..82
Equity Stocks $557,758.78 96.12% $16,480.71 2.9548%
Investable US Dollars $15,894.50 2.74%
Miscellaneous Assets $6,613.00 1.14%
. .. Equity + Misc Weight …..2 ….. …..222 …22 …..223
Total $580,266.28 100.00%

Sector distribution has not moved around much. Over the years I have tried to diversify away from mostly consumer staples. I have increased positions in Industrials and Technology. Discretionary and Healthcare are also now significant portions. I add a lot into Healthcare and Utilities and Staples as they are very core and consistent and anti-cyclical businesses with good yields. The discretionary business has grown a lot on their own, especially ROST and TJX and MCD. The Consumer Staples  and Utilities have held up well in this correction compared to my more cyclical sectors like industrials.  Diversification is important as I cannot tolerate the risks associated with concentration. However, concentration is the real way to generate high returns and many famous investors operate in this regard such as Buffett. To me I do not need these type of returns and risks to achieve my goals so I prefer diversification.

The net worth growth is steadily inching back up to $600K. The spike up towards end of last year was due to changing employers. A lot of that cash has been deployed already so that corresponds with the spike in forward annual income. I recently have held cash only during the market move downward. In January I am expecting my cash positions to be in the $15K-20K range and am considering purchases now.

One important observation is the overall steadiness of the forward annual dividend graph. If one does their research and invests in very safe payout ratio dividend paying companies with decades of dividend increasing track record, then the dividends will be much more guarantee compared to price. It is also easier to predict dividend increases as one can read a company's track record and make conservative estimates where it is going. One cannot do the same with price however. Price is up to the whims of the market, it can go up and it can go down. Dividends on the other hand can only be paid out with cash, as long as a company's fundamentals are good then the cash will keep rolling in. This is why I like to focus on the second graph more than the first graph.

Happy investing, let us make 2019 a blow out year for this portfolio.



  1. Happy investing in 2019 Young Dividend. You are definitely on the path to success!

  2. Looks like that forward income growth is starting to accelerate! Hopefully the trend continues for 2019!

    Cheers, Frankie

  3. Congrats to your steadily climbing forward dividend. Just keep executing your plan, the results are already more than visible.
    I'm with you on your thoughts on MO/PM and already added in december. I also started to increase my purchases on lower yielding stocks, because my overall growth rate is nowhere near your stellar 10-13%.

    Thanks for your ongoing motivational and detailed posts.
    All the best for 2019!

  4. I am just starting out as a DGI myself and saw in one of your older post how you started the review process for your stock selections. Is there anything you could share with someone just starting out on how to go about building a core portfolio like yours?
    What screening methodology are you using (if you don't mind my asking)
    Any information would be greatly appreciated.
    Thank you

    1. I can make a post on how I pick stocks. I'll publish one in a few days.

    2. Thank you kindly

  5. i like the visa position ,and now your portfolio is pumping atleast 16.5k to you account.The snowball effect in full speed.