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I started posting my portfolio updates this year for two reasons. One, I wanted to get feedback from the people I respect on SA. I hope they will look at the investments I pick, and make suggestions on what I may have done right or wrong, and where I can improve my thought processes and actions. The other reason is to try to demonstrate that using relatively simple techniques, and spending a relatively small amount of time, someone can manage their own portfolio and still get acceptable returns that come close to matching the returns of the market or the "expert" financial advisers out there.

I'm not out to show that I can beat everybody else's returns, or that my methods are superior to anybody else's. And I'm not trying to say that people who spend more time analyzing more data will not have better returns. I'm just trying to show that by keeping it simple, I can still control my own portfolio and have returns that satisfy my needs and desires for retirement.

In early April, I posted my most recent K.I.S.S. Portfolio quarterly update. Here are the dividend increases since my last update.

PepsiCo (NYSE:PEP) declares $0.5675/share quarterly dividend, 6% increase from prior dividend of $0.5375. Forward yield 2.75%. For shareholders of record June 07. Payable June 28. Ex-div date June 05.

Johnson & Johnson (NYSE:JNJ) declares $0.66/share quarterly dividend, 8.2% increase from prior dividend of $0.61. Forward yield 3.10%. For shareholders of record May 28. Payable June 11. Ex-div date May 23.

Wells Fargo & Company (NYSE:WFC) declares $0.30/share quarterly dividend, 20% increase from prior dividend of $0.25. Forward yield 3.23%. For shareholders of record May 10. Payable June 01. Ex-div date May 08.

Omega Healthcare Investors Inc (NYSE:OHI) declares $0.46/share quarterly dividend, 2.3% increase from prior dividend of $0.45.Forward yield 5.71%. For shareholders of record Apr. 30. Payable May15. Ex-div date Apr. 26.

Qualcomm Inc. (NASDAQ:QCOM) declares $0.35/share quarterly dividend, 40% increase from prior dividend of $0.25. Forward yield 2.13%. For shareholders of record June 05. Payable June 26. Ex-divdate June 03.

Raytheon Company (NYSE:RTN) declares $0.55/share quarterly dividend, 10% increase from prior dividend of $0.50. Forward yield 3.86%. For shareholders of record Apr. 03. Payable May 02. Ex-div date Apr. 01.

During the past month, a pension contribution was deposited into my account, and I transferred some money from an old Fidelity 403b account I had into my optionsxpress account. Along with the dividends I received during the past month, I had over $38,000 to invest. In general, my plan is to make transactions only on a quarterly basis, but since I had such a large sum of money come in, I wanted to put it to work immediately, rather then waiting another two months before investing it. If I'm looking to collect dividend income, I should start collecting that income right away, right? So I ran my screen to see which stocks meet my criteria.

Here is a quick summary of my screen.

BUY CRITERIA

  1. Stock is on the CCC list
  2. Yield equal to or greater than 2%
  3. Payout ratio (based on EPS) under 60%
  4. Chowder Rule - Yield + 5 year dividend growth rate over 12%
  5. 10 year uptrend in earnings (as shown on the FAST graph). This is based on my personal determination of whether or not the uptrend is adequate enough for me.
  6. Quality rating of A- or better from S&P.
  7. Stock appearing to be under or fairly valued based on its FAST Graph.
  8. For MLPs and REITs I use different criteria. First, they must have a yield of 4% or more. They usually have slower dividend growth, so I need to start with higher yield. Second, Instead of looking at the EPS trend on FAST graphs I look at the Funds From Operations [FFO] graph, to see if it has a ten year uptrend. Finally, I still use the Chowder Rule, but I modified it somewhat so that they only have to have a yield + dividend growth of 10% or more, rather than 12%, but to show consistency I desire, it must work for the 3 year, 5 year and 10 year DGR's, rather then just the 5yr DGR, which is the usual Chowder Rule.

SELL CRITERIA - I only sell if the stock cuts or freezes its dividend.

Using the 4/30/13 Update of the CCC list here are the results of the screen:

Out of the 400+ stocks on the CCC list, screening for payout ratio, yield and the Chowder brought the number down to 78 stocks. Looking at these 78 stocks with FAST Graphs brought the number down to 35. The S&P quality rating knocked out another 12, leaving me with 23 passing stocks. These stocks are Aflac (NYSE:AFL), Air products (NYSE:APD), Baxter (NYSE:BAX), Chevron (NYSE:CVX), CSX (NYSE:CSX), Deere (NYSE:DE), Dover Corp (NYSE:DOV), First of Long Island (NASDAQ:FLIC), Harris Corp (NYSE:HRS), Illinois Tools Works (NYSE:ITW), L-3 Communications (NYSE:LLL), Lockheed Martin (NYSE:LMT), Medtronics (NYSE:MDT), Microsoft (NASDAQ:MSFT), Norfolk Southern (NYSE:NSC), Northrop Grumman (NYSE:NOC), Nu Skin Enterprises (NYSE:NUS), Parker Hannifin (NYSE:PH), Qualcomm (QCOM), Raytheon (RTN), Target (NYSE:TGT), Walmart (NYSE:WMT), and Walgreen (NYSE:WAG). Of these 23, stocks I already own 18 of them. This leaves five, BAX, CVX, DOV, NOC, and PH.

In addition, the following MPLs and REITs passed my criteria: Alliance Resource Partners (NASDAQ:ARLP), Buckeye partners (NYSE:BPL), Kinder Morgan (NYSE:KMP) and ONEOK Partners (NYSE:OKS). Of these, I already own BPL and KMP, so only ARLP and OKS were added to my list of passing stocks.

Here is the data and FAST graph for each of the seven stocks that I didn't already own.

ALLIANCE RESOUCE PARTNERS

Chowder Rule 3yr - 6.07 + 12.2=18.27

5yr - 6.07 + 13.6=19.67

10yr - 6.07 + 15.3=21.37

BAXTER

Quality Rating = A+

Yield + DGR = 2.56 + 16.4 = 18.96

Payout Ratio = 43.48%

CHEVRON

Quality Rating = A+

Yield + DGR = 3.28 + 9.2 = 12.48

Payout Ratio = 30.23%

DOVER CORP

Quality Rating = A

Yield + DGR = 2.03 + 11.6 = 13.63

Payout Ratio = 29.6%

NORTHROP GRUAMMAN

Quality Rating = A

Yield + DGR = 2.9 + 10.0 = 12.9

Payout Ratio = 27.92

ONEOK PARTNERS

Chowder Rule 3yr - 5.29 + 6.2 = 11.49

5yr - 5.29 + 5.4 = 10.69

10yr - 5.29 + 4.9 = 10.19

PARKER HANNIFEN

Quality Rating = A

Yield + DGR = 2.03 + 16.2 = 18.23

Payout Ratio = 26.75

I previously decided that I must have $11,000 available if I am going to start a new position. Since I had over $38,000, I was able to start 3 new positions. I had seven stocks that passed my screen (and that I didn't already own) so I needed to pick 3 out of the 7. Since my goal is to collect dividend income, and I am targeting a total portfolio yield of 4%, I picked the 3 highest yielding stocks out of the seven for purchase. These were ARLP, OKS and CVX.

On May 6th I put in an order to buy $11,000 of each of these stocks. I bought the following:

147 shares of Alliance Resource Partners at $72.55 per share

227 shares of ONEOK Partners at $51.28 per share

90 shares of Chevron Corp at $122.84

The remaining money was split amongst the ten stocks already in my portfolio which have the highest PAAY. My method for determining this was discussed in this article. Those ten stocks were Air Products and Chemicals (APD), BHP Billiton (NYSE:BBL), Deere (DE), First of Long Island (FLIC), GE (NYSE:GE), Harris (HRS), Kinder Morgan Partners (KMP), Pimco Corporates & Income Opportunity Fund (NYSE:PTY), Wells Fargo and Wal-Mart (WMT). I wasn't able to make equal dollar amount purchases of these ten stocks because the money available was not divided evenly between my OE account and my pension account. GE and WFC are in my OE account, which had more money left over, so more money was put into GE and WFC then the other 8 stocks.

The actual purchases I made of each stock were as follows:

BHP Billiton 7 shares at $58.33

Walmart 5 shares at $78.89

Pimco Corporate Opportunity 18 shares at $22.10

Kinder Morgan 5 shares at $86.85

Harris Corp 8 shares at $46.91

First of Long Island 13 shares at $30.00

Deere 4 shares at $91.43

Air products 5 shares at $89.74

GE 36 shares at $22.42

Wells Fargo 21 shares at $37.85

In addition, during April, I received 2.576 shares of GE and 32.164 shares of Annaly (NYSE:NLY) due to automatic dividend reinvestments.

Following these purchases and DRIPs my portfolio looks like this:

Stock

Shares/Par Value

Price (As of May 2nd)

Market Value

Estimated Ann Inc ($)

Curr.

Yield(%)

%Port

AFLAC

217

$53.94

$11,704.98

$303.80

2.55

1.80%

Air Products

111

$90.86

$10,085.46

$301.04

3.19

1.55%

Alliance Resource Partners *

147

$73.17

$10,755.99

$664.44

6.1

1.65%

Amerigas Partners (NYSE:APU)

339

$46.09

$15,624.51

$1,084.80

7.06

2.40%

Annaly (NLY)*

1937.35

$15.09

$29,234.61

$3,487.23

11.61

4.49%

Becton Dickinson (NYSE:BDX)

137

$98.98

$13,560.26

$271.26

2.06

2.08%

BHP Billiton

168

$58.78

$9,875.04

$367.08

4.11

1.52%

Boeing (NYSE:BA)

153

$94.46

$14,452.38

$296.82

2.1

2.22%

Buckeye Partners

280

$67.14

$18,799.20

$1,162.00

6.63

2.89%

Cincinnati Financial (NASDAQ:CINF)

279

$49.17

$13,718.43

$454.77

3.35

2.11%

Conocophillips (NYSE:COP)

197

$62.24

$12,261.28

$520.08

4.33

1.89%

Cracker Barrel Old Country (NASDAQ:CBRL)

180

$84.17

$15,150.60

$360.00

2.42

2.33%

CSX Corp

546

$25.37

$13,849.29

$327.60

2.47

2.13%

Chevron Corp

90

$122.67

$11,040.30

$360.00

3.2

1.70%

Darden Restaurants (NYSE:DRI)

298

$53.31

$15,886.38

$596.00

3.82

2.44%

Deere

102

$91.98

$9,381.96

$199.92

2.28

1.44%

Diageo (NYSE:DEO)

62

$123.81

$7,676.22

$175.33

2.3

1.18%

Dominion Resources (NYSE:D)

219

$59.53

$13,035.98

$492.75

3.68

2.00%

Emerson Elec (NYSE:EMR)

161

$57.73

$9,294.53

$264.04

2.94

1.43%

First Long Island Corp

419

$30.10

$12,611.90

$406.00

3.33

1.94%

General Dynamics (NYSE:GD)

162

$75.56

$12,240.72

$362.88

3.01

1.88%

General Electric *

339.72

$22.66

$7,696.76

$258.19

3.3

1.18%

Harris Corp

253

$48.67

$12,312.25

$362.60

3.22

1.89%

Hasbro Inc (NASDAQ:HAS)

300

$47.72

$14,316.00

$480.00

3.42

2.20%

Illinois Tool Works

157

$67.95

$10,668.15

$238.64

2.36

1.64%

Johnson & Johnson (JNJ)

159

$85.39

$13,577.01

$419.76

3.1

2.09%

Kinder Morgan

165

$87.91

$14,505.15

$832.00

5.98

2.23%

L-3 Communications

146

$83.91

$12,250.86

$321.20

2.67

1.88%

Lockheed Martin

144

$101.80

$14,659.20

$662.40

4.57

2.25%

McDonald's (NYSE:MCD)

98

$99.70

$9,770.60

$301.84

3.02

1.50%

Medtronic

261

$49.02

$12,794.22

$271.44

2.19

1.97%

Microsoft

495

$32.57

$16,121.66

$455.40

2.77

2.48%

Nike (NYSE:NKE)

143

$64.21

$9,182.03

$120.12

1.33

1.41%

Norfolk Southern

174

$78.65

$13,685.10

$348.00

2.62

2.10%

Novartis (NYSE:NVS)

200

$74.54

$14,908.00

$411.50

2.8

2.29%

Omega Healthcare (OHI)

383

$34.48

$13,205.46

$704.72

5.47

2.03%

ONEOK Partners *

227

$52.92

$12,012.84

$649.22

5.6

1.85%

Paychex (NASDAQ:PAYX)

438

$37.59

$16,464.42

$578.16

3.58

2.53%

Pepsico Inc (PEP)

162

$82.88

$13,426.56

$367.74

2.75

2.06%

Phillips 66 (NYSE:PSX)

39

$61.61

$2,402.79

$48.75

2.07

0.37%

Pimco Corp & Income

763

$22.02

$16,801.26

$1,162.20

7.09

2.58%

Plains All American (NYSE:PAA)

276

$59.04

$16,295.04

$634.80

4.06

2.51%

Procter & Gamble (NYSE:PG)

166

$78.61

$13,049.26

$400.06

3.1

2.01%

Qualcomm

143

$64.48

$9,220.64

$200.20

2.23

1.42%

Raytheon

198

$63.75

$12,622.50

$435.60

3.52

1.94%

Realty Income (NYSE:O)

341

$52.44

$17,882.04

$741.59

4.26

2.75%

Sysco (NYSE:SYY)

372

$34.35

$12,779.69

$416.64

3.2

1.96%

Target Corp.

191

$69.38

$13,251.58

$275.04

2.08

2.04%

United Technologies (NYSE:UTX)

108

$95.03

$10,263.24

$231.12

2.33

1.58%

Wal-Mart Stores

180

$78.54

$14,137.20

$329.00

2.4

2.17%

Walgreen Co

294

$48.63

$14,296.49

$323.40

2.25

2.20%

Wells Fargo *

222.43

$37.90

$8,430.10

$266.92

3.1

1.30%

Cash

$194.66

0.03%

TOTALS

$673,422.76

$25,706.08

3.82%

100.00%

* Indicates stocks held in my Optionsxpress account. These stocks are enrolled in automatic DRIP.

Since my initial posting in January, my expected dividends received in the next year increased from $22,475.55 to $25,706.08, an increase of 12.57%. Some of this is due to the purchases I have made since then, but some of it is also from dividend increases and dividend reinvestments. If I continue to increase my dividend income at this rate year after year, I should have no problem reaching my goals for retirement.

One other note. I have stopped including Nokia (NYSE:NOK) in my updates, since I hold it as speculative position, and not as part of my dividend growth portfolio.

And now I will throw a question out to you readers....

Since I have now added more funds into my account how do I go about calculating a yearly return for my portfolio? The value of my portfolio has increased from $575,000 to $673,000 this year, but about $35,500 of that was new money I added into the portfolio. So I can't just compare the portfolio value at the end of the year to the value at the beginning of the year, because much of that difference will be from money added, rather then from investment return. I'm sure there must be a formula, but I can't figure out what it is. I would appreciate any suggestions.

Disclaimer: I am not an investment advisor. Nothing I write should be considered to be a recommendation to buy any particular stock. I am simply discussing and explaining the methods I use. Every investor should do their own due diligence.

Source: My K.I.S.S. Portfolio May 2013 Update