Portfolio Update: Still Trimming ETF/CEF Holdings

Once again it is time for a goals/progress update. I am pleased to report that annualized dividend income rose in September, extending the streak to 7 months after February’s decline. Since I began publicly tracking annualized dividend income in November 2007, it has increased in 21 of the last 22 months.

My goals were defined in this December 1, 2007 Investing Goals post and updated in my 2009 Investing Goals post. Below is an updated version of the table found in the original post.

Description	Dividend Income Annualized	Yield on Cost
2027 Goal	110,000	20.00%
2017 Goal	30,000	10.00%
2009 Goal	8,000	5.00%
December/2008	5,636	5.28%
Purchases YTD	3,276	-0.18%
Div. Changes YTD	(446)	-0.38%
Sales YTD	(1,811)	0.28%
September/2009	6,655	5.00%
Purchases	432	-0.05%
Div. Changes	(29)	-0.02%
Sales	(160)	0.06%
August/2009	6,412	5.01%

The above information covers the current month and year-to-date through the current month.

Click here for a Detailed Historical Progress Table.

For the month, annualized dividend income increased $243, and Yield on Cost (YOC) decreased (0.01%). This month’s changes were a net of new purchases, dividend changes and sales. Let’s examine each of the these categories:

Purchases: The $432 increase in annual dividend income and (0.05%) decrease in YOC related to the following purchases (yield at the time of purchase):

• $83 Johnson & Johnson (JNJ) 3.24%

• $94 SYSCO Corporation (SYY) 3.71%

• $255 iShares iBoxx $ Invest Grade Corp Bond (LQD) 5.46%

All the purchases, except LQD, lowered my YOC. As noted in earlier updates, I generally expect YOC to drop each month since most new investments will yield less than my current YOC, and dividend increases will not be sufficient to offset it.

Dividend Changes: The $29 decrease in annual dividend income and (0.02%) decrease in YOC related to the following dividend changes (a=dividend stated in annual terms, q=quarterly, m=monthly):

• $5 Chevron Corporation (CVX) $0.65q>$0.68q 0.01%

• ($2) Vanguard Inter-Term Bond ETF (BIV) $3.48m>$3.46m 0.00%

• $9 iShares iBoxx $ Invest Grade Corp Bond (LQD) $5.56m>$5.79m 0.00%

• ($18) Eaton Vance Tax-Adv. Global Dividend Fund (ETO) $1.65m>$1.59m -0.01%

• ($23) Vanguard REIT Index ETF (VNQ) $2.67m>$2.32m -0.02%

Sales: The ($160) decrease in annual dividend income and 0.06% increase in YOC related to the following sale:

• ($160) SPDR S&P Dividend (SDY) 0.06%

In September I continued the process of trimming back my ETFs/CEFs [closed-end funds] income holdings with the sale of SDY. I will continue to reduce my holdings in this area each month.

Based on year-to-date results, I am going to raise my revised estimate of annualized dividend income on December 31, 2009 to $7,000 from $6,700.

That’s it for this time. The next monthly progress update will be early November.

Comments

[William Taylor:]

Thanks for your interesting articles. Yesterday on Seeking Alpha there was an article about XOM by Michael Fitzsimmons critical of XOM and it's small dividend relative to others in its group. I have held XON for over two decades and now realize that a bigger dividend, (how about a doubled one), would suit me just fine and that I should bail out of the giant and put my money to better use. We are not talking peanuts here! My biggest holding BAC, which used to give me well over $ 10,000 a year in dividends is now on my "stinkers" list and as I am retired I could use the income I have lost from BAC,( I will hold it for another three years and see what happens before I decide to keep or sell it), but I believe XOM can well afford to reward shareholders.

Oct 11 10:32 AM

[Short Bus:]

nice goals, however at the current rate of government money printing; in 2027, $110,000 will hardly be enough to even buy yourself a fridge.

Oct 12 01:39 AM

[David Van K...:]

William, Just a thought: BAC has radically changed from when you bought it. It's no longer the same company. Everything about it, from its business model, financial health, stock price, ownership structure, management philosophy and culture, to its future dividend policy, is speculative. If I were holding it as a dividend-generator, I would sell it. You sound like a very patient person, and I generally am too, but I ran out of patience with BAC more than a year ago. Best of luck to you.

Oct 12 08:01 AM