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Late last year, I did a few surveys to find out what readers liked the most and wanted to see more of. The Ultimate Sustainable Dividend Portfolio post that we published in September was clearly a favorite. After publishing an update in January, it is back today, with data as of Tuesday’s close.

It made it possible for me to give 20 dividend stock picks that would provide long term sustainable dividend flows to build passive income. I’ve decided to build upon this by doing monthly updates of this portfolio. The picks were made on September 14th 2011 so I will be using the previous night’s prices as my reference.

The 20 stocks were chosen out of thousands and I will be making some changes in the near future with one main objective; Keep out any stocks that could potentially limit their dividend growth in the near future. The goal remains the same: finding the ultimate stocks that can provide sustainable dividend growth.

Ticker Name Shares Sept 13 Prices Sept 13 Values Feb 14 Prices Feb 14 values
OMC Omnicom Group Inc 25.7 38.91 $999.99 $48.00 $1,233.60
MSFT Microsoft Corp 38.4 26.04 $999.94 $30.25 $1,161.60
JCI Johnson Controls Inc 34.8 28.74 $1,000.15 $33.27 $1,157.80
PEP PepsiCo Inc/NC 16.5 60.54 $998.91 $63.52 $1,048.08
ETN Eaton Corp 25.4 39.31 $998.47 $51.74 $1,314.20
DOV Dover Corp 19.5 51.2 $998.40 $66.00 $1,287.00
ITW Illinois Tool Works Inc 23 43.41 $998.43 $55.97 $1,287.31
XLNX Xilinx Inc 32.2 31.08 $1,000.78 $36.53 $1,176.27
SJM JM Smucker Co/The 14 71.65 $1,003.10 $79.42 $1,111.88
BLK BlackRock Inc 6.6 151.22 $998.05 $191.52 $1,264.03
TROW T Rowe Price Group Inc 19.9 50.36 $1,002.16 $59.95 $1,193.01
OXY Occidental Petroleum Corp 12.4 80.45 $997.58 $104.00 $1,289.60
COP ConocoPhillips 15.4 64.76 $997.30 $73.60 $1,133.44
MUR Murphy Oil Corp 19.5 51.33 $1,000.94 $61.75 $1,204.13
XOM Exxon Mobil Corp 14 71.65 $1,003.10 $84.67 $1,185.38
ADI Analog Devices Inc 30 33.28 $998.40 $39.43 $1,182.90
LLTC Linear Technology Corp 34.1 29.33 $1,000.15 $33.54 $1,143.71
HAS Hasbro Inc 27.8 36.03 $1,001.63 $36.58 $1,016.92
MAT Mattel Inc 37.9 26.375 $999.61 $32.50 $1,231.56
INTC Intel Corp 48.2 20.76 $1,000.63 $26.78 $1,290.80
Cash 2.27 $218.28
USDP Total Value $20,000.00 $24,131.48

I do expect for dividends to be a bit more volatile from month to month but they should increase steadily over time so that will be an important metric. February was actually the first month with over $100 in dividends! In the next few months, I will be giving monthly updates to this amount so we’ll see how that goes. Here is the amount to start off:

Ultimate Sustainable Dividend Portfolio News

Ticker Name News
ETN Eaton Corp Dividend Increase from $0.34 to $0.38, a 11.76% increase
OXY Occidental Petroleum Corp Dividend Increase from $0.46 to $0.54, a 17.39% increase
COP ConocoPhillips Announced it was going to spin off part of its business
LLTC Linear Technology Corp Dividend Increase from $0.24 to $0.25, a 4.17% increase
HAS Hasbro Inc Dividend Increase from $0.3 to $0.36, a 20% increase
MAT Mattel Inc Dividend Increase from $0.23 to $0.31, a 34.78% increase

Returns

I will also be comparing the returns of this portfolio to the return of the S&P500 (with dividends reinvested).. Keep in mind that I would expect the Ultimate Sustainable to do better in difficult times and worse in great times. Why? The USDP is a more stable portfolio that will fluctuate less over time. That is why I’m (happily) surprised to see the USDP outperforming the S&P500… hopefully it continues.

Trades

Every month, I will discuss trades that will be done in the portfolio, they will only be done once per month and most months will actually have no new activity. These are sustainable dividend picks so there is no reason to become too active.

As I have discussed in the recent past, there are two main flaws that I will want to address in the near future for this portfolio:

-Over exposure to the oil sector (I will likely take out an oil stock in the next few months)

-Under exposure to international dividend stocks

Source: Ultimate Sustainable Dividend Portfolio - February 2012 Update