Slow And Boring DGI Portfolio Update

by: DGI Guy

Summary

I provide my quarterly update.

I am meeting my 3% yield and 5% dividend growth goals.

Slow and steady wins this race. I am on track for a great 2016.

Introduction

Wrapping up another quarter means it is time to provide another update on the portfolio. If anyone follows the Podcast, you will know that I have been a little preoccupied with other things. This feels like a hands-off time period for the portfolio, but I did make a couple small changes with the goal of simplifying the portfolio. That is putting the cart before the horse though. Lets do a quick recap.

This portfolio exists as a traditional IRA that was created as a roll over from a 401k when I left a job a few years back. I know long term, and specifically in retirement, I will be a full on dividend growth investor. Because of limitations in my current 401k, I cannot be fully committed to the idea now. The majority of my funds sit within a 401k in a low cost index fund. I had concerns that when I transitioned into retirement that I would have no education on how to be a successful DGI (or what I could realistically expect in terms of yield and return). So, when given the opportunity to give myself an education I took it. I want to learn the rules of the road before I have access to my life savings. I will continue to document the success (and failure) of the portfolio here on Seeking Alpha. I think it is great to get feedback from the community on the topic, but I also hope it inspires other to make the jump into managing their own portfolio.

Portfolio Overview

Funded with a 401k rollover Retirement timeline is roughly 30 years Goal is to earn a 3% yield with a 5% dividend growth Provide me with a real time education on managing a dividend growth portfolio

Holdings

Ticker

Shares

Price

Market Value

Quarterly Div

Annual Dividend

Expected Income

Yield

ABBV

50

62.91

$3,146

$0.57

$2.28

$114.00

3.62%

AFL

50

71.44

$3,572

$0.41

$1.64

$82.00

2.30%

AMGN

70

153.92

$10,774

$1.00

$4.00

$280.00

2.60%

AMP

58

$85.54

$4,961

$0.75

$3.00

$174.00

3.51%

BA

25

$124.54

$3,114

$1.09

$4.36

$109.00

3.50%

CFR

8

$59.91

$479

$0.54

$2.16

$17.28

3.61%

CMI

44

$108.82

$4,788

$0.98

$3.92

$172.48

3.60%

EMR

145

$50.64

$7,343

$0.48

$1.90

$275.50

3.75%

F

166

$12.24

$2,032

$0.15

$0.60

$99.60

4.90%

GILD

101

$84.29

$8,513

$0.43

$1.72

$173.72

2.04%

GM

242

$27.68

$6,699

$0.38

$1.52

$367.84

5.49%

GPS

130

$21.21

$2,757

$0.23

$0.92

$119.60

4.34%

HSY

50

$109.52

$5,476

$0.58

$2.32

$116.00

2.12%

JNJ

31

$121.89

$3,779

$0.80

$3.20

$99.20

2.63%

JPM

75

$58.88

$4,416

$0.44

$1.76

$132.00

2.99%

KO

150

$45.08

$6,762

$0.35

$1.40

$210.00

3.11%

MS

210

$24.74

$5,195

$0.15

$0.60

$126.00

2.43%

RY

50

$58.39

$2,920

$0.63

$2.52

$126.00

4.32%

SO

150

$54.11

$8,117

$0.56

$2.24

$336.00

4.14%

T

200

$42.59

$8,518

$0.48

$1.92

$384.00

4.51%

TGT

9

$69.79

$628

$0.56

$2.24

$20.16

3.21%

TUP

40

$54.16

$2,166

$0.68

$2.72

$108.80

5.02%

UTX

30

$99.67

$2,990

$0.66

$2.64

$79.20

2.65%

VZ

50

$55.55

$2,778

$0.56

$2.24

$112.00

4.03%

WFC

75

$45.81

$3,436

$0.38

$1.52

$114.00

3.32%

XOM

60

$93.01

$5,581

$0.75

$3.00

$180.00

3.23%

Cash

$262.25

Click to enlarge

Note: Price is based on market price as of 9a on 7/6/16.

Q2 Sales

I made only 1 sale during Q2 - UNP. I sold on 5/23 for $82 per share. It is currently at $87. I nailed the timing on that one! I find that I do what I call boredom trades. When nothing is going on, I will look for something to do. This is probably where this falls. I do like the idea of cleaning up my portfolio and keeping fewer positions. As I mentioned in the intro, I have been distracted by other projects lately and I cannot keep track of all the stocks in my portfolio. I am not souring on UNP. I think in the long term they will be just fine. I just know that I won't keep up on it to verify that information. So, for now, it is sold.

Click to enlarge

Quarterly Buys

So, as I just mentioned, I had 1 sale which put cash in my hand. With the goal of simplifying my portfolio, the question is what did I do with the money? Well, I used it to add to a position I already owned - EMR. I also added some other positions through dividend reinvestment.

  • CFR - 8 Shares (Div Reinvestment) @ $59.03
  • EMR - 55 Shares @ $50.84
  • TGT - 9 Shares (Div Reinvestment) @ $69.25

For those of you who follow the portfolio closely (whoever you are!) you will notice that CFR is new in this portfolio. This seems in contrast to the portfolio goal I mentioned of simplicity with the sale of UNP. Well, it is new to this portfolio, but not new to me. I own it in another portfolio (My Pay The House Off Early Fund!). I was following it anyway and it was at a decent price so I added it!

Dividend Increases

One of the things that I love about dividend investing is the clockwork in which things happen. So far, YTD, I have had 15 positions raise their dividends. 8 of those came during Q1. For Q2, the following raises happened:

  • AMP - 12%
  • CFR - 2%
  • JNJ - 7%
  • RY - 7%
  • SO - 4%
  • WFC - 1%
  • XOM - 3%

The 15 positions that have raised their dividend this year make up 67% of the portfolios income and their increases represent a 5.8% increase in the overall income expectation. That is pretty good in my book!

I did have a couple non-raises that are now on my watchlist. I won't add much detail here, but know they are on the chopping block if I see some better opportunities. Those positions are: GPS & MS. I had high hopes for a good MS raise. We will see what happens this month on a potential raise.

Conclusion

Category

Goal

Actual

Current Yield

3%

3.4%

Dividend Growth

5%

5.8% YTD

Click to enlarge

Q2 2016 Dividends: $1004

Q1 2016 Dividends: $1006

Q2 2015 Dividends: $500

As I look at my YTD return, I take a look back at my specific goals. I want a 3% yield with 5% growth in the dividend. The portfolio is meeting my goals and producing about 13% more income than my goal. Also, I am looking for 5% growth on the overall portfolio. To date, with just about half of my positions rising in 2016, I am at 5.8%. I am meeting my goals.

You will note that I did not mention anything about the value of my portfolio. This is because I do not really track it that closely. I am focused on income. This quarter, I had a value of ~$120k. Last quarter I had a value of ~$113k. The market fluctuates. The income does not! Stay focused on your goals and what you can (kind of) control and you will do just fine!

Disclosure: I am/we are long ALL POSTIONS IN THIS ARTICLE.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.