I'm retired and my portfolio has been a work in progress since I first began managing my own investments in February of last year. Since my 1st article for Seeking Alpha back in February of this year I have sought to represent my journey in becoming a Dividend Growth Investor.
I read, I back tested, I asked questions and ultimately I learned. Throughout this process, my best source of information was the contributors and commenters I met here at Seeking Alpha.
I am pleased to present the 50 stocks making up my portfolio. They were purchased during the period between February of 2011 and today. While I'm still learning to properly evaluate stock value, the majority were purchased at a point during this time period when they were fairly valued. Anyone considering them for purchase today needs to evaluate whether they remain fairly valued.
The goal of this portfolio is to provide my wife and I with a steady and growing stream of income realized solely from the dividends and dividend growth each stock provides. Our goal is to continue to have the portfolio yield 5% or more and to grow at a rate in excess of inflation. An additional goal is for the income to be provided without the need to tap capital gains and sell stock shares. The income solely generated from dividends and dividend growth produces our new paycheck, transferred to our checking accounts like our other retirement checks the first of each month.
In this article I am going to present my core portfolio made up of 40 stocks enjoying a "buy and monitor" status. As long as they continue to provide growing dividends I expect them to be in our account for a good long time. Next time around I'll present the remaining 10 stocks used in part to increase portfolio yield. These are monitored closely. I expect turnover to be more prevalent within this group.
The first 23 stocks in my portfolio, presented below, have the distinction of being in what I consider my top tier of safety. First off each is included among the Dividend Champions, Challengers and Contenders (CCCs) maintained by David Fish. Second, each was among the 50 steadiest Dividend Growth stocks discovered from my back testing of the period between 2002 and 2011. Each of these stocks had less than half the loss of the S&P 500 during the turbulent markets of 2002 and 2008. Each stock also had three or fewer down years during the 10-year period as well as outperforming the index during the same 10-year period.
The next two stocks were also chosen from my back testing but are not currently included among in the CCCs.
The next 15 stocks while not among my 50 steadiest performers from 2002-2011 have a proven record of providing safe growing dividends as evidenced by their inclusion among the CCCs.
I back tested this 40 stock portfolio and compared its performance against the S&P 500 for the 10-year period between 2002 and 2011. During this period the portfolio beat the index for each of the 10 years. It was strongest against the index during the down years of 2002 and 2008. It was -6.8% vs. -23.4% for the index in 2002. In 2008 this portfolio was -16.63% vs. -38.5% for the S&P. During this 10-year period, the S&P 500 averaged 3.86% including dividends, while the average for this portfolio was 12.98%. This portfolio yields approximately 4.5% vs. the current yield for the S&P 500 of just under 2%. The average 5-year Dividend Growth Rate (DGR) for the portfolio is 11.17%, far greater than current inflation.
The stock charts, which follow include recent yield, 5 year Dividend Growth Rates and 10-year average returns. In the note section, many of the stocks have an asterisk. This represents stocks with greater stability in the area of dividend growth over the past 10 years than the others without this distinction.
In Part Two, I will be presenting the final 10 stocks as well as a summary of our portfolio's performance and our investment goals moving forward.
Stock | Ticker | Yield % | 5-Year DGR % | 10 Year Ave Return | Notes |
Omega Healthcare Investors | 7.2 | 10.1 | 19.1 | * | |
Reynolds American | 5.2 | 9.4 | 18.7 | * | |
W.P.Carey | 4.9 | 3.3 | 13.2 | * | |
Pepsi | 3.1 | 12.2 | 5.4 | * | |
Procter & Gamble | 3.7 | 11.2 | 7.9 | ||
National Retail Properties | 5.4 | 3.0 | 15.1 | * | |
Altria | 4.7 | 15.0 | 17.1 | * | |
Magellan Midstream Partners | 4.7 | 6.4 | 20.2 | ||
Verizon | 4.5 | 3.9 | 3.6 | ||
Unilever | 3.8 | 7.7 | 10.0 | * |
Stock | Ticker | Yield % | 5-Year DGR % | 10 Year Ave Return | Notes |
Chevon | 3.4 | 9.0 | 12.8 | * | |
Health Care Reit | 5.0 | 2.2 | 15.9 | * | |
Intel | 3.2 | 14.4 | -.7% | * | |
Kinder Morgan Partners | 5.9 | 7.2 | 15.9 | * | |
Coke | 2.6 | 8.7 | 6.8 | * | |
McDonald's | 3.1 | 20.4 | 17.1 | * | |
AT&T | 5.0 | 5.3 | 2.5 | ||
Kimberly Clark | 3.5 | 7.8 | 5.7 | * | |
Sunoco Logistics | 4.6 | 9.8 | 26.4 | * | |
Plains All America | 5.1 | 6.3 | 18.9 | * |
Stock | Ticker | Yield % | 5-Year DGR % | 10 Year Ave Return | Notes |
Southern | 4.2 | 4.0 | 9.9 | * | |
Darden Restaurants | 3.9 | 28.4 | 8.5 | * | |
Johnson and Johnson | 3.5 | 10.3 | 3.6 | * | |
BCE Inc. | 5.4 | 12.8 | 11.6 | ||
Royal Dutch Shell | 4.9 | 6.7 | 9.6 | ||
Avista Corp. | 4.34 | 14.1 | 10.8 | * | |
Dynex Capitol | 11.18 | 31 (3yr.) | 20.7 | ||
Rogers Communication | 4.36 | 81.4 (15.9) | 18.4 | * |
Stock | Ticker | Yield % | 5-Year DGR % | 10 Year Ave Return | Notes |
Lockheed Martin | 4.59 | 21.1 | 7.9 | * | |
Leggett & Platt | 5.3 | 9.9 | 3.9 | ||
Abbott Labs | 3.16 | 10.3 | 3.5 | * | |
Westar Energy | 4.41 | 5.1 | 10.8 | ||
Heinz | 3.79 | 7.4 | 6.6 | * | |
PPL Corp. | 5.18 | 4.9 | 9.7 | ||
Hasbro | 4.25 | 22.3 | 9.0 | * | |
Waste Management | 4.25 | 9.1 | 2.9 | * | |
Astrazeneca | 6.26 | 13.9 | 3.4 | * | |
Wal-mart | 2.28 | 16.5 | 2.9 | * |
Stock | Ticker | Yield % | 5-Year DGR % | 10 Year Ave Return | Notes |
Walgreen | 3.72 | 22.9 | .9 | * | |
Enbridge Energy Partners | 6.92 | 2.5 | 13.2 |
Disclaimer: I am not a professional investment advisor or financial analyst. You need to do your own research and due diligence before you decide to trade any securities or other products.
