Ryan Takach's  Instablog

Ryan Takach
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I am an individual investor with over eight years trading experience in equities and options. I hold an MBA from the Kellstadt Graduate School of Business at DePaul University in Chicago and a BA in Supply Chain Management from Michigan State University. My work has brought me to different parts... More
  • Dividend Portfolio Mid-Year Review 0 comments
    Jun 9, 2013 11:12 AM | about stocks: ABBV, ABT, ADP, BP, CLF, ED, F, GE, HCP, INTC, JNJ, KMB, KO, MCD, MKC, MO, PBR, PEP, PM, SYY, T, VFC, WMT, XOM, YUM

    Hi everyone, it's the first week of June so I thought it'd be a good time to see where I stand with my dividend portfolio. In prior articles I talk mostly about my quest to build positions in the S&P Dividend Aristocrats, but some of my dividend holdings are not on that list, and some will probably never be on that list (I have a few positions deep in the red that are best left for dead, but I'm not selling at the moment, I'm hopeful of a comeback).

    At the moment I am managing two separate brokerage accounts: Interactive Brokers and ShareBuilder. I've written about this briefly before, and there are tradeoffs for each account, but my goal is to have all my securities in my Interactive Brokers account by the end of the year. Account transfers are easiest when the securities being transferred have been held for a year or longer; all my ShareBuilder holdings will go long-term on October 16, at which point I will initiate the [lengthy] process of transferring from SB. They don't allow ACATS so it's a bit tedious, but once it's done I'll be conducting all my taxable account activities within IB.

    As a side note, I do have some of the same companies in both accounts: CLF, PM and T. I will also look at adding to positions that are already in SB within my IB account, to anticipate the transfer over. A big goal here is to build round 100 share lots for option writing later. In the cast of AT&T (NYSE:T), I have 45 shares in SB and 30 shares in IB, I only need 25 more shares to get to 100, so naturally I'll buy them in the IB account. Another example: I have 44 shares of Coca Cola (NYSE:KO) in my SB account, but none in my IB account. KO goes ex-div on Wednesday June 12, so I might add some shares in the IB account, this way I'll have a head start getting to 100 shares in the IB account before the brokerage transfer.

    I may have over-explained that one, but it's an important point. Between both of these accounts I hold 26 unique securities, 25 of which are dividend payers. I'm reaching the saturation point: getting into more than 30 positions is going to be over-diversified and likely not exceed the performance of the overall market. It will also require a lot more time to keep up with the events and outlook for each of those companies. At that point I may as well buy an S&P ETF. The only reason to add to my list now is so I can round out my dividend calendar. Otherwise, I should continue adding to the existing 25 dividend positions in the IB account.

    I will put the list below, but I'm only tracking 24 securities, specifically because Petroleo Brasileiro (NYSE:PBR) pays an erratic dividend not worth tracking, and Solazyme (SZYM) does not pay one at all. So here are the true dividend payers:

    First, the current dividend calendar as of June 9, 2013:

      Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
    ABBV   X     X     X     X  
    ABT   X     X     X     X  
    ADP X     X     X     X    
    BP     X     X     X     X
    CLF     X     X     X     X
    ED     X     X     X     X
    F     X     X     X     X
    GE X     X     X     X    
    HCP   X     X     X     X  
    INTC     X     X     X     X
    JNJ X     X     X     X    
    KMB X     X     X     X    
    KO       X     X     X   X
    MCD     X     X     X     X
    MKC X     X     X     X    
    MO X     X     X     X    
    PEP X   X     X     X      
    PM X     X     X     X    
    SYY X     X     X     X    
    T   X     X     X     X  
    VFC     X     X     X     X
    WMT X     X   X     X      
    XOM     X     X     X     X
    YUM   X     X     X     X  
      Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
    Count of Divs 10 5 9 10 5 10 9 5 10 9 5 9

    This just shows the frequency of each dividend payment, from this it looks like I need to work on my Feb-May-Aug-Nov cycle in terms of frequency.

    Now for the dividend payment amounts

    Jan $181.98
    Feb $53.10
    Mar $172.78
    Apr $180.99
    May $53.10
    Jun $219.78
    Jul $133.99
    Aug $53.10
    Sep $233.06
    Oct $133.99
    Nov $53.10
    Dec $171.79

    I'm currently tracking $1,640 in dividend income yearly. We again see that the Feb-May-Aug-Nov cycle is a bit light on income, I could beef this up by adding to the existing five positions that pay during those months, or by adding four or five new positions with the same schedule.

    And how am I doing building round lots?

    stock shares
    ABT 10
    ED 10
    HCP 10
    JNJ 10
    MKC 10
    ABBV 15
    ADP 20
    SYY 20
    VFC 20
    YUM 20
    XOM 21.5268
    KMB 23.1027
    PEP 23.635
    MCD 25.3069
    PM 27
    MO 40
    BP 43.2983
    KO 44.3719
    PBR 63.2868
    T 75
    INTC 100
    SZYM 100
    WMT 100
    F 199.9141
    GE 200
    CLF 245.9984

    That table is sorted from smallest to largest (ignore SZYM and PBR, I'm not adding to those). Those small lots at the top represent positions I have recently opened (except for PM, I've owned half those shares since the MO spinoff). This information, along with the dividend calendar and an assessment of current market value, helps me to determine how to make my next investment. I consider the dividend ex-date, the amount of income I'd be creating in any particular cycle, the market value of the security in question, and the number of shares required to get to 100. Those decision variables sometimes clash, and sometimes a buying opportunity will be missed due to lack of funds or other circumstances, but it provides a reasonably clear picture of how I think about my portfolio.


    The purpose of this article was basically to provide full disclosure and paint a picture for the reader how I develop my strategy. I don't think it's entirely fair to readers that I write about my strategy without really showing how that strategy is playing out in real life. Considering some of the bad positions on that list (NYSE:CLF) I'm about break-even, so I'm not boasting about how much capital appreciation I've got, but about how much income I'm creating. I hope to build upon the dividend income strategy with my option income strategies later on when I have enough shares to write more covered calls. Furthermore, I would contest that this is more than a "set it and forget it" strategy due to the number of considerations involved in making an investment election. This portfolio does require me to keep up with news, press releases, earnings, and general public sentiment in order to ensure I'm parking my cash in a safe place.

    Here is how the portfolio is made up in terms of % of investment and % of market value as of June 9

    (click to enlarge)
    Percentage of total cost

    Market Value

    Disclosure: I am long ABBV, ABT, ADP, BP, CLF, ED, F, GE, HCP, INTC, JNJ, KMB, KO, MCD, MKC, MO, PBR, PEP, PM, SYY, T, VFC, WMT, XOM, YUM.

    Additional disclosure: This is not investment advice. I am not a certified financial planner or any other type of investment professional. I am not offering advice, just showing how my personal strategy is playing out. Any decision you come to from reading this is your own, any market decision can result in financial losses.

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