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Dividend Growth Portfolio Update - 6/22/12

|Includes:AGNC, AM-OLD, COP, HAS, Altria Group, Inc. (MO), MTGE, NLY, NUE, PG, TGH, WBA

Back in January 2011 I undertook developing an experimental Dividend Growth (NYSE:DG) portfolio after several months of learning about that approach in the Dividend & Income section of Seeking Alpha. In the 18 months since that time, I have been adding and trimming various stock holdings from my DG portfolio as I've continued to learn.

Here's how my 15 stock DG portfolio stands now:

Stock % of holdings Stock % of holdings
ABT 6.9% MO 11.2%
AGNC 3.3% MTGE 3.3%
AM 6.3% NLY 5.7%
AVA 5.8% NUE 4.1%
COP 3.0% PG 13.2%
CTL 4.3% TGH 5.9%
HAS 7.5% WAG 6.5%
INTC 8.9% cash 4.1%

Total = 100.0%

My original plan was to establish 15 or 16 equally weighted positions of around 6% each. Since then I have decided to expand the number of holdings to around 30 over time, with each position being roughly 3.3% of the total. I am currently in the process of trimming and reallocating my holdings as conditions warrant. I am still looking for solid, undervalued DG stocks to add and will determine which shares to sell once a good buy candidate is found.

Since beginning my DG portfolio I have experienced capital gains on closed positions of about 12% of the initial portfolio value for positions I have already trimmed.

The remaining open positions have unrealized capital gains of about 9.9% of their cost (some of which are reinvested capital gains from above).

And the dividends I am receiving are 6.02% of the cost of the shares I still hold. That number will certainly grow as this year's crop of dividend increases comes in.

I have to say that for someone who has spent nearly 20 years chasing capital gains this DG investing stuff is noticeably easier. The profits I've generated using this approach have seemed too large and too easy for the amount of effort I've put in, especially in a lackluster market like we've experienced in the last few years.

I guess it boils down to a simple formula. Find great companies with a history of performance and growing dividends, then buy them at a good price and let them do the heavy lifting.

It doesn't get any better than that in my book. You can be sure I'll be adding more money to this DG portfolio in the future.

Many thanks to the numerous authors and contributors of the Dividend & Income DG articles on Seeking Alpha. They have saved me countless hours of work and helped me to find an investing methodology in which I can have great confidence.