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What I Own - Or My 4 Year Forward Portfolio Income Spreadsheet

Mar. 27, 2015 6:13 PM ET10 Comments
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My goal is to have a portfolio yield close to 4% while having a portfolio CAGR close to 5%. I have made some changes to increase the portfolio CAGR well past that goal. But many of the new additions (the refinery MLPs) will have lower CAGRs five years from now.

I did not like my prior weighting in MLP G&Ps. I liked the 'yield + CAGRs" at the time of purchase. But there was lots of volatility in the DCFs and the CAGRs. I sold all of my units in CMLP and DPM - and 20% of my units in MWE. These were all negative UBTI producing MLPs. Most of what I sold was in an IRA. I wanted exposure to ultra-high distribution CAGR projection 'refinery logistic' MLPs (which have recently zigged when other MLPs zag). I wanted MPLX, PSXP, SHLX and VLP. That would have really hurt my portfolio yield in the here and now. I purchased units of MPLX, PSXP, SHLX, TLLP, shares in the leveraged ETN MLPL and shares in KMI. I kept my weightings light due to UBTI concerns about the additions. I feel that those who write about MLPs should have portfolios that beat the Alerian MLP index. This shift was partially done so my MLP portfolio produces the returns that will maintain my Seeking Alpha writing career (grin). This shift is also evidence that I strongly believe 'you get the results for which you plan - not the results that you only desire'. I produce the stats that aid in the production of realistic plans. To finance those purchases, I also sold (in addition to the already mentioned sales) REITs LTC, HME and OFC - and most of my shares in IBM. I had already mentioned my disappointment with BAX. BAX was traded to soon to be dividend producing GILD. When/if BIIB or CELG announce dividend payments - they will probably be added.

To some degree we all have portfolios created by inertia. We own what we use to own. Every portfolio is a work in progress. But . . I am really close to owning what I want to own. I could not have said that two years ago. Writing for Seeking Alpha (and the required disclosing my holdings) has nudged me to own what I believe I should own. So if you are a portfolio procrastinator, begin an activity that will aid you in throwing away the portfolio trash. Share the information about your holdings with a small group of friends and/or family. Or share this link with them - then say yes when they make this suggestion.

I still have a sub-35% allocation to diversified equity mutual funds. I do not need to have near ideal diversification in my 'individual stock holdings'. But . . . as I shrink my allocation to mutual funds, I need to increase my diversification in individual holdings. I need significantly more tech stocks (or higher weightings in those I own). But there are not any more dividend paying tech stocks that I want to own.

I can afford to reduce my portfolio CAGR with the addition of some low risk zero CAGR investments. You can Google "investment grade preferred stocks" to get a list that is under consideration. That list includes AEH, NTRSP, PRH and VZA. If there were more fear of rising interest rates in the market, I would buy a 2% allocation in T along with 1% allocations to three other 2% growth utilities.

Don't get suggestions on what to buy from my ownership list. Get those suggestions for my 'Yield + CAGR - RRR' spreadsheets. There is lot's of good stuff out there. I don't own all of it. This spreadsheet is being produced so that you have evidence that you can own some high CAGR equities and still have a portfolio with an acceptable yield. I also want to provide evidence that I practice what I preach.

Finally, if you do not know your portfolio yield and CAGR, take the time and effort to do the calculation in a similar spreadsheet to the one provided below. The calculation is a bit complex and time consuming. Still . . . This should be a requirement for all retired and nearly retired investors. You need to know where your current investments are taking you. How do you know that you need to change if you don't even know where you are headed? Don't wait until 2025 to realize you needed more growth investments back in 2015.

To produce the projected income data for 'year zero' - take the dividend times four, times the number of shares. To get the income for 'year 1' - take the dividend times four, times the number of shares, times 'one plus the CAGR'. For TCO, the CAGR projection is 4%. One plus the CAGR is '1.04'. To get the income for 'year 2' - take the dividend times four, times the number of shares, times 'one plus the CAGR', times 'one plus the CAGR'. Add a 'times one plus the CAGR' for each year. You can not arrive at a portfolio CAGR by adding the CAGRs and dividing by the number of investments - even if all investments were close to the same dollar amount.

A portfolio CAGR is a weighted calculation. To add to the complexity, it is not weighted by investments - but by the income produced by each investment. There are no shortcuts. Well - I use javascript to do the calculations. You could also use most spreadsheet software to do the same. A back of the envelope calculation almost always results in an over estimate of the portfolio CAGR. As you have already been told, don't wait till 2025 to do this calculation on your own holdings.

If there is a fellow Seeking Alpha contributor that has produced similar portfolio CAGR stats in their own blogs or articles - please add a link to that data in the comment section below.

The dollar amounts for the income will be deleted on Monday.

I am a Christian who tries to practice the 'do unto others as you would have them do unto you'. I believe that this 'portfolio information' is the kind of stuff I really needed back some twelve years ago when I began purchasing individual stocks . . . . and really did not know what I was doing. Put in different words, I did not know what I was doing until I viewed investments in a 'yield + CAGR - RRR' format. By sharing this personal portfolio information along with the data I generate in multiple sectors, it is my hope that it leads to your edification. I hope I am doing the 'do unto others' task with the best of my limited ability.

Q1 2015 'Portfolio CAGR' and Dividend Growth Dollars Expectation

Current Dividend Current Projected LTM Div Amount ------ Projected Income per Year ------
Company /Quarter Yield CAGR Growth shares Invested Yr 0 Yr 1 Yr 2 Yr 3 Yr 4
REITs
TCO 76.75 0.565 2.94 4.00% 4.63% x x x x x x x
O 51.06 0.189 4.44 1.90% 3.73% x x x x x x x
UE 23.65 0.200 3.38 2.00% 0.00% x x x x x x x
VNO 110.94 0.530 1.91 2.00% 0.00% x x x x x x x
AVB 174.12 1.250 2.87 5.00% 7.76% x x x x x x x
UDR 33.91 0.260 3.07 3.50% 10.64% x x x x x x x
OHI 40.21 0.530 5.27 4.00% 8.16% x x x x x x x
VTR 73.32 0.790 4.31 6.00% 8.97% x x x x x x x
MLPs
ARP 7.60 0.325 17.11 0.00% -43.97% x x x x x x x
EPD 32.40 0.370 4.57 6.00% 5.71% x x x x x x x
GEL 46.20 0.595 5.15 8.50% 11.21% x x x x x x x
KMI 41.27 0.450 4.36 9.00% 9.76% x x x x x x x
MMP 78.63 0.695 3.54 8.50% 18.80% x x x x x x x
MPLX 69.46 0.383 2.21 20.00% 22.36% x x x x x x x
MWE 63.02 0.900 5.71 5.00% 4.65% x x x x x x x
PAGP 28.11 0.203 2.89 14.00% 27.67% x x x x x x x
PSXP 68.11 0.340 2.00 20.00% 51.11% x x x x x x x
SHLX 38.92 0.163 1.67 20.00% 0.00% x x x x x x x
TLLP 53.97 0.667 4.94 10.00% 18.05% x x x x x x x
TRGP 94.97 0.775 3.26 15.00% 27.57% x x x x x x x
WES 66.30 0.700 4.22 8.00% 16.67% x x x x x x x
WMB 49.28 0.580 4.71 10.00% 44.10% x x x x x x x
VTTI 24.88 0.263 4.22 10.00% 0.00% x x x x x x x
MLPL 49.39 1.625 13.16 5.50% 15.74% x x x x x x x
Banks
BOKF 60.51 0.420 2.78 5.00% 5.00% x x x x x x x
CFR 68.78 0.510 2.97 4.00% 2.00% x x x x x x x
PB 52.01 0.275 2.11 8.00% 14.58% x x x x x x x
USB 42.86 0.245 2.29 7.00% 6.52% x x x x x x x
WFC 54.12 0.350 2.59 5.00% 16.67% x x x x x x x
Consumer Staples
CL 68.75 0.360 2.09 6.50% 5.88% x x x x x x x
HRL 57.26 0.250 1.75 9.50% 25.00% x x x x x x x
HSY 101.89 0.535 2.10 9.50% 10.31% x x x x x x x
INGR 76.93 0.315 1.64 9.50% 0.00% x x x x x x x
GIS 54.99 0.410 2.98 6.00% 7.89% x x x x x x x
PEP 95.95 0.655 2.73 5.50% 15.42% x x x x x x x
PG 82.31 0.644 3.13 5.00% 7.00% x x x x x x x
SJM 116.01 0.640 2.21 7.00% 10.34% x x x x x x x
Health Care
ABC 113.19 0.290 1.02 10.50% 23.40% x x x x x x x
ABT 46.78 0.240 2.05 9.00% 9.09% x x x x x x x
AMGN 162.59 0.790 1.94 8.00% 29.51% x x x x x x x
GILD 101.00 0.430 1.70 9.50% 0.00% x x x x x x x
NVO 53.84 0.207 1.54 9.50% 30.19% x x x x x x x
StJ 65.82 0.270 1.64 8.90% 8.00% x x x x x x x
SYK 92.56 0.345 1.49 8.80% 13.11% x x x x x x x
Energy-Mining
BBL 44.96 0.620 5.52 6.00% 0.00% x x x x x x x
XOM 83.58 0.690 3.30 7.20% 9.52% x x x x x x x
Technology
AAPL 123.25 0.470 1.53 10.00% 7.87% x x x x x x x
APH 57.64 0.125 0.87 10.00% 25.00% x x x x x x x
CSCO 27.13 0.190 2.80 7.50% 0.00% x x x x x x x
IBM 160.40 1.100 2.74 8.30% 15.79% x x x x x x x
QCOM 67.03 0.420 2.51 9.50% 20.00% x x x x x x x
TEL 70.54 0.290 1.64 10.00% 16.00% x x x x x x x
Industrials
HON 102.96 0.517 2.01 9.50% 15.00% x x x x x x x
UTX 116.90 0.640 2.19 9.50% 8.47% x x x x x x x
Packaging
PKG 77.79 0.400 2.06 8.00% 0.00% x x x x x x x
RKT 64.00 0.321 2.00 8.00% 83.14% x x x x x x x
Rail Roads
NSC 103.62 0.590 2.28 8.50% 9.26% x x x x x x x
UNP 108.44 0.550 2.03 12.50% 20.88% x x x x x x x
BDCs
AINV 7.60 0.200 10.53 0.20% 0.00% x x x x x x x
ARCC 17.16 0.380 8.86 0.75% 0.00% x x x x x x x
MAIN 30.70 0.170 6.64 4.25% 3.03% x x x x x x x
PFLT 13.98 0.270 7.73 2.25% 0.00% x x x x x x x
PNNT 9.07 0.280 12.35 0.20% 0.00% x x x x x x x
Bonds + Bond Funds
HTGC 25.50 0.437 6.85 0.00% 0.00% x x x x x x x
MCQ 25.33 0.437 6.90 0.00% 0.00% x x x x x x x
TCC 25.17 0.437 6.94 0.00% 0.00% x x x x x x x
PHIGX 7.89 0.035 5.32 0.00% 0.00% x x x x x x x
VKMMX 13.77 0.047 4.10 0.00% 0.00% x x x x x x x

Yield on original dollars 3.78 4.00 4.24 4.50 4.78

Year over year Growth 5.79 5.94 6.10 6.27


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