My Income Portfolio Quarterly Update (Q1 2013)

by: Invest Yourself


In my very first article that I wrote for this website I outlined my intentions and goals as an investor. In that article I also outlined my investing methodology. As part of this article series I decided to write quarterly updates regarding this portfolio. This is my 2013 first quarter update of my dividend income portfolio.

Portfolio Holdings/Dividends:

My portfolio holdings for the end of Q1 2013 are as follows.

Stock Held Shares Current Dividend Annualized Dividend
The Hershey Company (NYSE:HSY) 22.5416 $0.42 $37.86
Waste Management, Inc. (NYSE:WM) 46.8771 $0.365 $68.44
IBM Corporation (NYSE:IBM) 7.9593 $0.85 $27.06
PowerShares Preferred Stock ETF (NYSEARCA:PGX) 105.82 $0.0778 $98.79
iShares iBoxx High Yield Corporate Bond (NYSEARCA:HYG) 16.852 $0.4884 $98.76
Wells Fargo & Company (NYSE:WFC) 45.0339 $0.25 $45.03
Southern Company (NYSE:SO) 34.1157 $0.49 $66.86
E. I. du Pont de Nemours and Company (DD) 29.1138 $0.43 $50.07
Darden Restaurants, Inc. (NYSE:DRI) 40.2243 $0.50 $80.44
Chevron Corporation (NYSE:CVX) 14.0661 $0.90 $50.63
Archer Daniels Midland Company (NYSE:ADM) 49.0127 $0.19 $37.24
Johnson & Johnson (NYSE:JNJ) 23.0427 $0.61 $56.22
Wal-Mart Stores Inc. (NYSE:WMT) 23.8481 $0.47 $44.83
Intel Corporation (NASDAQ:INTC) 79.9235 $0.225 $71.93
Aflac (NYSE:AFL) 30.637 $0.35 $42.89
Pepsico, Inc. (NYSE:PEP) 22.6484 $0.5375 $48.69
American Water Works (NYSE:AWK) 40.1918 $0.25 $40.19
General Electric (NYSE:GE) 66.7878 $0.19 $50.75
Main Street Capital (NYSE:MAIN) 47.7653 $0.155 $88.84
Realty Income Corp (NYSE:O) 37.5108 $0.1812 $81.56

These holdings result in a total annualized dividend for this portfolio total of:

Annualized Portfolio Dividend Total 1187.08

This is a 7.1% quarterly increase from our annualized dividend total of $1107.44 at the beginning of the year.

Portfolio Buys/Sells:

During Q1 I made a couple transactions that affected the holdings of my portfolio.

  • Buys
Stock Shares Bought
Darden Restaurants, Inc. 10.5841
Intel Corporation 23.4073
Main Street Capital 47.7653
Aflac 30.6370

The purchase of DRI and INTC shares were my planned share additions highlighted by my investment strategy outlined in my first article which raised my cost basis in those stocks to $2,000. I will seek to raise my cost basis in the remaining stocks one at a time as the funds become available. The AFL and MAIN purchases were part of a stock portfolio swap performed in the first quarter highlighted in the sell table below. The purchases of AFL and MAIN were both $1500 dollar purchases.

  • Sells
Stock Shares Sold Total Sale ($) Profit
Verizon Communications Inc. (NYSE:VZ) 37.4011 $1,679.08 $179.08
HJ Heinz Co (HNZ) 26.5582 $1,906.22 $406.22

Warren Buffet announced in the first quarter a buyout of HNZ at 72.50. Since this buyout effectively capped the upside potential for HNZ I decided to sell HNZ and replace it with another stock in my portfolio. That decision process is discussed in more detail in this article. I also decided to sell VZ because I believe that the Federal Reserve will seek to slow its quantitative easing policy and seek to raise interest rates around the end of 2013. Companies like VZ that have large debt loads will suffer if any rate increase is implemented. For these reasons I decided to close my positions in both VZ and HNZ and replace them with AFL and MAIN.

Portfolio Performance:

During Q1 of 2013 I contributed additional funds to my brokerage account totaling $565.09. This raises my overall portfolio cost to $22,172.84. This particular portfolio was first started on 2/26/2009. The current value, of my portfolio holdings including cash on hand as of 4/1/2013, is $34,271.02.

Portfolio Dividend Yield On Cost(YOC) 5.35%
Total Net Portfolio Gain $12,098.18
Annualized Portfolio Gain(Based on Portfolio Cost) 13.3%

There are three important metrics for this portfolio that I will track over time: Annualized Dividends, Yield On Cost(YOC), and Portfolio Value.

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As you can see the first three months of 2013 have been very kind to my portfolio. It has been this way for most people with the DOW and S&P hitting new all time highs. I will utter a word of caution for those of you not investing with a dividend growth portfolio mindset. This market looks slightly overbought and I do expect some sort of minor correction possibly some time near the end of April or during the May time frame. I fear that the longer this rally continues the sharper the correction will be. For those of you who invest following my model look at this correction as an opportunity to buy. I would hesitate overpaying for stocks between now and this correction. If you do wish to buy stocks make sure that the ones you purchase are still fairly valued which for dividend investors would mean that your stock's P/E should be lower than 18. Please comment in the section below and let me know what you think of my portfolio and also when you think a correction may occur.

Disclosure: I am long ADM, AFL, AWK, CVX, DD, DRI, GE, HSY, HYG, IBM, INTC, JNJ, MAIN, O, PEP, PGX, SO, WFC, WM, WMT. 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.