My Income Portfolio Quarterly Update (Q4 2013)

by: Invest Yourself


The first of last year I decided to start sharing my personal income portfolio with my readers. As part of this article series I decided that I would write quarterly follow up articles so that my readers can view my portfolio changes and progress. You can view my original article here and my previous quarterly updates Q1, Q2, and Q3 in the provided links. These articles will show you on a quarter by quarter basis how I am managing my income seeking portfolio.

Activity Summary:

The stock market Q4 performance was quite interesting to watch. Q4 has seen its share of ups and downs but ended the year with a strong Santa Clause rally. The Federal Reserve has officially announced QE taper actions while committing to keep the Federal funds rate low for the extended future. More and more people believe that stocks are starting to move into an overbought range. I personally feel that there are still fair valued stocks to be bought and owned. This quarter I added to my position in the 6 remaining stocks that needed their cost basis raised to 2,000. Those transactions and my current level of holdings will be discussed further in later sections of this article.

Portfolio Holdings/Dividends:

My portfolio holdings for the end of Q4 2013 are as follows.

Stock Held Shares Current Dividend Annualized Dividend
The Hershey Company (NYSE:HSY) 22.0967 $0.485 $42.86
Waste Management, Inc. (NYSE:WM) 48.8565 $0.365 $71.33
IBM Corporation (NYSE:IBM) 10.6629 $0.95 $40.51
PowerShares Preferred Stock ETF (NYSEARCA:PGX) 142.0442 $0.0739 $125.96
iShares iBoxx High Yield Corporate Bond (NYSEARCA:HYG) 22.5964 $0.4673 $126.71
Wells Fargo & Company (NYSE:WFC) 47.7971 $0.30 $57.35
Southern Company (NYSE:SO) 44.9836 $0.5075 $91.31
E. I. du Pont de Nemours and Company (DD) 38.0141 $0.45 $68.42
Darden Restaurants, Inc. (NYSE:DRI) 40.2243 $0.55 $88.49
Chevron Corporation (NYSE:CVX) 17.9036 $1.00 $71.61
Archer Daniels Midland Company (NYSE:ADM) 60.2494 $0.24 $47.05
Johnson & Johnson (NYSE:JNJ) 23.1511 $0.66 $61.11
Wal-Mart Stores Inc. (NYSE:WMT) 25.9525 $0.47 $48.79
Intel Corporation (NASDAQ:INTC) 79.9235 $0.225 $71.93
Aflac (NYSE:AFL) 38.1096 $0.37 $56.40
PepsiCo, Inc. (NYSE:PEP) 24.4584 $0.5675 $55.52
American Water Works (NYSE:AWK) 52.3012 $0.28 $58.57
General Electric (NYSE:GE) 88.4934 $0.22 $77.87
Main Street Capital (NYSE:MAIN) 68.3806 $0.16 $135.39
Realty Income Corp (NYSE:O) 42.7319 $0.1822 $93.41

Main Street Capital currently has declared semi-annual bonus payments of $0.25 per share amounting to additional dividend payments totaling $34.19. Since these are bonus payments are not guaranteed I will factor them into the annualized portfolio dividend total but not into the annualized total for MAIN.

The dividends of these holdings result in a total annualized dividend for this portfolio of:

Annualized Portfolio Dividend Total: $1490.59 + $34.19 = $1524.78

Portfolio Buys/Sells:

Here are the Q4 transactions that affected the holdings of this portfolio. All of the rules governing the way purchases are made and how much of each stock is purchased can be found in my original article here with a few fundamental rule changes that I decided to make during Q2 mainly dealing with the compounding of dividend payments for my monthly paying investments. For more information about those changes please refer to my Q2 update which I referenced at the top of this article.

  • Stock Buys
Stock Shares Bought Share Price
IBM 2.7036 $183.46
WMT 6.2535 $79.32
HSY 5.1640 $96.05
ADM 11.2367 $43.34
AFL 7.4726 $66.38
AWK 12.1094 $40.96
  • Stock Sales (No sales were made this quarter)

No sales were made during the fourth quarter however IBM has been placed on my watch list. If there revenue conditions to not improve in the coming quarters I may seek to replace them in my portfolio with another stock.

Portfolio Performance:

I deposited an additional $2755.98 into this portfolio during the second quarter raising my total current cost of this portfolio to $27,092.52 including current cash on hand. Performance metrics for this portfolio are displayed in the tables and graphs below.

Annualized Dividend Total


Portfolio Dividend Yield On Cost(YOC) 5.63%
Total Net Portfolio Gain $16,116.34
Total Portfolio Value $43,208.86

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

This graph represents the growth of my annualized dividend.

This graph represents my total portfolio value(blue) and my net gain in value above deposited funds(red) over time.

This graph represents my portfolio's Yield On Cost over time.

Portfolio Quarterly Summary:

As you can see from the statistics above Q4 was a great quarter for us. Our annualized dividend increased by 6.45% on a quarterly basis (primary goal); our net portfolio gain increased by 22.27% on a quarterly basis (secondary goal). Our Yield on Cost (YOC)(tertiary goal) did decrease this quarter by 4.41% due to the large deposits made during the quarter. I do expect this to rebound though in coming quarters and years as my portfolio grows faster and additional deposits become a smaller percentage of the overall portfolio value.

Future Portfolio Actions:

As I predicted our YOC did take a hit this last quarter due to the large deposits made into the account. I fully utilized all the cash deposited this quarter and will be making additional deposits in Q1 of 2014. These deposits will potentially hold down our YOC again this quarter. Now that I have raised all of my holdings to the same cost basis level ($2,000) I will now be adding additional stocks to my portfolio as I outlined in another article in Q4 which can be read here.

Market Headwinds:

I do think Q1 2014 stock price growth will slow when compared to 2013. The market has moved into a fair valued window and certain investments may be slightly overbought, which means localized corrections may occur during Q1. If corrections for these stocks go to far be prepared to pounce on value style investments. I think Q1 has the potential to offer some value buy points for current market leaders. Please let me know what you think Q1 holds for us in the comment section below.

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.