My Income Portfolio Quarterly Update (Q4 2016)

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Includes: ABBV, ADM, AFL, AMLP, AWK, CSCO, CVX, DE, DRI, DWDP, FCPT, FLO, GE, HSY, HYD, INTC, JNJ, KLAC, LTC, MAIN, MMM, NSC, O, PEP, PGX, SO, WFC, WM, WMT, WY
by: Invest Yourself

Summary

This article series on my portfolio is designed to prove that income investing is not just for people near retirement age.

Dividend growth investing is the most reliable way to generate recurring income over time.

Dividend investing is a long-term goal centered on the principal of supplementing/replacing current income.

Introduction:

For those of you who have never read any of my articles before, this is my Q4 update for a continuing article series that I started in 2013. I decided to share my personal income portfolio investments with my readers as part of a quarterly article series. These articles, along with periodic action articles cataloging changes in my investment portfolio or investment swaps, are intended to show you that when properly monitored, an income portfolio can offer you reliable returns with minimized risk when starting at a young age. You can view my Q4 article from a year ago here and my previous Q3 update for 2016 here. For more quarterly information, please check out my other articles. These articles will show you on a quarter by quarter and year-over-year basis how I am managing my income-seeking portfolio and what my current level of success is. I intend to demonstrate that, when executed correctly, an income strategy is the ideal approach for young investors and is not just for near retirement age individuals.

Portfolio Activity Summary:

Q4 was a very interesting quarter with ups and downs. The US presidential election had many people adjusting their holdings and positions based upon who was predicted to win. Donald Trump's victory definitely threw a large curve ball based upon the fact that almost everyone predicted a Hillary Clinton victory. While this affected a lot of people's portfolios my portfolio just keeps plugging along like it always does. This quarter I began purchases in 4 new positions that will bring my holding count to 30 investments. I began positions in FLO, ABBV, KLAC, and MMM. I also had one stop loss order execute this quarter as well as closure of a short term natural gas investment. Profits from all of these investment gains were rolled back into the portfolio.

Portfolio Holdings/Dividends:

My portfolio holdings for the end of Q3 2016 are as follows:

Symbol

Name

Held Shares

Dividend (Per-Share)

Annualized Dividend

(NYSE:MAIN)

Main Street Capital

90.7375

0.185

$201.44

(NYSE:AFL)

Aflac

34.1135

0.43

$58.68

(NYSE:HSY)

The Hershey Company

22.8296

0.618

$56.43

(NYSE:WM)

Waste Management, Inc.

45.5440

0.425

$77.42

(NYSEARCA:PGX)

PowerShares Preferred

185.5671

0.073

$162.00

(NYSE:LTC)

LTC Properties Incorporated

67.8177

0.19

$154.62

(NYSE:WFC)

Wells Fargo & Company

49.2164

0.380

$74.81

(NYSE:SO)

Southern Company

56.1664

0.56

$125.81

(NYSE: DOW)

Dow Chemical

48.0306

0.46

$88.38

(NYSE:DRI)

Darden Restaurants, Inc.

33.4610

0.56

$74.95

(NYSE: FCPT)

Four Corners Property Trust

123.7622

0.243

$120.05

(NYSE:CVX)

Chevron Corporation

24.3504

1.07

$104.22

(NYSE:ADM)

Archer Daniels Midland Company

60.9081

0.3

$73.09

(NYSE:JNJ)

Johnson & Johnson

20.6053

0.80

$65.94

(NYSE:WMT)

Wal-Mart Stores Inc.

32.7575

0.50

$65.52

(NASDAQ:INTC)

Intel Corporation

76.9925

0.26

$80.07

(NYSE:PEP)

PepsiCo, Inc.

29.1198

0.7525

$87.65

(NYSE:AWK)

American Water Works

36.8747

0.375

$55.31

(NYSE:GE)

General Electric

80.3713

0.23

$73.94

(NYSE:O)

Realty Income Corp.

40.4407

0.202

$98.03

(NASDAQ:CSCO)

Cisco

91.4934

0.26

$95.15

(NYSEARCA:HYD)

Market Vectors ETF HG YLD MUNI

86.4991

0.130

$134.42

(NYSEARCA:AMLP)

Alerian MLP ETF

197.9941

0.24

$190.07

(NYSE:NSC)

Norfolk Southern

25.7162

0.59

$60.69

(NYSE:DE)

Deere Inc.

28.798

0.6

$69.12

(NYSE:WY)

Weyerhaeuser

78.4606

0.31

$97.29

(NYSE:MMM)

3M Co.

2.7811

1.11

$12.35

(NASDAQ:KLAC)

KLA-Tencor Inc.

12.5829

0.520

$26.17

(NYSE:FLO)

Flower Foods Inc.

57.8008

0.16

$36.99

(NYSE:ABBV)

AbbVie Inc.

16.7886

0.570

$38.28

Main Street Capital has currently declared semi-annual bonus payments of $0.275 per share, amounting to additional dividend payments totaling $49.91. Since these 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:

$2658.90 + $49.91 = $2708.80

My Q4 dividend payout value is 18.70% above my Q3 total last year and 6.81% above my Q3 total.

Portfolio Statistics:

Below are a couple images that outline the current relative value and trailing year's performance contributions. These informational images are compliments of the website simplywall.st.

Portfolio Diversification Breakdown:

I have included a picture of my portfolio diversification by industry breakdown to show my investment sector dispersion.

Portfolio Buys/Sells:

I continue to contribute capital towards this portfolio at my defined savings rate. I made 9 purchases during Q4, one of them was a re-buy of a sell trade executed during the quarter. This sell order is highlighted in the sell table below.

Stock Buys

Stock

Shares Bought

Share Price

KLAC

6.2308

$79.61

AMLP

30.9050

$12.72

DRI

33.4618

$74.59

ABBV

8.0025

$61.99

FLO

25.7314

$19.28

KLAC

6.3521

$78.09

MMM

2.7811

$178.36

ABBV

8.7861

$56.46

FLO

32.0694

$15.47

Stock Sales

Stock

Shares Sold

Share Price

DRI

41.9557

$74.65

Portfolio Goal Performance:

I deposited an additional $1,672.34 into this portfolio during the second quarter, raising my total current cost of this portfolio to $40,674.30, including current cash on hand. Performance goal values for this portfolio are displayed in the tables and graphs below.

Annualized Dividend Total

$2,708.80

Portfolio Dividend Yield On Cost (YOC)

6.66%

Total Net Portfolio Gain

$33,241.97

Total Portfolio Value

$73,916.27

There are three important metrics for this portfolio that I will track graphically over time: annualized dividends, yield on cost, and portfolio value/net gain. A picture is worth a thousand words, therefore, I created the graphs below based upon my prior data points that you can view in my previous quarterly articles on my author page here.

The above graph displays my portfolio's historical annualized dividend. This value is the primary metric for this account that we are interested in tracking. The purpose of this account is to generate residual annual income via dividends.

The above graph displays our total portfolio value and net value gains. Please remember net value of the account is not my primary concern. I am mainly focused on how much income I can generate from this account, but it is never a bad thing to see capital worth increase.

The above graph displays our portfolio YOC over time. You can see that continued contributions have a negative YOC impact. As the total cost of the portfolio increases over time, the negative effect this new money has will become less and less noticeable.

Year-End Goals:

I had set a year-end payout goal increase for 2016 of 17%, which would put my year-end 2016 goals at $2,670.06. I not only met, but exceeded those goals with a year-end payout of 2708.80 in annualized dividends. This makes my year over year dividend payout 18.7 percent higher than the previous year. I am once again setting a 17% increase goal for 2017 which would put my year-end 2017 goal at $3169.29

General Market Comments:

Q4 saw some interesting surprises with the U.S. presidential election taking a different route than most expected. This caused a lot of stock market rotation and initial exuberance that combined with the Christmas effect caused a very nice year-end rally. This left a lot of portfolios, mine included, much higher at the end of Q4 than at the beginning. Can this increased vigor keep the market climbing in Q1? This remains to be seen. I personally think that Q1 will be a rather flat quarter with a slight downside bias due to the new presidential administration. The next 4 years should be nothing if not entertaining. I have a feeling that many great buying opportunities will be afforded us over the next 4 years. Keep some of your powder dry and ready to react to market gyrations. Do not be afraid to take profits.

Disclosure: I am/we are long ABBV, ADM, AFL, AMLP, AWK, CSCO, CVX, DE, DOW, DRI, FCPT, FLO, GE, HSY, HYD, INTC, JNJ, KLAC, LTC, MAIN, MMM, NSC, O, PEP, PGX, SO, WFC, WM, WMT, WY.

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.

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