Retirement: A Future-Proof Portfolio For Young Investors - Dividend Increases And Watchlist

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Includes: ADM, ADP, BASFY, BG, CHL, DCMYY, DEO, DIS, DNNGY, ED, ESSYY, ETN, FSLR, GILD, GLW, HASI, INFY, JMHLY, JNJ, KNYJY, LNZNF, MDT, MMM, NGG, NVO, O, RHHBY, SVCBF, TCEHY, TSM, UNP, VTR, VWDRY, WPC
by: Giesbers Investment Strategy
Summary

Seems that I started the future-proof portfolio for young investors just before a market dip.

Measured in my home currency euro, the portfolio is currently down 8 percent.

On the bright side, there already were some nice dividend increases and, sadly, one small cut.

I will also share my watchlist.

On January 25th, I introduced my future-proof model portfolio for young investors in this article. Now I would like to discuss three things: how the portfolio is holding up, dividend increases and my watchlist.

Portfolio

This is the portfolio including weight of shares and the gain or loss until now:

Name Shares Value in € Weight Gain/Loss
Consumer
Unilever 43 1,899.74 4.13% -5.76%
Disney 22 1,818.47 3.95% -8.20%
Archer Daniels Midland 57 1,922.25 4.18% -3.73%
Diageo 69 1,929.69 4.19% -3.89%
Accell 42 911.40 1.98% -8.63%
Armanino Foods of Distinction 488 987.03 2.15% -1.39%
Amsterdam Commodities 40 946.00 2.06% -5.59%
Industrial
3M 10 1,817.82 3.95% -9.92%
BASF 21 1,804.53 3.92% -10.69%
Union Pacific 18 1,832.97 3.98% -11.11%
Kone 44 1,859.00 4.04% -7.73%
Eaton 29 1,878.16 4.08% -6.58%
Vestas Wind Systems 35 2,015.37 4.38% 1.58%
Healthcare
Medtronic 23 1,802.74 3.92% -8.61%
Roche 10 1,900.80 4.13% -4.53%
Gilead Sciences 15 956.91 2.08% -3.82%
Johnson & Johnson 17 1,751.94 3.81% -10.85%
Novo Nordisk 43 1,734.55 3.77% -13.39%
Utilities
Consolidated Edison 31 1,889.37 4.11% -5.70%
National Grid 109 932.62 2.03% -6.74%
Ørsted 21 970.82 2.11% -1.76%
Technology
Corning 72 1,670.61 3.63% -16.37%
TSM 54 1,777.48 3.86% -11.02%
Infosys 67 934.94 2.03% -7.27%
Automatic Data Processing 20 1,765.70 3.84% -10.42%
Tencent 20 836.77 1.82% -14.55%
REITs
Realty Income 46 1,784.27 3.88% -11.71%
Ventas 44 1,827.26 3.97% -8.74%
W.P. Carey 19 917.97 2.00% -9.10%
Hannon Armstrong 56 936.27 2.03% -5.73%
Total 46,013.45 100.00% -7.99%

The portfolio is currently down almost 8%, with some stocks even down double digits. Actually, Vestas (OTCPK:VWDRY) is the only company which has a positive result at the moment. This is not a good start! Compared to the S&P 500, which is down about 9% since the 25th of January, results look a bit less bad. Still I'm sure we can agree that, in hindsight, this date was not a good moment to launch a buy and hold portfolio!

But since this is a very long-term portfolio, I do not mind ups and downs. Market dips actually mean that I can buy more of the same shares for less money. While buying the dip has performed incredibly well the last couple of years (as illustrated by this meme from 2014), there is no guarantee whatsoever that this will continue to be the case.

Dividends

Realty Income went ex dividend on the 31st of January, but the portfolio did not receive any dividend payments yet. Things which are much more interesting are dividend increases of the companies in the portfolio. Here is a list of recent dividend in- or decreases of the companies in the portfolio (all values are in their local currencies):

Previous yearly dividend New yearly dividend Increase
Archer Daniels Midland 1.28 1.34 4.69%
Diageo 0.62 0.63 1.93%
3M 4.70 5.44 15.74%
Union Pacific 2.66 2.92 9.77%
Kone 1.55 1.65 6.45%
Vestas Wind Systems 9.71 9.23 -4.94%
Roche 8.20 8.30 1.22%
Gilead Sciences 2.08 2.28 9.62%
Novo Nordisk 7.60 7.85 3.29%
Consolidated Edison 2.76 2.86 3.62%
Ørsted 6.00 9.00 50.00%
Realty Income 2.56 2.63 2.82%

Archer Daniels Midland (ADM) announced a dividend increase of 4.69%, which is relatively low compared with previous increases of the last couple of years. This is somewhat understandable though when considering their merger plans with Bunge (BG).

Diageo (DEO) announced a dividend increase which is more in line with past increases. Note that Diageo usually has two dividend increases each year, because it doesn't pay out its dividend in equal parts.

3M (MMM) positively surprised me with the largest dividend increase since 2015. Very nice!

Union Pacific (UNP) increased its dividend for the second quarter in a row. For this steady company which usually only rises its dividend once a year, this is certainly a nice surprise!

Kone (OTCPK:KNYJY) had a relatively small dividend increase. This probably has to do with consolidation in its elevator business. Still I'll gladly take the 6.45% increase!

Vestas (OTCPK:VWDRY) decreased its dividend. Wait, is this going in the wrong direction? The company always pays out 25-30% of its yearly earnings in dividend, and because the profit of the company decreased in 2017, they understandably have to pay out a lower dividend to their shareholders. The company is solid though and I expect the dividend to recover during the next couple of years. This is also reflected by the stock market reactions after their results: Vestas is the only company in my portfolio of which the price did not decrease since the 25th of January.

Roche (OTCQX:RHHBY) had a very tiny dividend increase. With its focus on cancer treatments, this is another company of which I expect more growth in the further future than at the moment.

Gilead Sciences (GILD) increased its dividend by almost 10%. Though the company has had a tough time the last couple of years, it seems to be set for recovery.

Novo Nordisk (NVO) is the same story as Diageo: two yearly dividend payments which are of a different value, so it is very difficult to already calculate a yearly dividend increase.

Consolidated Edison (ED) increased its quarterly dividend by only 2.5 cents, which is still ok compared with its recent past. This is a very solid company which I do not expect to surprise on the dividend front. If this list is getting boring, that's a good sign. Boring and predictable dividend increases are no problem at all.

Ørsted (OTCPK:DNNGY) on the other hand announced a gigantic 50% dividend increase, which makes the company yield 2.6% currently. This huge increase is probably also impacted by the fact that the company is only publicly tradable since 2016, and this is their second dividend since then. I expect their next year's dividend increase to be much lower.

Realty Income (O) probably performed its highest yearly dividend increase in January. The company usually increases its dividend multiple times per year, which is easy for them to do since they pay a monthly dividend. The increase of January is usually the largest. In contrast to their share price developments which continue to go down, I am happy with this dividend increase.

On aggregate, I am very happy with almost all of the dividend increases of the portfolio. Only Vestas and Roche disappointed a bit. But this portfolio is less about yield and more about future perspective, so I should not put too much emphasis on dividend growth on the short term.

For the other companies, I am still waiting for a dividend increase in 2018. Note that I did not include dividend increases of the end of last year of companies like Ventas (VTR) and Disney (DIS), because the first payout of this increase already took place, and my portfolio started on the 25th of January.

Watchlist

I plan to add positions now and then in the future for this portfolio. For book-keeping purposes, it is probably best when I do this with received dividend, but I am not excluding the possibility of adding new capital if the situation asks for it. At the moment, I am looking to diversify my holdings some more, with more emphasis on Asian companies and maybe adding some firms in the sector of telecommunications.

Without further ado, here is my current watch list, in no particular order:

Stock Sector Country Currency Price Yearly dividend
Essity Consumer SE SEK 221.50 2.60%
First Solar Energy US USD 60.69 0.00%
Lenzing AG Industrial AT EUR 96.15 3.12%
China Mobile (ADR) Telecom CN USD 48.63 3.61%
Jardine Matheson Consumer SG USD 61.50 2.50%
NTT Docomo (ADR) Telecom JP USD 24.23 3.35%

Essity (OTCPK:ESSYY) is a leading health and hygiene company from Sweden, mostly known from brands like Tork, Leukoplast and Tena. I have been looking at initiating a position in this magnificent company since 5 years, when they were still a single company together with Svenska Cellulosa (OTCPK:SVCBF). The company has been expensive ever since.

First Solar (FSLR) is a promising solar company from the US which can benefit from the import tariff on solar cells. They went through some turmoil recently but seem to be back on track. Reason I did not take a position in them yet is that I find them relatively unpredictable.

Lenzing (OTCPK:LNZNF) is a supplier of fibers for the textile industry. The industry is somewhat dynamic and the future of the company depends on their successful transformation from a volume-oriented company to a specialized producer. You can read more about Lenzing here (paid content).

China Mobile (CHL) and NTT Docomo (DCM) are two Asian telecommunication companies from China and Japan. I currently have no exposure to telecommunication companies, and these two look relatively good, also compared to their western counterparts. They possess almost no debt, pay good dividends and have modest growth expectations for the future. China Mobile is the cheaper one of the two, but has the disadvantage that they have to stick to the policy of China, which can be somewhat unpredictable from a western perspective. Currently I am doing more research into both of these companies and their competitors, I am not going to initiate a position without doing more research.

Jardine Matheson (OTCPK:JMHLY) was recommended to me by multiple readers of my previous article about this portfolio. I did not know them before. Jardine Matheson is a huge Singapore-based conglomerate which is active in many different markets, making it an ideal long play on Asia. They do not seem to be too expensive at the moment, especially not when compared with US stocks.

I did not set any buy levels for these stocks, and I'm currently investigating in which ones (if any) I want to initiate a position for which price. If you have any advice about this, it is very welcome! I will keep you informed about the progress of this portfolio in my next articles.

Thank you for reading! If you have any ideas about my model portfolio or my watchlist, please let me know in the comment section below!

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Disclosure: I am/we are long ALL STOCKS LISTED IN MY PORTFOLIO. 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.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.