My Dividend Growth Portfolio - 42 Holdings, 5 Buys, 4 Sells

Summary

• $574 in dividends were gained during the month, a 92% increase over last year.
• I've removed my Gilead, Amgen, Wells Fargo and J.M. Smucker holdings.
• I've reinvested that money across existing passive ideas and individual holdings.

February was another busy month both for the broad market and for me as well. I've continued to transition my portfolio to having lesser individual holdings and having more of my portfolio be dividend ETF concentrated. This was my stretch goal for this year, in fact I wasn't even sure I wanted to move in this direction. For me, I've come around to the idea that I want to be more passively invested.

The reasons are numerous but the recent bet by Warren Buffett and discussed at length in his annual letter solidified for me this concept. I still love having individual holdings, don't get me wrong, but I want to be able to focus more on fewer names and letting some of the existing ETF products help drive a larger share of the ship.

It's always worth remembering that there are opportunity costs associated with any investment. Any dollar invested in "Company A" takes away a potential dollar in everything else. I don't have time for average. I have two young boys and plenty going on in my life. I can easily buy the "average" with a variety of low cost and passive ETFs that also fit my investing profile.

I'll cover in more detail my moves later in the article.

For anyone interested in seeing changes in real time, I have my portfolio and dividends tracked on Dividend Derek. I also have a trimmed version that you can freely take for yourself if you wish, found here.

I've received some questions in the past so you can save off a copy by selecting "File" -> "Make A Copy".

2018 Goals

Having had a chance to see and review my goals over the course of the year, I have a new set of goals for 2017.

1. I want my holdings to have a weighted 1 year dividend growth rate of at least 7%.
2. By the end of 2018, I want to have a projected dividend income of at least $7,725.
3. I want to suffer no dividend cuts.

Notes About My Goals

This year I'm a little more aggressive with my desire for good increases. I'm targeting an overall average of 7% (up from 5%). After analyzing my performance I believe I need to demand more from my holdings. My portfolio should be able to deliver consistently strong performance with how long I have until retirement. Additionally as I previously mentioned, I believe the new tax plan will have the incentive of driving more money back to shareholders.

After February the average is over 9% thanks for solid raises from Cisco, Corning, T. Rowe Price and Prudential during the month. This still includes the 0% expected from CVS.

For my income goal, here's how I roughly calculated it

Starting Income	$6,800
7% Organic Dividend Growth	$250
Maxing 401k @ 3%	$555
Employer Match	$120
End of 2017 Income	$7,725

Click to enlarge

I started by rounding my starting income to $6,800. From there I added 7% average organic dividend growth.

Next is the money coming from maxing my 401k contributions. The cap was raised for 2018 so I can contribute a maximum of $18,500. I am also assuming that the money buys an average of a current 3% yield.

From there I add in dividends purchased with employer match money. Sum all that up and brings me to my goal of $7,725.

Lastly, I really don't want to see a dividend cut. The goal sounds rather obvious but there is a lot of legwork that goes into making that come true. As I've found out the past two years, it's not as simple as it may look.

Portfolio Strategy

Buying Criteria

These are the general guidelines I will review to see if something is worthy of adding to my portfolio or whether I will add to an existing position.

• Being a member of David Fish's Dividend Champion, Challenger and Contender list - obviously a longer streak is preferred.
• I prefer companies with a Chowder rule over 8%, obviously higher is better. Telecoms, REITs and utilities can get a pass due to their higher initial starting yield.
• No one individual holding should be weighted >7% of the portfolio's total cost or weighted >7% of the portfolio's total dividend income. ETFs are excluded from this. As an example, AT&T is over 6% of my income so I'm tapped out for a while here.
• Investment grade holdings >BBB+ should generate 95% of the portfolio's dividend income. This is currently at 87.25% due to the combined weight of REIT holdings that tend to lack the superior credit rating due to their nature.
• I want to see steady earnings growth over time; this will generally remove commodity-based companies.
• I like cash cows. Good profit margins (> 10%) are appreciated, though not required, if the company has a wide moat due to its business.
• I like to see shareholder-friendly management, a healthy and rising dividend and willingness to buy back shares, though in practice, the buybacks aren't always done at opportune times. A good metric to look into is the "total shareholder yield". This aggregates net dividends, buybacks and debt reduction.
• Though a small part of my portfolio, I do have some non-dividend-paying stocks like Facebook (FB), Google (GOOG) (GOOGL) and Amazon (AMZN). These are the long tail ideas that may continue to generate significant alpha over time. I want to focus on some of these ideas more so than I am right now, these may become the great dividend ideas of the future.
• Perhaps most importantly, the valuation needs to be right per F.A.S.T. Graphs. The stock should be trading at fair value or better for an appropriate timeline (12+ years if possible). With a longer time frame I can see how shares fared during the Great Recession, and this also removes some of the recency bias that can come from only analyzing valuation during this extended bull market.
• I will also use Simply Safe Dividends and the information provided by Brian on his site. Among a plethora of information available, he has a dividend scorecard where companies are ranked in terms of dividend safety, growth and yield. I aim to pick companies that are in the 80+ safety range, though not always.
  

Selling Criteria

There are only a few reasons I'll sell a stock, though any of these events is not a guarantee I'll do so.

• Dividend cut.
• Company degradation - This could be things like deteriorating balance sheets, loss of competitive advantage, loss of credit ratings. These factors would come to light before a dividend cut manifests. This may also appear in a streak of less than expected dividend increases. The dividend increase is the more visible outward sign of a company's success. A paltry increase or two may underscore problems below the surface.
• Wild overvaluation - This becomes a bigger factor if there is something at a fair valuation that I wish to purchase with the proceeds. I will admit that several things I have sold have continued to defy financial gravity so I am more becoming of the mind of just ignoring overvaluation if the underlying business continues to operate well.
• I just don't want to own it. When I pull this card I will more fully explain my reasoning. Part of the beauty of owning individual companies is choosing where I put my money. I can opt to not support companies, products, management, etc. that I do not agree with. An example of this could be Wells Fargo (WFC) that has management issues and illegal/unethical business practices.
• Based on expectations the money is better passively invested or focused into better ideas.

Timing

One tactic I've been using lately when adding to an existing holding is buying additional shares prior to the ex-dividend date after the company has announced its yearly increase. The increase amount gives a quick "at a glance" look into how management things the company is operating. This can be confirmation that the investment thesis is indeed working well. Sometimes the converse can be true too, being snubbed with a "bad raise" can be a red flag that things are not as they seem and it's time to research what's up. I've done this a few times already with MO, SBUX, GLW, PRU and very soon to be HD.

Most importantly, this was not done to chase dividends but to strategically add to a position that was worthy of being added to. Trees don't grow to the sky and neither do dividend yields. A quality company that has a nice dividend increase should see their stock price rise by a similar amount over the course of the year, readjusting to the new and higher dividend amount. By jumping the gun, you can speed up the compounding process.

If this sounds interesting to you, you should check out my weekly article as I give the full list of these companies. I also have upcoming ex-dividend functionality on my site Custom Stock Alerts to help me keep tabs on these increases.

Dividend Increases

• Corning (NYSE:GLW) declares $0.18/share quarterly dividend, 16.1% increase from prior dividend of $0.155.
• Prudential Financial (NYSE:PRU) had declared $0.90/share quarterly dividend, 20% increase from prior dividend of $0.75.
• Omega Healthcare Investors (NYSE:OHI) declares $0.66/share quarterly dividend, 1.5% increase from prior dividend of $0.65.
• Cisco Systems (CSCO) declares $0.33/share quarterly dividend, 13.7% increase from prior dividend of $0.29.
• T. Rowe Price (NASDAQ:TROW) declares $0.70/share quarterly dividend, 22.8% increase from prior dividend of $0.57.
• Home Depot (NYSE:HD) declares $1.03/share quarterly dividend, 15.7% increase from prior dividend of $0.89.

Dividend Cuts

None!

The Portfolio

Name	Ticker	DRIP Basis	Sector	CCC Status	S&P Credit Rating
Apple	AAPL	$110.66	Technology	Challenger	AA+
Abbott Laboratories	ABT	$37.47	Healthcare	Challenger	A+
Aflac	AFL	$59.50	Financials	Champion	A-
Amerprise Financial	AMP	$94.52	Financials	Challenger	A
Amazon	AMZN	$658.58	Technology		AA-
Anthem	ANTM	$131.33	Healthcare	Challenger	A
Berkshire Hathaway	BRK.B	$129.45	Financials		AA
Cummins	CMI	$93.86	Industrials	Contender	A+
Cisco Systems	CSCO	$26.12	Technology	Challenger	AA-
CVS Health	CVS	$79.34	Healthcare	Contender	BBB+
Diageo PLC	DEO	$97.87	Consumer Discretionary	Challenger	A-
Walt Disney	DIS	$96.44	Consumer Discretionary	Challenger	A
Duke Energy Corp	DUK	$63.09	Utilities	Contender	A-
Facebook	FB	$110.92	Technology
Corning	GLW	$22.92	Technology	Contender	BBB+
Google (Alphabet)	GOOG	$698.78	Technology		AA+
Home Depot	HD	$131.10	Consumer Discretionary	Challenger	A
Johnson & Johnson	JNJ	$116.29	Healthcare	Champion	AAA
JPMorgan Chase	JPM	$61.98	Financials	Challenger	A-
Medtronic	MDT	$72.41	Healthcare	Champion	A
Altria	MO	$40.95	Consumer Staples	Champion	BBB+
Nike	NKE	$55.20	Consumer Discretionary	Contender	AA-
Realty Income	O	$54.12	REIT	Contender	BBB+
Omega Healthcare Investors	OHI	$28.17	REIT	Contender	BBB-
Prudential Financial	PRU	$90.84	Financials	Challenger	A
Public Storage	PSA	$205.12	REIT	Challenger	A
Starbucks	SBUX	$56.19	Consumer Discretionary	Challenger	A-
Schwab US Dividend Equity	SCHD	$37.04	ETF
Tanger Factory Outlets	SKT	$26.43	REIT	Contender	BBB+
S&P 500 High Div Low Volatility	SPHD	$39.65	ETF
STAG Industrial	STAG	$23.75	REIT	Challenger	N/R
Stanley Black & Decker	SWK	$89.15	Industrials	Champion	A
AT&T	T	$34.10	Telecommunications	Champion	BBB+
T. Rowe Price	TROW	$64.63	Financials	Champion	A+
Travelers Companies	TRV	$89.13	Financials	Contender	A
Under Armour	UA	$32.82	Consumer Discretionary		BB+
United Technologies Corporation	UTX	$84.72	Industrials	Contender	A-
V.F. Corp	VFC	$50.94	Consumer Staples	Champion	A
Ventas Inc.	VTR	$54.30	REIT	Challenger	BBB+
Verizon	VZ	$46.20	Telecommunications	Contender	BBB+
W.P. Carey	WPC	$60.24	REIT	Contender	BBB
Williams-Sonoma	WSM	$44.88	Consumer Discretionary	Contender	NR

Click to enlarge

I simplified the reporting reporting this month so it's easier to digest the moving pieces.

Here are the column definitions for the ones that may not be evident:

• DRIP Basis: "Cost" / Shares Total
• CCC Status: The classification from From David Fish's "CCC" list

I'm down to 42 positions with closing out four positions during February.

Buys

Corning (GLW)

I wrote about Corning in a recent article so it should come as no surprise that I added to my position. I love science companies, I love companies that have a healthy mix of growing the business and rewarding shareholders.

At a glance, the company scores great across the different metrics from Simply Safe Dividends. Safe dividend, rapidly growing dividend (thanks Corning for the 16% increase) with an above average yield.

On top of that, the company has a large capital return program in place. From the linked article:

As we shared, the strategy and capital allocation framework outlines our leadership priorities. We continue to focus our portfolio and utilize our financial strength to extend our leadership, drive our growth and reward our shareholders. Under the Framework, we target generating $26 billion to $30 billion in cash through 2019. We plan to return more than $12.5 billion to our shareholders through repurchases and dividends, and we invest $10 billion to extend our leadership and deliver growth across all of our market access platforms. We made great progress towards those goals since we announce the Framework in October of 2015.

Our cash generation is on target, and through the end of 2017, we return $9 billion through share repurchases and dividends. We've invested $4.5 billion under the Framework in RD&E capital expenditures and acquisitions. We're starting to see the returns already. As you can see in our most recent results 4-year sales increased 8%, EPS increased 11% and we expect these returns to accelerate. We believe that these results illustrate to benefits of our framework. We are best in the world in three, core technologies, four manufacturing and engineering platforms, and five market access platforms.

The emphasis is mine but the company is getting the job done, returning capital while still heavily investing in the business. Most importantly, both the top and bottom line are expected to grow at a high single / low double digit clip.

Schwab US Dividend Equity ETF (SCHD)

The SCHD ETF has been my favorite dividend ETF for a few years now as a combination of its low cost and use of fundamental metrics as a filtering process to build the index. I'm planning a follow-up article covering SCHD but at a high level these companies in the index have a 10+ years of dividend increases and meet certain yield and quality metrics. Adding here also gets me closer to a more streamlined portfolio.

S&P 500 High Dividend Low Volatility ETF (SPHD)

This is the yin to my SCHD yang. SPHD takes a different approach by (true to its name) takes the highest yield stocks in the S&P that have the lowest volatility to create a portfolio. By its selection nature this will tilt more to the utilities and real estate sectors which are underweight and absent from SCHD respectively.

This fund may lag in a rising interest rate environment but that has not been demonstrably proven yet. In any event, right now my SPHD:SCHD ratio is approximately 1:3.

Starbucks (SBUX)

In my opinion Starbucks is another long tail dividend idea similar to Apple. Dividend initiators have a history of outperformance and I believe a strong consumer brand like Starbucks will continue to be a perennial market beater. While the latest quarter may have disappointed some investors, China remains a large growth opportunity for the company and management continues to reward shareholders with large dividend increases and buybacks.

Another point to make is that companies like Apple and Starbucks won't make SCHD until they have 10 years of dividend growth under the belts and with their low yields probably won't ever make SPHD.

Prudential (PRU)

Prudential has been an under the radar type of stock. I first purchased it when it carried a PE of 7 and a yield over 4%. It's been one of my best performing stocks and management recently have rewarded shareholders with another 20% dividend increase. I decided to use the upcoming opportunity to add prior to the ex-dividend date to capture that.

Sales

Gilead (GILD) and Amgen (AMGN)

I'm going to cover selling these two as one item. After reading over the latest earnings transcripts, slides and article commentary here on SA I've come around to the fact that I don't truly understand the biotech companies. As I mentioned with Corning, I love science, I love life bettering or saving drugs but I don't feel that I have any kind of advantage as an individual investor with regards to the biotech industry.

In fact, both companies just had nice dividend increases but neither is expecting much growth this year. It would be more prudent in my mind to take the average provided by a diverse and quality filled dividend ETF. I don't have the ability to "read the tea leaves" on where a particular biotech company is heading.

Wells Fargo (WFC)

Well, this one was bound to happen, I actually use it as an example as one of my sell criteria. So after all the various account scandals, the last shoe to drop was the "mic drop" by Janet Yellen. Wells Fargo's asset base will be capped until a slew of changes are made. While those changes should ultimately help, I see below average returns for the forseeable future. I'll hold it vicariously through Uncle Warren.

J.M. Smucker (SJM)

Lastly, I sold my shares of J.M. Smucker. I waited until earnings and the clarification that would bring. Unfortunately, I didn't like said clarity. Results continue to be weak, top line growth is virtually non-existent. The company is in desperate need of a hit. They upped their expected EPS for the full year due to the tax plan, but so has everyone else.

I don't see the catalyst here to drive the stock higher. With full hindsight bias, the mistake I made was buying at about $120 and not $100. I think it the roughly $120 I paid was a fair price though not a great price.

Charts and Graphs

DividendsThe $574 was 92% improvement over February 2017. Not shown here but it was an 11% improvement in quarter over quarter performance vs November 2017.

Growth

With my forward looking projected dividend income, the $6913 currently expected is 32% higher year over year. With all the moves I made during the month I still increased the expected amount by about 1%.

With about $9,500 in cash currently and most of a full year of 401k contributions yet to come, I've got a lot of firepower at my disposal.

Visualizations

Income by SectorI receive 1/4 of my income from REITs with the rest of the sectors having a fair allocation. I myself am a little confused as to which way REITs will go, I've now seen stories and market moves both for and against REITs based on rising rates.

Sector AllocationsI'm still targeting some more industrial exposure, I'd like to add to my UTX and SWK positions. Perhaps the market will temper tantrum some over the new tariffs being imposed and give me an opportunity at a reasonable valuation.

Champion, Contender, Challenger ViewThis graph shifted a little and with the removal of Gilead now all of my dividend paying companies have at least a 5 year history!

Dividends By MonthThis has been my performance since I started keeping tabs, I'm quite happy with how those bars are growing!

Conclusion

I had another strong performing month with another record setting amount of dividends collected. The proof is in the pudding as they say and I have a stable of companies that wishes to pay me more and more every year.

Last month I concluded that the market had just recently been falling and lo and behold, history repeating itself. I built and run Custom Stock Alerts and hope to have some of my stock alerts triggered. Stop by and get email or text alerts on your stocks.

Let me know what you think, do you agree or disagree with adding more ETF exposure to focus on fewer names? I know ETF can be a 4-letter word so let me know your thoughts!

Analyst’s Disclosure: I am/we are long AAPL, ABT, AFL, AMP, AMZN, ANTM, BRK.B, CMI, CSCO, CVS, DEO, DIS, DUK, FB, GLW, GOOG, HD, JNJ, JPM, MDT, MO, NKE, O, OHI, PRU, PSA, SBUX, SCHD, SKT, SPHD, STAG, SWK, T, TROW, TRV, UA, UTX, VFC, VTR, VZ, WPC, WSM. 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.

Comments

[MnMInvestor]

Thanks for the article Derek - I stole your ideas and added GLW and PRU as well. Did some portfolio pruning / resizing this month. All the best.

[Zoe123]

Can anyone share their thoughts or guidance on PG and CPB to add for their DGI portfolio? From what I've been reading on SA thus far I've haven't seen many speak if those two possibilities.

[scottrg123]

First time I have read your posting, I will be following it going forward.

May I ask why you don’t own Lowes?

[jravens1313]

HD is better!

[Nick Kearney]

Derek you sold amgen with a 60%+ return on investment. Have you considered the returns?

[sawardekar]

article is very long cutting some tables will be more digestible

[14167772]

Just curious, what's the portfolio dividend yield and what is the portfolio unrealized gain or loss percentage?

[Dividend Derek]

So my yield on cost right is 3.37% which includes all of the money in companies that don't pay dividends also. That wouldn't be the yield if this basket were bought today.

So based on what I put in vs current value today its up 25%. Now that also is from buying shares at various times over the past 2 years and not snapshotting the portfolio on Jan 1 and then comparing that to the S&P. So for example all of the stuff I just bought this past month is hurting any kind of return calculation.

[thomasf55]

Thanks for the write-up, Derek.

And thanks for including the "just don't want it" criterion. I tell my son, just because you're investing doesn't mean you can't make a non-monetary value judgment. Granted, no company is perfect. But for some there comes a point when I say "I don't want to make my money that way." With respect to WFC, a) I felt they crossed a line and I didn't want to join them and b) I figured they would have to pay in a way that would affect their future growth. So I sold them.

Share your view on PRU. Their payout ratio is quite low, portending more dividend growth in the future. Bought shortly before the announcement.

[Dividend Derek]

Exactly, this is one of the key reasons in my mind for buying individual shares. You can vote with your investing dollars and say no, I don't care how you operate and want no part of it.

Right - regarding PRU the numbers are all looking right and it seems to be a fairly boring / undercovered company. As long as the bonds they are investing in don't suffer the same fate as they did in '08 we should fare much better!

[@djrt]

$AAPL & $GBTC = Golden Goose

[Dividend Derek]

I'm still not entirely sure what to make of crypto but as a techie I couldn't resist not building a crypto miner.

[SaltDaddy]

Good update on your portfolio. I was looking at your projected growth and I think your missing a component? You mave have mentioned it and maybe I just missed it, but are you taking your dividends in cash and selectively reinvesting or dripping? Where does that number show up in your projected income? I'm guessing you would use the 3% average yield for that as you would our new capital allocations? Also, it seems the $250 value for average organic growth is low for 7%...how are you calculating that?

I'm not too far ahead of you with a very similar strategy, allthough no ETFs, so your journey is rather interesting for comparison sake. Thanks for sharing.
-Jeff

[Dividend Derek]

So dividends are reinvested and you are absolutely right that the drip component is missing. The challenge of that piece is that it gets into projecting what the yield may be at the time of a dividend payment in the future. I'm OK with it being a bit imprecise but knowing that the amount I am projecting could be a little under reality.

I'm also dependent on the other components of my projections like being able to invest all new 401k money at 3% or better. Well that may be tough to do, I may add some GOOG shares or maybe more SBUX (like I have) that yield under 3%.

Regarding the organic amount, yes that actually does appear wrong good catch.

[socalifjimmy]

Hey Derek, I enjoy your letters and actually model my own portfolio the same way minus the etf’s. Have you compared your actual individual stock returns as a whole compared to the Schwab etf? Jim

[Dividend Derek]

I did yeah, so during my yearly review I compared (in aggregate) my portfolio versus the ETFs. The ETFs of course would mess it up slightly but at the time it was only 10-15% of my total portfolio. In fact I need a better model for long term performance. Comparing a stock I've maybe owned for 6 months or less is not fair to compare against any kind of full year benchmark. I can try and see if I can make it a more elaborate calculation for positions over 1 year.

[Kenyatta]

Thanks for share your portfolio performance. You are smart. Keep up.

[Dividend Derek]

Thanks - too bad smarts don't guarantee performance!

[ShullBit]

Thanks for your work !

[Dividend Derek]

Sure thing, love your image.

[Zoe123]

Thank you everyone for the feedback. Much appreciated and all well said.

[Dividend Derek]

Hope you got some info to get started and don't hesitate to reach out and ask questions, this is why we are all on this great community!

[TJ Burke]

My reasons to sell are in line with yours except I have one more- it’s immediate and event driven - “accounting irregularities”. Included often with this would be an abrupt of their accounting firm and/or CFO, CEO, etc

[TJ Burke]

Sorry - abrupt resignation of accounting firm

[Dividend Derek]

Yes that would be one as well, I don't have GE shares but their needing to restate years of earnings would not sit well with me.

[kas23]

DD, well, at least they are restating them at all! One of the biggest criticisms with GE was their murky accounting practices. They’ve acknowledged this and are in the (long) process of rectifying this situation. I don’t care how they do their accounting, but make it consistent and transparent.

[Gary Jakacky]

The dividends are fallin' like dominoes! Sorry Derek...had to say that. Great article. Between the article and the many comments it explains why I read seeking alpha.

[Dividend Derek]

Thanks Gary

[allday1234]

zoe123
Success in the markets requires a lot of work on your part. There is no cookie cutter formula and that success is fueled by many obstacles such as market corrections and at time's following the advice of the many who feel that only they know how to invest. It is not an overnight instant experience as a rule. I am running with about 55 different positions all which produce dividends as early on I believed that was the best course for me. I have no ETF's, I have 13 CEF's, and most recently started investing in Preferred stocks to increase my income percentage to a higher level as most will give you a 7 to 10% yield. That being said if you know nothing about preferred investing you should educate yourself first. There is a site Maybe more than one that list the preferred
http://bit.ly/2t9QZMO

It is the one I use, I also use my CFP as a sounding board to answer questions that I am hazy on.
Your best bet is to have a PLAN, and to follow it , WRITTEN IS BETTER! When obstacles occur and they will, look as to how to correct them and make corrections to your plan.
My plan works for me my dividend income is currently projected for 2018 to be 90K+, it however is not for everyone, only you can make that choice.

Allday

[Dividend Derek]

Great advice and I was going to take a peek at some preferreds. I do have preferreds on my site and have a few alerts setup for example some of the PSA shares.

[brett-h]

Getting rid of AMGN may not be a goody decision. I would be adding to it. Look at Friday’s chart, it’s getting ready to go way higher in stock price, the divi is a bonus.

[hammer101]

I agree Brett Big fan of AMGN.....mix of growth and yield.....definitely a long term hold.......nice dividend growth and low payout ratio. This is not a biotech newbie so don't understand the authors sale

[Dividend Derek]

Not much for charts I prefer the fundamentals but that said revenue seems to be capped for some time. I also don't feel that I personally understand the industry enough to warrant specifically holding shares. I feel like I'm flying blind somewhat and reliant on other analysis rather than deducing my own.

[kas23]

DD, Biotechs can be intimidating considering you need an advanced degree to truly understand what they are doing (and knowing prices don’t follow traditional fundamentals). However, it’s hard to go wrong owning the big ones; Amgen, Celgene, Gilead, etc. They almost act as mutual funds (like BRK) considering most their growth comes from individual products/acquisitions. Another way is to buy IBB or my personal favorite FBT.

[jravens1313]

Dividend growth strategy is a solid one in the long run. I can't stomach the underperformance though. I prefer the FANG's and high growth tech over the 3-5% per year. Been at this since 2000 and the monster downturn "safety" doesn't compare to the gains in many of the co's I have owned. Maybe I get burned in a few years, but I promise I will be back even stronger.

[Lobeta]

"Dividend growth strategy is a solid one in the long run. I can't stomach the underperformance though."

Underperformance relative to what? Exceeding the total return of the S&P 500 has been very do-able with a dividend growth portfolio.

[Dividend Derek]

I think that's where I am, I've been pivoting towards a hybrid model. DGI often comes off as a rigid, you must do this, sort of mentality. But the underperformance also has several factors and quite a few of my DGI companies have done extraordinarily well, MO just announced a mid-year dividend increase.

[cdcarver]

Don't get hung up on dollar value, A good buy in a $1,000,000 portfolio is a good buy in a $30,000 portfolio. I assume from you commenting here you are thinking of following a DGI model. Getting started isn't easy, but I assure you that you will figure it out, A lot of good info around this site and others. Just remember- don't follow any blind advise, always do your own research.

[Dividend Derek]

Absolutely agree with that sentiment which is why I wanted to point out that I started with nothing 10 years ago. This is in a retirement account and I had just started working in the summer of '07, fun times!

[Zoe123]

where can I read about someone's portfolio that started out with $30k to get a 6%+ return annually?

[wsoyke]

zoe123
Great question.
Some suggestions. First think total return not just dividends. So MSFT, AAPL have dividends around 2% but share price increase will far exceed your goals and recent market pullback has both at good entry points. Dividends for MAIN and MO 7.9% and 4.23% dividend, also on sale with recent market pullback and expected big share price increase potential. All above are increasing dividends through solid cash flow growth. Bought at present prices I'd expect CAGR of 15 to 20% with dividends reinvested. $7500 invested in each is a good start. Perhaps future investment into tech mutual funds. No load low fees. Fidelity has a good research tool.

[Dividend Derek]

Honestly, S&P 500 index in fact I would advise you to read through Warren Buffett's annual letters. This year concluded the 10 year "bet" where a series of hedge funds could pick whatever they wanted and it was compared to a plain S&P 500 index. Guess which won? The plain boring, S&P - sometimes boring is best!

http://bit.ly/2FQ6snS

In fact this is part of my rationale for swinging back towards indexing a decent portion of my portfolio.