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

Dividend Derek profile picture
Dividend Derek


  • $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

This article was written by

Dividend Derek profile picture
Derek is an individual investor seeking to navigate the investment world to provide a wealthy and stable retirement for his family. He aims to help fellow investors, notably younger investors, establish a plan to produce a growing income stream. Derek holds a Bachelor's degree in Computer Science with a minor in Economics from the University of Delaware and lives with his wife and two children.Derek created and operates customstockalerts.com. It's a suite of utilities for investors to stay on top of all their stocks. Pick a company you're interested in, pick an alert type (price, dividend yield, PE, etc.) and a value. You'll get a text or email (your choice) when your value hits. Also, get alerts for upcoming dividends, including increases (works for stocks and ETFs). Use it as a chance to buy and collect the dividend!Come check me out at customstockalerts.com!

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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (100)

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

May I ask why you don’t own Lowes?
HD is better!
Derek you sold amgen with a 60%+ return on investment. Have you considered the returns?
article is very long cutting some tables will be more digestible
Just curious, what's the portfolio dividend yield and what is the portfolio unrealized gain or loss percentage?
Dividend Derek profile picture
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 profile picture
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 profile picture
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 profile picture
$AAPL & $GBTC = Golden Goose
Dividend Derek profile picture
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 profile picture
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.
Dividend Derek profile picture
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.
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 profile picture
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.
Thanks for share your portfolio performance. You are smart. Keep up.
Dividend Derek profile picture
Thanks - too bad smarts don't guarantee performance!
ShullBit profile picture
Thanks for your work !
Dividend Derek profile picture
Sure thing, love your image.
Thank you everyone for the feedback. Much appreciated and all well said.
Dividend Derek profile picture
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 profile picture
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 profile picture
Sorry - abrupt resignation of accounting firm
Dividend Derek profile picture
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 profile picture
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 profile picture
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 profile picture
Thanks Gary
allday1234 profile picture
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

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.

Dividend Derek profile picture
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.
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.
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 profile picture
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 profile picture
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.
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.
"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 profile picture
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.
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 profile picture
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!
where can I read about someone's portfolio that started out with $30k to get a 6%+ return annually?
wsoyke profile picture
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 profile picture
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!


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