On the 25th of January this year, I started the future-proof portfolio for young investors to serve as an example of how young investors who are saving for their retirement can choose to distribute their funds. This means that the portfolio recently became 7 months old. Though it is the long term which matters, I like to review the performance of my portfolio every couple of months.
I am not focusing on dividend yield, but on future-proof companies and growth. Of course, this is a subjective exercise and as such, this portfolio will serve as an example of my interpretation of this.
The maximum drawdown of the portfolio has been about 8%. At the time of the last update, in the beginning of June, the portfolio recovered this loss partially but was still 1.67% in the red. Keep these numbers in mind and let us get straight to the current portfolio performance, including dividend payments:
|Name||Shares||Value in €||Dividend||Weight||Gain/Loss|
|Archer Daniels Midland (NYSE:ADM)||57||2,465.41||31.70||4.73%||25.06%|
|Armanino Foods of Distinction (OTCPK:AMNF)||488||1,175.65||18.45||2.26%||19.30%|
|Amsterdam Commodities (OTC:ACNFF)||40||802.00||44.00||1.54%||-15.57%|
|Union Pacific (NYSE:UNP)||18||2,333.95||22.01||4.48%||14.25%|
|Vestas Wind Systems (OTCPK:VWDRY)||35||2,107.51||43.36||4.04%||8.41%|
|Gilead Sciences (NASDAQ:GILD)||15||963.61||14.32||1.85%||-1.70%|
|Johnson & Johnson (NYSE:JNJ)||17||1,957.68||24.58||3.76%||0.87%|
|Novo Nordisk (NYSE:NVO)||43||1,828.65||45.32||3.51%||-6.43%|
|Consolidated Edison (NYSE:ED)||31||2,085.01||36.99||4.00%||5.91%|
|National Grid (NYSE:NGG)||109||981.60||37.28||1.88%||1.89%|
|Automatic Data Processing (NASDAQ:ADP)||20||2,466.22||22.03||4.73%||26.24%|
|Realty Income (NYSE:O)||46||2,329.58||59.28||4.47%||18.20%|
|W.P. Carey (NYSE:WPC)||19||1,087.32||32.24||2.09%||10.87%|
|Hannon Armstrong (NYSE:HASI)||56||1,014.95||30.69||1.95%||5.28%|
The last three months have been excellent! As we can see, the portfolio is now 6.25% in the green. Total dividend payments which we received amount to € 1,029. A couple of companies have been performing really well, especially Archer Daniels Midland and Automatic Data Processing. But most of the companies are showing decent gains, with a couple of exceptions. At the moment, our biggest bleeders are the two Dutch companies Accell and Amsterdam Commodities, German BASF and Chinese Tencent. Interestingly, these 'exotic' investments have dragged down the performance of my portfolio during the first seven months!
A couple of dividend increases
|Previous annual payout||New annual payout||Increase|
Wait, didn't Union Pacific just increase their dividend this year already? Yes, of course, but this is another raise! Since one year ago, the company increased their quarterly payout from $0.605 to $0.80, amounting to dividend increase of 32.2% over one year. To add, Medtronic and TSM also announced some very healthy dividend increases.
A note about exchange rates
This portfolio was started on the 25th of January 2018, when the EUR/USD exchange rate was about 1.24. Currently, this exchange rate is about 1.17. About 62% of our portfolio is invested in stocks which are traded in US dollars. This means that our performance would be 3.7 percentage points worse if the dollar would be our base currency. So for n US investor who would have this portfolio, the performance from its inception until now would be 6.25 - 3.7 = 2.55%, a whole lot lower than our beautiful 6.25%.
Exchange rates are something which this portfolio ignores. They will continue to fluctuate in the future, but as long as we invest in companies which have a good part of their income in different currencies, this will not matter much. The performance of these companies will be reflected in their share price. The only risk here is when we invest in companies which are mainly active in a specific part of the world. Smaller companies like Armanino Foods or Accell have their production facilities and sales in relatively specific parts of the world, and here exchange rates might have influence on the stock performance for me as a European investor. Even larger companies like Realty Income or Tencent which are still relatively focused on one part of the world might have this risk as well. But by creating a diversified portfolio an investor can make sure this risk is minimized.
A new position and addition to an existing one
I outlined my plan to invest € 3,000 in my portfolio every half year in the previous update. Since then, I bought shares of Singapore Telecommunications (OTCPK:SGAPY) for € 2,000. The other € 1,000 I invested in an existing position which is down but from which I expect a lot in the future: Tencent.
With these changes the future-proof portfolio for young investors currently looks like this:
|Name||Shares||Value in €||Weight|
|Archer Daniels Midland||57||2,465.41||4.47%|
|Armanino Foods of Distinction||488||1,175.65||2.13%|
|Vestas Wind Systems||35||2,107.51||3.82%|
|Johnson & Johnson||17||1,957.68||3.55%|
|Automatic Data Processing||20||2,466.22||4.48%|
I would like to end this update with a takeaway which is important for every investor who is investing for his or her retirement, and I cannot stress this enough: Though I provide an update of this portfolio every few months, I am focused on the long term. I am happy with the performance of the portfolio until now, but even the portfolio would have been down 25% I would not worry. In that case, I would be happy to add to my existing positions with a discount. Dividend payments have increased and most companies in which I have invested look to be doing very well. Investing for your retirement is not only about picking decent stocks, it is even more about persistence and sticking to your plan.
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 MENTIONED.
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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