My 34 Holding Dividend Growth Portfolio Update

by: Dividend Derek

$465 of dividends were collected during the month and $6,421 YTD.

No portfolio changes were made during the month though I am patiently watching. I have $10,000 looking for a dividend home.

I'm looking forward to a stocking full of dividends this December to round out a great year.


Welcome to my monthly portfolio review covering all of the activity over the past month. This article series covers my investing journey as a father of two towards my eventual retirement. Any specific stocks or amounts are particular to my self-directed 401(K) plan.

The goal of my portfolio is to generate a growing income stream for me and my wife during our golden years. The aim is to live off dividends without touching the principal. Dividend growth stocks are the chosen vehicle to meet that goal. At 33, I have approximately 26 years before I can (safely) touch any of this money.

What's New?

After the calamity of October, November was a welcome relief though the ride was anything from smooth. Markets moved up to the election, down until Thanksgiving to then rally towards the end of the month. Even as I began preparing this piece, December has already started with a bang. Tariff delays were quickly met by markets rising during the morning on Monday to then giving up those gains. Tuesday was a slaughter with the Dow down nearly 800 points and the major indices finishing down over 3%.

Being a bottom up investor, I try to not pay too much attention to what "the market" is doing though it is entertaining to watch. I always try to keep in mind the story about "Mr. Market" and every day the prices he may shout out for each equity I own. A side perk of this time of year is just how busy each and every day is. I don't always have the ability to watch how my portfolio is doing and it doesn't really matter. In fact, this was part of the catalyst of why I built Custom Stock Alerts. The dividend payments received from my holdings also don't drop due to what the market is doing. The water underneath of a wave is surprisingly calm.

I highlighted that I maxed my 401k contributions for the year in October so the money I have is what I have until contributions begin again in January. If I don't add to any specific holding I will probably add to my Schwab US Dividend Equity ETF (SCHD).

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."

With that said, let's dive into the details.

2018 Goals

  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 $7,950.
  3. I want to suffer no dividend cuts.

Notes About My Goals

My dividend growth rate jumped up to 12.6% this month. The fat 32% increase from MasterCard (MA) balanced the 4.8% from Disney (DIS). Both moves seem appropriate; MasterCard (and by extension Visa) have been on fire for years with tremendous tailwinds in the payments space. Disney is in the middle of a major acquisition and needs to maintain cash and balance sheet quality as it digests the Fox assets.

My second goal will not be met this year. Leading up to July it was, but as it is written, will no longer be the case. By removing several dividend-paying stocks and either putting that money into lower-yielding companies or those with no dividend, my projected income has taken a hit. After peaking at $7,725 in July, it has declined to a current value of $6,359.

I've noted my rationale revolves around stronger earnings growth. I'm still working to strike the balance of current yield versus longer-term earnings growth given my time horizon. Given the right circumstances, I will still invest in a higher-yielding instrument. With the recent market pullback, many names that I already own have looked much more attractively valued.

Finally, and perhaps most obviously, I don't want to see a dividend cut. So far so good for the year. I've avoided the General Electric (GE), Anheuser-Busch InBev (BUD) and L Brands (LB) dividend cuts.

Portfolio Strategy

Buying Criteria

These are the general guidelines I will review to see if something is worthy of adding to my dividend 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.
  • Dividend yield + 5 year dividend growth rate > 8% (Chowder rule). Telecoms, REITs and utilities can get a pass due to their higher initial starting yield. Investments in these areas I want to have an additional "kicker," stocks near a 52-week low or some other way they may generate alpha over a short- to medium-term horizon. I want to highlight this as part of my thesis. The kicker may be better defined as a low-P/E stock that has not yet reverted to its mean.
  • Investment grade holdings >BBB+ should generate 95% of the portfolio's dividend income.
  • 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. A company with a moat should be analyzed to see how easily its moat can be disrupted.
  • I like to see shareholder-friendly management. This manifests in a healthy and rising dividend and a willingness to buy back shares. Often buybacks aren't always done at opportune times. Additionally, they are frequently established to just buy back stock options for employees. A good metric to look into is the "total shareholder yield." This aggregates net dividends, buybacks and debt reduction.
  • 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 none of these events is a guarantee I'll do so.

  • Dividend cut
  • Company degradation - This could be things like deteriorating balance sheets, loss of competitive advantage and loss of credit ratings. These factors may 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 may put in a limit order to sell, should the gravity kick in.
  • 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 companies with management issues or criminal/unethical business practices.
  • Based on known information, capital is better passively invested or focused into better ideas.


One tactic I've been 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 in amount gives a quick, "at a glance" look into how management thinks the company is operating. This can be confirmation that the investment thesis is indeed working well. Sometimes, the reverse 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 several times already with Altria Group, Inc. (MO), Starbucks (SBUX), Corning (GLW), Prudential Financial (PRU), Home Depot (HD), Johnson & Johnson (JNJ) and Illinois Tool Works (ITW).

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 its 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, where 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

Dividend Cuts

  • None!

The Portfolio

Name Ticker Percent of Portfolio CCC Status S&P Credit Rating
Apple AAPL 3.63% Challenger AA+
Abbott Laboratories ABT 2.92% Challenger A+
Aflac AFL 2.06% Champion A-
Amerprise Financial AMP 1.75% Challenger A
Cummins CMI 1.92% Contender A+
Cisco Systems CSCO 2.30% Challenger AA-
CVS Health CVS 2.33% Contender BBB
Walt Disney DIS 3.24% Challenger A
Corning GLW 3.42% Contender BBB+
Home Depot HD 2.37% Challenger A
Illinois Tool Works ITW 3.09% Champion A+
Johnson & Johnson JNJ 3.27% Champion AAA
JPMorgan Chase JPM 2.07% Challenger A-
MasterCard MA 2.63% Challenger A
Medtronic MDT 2.44% Champion A
3M MMM 1.52% Champion AA-
Altria MO 2.92% Champion BBB+
Nike NKE 2.03% Contender AA-
Realty Income O 1.02% Contender A-
Prudential Financial PRU 1.91% Challenger A
Public Storage PSA 2.24% Challenger A
Starbucks SBUX 3.48% Challenger BBB+
Schwab US Broad Market ETF SCHB 2.44%
Schwab US Dividend ETF SCHD 1.90%
Tanger Factory Outlets SKT 1.84% Contender BBB+
STAG Industrial STAG 1.50% Challenger N/R
Stanley Black & Decker SWK 2.72% Champion A
AT&T T 3.78% Champion BBB+
T. Rowe Price TROW 1.49% Champion A+
Travelers Companies TRV 1.78% Contender A
United Technologies Corporation UTX 2.06% Contender A-
Visa V 2.86% Contender A+
Ventas Inc. VTR 1.71% Challenger BBB+
W.P. Carey WPC 1.82% Contender BBB

Here are the values behind the "CCC Status" category:

  • King: 50+ years
  • Champion/Aristocrat: 25+ years
  • Contender: 10-24 years
  • Challenger: 5+ years


Ticker Owned Since Versus S&P Benchmark Versus Benchmark
AAPL 4/13/2015 10.29% SPY 10.29%
ABT 12/6/2016 67.82% SPY 67.82%
AFL 10/30/2014 16.37% SPY 16.37%
AMP 9/29/2016 0.98% SPY 0.98%
CMI 10/30/2015 17.78% SPY 17.78%
CSCO 4/6/2016 46.89% SPY 46.89%
CVS 10/7/2016 -33.79% SPY -33.79%
DIS 12/28/2015 -28.95% SPY -28.95%
GLW 10/14/2015 59.99% SPY 59.99%
HD 5/3/2016 0.66% SPY 0.66%
ITW 8/24/2018 3.94% SPY 3.94%
JNJ 12/9/2015 14.87% SPY 14.87%
JPM 7/15/2016 45.88% SPY 45.88%
MA 7/26/2018 1.41% SPY 1.41%
MDT 11/22/2016 9.70% SPY 9.70%
MMM 5/24/2018 2.57% SPY 2.57%
MO 10/31/2013 10.93% SPY 10.93%
NKE 5/3/2016 -5.64% SPY -5.64%
O 5/3/2016 -19.59% VNQ 8.27%
PRU 4/7/2016 -1.77% SPY -1.77%
PSA 4/28/2017 -10.07% VNQ 1.17%
SBUX 12/3/2015 -21.91% SPY -21.91%
SCHB 9/24/2018 -0.61% SPY -0.61%
SCHD 9/24/2018 1.66% SPY 1.66%
SKT 7/26/2017 -16.56% VNQ -7.43%
STAG 5/20/2016 12.21% VNQ 38.94%
SWK 1/28/2016 -5.37% SPY -5.37%
T 11/3/2015 -28.52% SPY -28.52%
TROW 9/29/2016 23.10% SPY 23.10%
TRV 4/28/2014 -1.69% SPY -1.69%
UTX 1/28/2016 -1.51% SPY -1.51%
V 7/26/2018 1.91% SPY 1.91%
VTR 12/8/2015 -1.78% VNQ 18.03%
WPC 5/15/2017 7.01% VNQ 15.53%

This table is how shares have performed since I first purchased them. I am able to compare versus both the S&P and another benchmark for each holding. It's supported by the stock return calculator (there is also API access available) that I built.

Versus S&P: This is a measure of the alpha generated (or not) versus the S&P 500 as a benchmark. This is calculated using the stock return calculator here, and it uses the "Owned Since" column as the starting date. This may not reflect actual results, as multiple purchases would change the figure. I can also set the benchmark at the individual ticker level.

The next column allows flexibility to define what my benchmark can be. For example, look at the REITs - I've set their benchmark to be VNQ for an apples-to-apples comparison. A utility could be compared to XLU for example.

Things can shift very, very quickly though. Follow the journey of VTR. From the September review:

As an example, VTR has lagged the S&P by 33% and VNQ by about 1% since 12/8/2015. Using some of these results, I can start determining whether I am making good stock picks or not.As another example, SBUX has been a terrible pick since I first purchased it (trailing by 50%+) but GLW has been a fantastic pick (up 68%).

Now from the October edition:

When I run the same comparison now, you can see that VTR has lagged the S&P by 13.50% (an improvement of 20% in a month) and has now beaten VNQ by 10.6%.

Now that I look here in the beginning of December, VTR has only lagged the S&P by 1.75% and has outperformed VNQ by 18%.

My Buys




Charts and Graphs


The green bars are 2018 and you can see the $465 of dividends received in November. That amount was lower than what I received in August ($468).


  • This month was bolstered by the extra $52 received from AT&T when I went overweight a few months ago. Fun side note the $162 bought me an extra 5 shares.
  • The amount received from Realty Income dropped after I decided to trim shares last month.
  • There was no benefit from increased dividend rates this month.
  • Williams-Sonoma was the only former holding that paid me during August but not in November.

The combination of new shares, reinvesting dividends and dividend hikes multiply to create a growing income stream for retirement.


As we sprint towards the end of the year, December is poised to be a large dividend month by coming at the end of a quarter. I am optimistic my Q4 amount will beat last year's value even as I've pivoted to lower yields and growth.

The year over year dip was from having some higher yielding instruments last year; Verizon and Omega Healthcare Investors. Year to date however I have already eclipsed what I received in all of 2017.

I made a big push at the tail end of 2017 buying dividend stocks which is why my forward looking YoY growth continues to fall behind.


Income By Sector

November 2018

With no changes to the portfolio there is only minor meandering this month. I'm still looking to gain utility exposure via an ETF. I have stock alerts set up when either XLU or VPU are near their respective 52-week lows to take another look.

Sector Allocations

November 2018

No real changes here this month.

Champion, Contender, Challenger View


No changes this month.

Things Coming Up

I like to run this screener to get some idea generation going again this month, in case it helps anyone out. Here are the filters I start with:

  • $10 billion+ in size
  • US companies
  • Positive dividend yield
  • Forward P/E under 20
  • Sorted by their 52-week lows

I still need to take a closer look at Ameriprise Financial - that's a holding I've had for about two years that has done well but is back near the bottom of its range. Interesting on the list are video game companies, Activision Blizzard (ATVI) has fallen nearly 50% since the beginning of October!

I'm still waiting for Ventas to announce their dividend increase. I was waiting for Public storage but their dividend looks frozen as 2018 payments will be the same as 2017. This is rather disappointing and will put them under review as a change in thesis.

As we are at the end of the year, be sure to keep an eye out for my Q4 and yearly review coming sometime in early January.


The $465 in dividends I collected was the stable part of my portfolio during a turbulent month in the market. I didn't make any trades but I continue to watch for opportunities.

How was your November? Hopefully you had a great Thanksgiving! Did you add any shares or take some money off the table?

Anyway, let me know what you think, and happy investing. Finally have a great holiday season and let me be the first to wish you a Happy New Year!

Disclosure: I am/we are long AAPL, ABT, AFL, AMP, AMZN, BRK.B, CMI, CSCO, CVS, DIS, FB, GLW, GOOG, HD, IQ, ITW, JNJ, JPM, KWEB, MA, MDT, MMM, MO, NKE, O, PRU, PSA, PYPL, SBUX, SCHB, SCHD, SKT, SQ, STAG, SWK, T, TROW, TRV, TWTR, UTX, V, VTR, WPC. 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.