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Nicholas Ward's Dividend Growth Portfolio: September 2023 Fair Value Update


  • My passive income stream increased by 55.58% in July and 63.07% in August, pushing year-to-date dividend growth to 40.26%.
  • I've been building my cash position in preparation for a market crash and taking advantage of high interest rates.
  • I continue to buy stocks while also allocating savings to cash equivalents, and selectively reinvest dividends back into dividend growth stocks.
  • Looking for a portfolio of ideas like this one? Members of The Dividend Kings get exclusive access to our subscriber-only portfolios. Learn More »

Dairy Discount in Grocery Store


It's been a couple of months since I've written a portfolio review.

I've been busy at work. I went on vacation last month (I recommend Ocracoke, North Carolina to anyone looking to take a relaxing break). And there have been a couple of

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This article was written by

Nicholas Ward profile picture

Nicholas Ward is a Senior Investment Analyst with Wide Moat Research and the former editor-in-chief and portfolio manager at The Intelligent Dividend Investor, The Dividend Growth Club, and The Income Minded Millennial.

Nicholas is a contributor to the investing group The Dividend Kings where he shares analysis on dividend growth stocks. The Dividend Kings is a group of analysts, led by Dividend Sensei, that teach members how to invest more wisely in dividend stocks. The focus is on helping investors safeguard and grow their money in all market conditions through the highest-quality dividend investments. Features include: 13 model portfolios, buy ideas, company research reports, and a thriving chat community for readers looking to learn how to invest more intelligently in dividend stocks. Learn More.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of A, AAPL, ABBV, ACN, ADC, ADP, AMGN, AMZN, APD, ARCC, ARE, ASML, AVB, AVGO, BAH, BAM, BEPC, BIPC, BIL, BLK, BMY, BN, BR, BTI, BX, CARR, CCI, CMCSA, CME, CMI, CNI, CPT, CRM, CSCO, CSL, DE, DEO, DHR, DIS, DLR, ECL, ENB, ESS, FRT, SPAXX, GOOGL, HD, HON, HRL, HSY, ICE, ITW, JNJ, KO, LHX, LMT, LOW, MA, MAA, MCD, MCO, MDT, MKC, MO, MRK, MSCI, MSFT, NKE, NNN, NOC, NVDA, O, ORCC, OTIS, PEP, PFE, PH, PLD, PLTR, QCOM, REXR, RSG, RTX, RY, SBUX, SHW, SPGI, TMO, TD, TXN, USFR, UNH, V, WM, WPC, ZTS either through stock ownership, options, or other derivatives. 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 (124)

User1117913587020187 profile picture
@nicholas @nicholas Ward @nicholas Ward www.facebook.com/...

Here you go. Since you're so big on investment income, Phoenix Capital Group promises 8% - 12% annual returns. "Equity-like returns, no equity-like volatility."
Nicholas Ward profile picture
@User1117913587020187 beware of promises that seem too good to be true.
I was busy buying Hershey now I am busy buying Pepsi. Pepsi has always done well for me. Now Hershey and Pepsi both pretty much 25 percent each in my portfolio with 10 percent in J&J and 5 percent each in P&G, Coke, Berkshire Hathaway, Google, Visa and Stryker. Rest 10 percent In Starbucks, Macdonald, Microsoft, Amazon, Apple, Nike, UNP, Disney, O, MO etc.
Nicholas Ward profile picture
@Cash Flow Assets Yeah - I think PEP and KO are both attractive after today's sell-off. They're climbing up my watch list. Very boring stocks, but I like having defensive holdings like this for when times get tough.
Three Wood Capital profile picture
Great update. Looks like we're in sync on somethings (beginning to allocate new capital to our top positions/highest conviction ideas). My portfolio has undergone an overhaul the last few months as I've reduced the amount of names and consolidated into higher conviction ideas (MCO, SPGI, V, MA, MSFT, CP, CNI, etc). In essence, got tired of reading earnings reports/following companies that I was not as bullish on as others. I'm jealous of your full time job providing you the opportunity to follow a wide universe of stocks.
Nicholas Ward profile picture
@Three Wood Capital yeah - it seems like we've reached similar conclusions at similar times. Great minds. I've def. spent time recently determining what positions are truly core to my long-term strategy and which stocks I'd be happy to sell/trim into strength. Unfortunately, the market has sold off recently, so I'm less likely to sell into weakness. But if we get a strong Santa Claus rally this year, don't be surprised to see me cutting ties with companies and lowering my position count a bit.
Three Wood Capital profile picture
@Nicholas Ward Are you rethinking your "full" position size as well then? I think you typically have is roughly around 2%, with anything over that being "overweight". Do you see yourself still sticking to that framework or maybe bumping full position to 2.5% and having those top ~10 names being closer to 3-4% weighting each?
Nicholas Ward profile picture
@Three Wood Capital not really - it's more about taking my highest conviction long-term ideas overweight. So yeah, I will probably end up with more 2.5%+ weighted positions, but it will be a select few. Basically, my plan is to focus the majority of my new capital additions to the portfolio over the next couple of years into a more focused group of stocks. Over time, this should elevate their weightings and make their performance more impactful long-term.
User1117913587020187 profile picture
@Nicholas Ward @Nicholas Ward I thought you're an owner of both Novo Nordisk and Meta? What happened to them?
jlipps profile picture
@User1117913587020187 I think he sold them last summer.
Nicholas Ward profile picture
@User1117913587020187 I used to own shares of both companies - I sold them awhile ago though.
User1117913587020187 profile picture
@Nicholas Ward Any reason why you're not longer term bullish on them anymore? Wondering more about META than Novo.
User1117913587020187 profile picture
@Nicholas Ward @Nicholas Ward @Dividend Ambassador @BM Cashflow Detective Why is AXP not in your portfolio? If it's good enough for Uncle Warren, I think it's worth a second look. It's at a pretty reasonable valuation, at the moment.
Nicholas Ward profile picture
@User1117913587020187 I prefer V/MA's toll booth-like business models in that space. And since I have large positions in both, I don't feel the need to add another player from that industry. AXP is cheaper, but its growth prospects aren't quite as strong, nor as its financial as attractive as a V/MA (IMHO). And being that I think V is undervalued right now, that's where any $$ that I'd want to allocate towards a financial stock would go right now.
User1117913587020187 profile picture
@Nicholas Ward I disagreed with your perceptions on BMY's future growth prospects and I disagree with AXP here, as well. If the financials of AXP passes Uncle Warren's sniff test, it's good enough for me.

The problem is the future is not completely knowable, you could be right or I could be right.

Same with approximating fair value. I believe there's a quote about being "precisely wrong" saying fair value is more of a range. I believe V might be around fair value and it's come down from overvaluation, but I don't find V to be cheap at all.
BM Cashflow Detective profile picture
$MA is my largest position in many years and it wouldn't be an exaggeration to say that I love the business model and fundamentals.

Mastercard's Cash Return On Invested Capital (CROIC) of 53.1% ranks in the 96.5% percentile for the sector.

Boy oh boy, what could be better in this world and in your own portfolio?!

The only problem is that “everyone” already knows it. A small dip doesn't change anything significantly. Smart calculators notice this very quickly and it significantly reduces the value of the share.

Due to combined valuation methods such as relative value and DCF value, the share is overvalued at 29%.

This means a huge 5y margin of risk of -7.09% CAGR.

You should really think about buying it ten times. If that's enough?!

$V is been my second largest position for many years. The love here is only slightly lower.

Visa's Cash Return On Invested Capital (CROIC) of 31.4% ranks in the 94.2% percentile for the sector.

However, this stock is even more overvalued at 35%.

Keep thinking about Chuck Carnevale's mantra.

"Valuation matters and it matters a lot!"

$AXP is one of my middle portfolio components. Unfortunately, the value of this potentially good investment is often underestimated.

American Express Cash Return On Invested Capital (CROIC) of 20.9% ranks in the 89.2% percentile for the sector.

The financial sector average, on the other hand, is only a measly CROIC of 8.8. Still questions?!

A really efficient and effective cash cow that is not worth overlooking.

Especially the current undervaluation with around 44% for “too” extreme pessimism.

This results in an extremely advantageous 5y valuation reversal potential of 12.30% CAGR.

The point is that many investors always view potential investments as being a little too disadvantageous in absolute terms rather than something more advantageous in relative terms. Understood?!

But the stock market is colorful and I am an enthusiastic accumulator of cheap and very colorful CROICs.

Well-done value investing is so simple. You just have to do it.
I think I recall you mentioned Target (TGT) was on your watchlist when it had its initial drop down to ~130. No position yet? Been watching patiently and thinking of going long myself soon.
Nicholas Ward profile picture
@jtag5 I've decided to keep my distance from the retailers, in general. I recently added to AMZN which hits that industry. And I own large stakes in LOW and HD. That's good enough for me - I don't really consider big-box retailers as wide moat companies.
steve7074 profile picture
@Nicholas Ward I agree with most, but am glad to own Costco, though it isn’t buyable very often. Proud owner since $350. I, also have come around to Kroger, but especially recommend Costco.
Nicholas Ward profile picture
@steve7074 I'd love to own COST...but like you said, it's nearly always overpriced (IMO, at least). Obviously, I should have just bought shares years ago...I've just never been able to justify a 30x+ multiple on a physical retail stock.
I more active with my cash then you. I buy T bills or CD for max for 6 weeks of duration (mostly 1 month). 6 months ago I consolidated my 2 brokerage accounts, I moved my positions from schwab to etrade bc etrade was more user friendly and conveniently. Then once etrade and morgan stanley merged - etrade got worse with Tbills (i cannot buy if i have less then 10k) and rates are not so great, and they never had great CDs. Once I have matured funds I transferred my cash back to schwab. schwab has better price for tbills and CDs! I recently got 5.5% CD for 1 month. schwab also let me invest right away once I initiate transfer even when it was >50K transfer. I have Fidelity too and their CDs are not as best as schwab. So instead of holding my cash in MM fund I am getting .5% more in best case and .3% in worse case. I use google reminders to know when maturity will happen. To reallocate money again take 5 mins only. I have maturity happens almost every 2 weeks.
Nicholas Ward profile picture
@alla_al Nice! I've been too lazy (and busy) to add building bond ladders to my weekly schedule. But it seems like I should probably find the time because you're generating ~50 bps more yield than I am with your strategy.
@Nicholas Ward Believe me you won't regret! I found of the benefits of paying attention on yield more then 10y ago! When I calculated how much I got per year with min effort I was motivated to do even more to see what my money do and where they go. Especially it works and you see the results in such env as we have right now. Even my hubby finally got onboard! It's hard too start and easy to follow. I don't bother to create a ladder (extra effort to think and manage it) bc it's just savings, I go with better deal, that's it. I keep it simple:)
@Nicholas Ward I am seeing in schwab 2 CDs. I don't see what I bought anymore, it's sold out.
State Bank of India NY 5.5% CD 10/27/2023
Santander Bank N.A. DE 5.5% CD 10/30/2023
RoseNose profile picture
Hi Nick!
Enjoyed the list, as you have many of the stocks I also own or would have interest in.... MO is a stand out as a bargain and great yield, but then its tobacco and many don't want it for the reason even though its legal. (just like alcohol and McDonalds food)..I am sure you will be updating WPC with the latest announcement.
Gotta Love, love love AVGO... amazing in many ways, Happy one to own and buy when we did.
Have a great fall and hope the family is doing well.
Happy Investing , Rose:))
steve7074 profile picture
@RoseNose McD food, I never get that one. Some will mention KO & PEP, everything in moderation.
In tobacco, I own PM. They seem the best equipped to get tobacco users off nicotine. Yield is great, wish they could get some growth.
RoseNose profile picture
@steve7074 : I own all of those dangerous stocks... PM, MO and BTI; KO, PEP, MCD ... Hope all is good with you. Have a great week. Rose:))
Nicholas Ward profile picture
@RoseNose Yeah - I sold out of WPC on the day that the dividend "reset" was announced. That will be reflected in the next update.
What's your take on the WPC spin off?
Nicholas Ward profile picture
@extramoney I'm not happy about it - just about anytime that a company announces plans to cut the dividend, I sell. And looking at the report, that's what WPC is planning on doing here...using this spin-off to reduce the dividend by ~20-25%.
User1117913587020187 profile picture
Sharing huge double digit dividend growth every month may seem impressive, but it doesn't mean anything if you don't disclose dollar amounts. I know why it's the case for you and I explained it to someone on your recent AMZN article asking you to post audited statements, but still. Your growth numbers and charts are only useful to you because only you know what it really means, whether it's going to ultimately mean you meet your financial goals and achieve financial freedom or not.

You can have 50%+ dividend growth period after period and fall short of meeting your goals, which no one even knows what those are either.
Nicholas Ward profile picture
@User1117913587020187 I've stated many times before that my goal is to generate double digit annual dividend growth. Doing that will allow me to reach my financial goals...anything above 10% is a cherry on top and simply accelerates the journey towards financial freedom. If interest rates remain "higher for longer" as many analysts (including myself) think, then I could end up retiring much sooner than expected.

As for sharing the extent of my wealth online with strangers...that's a no-go. I see no benefits to doing so and I prefer to discuss all of my trades in percentage terms to protect my family's privacy.
In my view, interest rates have nearly peaked, but I don’t see the pivot on the horizon, yet. The labor markets are still tight and wage inflation is going to continue to drive inflation at a 3.5+% rate for a while. The Federal Reserve will not lower interest rates until the inflation rate takes another significant drop toward the goal.

My dividend producers are going to be fine, although there won’t be bull market to enjoy for a while. My speculative companies have been hammered to multi-year lows, but luckily I don’t have much money in them. I’m reallocating some of those speculative funds to my long term winners with growing dividends. The no-profit tech sector is out of favor and will stay that way until inflation is tamed.
Nicholas Ward profile picture
@JazzPaw I think it all depends on your time horizon.

Regarding rates, I think you're probably right. I don't think we'll see many more raises...but I also don't expect to see the Fed cut for awhile either.
Thanks for sharing your portfolio. You probably have more holdings than I could manage but diversification is a very personal thing.
I especially like your high growth names, and am looking at layering into some of them as they approach buy levels, DHR, TMO, MSCI, SPGI.
I wondered what you would consider the minimum number of stocks to achieve diversification? ( although I understand that not everyone needs to be “diversified per se).
Keep up the good work!
Nicholas Ward profile picture
@Eli73 Honestly, I think it comes down to personal preference, like you said. For me, once I identify a secular growth trend and an industry that I want exposure so, I feel more comfortable forumating fair value estimates for the blue chips in the industry and trying to build positions in all of them. For instance, I own V and MA...DHR, TMO, and A...SPGI and MCO...I don't think it's really possible to pick which one is going to be the out performer over the long-term so I just buy them all.
@Nicholas Ward thanks, I think that’s a great strategy. It’s definitely hard to pick the winners. Best wishes.
steve7074 profile picture
@Nicholas Ward I do that sometimes, figuring I can sell the weaker one later on if wish. Still own HD & LOW.
Is there a mutual fund or EFT that is anywhere close to this portfolio? It'd be nice to not have to buy each individual stock to get this overall benefit(s).
steve7074 profile picture
@SCBruce Plenty of them. Do the research on some. Might take buying a growth & a value. Their holdings are available. JEPI, JEPQ, SCHD could be a good start.
I agree with your premise even though I own a chunk, probably one half the number, which I would like to reduce.
His current price & fair value could also be a good source for individual buys.
Nicholas Ward profile picture
@steve7074 SCHD or VIG probably fit the mold best (IMO). But, the problem with buying ETFs (once again, IMO) is that you're forced to buy the good with the bad. The overvalued and the undervalued...higher quality stocks and lower quality stocks. I prefer to pick and choose the best companies at any given point in time. But, I also acknowledge that it's a lot of work and requires time/energy that others may not have/want to dedicate to the market. Overall, VIG is my favorite DGI ETF.
@steve7074 great advice. I was thinking the same thing picking out the ones selling below fair value
Thanks for the timely article. Lymes disease. I live in WI which has deer everywhere. Have a herd just half a mile from my house, and they roam the back yards at night. Make sure you see a specialist for treatment. Most MDs do not have the experience with the disease. The best for you.

Wonder it you are considering selling DIS and Black Rock holdings? These are way to political for my blood. Their internal culture is way too political and can continue to rock havoc no matter what the CEOs are saying to assuage stock holders.
Nicholas Ward profile picture
@labman106 we have seen a specialist (it was for my daughter, not me, which made it worse watching her suffer).

I think BLK is a very solid DGI stock and I have no plans to do anything but buy into weakness (IMO, the moat is very wide).

DIS, on the other hand, has been a pretty big disappointment. Not because of political issues, but simply because of its problems with cash flows...no one is making money streaming and the entertainment has quickly become a low margin business. If DIS were to rally, I'd likely sell the rest of my shares and move along (I already trimmed DIS once when they but the dividend several years ago). Honestly, I thought they would have reinstated it by now, but I definitely underestimated how hard the streaming business is.
User1117913587020187 profile picture
@Nicholas Ward DIS got on my watchlist several years ago and it finally got cheap, but now that it has I don't seem to be buying.
Nicholas Ward profile picture
@User1117913587020187 if DIS was still paying a growing dividend I'd be much more bullish here. But without the dividend I'm not the stock's biggest fan. I am hoping to return to Orlando with the kiddos again next year so never fear, the Ward family will do our best to support annual sales figures.
Sharepro profile picture
Thank you Nick for the update. Together with Sebastian Wolf you're my favourite author on SA. I left DK recently. Besides your channel the platform became meaningless to me. Thus it's great to get updated information from you. All the best to you and your family.
Nicholas Ward profile picture
@Sharepro thanks for stopping by. I know that a lot of readers look forward to the monthly updates so I def. plan to continue to publish them moving forward. They usually get pushed to the back burner when other work pops up, but eventually I'll get to them :)
I bought lots of Hershey and Pepsi this month. They are 25% and 20% of my portfolio. I had no allocation to REITS so I added O and WPC this morning and bought RTX after mini crash. No buy for you last month?
Nicholas Ward profile picture
@Cash Flow Assets I've made a bunch of trades - I just figured that most of them were too old to be actionable. I August I sold VZ, STZ, and CMG...and bought CNI, HSY, SPGI, MCO, and NVDA. In July I sold DPZ, PYPL, and trimmed BMY...and bought CNI, CPT, and NNN.
@Nicholas Ward I would have kept CMG. I studied in detail when the stock was trading under $300 when there were food quality issues over six years ago or something. My dentist asked me which stock I should buy and I said CMG (but I never bought it for myself for whatever reason). Fast forward our dentist mentioned it a few months ago and he is up over 600 percent on big position.
Nicholas Ward profile picture
@Cash Flow Assets Yeah, it's a solid company, for sure. But, I was looking for stocks to sell in an IRA (where I can't really add money to anymore due to income levels) so that I could buy more CNI and CMG/STZ were the easiest sales...locked in profits of 46% and 49%, respectively, and I think both stocks are a bit expensive after their recent rallies. What's more, outside of scale, I'm not sure that fast food brands have a competitive moat. They're dependent on brand awareness and consumer tastes (which are very fickle). I'm doing my best to focus on attention (and $$) on the widest moat companies/compounders these days.
amegalo profile picture
Nicholas, a nice article as usual.. I too am enjoying a 5% plus in a money market fund as well. I use SWVXX.. I also am allocating some cash to high yield stocks, MO, VZ and XSHD (an etf.)
Cash seems to be the easy way to go but in the long term buying undervalued stocks will prove to be fruitful. I noticed GD on your watch list.. I bought a tiny bit in 2020 for about $144/ share.. I wish I bought more back then but it was a tough investing environment.
That proves when you have faith in an undervalued stock , time will be your friend..
Take care and I’ll watch for future updates.
Nicholas Ward profile picture
@amegalo agreed - this is the first time that I've had access to high yielding cash equivalents and it's really nice. I'm also saving up for major home renovations right now and it's really cool to make ~5% on those funds while we wait for the contractor to get their ducks in a row.
amegalo profile picture
@Nicholas Ward yeah it’s nice to have income from investments.. I just had my deck renovated, paid for by dividends from my after tax account , with still some money left to earn more income.
jlipps profile picture
I notice some of your positions are currently priced under your acquisition cost (HSY, O, CRM, ADC, A, ASML, TMO, RY, CCI, PFE, FRT, MO, TD, ENB, WPC, BTI, MAA, HRL, ARE, LHX, CPT, BEPC, RTX). How are you prioritizing your dividend reinvestment to lower your cost basis for these positions?

I am actually in a similar boat with ADC, O, ASML, CCI, MO, & ENB.
Nicholas Ward profile picture
@jlipps some of them are high priorities (such as HSY). Others are disapointments (due to poor fundamental growth). I'm not interested in adding to stocks that have lower quality scores. Those are names that I'd consider selling/trimming if/when they rally. At this point in time, I'm most interested in accumulating shares of the highest quality companies on Earth (I'm not interested in sacrificing quality for value).
jlipps profile picture
@Nicholas Ward which position is #1 on your chopping block due to low quality?
Nicholas Ward profile picture
@jlipps this morning I sold WPC because of the dividend "reset" news (in other words, a cut). So I guess that's the answer.
bill h illify profile picture
Good read and much appreciated. Very impressive results. Been slowly building a position in CP recently. Keep on staying on.
Nicholas Ward profile picture
@bill h illify thanks! CP is definitely on my shopping list night now. I'm in the process of finishing my basement (which is going to cost a pretty penny). But, once I figure out how much $$ I have to allocate towards the portfolios, CP is def. a high priority target.
bill h illify profile picture
@Nicholas Ward
Good luck on that basement. I did that about 15 years ago with my dad and father in law, was fun but definitely time consuming. It was well worth it and I’m sure you will find it to be as well.
Nicholas Ward profile picture
@bill h illify I wish I had the know-how to do it myself. It would save me a lot of $$. I'll be contracting the work out...I'm not handy enough for a big job like that.
steve7074 profile picture
SPAXX is Fidelity’s lowest yielding MM. you can open SPRXX, which yields 5.05%, there is even a premium which takes $10,000 to open, yields 5.17%. On stock buys & sells, Fidelity automatically moves these to the sweep for settlement, Not all brokerages run their MM so smoothly.
Love Fidelity.
@steve7074 I wonder if Merrill has an equivalent MM fund otherwise I would move some of my cash to Fidelity.
steve7074 profile picture
@EPata I did that a year ago August. Merrill has a premium MM, yielding a little less, but takes $100,000 to open
I was with Merrill for about 4 years. Your broker or you have to move your MM to your sweep account after your purchases.
Fidelity is so much better than Merrill. Also allows buying. & selling partial shares. You can also meet at their office, Merrill only seems to do that for Wealth Mgt Accounts
Nicholas Ward profile picture
@steve7074 interesting - I'll need to check. I used to have more core position if FZFXX because its yield was slightly higher than SPAXX...but then they evened up. Good looking out though - ~0.05% makes a difference over time.
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