For this post, I will review the highlights from my first post, Dividend Portfolio Analysis: Part 1, and will then spend the rest of the article addressing my portfolio's Dividends. As Dividend enthusiasts, I hope you enjoy it; and I look forward to your comments.
If you missed my portfolio's first analysis, on Diversification, you can find it here. In that article I gave my portfolio a fictional 'B' grade: 11 stocks, 6 different sectors, 'Large Value' portfolio style, top five holdings making up over 55% of my portfolio. I also discussed some "pros" and some serious "cons" with my portfolio. Click here.
To start this article on Dividends, here is a quick review of my current holdings:
Portfolio Quick Facts
*Dividend Growth:
*Out of 11 holdings:
- 7 on 'US Dividend Champions List' (25+ yrs of dividend increases):
* ABT, ADP, CINF, JNJ, LEG, PEP, PG
- 2 on 'US Dividend Challengers List' (5-9 yrs of dividend increases):
*SO (9 yrs), WM (8 yrs)
- 2 not on a 'list':
*PAYX: raised dividend for 19 years straight - failed to raise in 2010
*GE: decreased dividend in 2009 - first time GE failed to raise dividend since 1938.
*Dividend Strength:
*Average Portfolio Dividend Yield - 3.71%
*All holdings yield greater than 2.5%
- no yield greater than 5%
*Each month, at least 3 companies pay a dividend into my portfolio. All twelve months are covered with an average of 3 checks per month.
Dividends Grade: A
Pros: Though I have two companies who either cut or failed to raise their dividend in the recent economic downturn, 64% of my portfolio's holdings have increased their dividends for more than 25 years. GE has begun to raise its dividend again, and PAYX (though it has not raised its dividend recently) continues to pay a healthy 3.95%. Finally, my portfolio yields 2% more than the S&P 500 yield, a mere 1.71%. Assessment - My portfolio consists of solid, dividend growing companies with decent yields.
Cons: None of my holdings' yields greater than 5%. Without decent capital appreciation, overall return may be low. Assessment - Expect my next purchase to be a "higher yielding" stock, but major portfolio tweaks are not necessary at this time.
Conclusion: My portfolio's overall 'dividend strength' is favorable. A decent yield, combined with dividend growing companies should provide for a quality return over the long run.
I would appreciate it if you share your thoughts as I'm always looking to improve. Please comment below if you can.
Until next Thursday for this series. Be sure to look for other posts throughout the week.
Thanks for reading,
DivPartisan
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Our screens are similar, but I cull out stocks with an additional data points.
ReplyDeletefirst I have all of my potential picks in a spreadsheet (around 100 each year) then I narrow them down using various methods, such as minimum and maximum yield (too high is too risky). But the big one that I use at the very end, since I am after a rising stream of income - I add 4 columns and calculate in each one the 1 year, 3 year, 5 year, and 10 year average annual dividend increases.
Owning a dividend stock that has not hit at least 6% increases each year for the last 10 years means that I lose income to inflation. My goal is to exceed inflation with my dividend income, even if I do not add new monies.
The list that starts off over 100 picks usually gets paired down to a dozen or so.
When a stock does have one year where they lagged the 6% I may keep it in the list but I do look further into the books than the others. Also, you do have to consider spin-offs like when Altria spun off Kraft and then Phillip Morris International later. Those dropped the Altria dividend, but when you add in the Kraft dividend and PM dividend, Altria fit the criteria of a good dividend payer and increaser.
Keep up the website. Love it.
mshideler
Mshideler,
ReplyDeleteYou've got a great strategy and are extremely smart! I look forward to learning more from you! Thanks for the comment, and God bless!
DivPartisan
Cool article. An average yield of 3.72% is pretty attractive. I'd be happy with that. Is that average yield from current yield figures, or your YOC?
ReplyDeleteMantra,
ReplyDeleteThe average yield of 3.72% is current weighted yield. My YOC is higher. Take care!
This interesting topic is discussed with great seriousness, I learned a lot from these few lines in any case, thank you give time to your readers.
ReplyDelete