DGI Portfolio Report for February 2016

By | March 7, 2016

This report provides an update on my holdings, performance, plans and thoughts for my Dividend Growth Investing (DGI) Portfolio. I started this portfolio with an initial funding of $100,000, which is is a nice and even number. I’m running this portfolio like a fund manager who runs a dividend growth fund. I will look for stocks that are a great fit for this portfolio, review the portfolio on a regular basis and make adjustments as necessary. Of course, I reserve the right to make any exceptions to buy or sell a stock. The results will be published here on Growing Money every month. I seek companies that have a healthy balance sheet and a competitive business advantage in the market, thereby protecting my principal investment. The dividend growth will help build a stream of growing income for the long term. If the dividends are sustainable and increasing over time, then naturally, the stock prices should follow and the total returns should be wonderful. This is a long term investing plan, which is a marathon and not a sprint, so do not expect any flashy words or colorful signs in these posts. It’s going to be a slow and steady climb to the top of the mountain.

The goal of this portfolio is to build a stream of steady and growing dividends to achieve financial freedom. The strategy is to buy strong and healthy companies with dividends that are sustainable and increasing over time. All the dividends are automatically re-invested back in the same companies. This portfolio will be reviewed on a regularly basis to ensure that the holdings are aligned with the goal of this portfolio.

Account Balance
Beginning Balance: $95,766.89
Ending Balance: $96,333.14
Net Gain/Loss: +$566.25 (+0.1%)

Portfolio Holdings:

Symbol Current Price Quantity Current Value Dividends (per share) Dividend Yield (%) Annual Dividends Prorated Monthly Dividends
VZ 50.73 207.173 $10,509.89 0.565 4.45% $468.21 $39.02
T 36.95 208.339 $7,698.13 0.48 5.20% $400.01 $33.33
JNJ 105.21 101.553 $10,684.39 0.75 2.85% $304.66 $25.39
O 58.54 203.822 $11,931.74 0.1985 4.07% $485.50 $40.46
OHI 32.06 723.83 $23,205.99 0.57 7.11% $1,650.33 $137.53
IBM 131.03 100.932 $13,225.12 1.3 3.97% $524.85 $43.74
MIC 61.05 302.978 $18,496.81 1.15 7.53% $1,393.70 $116.14
Cash $581.08
Total $96,333.14 $5,227.26 $435.61

Note: Options are not shown in this table.

Dividend Payouts This Month:
VZ    2/1/2016    $115.72
T    2/1/2016    $98.66
O    2/16/2016    $40.32
OHI    2/16/2016    $352.12

Month Total: $606.82

Lifetime Cumulative Dividends Received: $2,375.79
*This is the total dividends received since the inception of this portfolio in June 2015.

Portfolio Update

The stock market had continued its general weakness the month of February, however, most of my holdings have rebounded in this month. Unfortunately, I had miscalculated and expected a sideways market for several months, so I had sold many covered calls on them. Surprisingly, most of my holdings did very well and had climbed in price, despite the sell off in the market. Unfortunately, these covered calls had capped my portfolio growth and I was not able to capture the gains, as witness in my portfolio balance.

MIC – Macquarie Infrastructure Corp (NYSE:MIC) has reported their fourth quarter of 2015 earnings. After reading their earnings call transcript, I felt more confident about my position and will continue to hold. As long as they can grow their dividend with their cash flow, I will continue to hold this position.

IBM – International Business Machines Corp. (NYSE:IBM) has rebounded somewhat. IBM has continued to make aggressive acquisitions in the market. I think that we should see benefits of these acquisitions in the near future. I would not be surprised if IBM climbs above $150 by the end of this year. In the mean time, I will continue to collect their dividends.

O – Realty Income Corp (NYSE:O) is known as The Monthly Dividend company and it is for a good reason. I really like what see with this stock. The stock had risen during the turmoil in the market and had made all time highs. But it should cool off while the market picks itself back up again.

OHI – Omega Healthcare Investors Inc (NYSE:OHI) has not been doing so well lately, but has seen a small bounce this month. I think OHI is a great long term hold for a dividend growth portfolio.  Therefore, I will continue to hold and collect their generous dividends.

AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) have been performing very well recently. A few months ago, I had thought of selling T and VZ because I thought their dividend growth was not attractive, however after some a second thought, I realize that they are very strong companies and have a solid business model, so I would hold on to them for solid dividend payouts. It turn out to be a good move, because T and VZ hold up very well in this global market crisis. In fact, they do so well, their stock prices have increased despite many other stocks falling hard. The only regret is that I had sold covered calls against these companies and now their share price is well above my strike prices. I did not expect these two companies to climb in price so fast, but I guess it’s a good issue to have.

Options Strategy

I have employed the use of options for my holdings to earn a little more income where possible. I had sold covered calls in most of my positions, but that did not turned out in my favor because those holdings had risen in price, far above the strike prices. I may have to buy back some of those covered calls at a loss or roll over to a farther month. Unfortunately selling covered calls was a very bad idea in my case and I’ve learned my lesson here. I may have to abstain from selling covered calls, or if I do sell them in the future again, I will have to be aware of the potential of being called away.

Short Term Goal – Year 2020
My short term goal is to have $500 in dividend income a month on a prorated basis from this portfolio by the year 2020. I will make adjustments that are necessary to steer towards this direction. Currently, my monthly passive income for this portfolio is at $435.61, so I still have some way to go. These monthly updates will be constant reminders for me to stay focused and work hard on my goal. By making this portfolio opened to the public, I will hold myself accountable and show my thoughts and decisions to everyone. Good luck to me!

Happy investing!! Build passive income for life!


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