DGI Portfolio Report for July 2016

By | August 3, 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 and hope to use this portfolio to help me achieve financial freedom. I’m running this portfolio like a fund manager who runs a dividend growth fund. I 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 strategy is to buy strong and healthy companies with dividends that are sustainable and increasing over time. All the dividends are automatically re-invested 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.

Investment Objective
The DGI Portfolio seeks to provide, primarily, a growing stream of income over time and, secondarily, long-term capital appreciation and current income.

Investment strategy
The DGI Portfolio invests primarily in stocks that offer current dividends. The portfolio focuses on high-quality companies that have prospects for long-term total returns as a result of their ability to grow earnings and their willingness to increase dividends over time. These stocks typically—but not always— have a low dividend payout and shows a history of increasing dividends. The DGI Portfolio will be diversified across industry sectors.

Account Balance
Beginning Balance: $110,602.59
Ending Balance: $114,036.53
Net Gain/Loss: +$3,433.94 (+3.10%)

Portfolio Balance History Chart

DGI Portfolio - Balance 2016-07

Portfolio Holdings:

Symbol Current Price Quantity Current Value Dividends (per share) Dividend Yield (%) Annual Dividends Average Monthly Dividends
JNJ 125.4 102.99 $12,914.95 0.8 2.55% $329.57 $27.46
O 72.14 207.019 $14,934.35 0.199 3.31% $494.36 $41.20
OHI 34.9 836.793 $29,204.08 0.6 6.88% $2,008.30 $167.36
IBM 161.45 102.805 $16,597.87 1.4 3.47% $575.71 $47.98
MIC 76.19 313.718 $23,902.17 1.2 6.30% $1,505.85 $125.49
WFC 47.81 301.504 $14,414.91 0.38 3.18% $458.29 $38.19
Cash -$1,220.27
Total $110,748.05 $5,372.07 $447.67

Note: Options holdings are not shown in this table.

Dividend Payouts This Month:

Date Received Symbol Amount Month Received Month Total Quarter Received Quarter Total Cumulative Dividends Received
7/15/16 O $41.18 2016/07 $41.18 2016Q3 $41.18 $4,257.13

*Cumulative Dividends Received is the total dividends received in this portfolio since inception in June 2015.

Dividends History by Quarter Chart

DGI Portfolio - Dividends Received (by Quarter) 2016-07


Portfolio Update

For this month, the DGI Portfolio has moved up slowly. I am surprised at how well this portfolio is performing. I was expecting a downturn, but no matter how the market is doing, the DGI Portfolio has been resilient from the market volatility. This is mainly due to my holdings in JNJ and O. These two stocks have been the main engines of the portfolio. These two stocks has been hitting new all time highs. I would consider selling them but it would be difficult to replace these two stocks with the same time of quality.

I expect a general market pullback in August, so therefore having quality companies in the portfolio is very important. With my current holdings, I feel I can weather almost any storm. And if there is a financial tsunami, and my quality companies pull back, I know they will come back up in the future. In the mean time I would just let the dividends reinvest themselves and buy more shares of those quality companies. Therefore, I can sleep well at night (SWAN) with this portfolio.

JNJ – Johnson & Johnson (NYSE: JNJ) is a pristine AAA-rated US company, one of the only two left. The only other triple A-rated company is Microsoft (MSFT). JNJ is a solid, diverse, quality business. It is a rare and proven stock that you can buy and hold forever. The dividends are as close to guaranteed as you can in this company. This stock is definitely a stock that you want to hold during a recession but also want to have during a market boom. It seems to do well during any economy conditions.

JNJ has been hitting new highs this month. I’m very tempted to sell my holding, but what holds me back is the quality that this company has. It is easy to replace the dividend yield for this stock, but it is very difficult to replace this stock with another company of the same caliber.

O – Realty Income Corp (NYSE:O), also known as “The Monthly Dividend Company,” is the top of the line real estate investment trust (REIT ). Similar to JNJ, O is superb quality in the real estate space.  This is most likely the safest and most wanted REIT company in the market. And the proof is in the pudding. The company grows revenue and dividends year in and year out. It is one of those companies that you wish you had thrown all your life savings in several years ago.

The stock has defied gravity and kept soaring higher, making new all-time highs recently. This stock is now seen as a safe haven. Any signs of a market downturn diverts funds into this stock and only sends its price higher. I want to build a bigger position in this stock, so I do hope this stock drops soon so I can buy the dips, but it doesn’t seem like it will happen anytime soon. Any time this stock dips, the market sees it as a opportunity and the stock rebounds quickly. O is a stock on steroids, and it just gets stronger and stronger. I find it hard to believe but the stock has been flying in space for some time.

OHI – Omega Healthcare Investors Inc (NYSE:OHI) is a high quality medical REIT. This company specializes in skilled nursing homes and that is a growing area due to the increasingly amount of baby boomers reaching retirement age now and in the future. It is a great long term hold for a dividend growth portfolio. They have consistently increase their dividends and has a great business model. The company recently decided to hike their quarterly dividend by two cents, instead of the usual one. I have to tell myself to be patient with this one, because over time, this will most likely be one of those REITs that I would look back and say, “I wish I had backed up the truck on this stock.”

MIC – Macquarie Infrastructure Corp (NYSE:MIC) owns, operates and invests in a diversified group of infrastructure businesses providing basic services to customers in the United States. It is a great stock that has grown its dividends in the past several years. Last month, I had hope to see this stock close above $75. And it did!! At the end of July, the stock closed at $76.65. What a wonderful company.

IBM – International Business Machines Corp. (NYSE:IBM) an old and battle-tested technology company. It has been transitioning out of their old businesses to their new businesses, which includes strategic outsourcing, integrated technology services, cloud and technology support services (maintenance services).

I believe the company will successfully transform itself.  The company has been buying back shares and acquiring new businesses. The share buy backs reduce the float and help boost up their EPS. Shareholders will own more of the company and eventually when the company turns around, the earnings per share will be compounded with the reduced float.  This stock does require some patience, but I think IBM will pay off in the long run. IBM has been doing well this years. The stock has broken out of the $150 mark, as I had hoped last month. I’m looking forward to further stock price run-ups.

WFC – Wells Fargo & Co (NYSE:WFC) is arguably the safest and best bank out there. The company has a long history and has done well even during recessions. The dividend yield is at around 3% but I believe they will have a good dividend growth rate over the long term. I like companies that can grow their dividends at a fast rate over the long term and I think WFC is a such company. Unfortunately, the challenge for WFC and the whole banking industry is the Fed’s low interest rates. This stock will require some patients and shareholders can collect dividends in the mean time, but once the Fed starts raising interest rates, WFC will see much better days.

Options Strategy

I employ options strategies, mainly selling covered calls, to help generate more income with this portfolio. As with options, there are always risks involved. The biggest risk with selling covered calls is capping the capital gains that the stock can make when there is a run-up. Sometimes I’m forced to buy back those covered calls and that becomes very expensive. As with any strategy, it takes time to learn and perfect. I still have a lot to learn, but I think I’m doing a much better job these days.

Short Term Goal – Year 2020
My short term goal is to build a $500 monthly income stream from dividends in this portfolio by the year 2020. I will make adjustments that are necessary to steer towards this direction. Currently, my average monthly passive income from this portfolio is at $447.67, so I still have some ways 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 show all my thoughts and decisions to everyone, and also I will hold myself accountable for my actions. Good luck to me!

Happy investing!! Build passive income for life!


Source: Google Finance


Leave a Reply

Your email address will not be published. Required fields are marked *