Monday, February 15, 2016

Annual Review, 2015

This is my 3rd annual review of DivGro, my portfolio of dividend growth stocks. I created DivGro in January 2013 to generate a reliable and growing dividend income stream.

Keeping track of DivGro in a public forum has helped me to become a better dividend growth investor. Much of my learning has come from the research I do while writing articles, but I've also learned a lot from interacting with like-minded investors. So, a big Thank You! to all my readers for their support, encouragement and comments. Please keep it coming!

In this article, I'll be reviewing DivGro's 2015 performance by looking at the portfolio's overall performance as measured by rate of return, dividend income, dividend growth, and yield on cost (YoC). I'll also review some of DivGro's 2015 highlights.

Last year was a more challenging year for the markets and for DivGro, especially with energy stocks taking a big hit and talk of the Federal Reserve raising interest rates. After all the talk, the Fed finally announced a quarter percent increase. The stock market is certainly more volatile now, with concerns of slower growth in China, falling oil prices and geopolitical instability.

Performance


Below is a spreadsheet showing the state of DivGro on December 31, 2015. The last column shows Annualized Profit/Loss for stocks that I've owned for more than one year, on average.

While General Dynamics (GD) still leads the pack with a total return of more than 100%, on an annualized basis, Altria Group (MO) has displaced GD as the top performing stock in DivGro, as illustrated in the following chart:
Helmerich & Payne (HP) and BHP Billiton (BBL) are by far the worst performers.

Please note that, in this chart, I'm including only stocks that I've owned for longer than a year, on average.

Overall, DivGro has an average YoC of 4.1%, down slightly from 2014's average YoC of 4.6%. The reduction is due mostly to my selling of high yield MLPs (master limited partnerships).

DivGro's payback increased from 4.98% for 2014 to 7.98% for 2015. Payback is the proportion of capital returned as dividends.

The portfolio's average annualized profit is down significantly, from 21.85% at the end of 2014 to 5.91% at the end of 2015. Overweight exposure to energy stocks in 2015 is the main reason for DivGro's poor performance last year. I've been reducing my exposure to energy stocks in the last few months.

Rate of Return

In 2015, I invested $79,585, which is up significantly from the $36,850 invested in 2014. The ending market value of $178,873 represents a simple return of -2.22% on the total amount of $182,935 invested.

Of course, the simple return does not take into account the timing and size of investments. On 31 December 2015, DivGro's time-weighted return was 17.4%, down significantly from 34.1% at the end of 2014.

In comparison, the S&P 500 was up 2% in 2015.

Dividend Income 

The main goal of DivGro is to generate a reliable and growing dividend income stream. In 2015, DivGro generated a total of $7,907 in dividend income, up 100% from 2014's total dividend income.

Projected annual dividend income (PADI) increased to $6,778, which means I can expect to earn monthly dividend income averaging at least $565 going forward. PADI increased by 38.7% from 2014's end-of-year amount of $4,886:
Dividend Growth

An important aspect of my main goal with DivGro is dividend growth. I use selection criteria that favor stocks with a history of paying increasing dividends every year. In 2015, no fewer than 43 of DivGro's stocks increased dividend payments:

Dividend Growth Company Ticker Increase
%Incr
High (above 9%) Cummins Inc
The Walt Disney Company
International Business Machines Corp
T. Rowe Price Group, Inc
Microsoft Corporation
Pfizer Inc
Macquarie Infrastructure Corp
Reliance Steel & Aluminum Co
Qualcomm Inc
Texas Instruments Inc
AbbVie Inc
General Dynamics Corporation
The Travelers Companies, Inc
Apple Inc
Union Pacific Corporation
Caterpillar Inc
CMI
DIS
IBM
TROW
MSFT
PFE
MIC
RS
QCOM
TXN
ABBV
GD
TRV
AAPL
UNP
CAT
   78¢ to 97.5¢
57.5¢ to 71¢   
$1.10 to $1.30
44¢ to 52¢
31¢ to 36¢
26¢ to 30¢
   98¢ to $1.13
35¢ to 40¢
34¢ to 38¢
48¢ to 52¢
51¢ to 56¢
62¢ to 69¢
55¢ to 61¢
47¢ to 52¢
50¢ to 55¢
70¢ to 77¢
25.00%
23.48%
18.18%
18.18%
16.13%
15.38%
15.31%
14.29%
14.29%
11.76%
11.76%
11.29%
10.91%
10.64%
10.00%
10.00%
Medium (4 – 9%) Altria Group, Inc
Dominion Resources, Inc
Target Corporation
Omega Healthcare Investors, Inc
Johnson & Johnson
Walgreens Boots Alliance, Inc
Intel Corporation
The Coca-Cola Company
Eversource Energy
Exxon Mobil Corporation
Meredith Corporation
STAG Industrial, Inc
AFLAC Incorporated
Kimberly-Clark Corporation
McDonald's Corporation
The Gap, Inc
Realty Income Corporation
MO
D
TGT
OHI
JNJ
WBA
INTC
KO
ES
XOM
MDP
STAG
AFL
KMB
MCD
GPS
O
  52¢ to 56.5¢
    60¢ to 64.75¢
52¢ to 56¢
52¢ to 56¢
70¢ to 75¢
33.75¢ to 36¢     
22.5¢ to 24¢   
31¢ to 33¢
39.25¢ to 41.75¢
69¢ to 73¢
43.25¢ to 45.75¢
     11¢ to 11.58¢
39¢ to 41¢
84¢ to 88¢
85¢ to 89¢
22¢ to 23¢
18.34¢ to 19.1¢  
8.65%
7.92%
7.69%
7.69%
7.14%
6.67%
6.67%
6.45%
6.37%
5.80%
5.78%
5.30%
5.13%
4.76%
4.71%
4.55%
4.13%
Low (below 4%) Avista Corporation
HCP, Inc
ACE Limited
The Procter & Gamble Company
W.P. Carey, Inc
Digital Realty Trust, Inc
AT&T Inc
Wal-Mart Stores, Inc
Phillip Morris International Inc
ConocoPhillips
AVA
HCP
ACE
PG
WPC
DLR
T
WMT
PM
COP
31.75¢ to 33¢     
54.5¢ to 56.5¢
65¢ to 67¢
64.36¢ to 66.29¢
     94¢ to 96.46¢
83¢ to 85¢
46¢ to 47¢
48¢ to 49¢
$1.00 to $1.02
73¢ to 74¢
3.94%
3.67%
3.08%
3.00%
2.62%
2.41%
2.17%
2.08%
2.00%
1.37%

The following table shows DivGro stocks that did not increase dividend payments in 2015. The last column shows each stock's yield at the end of 2015:

Dividend Growth Company Ticker Dividend
Yield
None BHP Billiton plc
Chevron Corporation
Deere & Company
Gilead Sciences, Inc
Helmerich & Payne Inc
PennantPark Investment Corp
Starwood Property Trust
BBL
CVX
DE
GILD
HP
PNNT
STWD
$1.24
$1.07
60¢
43¢
68.75¢
28¢
48¢
10.95%
 4.76%
3.15%
1.70%
5.14%
18.12%
9.34%

Double digit yields likely are not sustainable in the long-run, so I'll need to consider my positions in BBL, PennantPark Investment (PNNT), and also Starwood Property (STWD) carefully.

Due to currency exchange fluctuations, 2 DivGro stocks paid out a smaller dividend in 2015 than in 2014. Please note that I'm reporting the dividends per share I received in US$ terms, after the deduction of foreign withholding tax: 

Dividend GrowthCompanyTickerDecrease
%Decr
NegativeNippon Telegraph and Telephone Corp
Toronto-Dominion Bank
NTT
TD
  40.29¢ to 38.07¢
   35.31¢ to 33¢      
5.51%
 6.54%

Longterm Positions

I'd like to briefly report on the performance of DivGro positions that are at least one year old, on average.

The following graph shows the YoC of these longterm positions. The business development company PNNT leads the pack with a YoC of 9.36%. Shortly after I bought my shares, the company froze its dividend. Despite the freeze, I decided to hold onto my shares and to continue collecting the high dividend yield. The share price has steadily declined for about 18 months, forcing the current yield up to a potentially unsustainable 20%. I'll continue to monitor the situation with PNNT carefully – should the company cut its dividend, I will sell my shares.
Here's a chart showing the 2015 dividend increases of my longterm positions. IBM, Microsoft (MSFT) and Pfizer (PFE) lead the pack. I like to see increases of at least 7%, so I'm happy that 12 of these longterm positions have increased their dividends by more than 7%.
Next up is payback percentage. Stocks with high yields should dominate here, and, indeed, PNNT has the largest payback percentage by far. Of course, stocks I purchased first will have an advantage over stocks I bought more recently.
I prefer to buy stocks in chunks of $2,500 at a time. Last year, I started adding to existing positions in addition to opening new positions. The following chart illustrates the impact of capital gains (or losses) on the relative weight of a position. Positions that I've doubled-up on are marked with an asterisk.

2015 Highlights


Without a doubt, my personal highlight of 2015 was our second 7-day cruise, this time to Alaska on the Norwegian Jewel. What an amazing experience! Alaska is a beautiful state and I can't wait to go back! What made the cruise even more special is that my wife and I were accompanied by my parents, who were celebrating their 80th and 79th birthdays!

As for DivGro highlights, in 2015 my total dividend income surpassed $13,000 and DivGro's projected monthly income crossed above the $600 mark. I now hold more than 50 different stocks in my portfolio which has a market value of over $178,000.

Page Views

At the beginning of 2015, DivGro had just over 150,000 page views (pv's). Throughout the year, the pv's steadily climbed, reaching 360,000 on 22 December 2015:

 28 December 2014
 average since inception: 207 pv's 
 3 September 2015
 average since inception: 308 pv's 
 25 March 2015
 average since inception: 246 pv's 
 5 December 2015
 average since inception: 328 pv's 
 13 June 2015
 average since inception: 280 pv's 
 22 December 2015
 average since inception: 332 pv's 

Currently, DivGro seems to be averaging about 710 pv's per day, which is up from 550 pv's per day a year ago. That's about 21,700 pv's a month!

Popular Posts

In 2015 I posted 107 articles, including 41 premium articles for Seeking Alpha and 5 articles on The DIV-Net. Here are some of the more successful articles in 2015, based on pv's:

Top 2015 DivGro Articles:
   • 19 Jan: Dividend Increases, January 2-16, 2015 (1,178 pv's)
   • 04 Apr: Updated Blogroll Page (1,070 pv's)
   • 15 Jul: Baxter Spins-Off Baxalta (998 pv's)
   • 18 Jan: Annual Review, 2014 (996 pv's)
   • 14 Apr: 10 Dividend Growth Stocks For April 2015 (991 pv's)

Top 2015 Seeking Alpha Premium Articles:
   • 18 Oct: Recent Buy: Exxon Mobil (8,196 pv's)
   • 16 Feb: 10 Dividend Growth Stocks For February 2015 (8,016 pv's)
   • 16 Mar: 10 Dividend Growth Stocks For March 2015 (7,552 pv's)
   • 13 Jan: 10 Dividend Growth Stocks For January 2015 (7,532 pv's)
   • 10 May: 10 Dividend Growth Stocks For May 2015 (6,389 pv's)

Top 2015 Seeking Alpha Regular Articles:
   • 04 Mar: Recent Buy: AT&T (7,149 pv's)
   • 07 Feb: Recent Buy: The Walt Disney Co. (6,938 pv's)
   • 04 Mar: Recent Buy: Caterpillar (6,281 pv's)
   • 06 Dec: Recent Buy: HCP, Inc (4,897 pv's)
   • 10 Feb: Dividend Increases, January 19-30, 2015 (3,769 pv's)

My Personal Favorite Articles of 2015:
   • 07 Feb: Recent Buy: DIS (874 pv's + 6,937 pv's on SA)
   • 03 Sep: Recent Buy: AAPL (910 pv's)
   • 18 Dec: Goals for 2016 (725 pv's)

All-Time Most Popular DivGro Articles:
   • 20 Jun'14: Tracking your DGI Portfolio (5,003 pv's)
   • 24 Feb'14: Popular Dividend Growth Stocks (3,385 pv's)
   • 21 Oct'13: Recent Buy: VNR (1,480 pv's)
   • 27 Apr'14: My New Watch List of Dividend Growth Stocks (1,348 pv's)
   • 01 Sep'14: 10 Dividend Growth Stocks For September 2015 (1,256 pv's + 4,247 on SA)
   • 19 Jan'15: Dividend Increases, January 2-16, 2015 (1,178 pv's)
   • 03 Nov'14: 10 Dividend Growth Stocks For November 2015 (1,125 pv's + 3,311 on SA)
   • 04 Apr'15: Updated Blogroll Page (1,070 pv's)
   • 28 Feb'14: More Popular Dividend Growth Stocks (1,065 pv's)

2016 Outlook


I've set some really challenging goals for 2016. I want to increase PADI to $12,000 and attempt to earn $10,800 in dividend income by 31 December 2016. To do so, I'll need to find ways to boost my recurring monthly deposits of $2,000. My plan is to continue depositing premium article income from Seeking Alpha monthly and to deposit "passive" income earned via Google Adsense biannually.

This year, I'm challenging myself to write 120 articles, including 52 premium articles for Seeking Alpha and 8 articles for The DIV-Net.

I'm hoping to earn some extra income on a few of my DivGro positions by writing covered calls.

A special word of thanks to all my readers, especially to those that comment regularly and continue to encourage me!

Thanks for reading! 

10 comments :

  1. Hey DivGro,

    Very nice overview you've got here!
    Impressive portfolio after just 3 years as well.

    Keep us updated and good luck in 2016!

    Best wishes, DfS

    ReplyDelete
    Replies
    1. Thanks, DfS -- the 3 years have been quite a journey and I just couldn't imagine, at the onset, that I'd be approaching the 200k mark at this time.

      Delete
  2. Keep it up Ferdis. You're doing amazing and 3 years in, you have accomplished a lot! Keep at it bud and slowly and surely, the dividend income stream will take care of all of your life's expenses. That would be soo sweet.
    Thanks for sharing and keep at it. Cheers buddy.

    ReplyDelete
    Replies
    1. Hey, Dividend Hustler -- thanks for your nice words. I'm really glad that I started this journey 3 years ago. While the current dividend income stream is still small, it is growing and I'm hoping that after 10 years it would cover our expenses sufficiently. As you say, that would be so sweet!

      Delete
  3. Very good job....

    OH ...je suis surpris de voir votre aperçu.....Félicitation DivGro ...je devrais surement revenir regarder cela de prés....A+

    ReplyDelete
    Replies
    1. Thanks, Gaston -- thanks for visiting and for your kind words. Please check back when you have a chance!

      Delete
  4. Thought I had commented earlier, but don't see it. Nice job as usual on the review FerdiS. Very nice.

    ReplyDelete
    Replies
    1. Thanks, Mike A -- I didn't see any earlier comment from you. I appreciate you visiting and commenting!

      Delete
  5. I've been following your blog for a while and just wanted to say keep up the good work! Can't believe you're almost at $200k after only three years. Just curious, but were your spreadsheets filled in by hand or do you have a system that has automated it all? Anyway, really appreciate the monumental effort this must have been - it was really interesting to read.

    ReplyDelete
    Replies
    1. Hi Andre -- thanks for visiting and commenting! I agree, its hard to believe that I'm nearing the $200k mark. Very grateful, I am.

      I wish I had a system for creating the spreadsheets and charts automatically! That would be great but, alas, I do these by hand. Fortunately, Google's spreadsheet works nicely and I can extract things like current price automatically.

      Cheers
      FerdiS

      Delete

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