As stated elsewhere on this blog, the goals of DivGro are to generate reliable and growing dividend income and to generate acceptable total returns exceeding the performance of the S&P 500 index. My strategy is to buy stocks of companies that consistently pay and increase their dividends. By reinvesting those dividends, I'll benefit from compounding and, over time, generate a return that handily beats inflation.
During this quarter, I contributed capital funds in the amount of $16,000 to DivGro (an opening deposit of $12,000 and 4 additional deposits of $1,000 each) and purchased a total of 5 dividend growth stocks. These stocks represent expected dividend income for 2013 of $721.09. At the end of March, DivGro had a market value of $16,736.95. Included in the overall gain of $736.95 is dividend income of $138.88.
The end market value of DivGro represents a simple profit of 4.61%. Of course, a better performance measure is personal rate of return (PRR), which takes into account when new capital is added. I used the XIRR function in Excel to calculate an annualized personal rate of return (PRR) for DivGro for Q1-2013. Including dividend income, DivGro achieved an annualized PRR of 25.72%. This is more than satisfactory, but I have no illusions that future quarters will bring more modest PRRs.
In the quarter ending March 2013, the Dow Jones Industrial Average increased 8.69% while the S&P 500 increased 7.30%:
|Jan 1, 2013|
|Mar 31, 2013|
Compared with these benchmarks, DivGro actually underperformed at about 6.43% (25.72% ÷ 4). In the long run, I hope to exceed the performance of the S&P 500 index.
Here is a spreadsheet summarizing DivGro's performance for Q1-2013:
- GD increased its annual dividend by 9.8% from $2.04 to $2.24, increasing annual dividend income from GD by $7 to $78.40; yield on cost (YoC) is now 3.31%
- Total expected dividend income for 2013: $721.09
- ETP: $0.8938/unit x 100 units = $89.38
- INTC: $0.225/share x 120 shares = $27.00
- CVX: $0.90/share x 25 shares = $22.50
- Total for Q1 of 2013: $138.88
- Year-to-date: $138.88 of $721.09 (19.26%)
Outlook For Q2-2013: At the beginning of April, I made a significant capital contibution to DivGro, after a 2-year CD of mine matured and I decided to transfer the funds to DivGro! This should provide a good boost to my portfolio and my dividend income expectations for 2013. I'll report on next quarter's performance in early July.