The Blogger's Dividend Growth Portfolio, 2015 Edition

This article originally appeared on The DIV-Net on Wednesday, 23 December 2015.

In January 2013, I joined a growing number of dividend growth investment (DGI) bloggers when I created DivGro. As a starting DGI blogger, I learned a lot by reading other DGI blogs and mimicking what seemed to be good ideas. For me, the best learning came from reviewing the portfolios of DGI bloggers who chose to make their portfolios public.

My blogroll contains over 100 DGI blogs and I include links to public portfolios. Having direct access to public portfolios gives me a quick overview of a blogger's investment philosophy. By now, I know most of the tickers usually found in DGI portfolios, so a quick glance at a public portfolio tells me a lot. Of course, if bloggers choose to include more details than just a list of tickers, that is most useful.

Recently, I updated my blogroll by separating blogs into different categories based on date and activity. New Blogs are blogs that are less than one year old. More established blogs are either Active Blogs (blogs with at least 50 posts in the past year) or Steady Blogs (blogs with fewer than 50 posts in the past year). I also have an Honor Roll containing well-known and popular blogs that contain high quality or inspirational articles.

My interest in public portfolios stems from research I did on the stock holdings of other DGI bloggers. In February 2014, I compiled a spreadsheet combining the holdings of 20 public portfolios and identified the 31 most popular dividend growth stocks held by these DGI bloggers. In October 2014, I expanded the spreadsheet to the combined holdings of 61 DGI bloggers and compiled a portfolio of 52 stocks called The Blogger's Dividend Growth Portfolio (the Blogger's Portfolio, for short).

With this article, I'm revisiting the Blogger's Portfolio and revealing the 60 most popular holdings, as of 11 December 2015.

COMPILING THE PORTFOLIO

Dividend growth investment focuses on companies that regularly increase dividends. To qualify as a dividend growth stock, I require increasing dividends over a period of at least 5 consecutive years. This definition of dividend growth stocks happens to be the one used by David Fish in compiling his list of CCC stocks (Champions, Contenders and Challengers), a wonderful resource for dividend growth investors. He updates the list monthly and provides key statistics for each stock.

To compile the Blogger's Portfolio, I created a spreadsheet with 43 columns corresponding to 43 public portfolios in DivGro's blogroll. The portfolios are from blogs in my Honor Roll, as well as established blogs either classified as Active or Steady. Therefore, all blogs included have been operational for more than a year.

Each column in the spreadsheet lists tickers of stocks in the corresponding public portfolio. I collated all tickers and counted the number of appearances of unique tickers. Out of 1,679 tickers, 467 are unique.

In the next step, I removed tickers that do not appear in the 11/30/15 version of the CCC list and tickers that appear in fewer than 6 public portfolios. Sorting the remaining tickers by frequency results in the following histogram:



One ticker appears in 36 out of the 43 public portfolios, while 2 other tickers appear in 34 and 33 portfolios, respectively. These are the 3 most popular dividend growth stocks. A total of 60 tickers appear in at least 6 portfolios each.

THE BLOGGER'S PORTFOLIO, 2015 EDITION

Last year, the Blogger's Portfolio contained 52 stocks. This year, I'm expanding the portfolio to 60 dividend growth stocks, color-coded in the following chart by sector:


This year, the most popular stock is Johnson & Johnson (NYSE:JNJ), followed by AT&T (NYSE:T) and Coca-Cola (NYSE:KO). It is interesting to see how the top 20 ranked stocks differ from the previous occasions I did this exercise:



Following is the entire portfolio with some key statistics for each stock, sorted by GICS sectors. I'm separating REITs (Real Estate Investment Trusts) from the Financials sector, as it appears that the GICS sectors will be expanding to 11 sectors in 2016.

In each table, Freq indicates the number of public portfolios containing Ticker, while Rank is the overall position in the list of 60 stocks. Years are the number of consecutive years of dividend increases according to the CCC list; Yield is the dividend yield as of the closing Price on 11 December 2015; and 5-DGR is the compound annual dividend growth rate over a 5-year period. Finally, M*FV and M*CR are Morningstar's Fair Value Estimate and Credit Rating, where available.

1. Consumer Discretionary


2. Consumer Staples


3. Energy


4. Financials


5. Financials (REITs)


6. Health Care


7. Industrials


8. Information Technology


9. Materials


10. Telecommunication Services


11. Utilities


SECTOR DISTRIBUTION

Another interesting thing to look at is the sector distribution of the Bloggers' Portfolio. Personally, I don't look for a uniform distribution of tickers by sector. Rather, I target a sector distribution that matches the sector distribution of my dynamic watch list, which is updated every month when the CCC list is updated. The following table compares the sector distributions of the Bloggers' Portfolio and DivGro's watch list:

Sector distribution comparison


In the Blogger's Portfolio, Consumer Staples and Health Care seem to be overweight, whereas Financials, Materials and Utilities are underweight.

NON-CCC STOCKS

In using the fairly restrictive definition of dividend growth stocks, namely only those currently in the CCC list, several great dividend paying stocks are removed from consideration. For example, David Fish removes stocks from the CCC list if the US dollar equivalent of their dividends do not increase every year. Also, dividend payers on the verge of becoming CCC stocks may be of interest to dividend growth investors.

As a bonus, I'm including a table presenting the most popular non-CCC stocks in the public portfolios of DGI bloggers.

Bonus List: Popular non-CCC stocks


Several of these companies have excellent dividend yields and may be worth more than a cursory look!

BY VALUE

Another way to aggregate the portfolios of bloggers is by market value, which provides a different way of weighting individual stocks in portfolios. (Counting tickers merely assigns an equal weight to each stock).

No fewer than 36 of the 43 portfolios provide detailed information, include the current market value of individual stocks. The total current market value of all 36 portfolios is just more than $3.4 million, which averages to $95,168 per portfolio.

Of course, the market value of a few large portfolios would dominate the aggregation, so I decided to assign proportional weights instead. Specifically, for each portfolio, I assigned weights to tickers based on market value. Then I determined the contribution of each ticker to the aggregate, assuming each portfolio's market value is $100,000. In this way, each of the 36 portfolios have an equal say in how tickers are weighted.

For this exercise, I used all tickers that appear in at least 6 portfolios, including those from non-CCC stocks. The following table presents the results for the top 20 stock sorted by average value per ticker:

Top-ranked stocks by average dollar value


It is fascinating to note that several of the top-ranked Blogger's Portfolio stocks are now nowhere to be found! For example, #5 Proctor & Gamble (NYSE:PG), #6 Chevron (NYSE:CVX) and #8 Wal-Mart (NYSE:WMT) dropped off entirely.

HOW DOES YOUR PORTFOLIO COMPARE?

Compiling the Blogger's Portfolio is a learning exercise and not an attempt to create the perfect dividend growth portfolio. I find it interesting to repeat this exercise periodically and to compare my portfolio with the Blogger's Portfolio.

Currently, my portfolio contains 52 stocks, of which 29 appear in the Bloggers' Portfolio. I own 15 of the top 20 ranked stocks.



Perhaps more interesting are the stocks I own that are not in the Bloggers' Portfolio.

Some have been removed from the CCC list after dividend freezes, including Energy Transfer Partners (NYSE:ETP), Intel (NASDAQ:INTC), and PennantPark Investment (NASDAQ:PNNT).

Others are no longer included in the CCC list after the companies paid US dollar equivalent dividends that did not increase from one year to the next. For example, Nippon Telegraph & Telephone (NYSE:NTT) and Toronto-Dominion Bank (NYSE:TD) no longer are included in the CCC list.

Several stocks are unique to DivGro, which means not even one of the 43 public portfolios I referenced contain these stocks! Examples include Eversource Energy (NYSE:ES), Meredith Corporation (NYSE:MDP), Macquarie Infrastructure (NYSE:MIC), and Reliance Steel & Aluminum (NYSE:RS).

CONCLUDING REMARKS

Dividend growth investing is not a popularity contest. The Blogger's Portfolio contains overvalued stocks as well as stocks that are in danger of receiving a dividend cut. In fact, while I was compiling the 2015 Edition of the Blogger's Portfolio, Kinder Morgan (NYSE:KMI) cut its dividend by 75%!

I've including Morningstar fair value estimates to help with a superficial value assessment. Before investing in any of these stocks, readers are strongly encouraged to do a thorough analysis. Do a fair value estimation using one of the generally accepted stock evaluation methods, like the DDM (dividend discount model). Search for articles that cover the stock you're interested in buying and read the company's last quarterly report.

I created DivGro in January 2013 to generate a reliable and growing dividend income stream. By keeping track of the portfolio and interacting with like-minded investors, I've become a better dividend growth investor. I've learned a tremendous amount about dividend growth investing by scrutinizing other blogs and studying the public portfolios of other bloggers.

I'd like to thank those bloggers on my blogroll that have made their portfolios public. Their willingness to share is what makes this article possible!

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