Monday, February 20, 2017

Monthly Review: January 2017

In January I celebrated DivGro's fourth anniversary. The journey has been (and still is!) exhilarating and I look forward to seeing where the next four years will take me. Coincidently, in December 2016 DivGro's projected annual dividend income (PADI) crossed the $12,000 mark, which means I can expect dividend income of at least $1,000 per month, on average, in perpetuity.

I've finalized the transfer of our trust account from Scottrade to Interactive Brokers where commission rates are more favorable for options trading. I still need to transfer stocks from one of my FolioInvesting accounts to Interactive Brokers so I can execute options trades on those stocks as well. Speaking of options, in January I secured $727 in options income. Recall that I tally secured options income, which is income received from closed options trades. Please see my latest options update for details.

In January I received dividend income of $1,095, essentially doubling the dividend income I received in January 2016. Additionally, I recognized past dividend income of $401 from a Roth IRA that I'm now managing as part of DivGro. DivGro's projected annual dividend income (PADI) increased to $12,398, a year over year increase of 65%!

In last month's review, I mentioned that I published my first Editor's Pick article at Seeking Alpha: Top Holdings of Dividend ETFs. The article generated lots of interest and now has topped 26,000 page views! In January, I published a similar analysis, this time looking at the holdings of established dividend growth bloggers: Top Holdings Of Dividend Growth Bloggers, 2017 Edition. While not as popular as the first analysis, I think the results are worth reviewing. In fact, based on backtesting using the Portfolio Visualizer, the 25 top holdings of DG Bloggers outperformed the 25 top holdings of Dividend ETFs.

January Highlights

Generating a growing dividend income stream is the main goal of DivGro. I review my dividend income regularly and consider factors that could affect future dividend payments.

In the month of January, I recorded dividend income totaling $1,496. Fifteen different DivGro stocks paid dividends. DivGro's projected annual dividend income (PADI) now stands at $12,398. Here is projected monthly dividend income (red line) plotted against monthly dividends:


Another way to see progress is to compare dividend income by month:


Transactions

In January, I added shares to 3 existing positions:

• AGIC Equity&Convertible Income Fund (NIE)
• Microsoft Corp. (MSFT)
• Wal-Mart Stores, Inc (WMT)

The shares added for MSFT and WMT are positions I hold in my Roth IRA, which I'm now managing as part of DivGro.

As a result of these transactions, DivGro's PADI increased by $114.

Dividend Changes

The following stocks announced dividend increases:

• Dominion Resources, Inc (D)
• Kimberly-Clark Corporation (KMB)
• Valero Energy Corporation (VLO)

The following stock announced a dividend decrease:

• PennantPark Investment (PNNT)

DivGro's PADI decreased by $203 due to these dividend changes.

Dividends Received

I received dividends from 15 different stocks this month, for a total of $1,496 in dividend income:

• Chubb Limited (CB) – $16.56
• Cisco Systems, Inc (CSCO) – $78.00
• The Walt Disney Company (DIS) – $177.06
• Eaton Vance Tax-Managed Global Diversified Equity Income Fund (EXG) – $58.86
• Kimberly-Clark Corporation (KMB) – $92.00
• Main Street Capital Corp. (MAIN) – $61.05
• Altria Group Inc. (MO) – $45.75
• Microsoft Corp. (MSFT) – $277.00 (from past dividends received)
• AGIC Equity&Convertible Income Fund (NIE) – $112.48
• Nike Inc (NKE) – $8.46
• Realty Income Corp. (O) – $10.13
• PennantPark Investment (PNNT) – $280.00
• Reynolds American, Inc (RAI) – $92.00
• STAG Industrial Inc (STAG) – $27.80
• Wal-Mart Stores, Inc (WMT) – $159.04 ($124.54 from past dividends received)

Markets

While I no longer compare DivGro's performance to the markets, it is worth looking at the context within which we're investing:

Dec 31, 2016
DOW: 19,762.60S&P 500: 2,238.83NASDAQ: 5,383.1210-YR BOND: 2.45%
Jan 31, 2017
DOW: 19,864.09S&P 500: 2,278.87NASDAQ: 5,614.7910-YR BOND: 2.45%

In January, the DOW gained 0.51%, the S&P 500 gained 1.79%, and the NASDAQ gained 4.30%. The yield on the benchmark 10-year Treasury note rose from 2.446 to 2.451%.

Below are charts showing the market activity of these indices in January, courtesy of Google Finance. (Click on the charts to see detail). Each chart shows a 20-period exponential moving average (in red). I've also included a 20-period relative strength index below the main chart.


Market Value

At the end of January, DivGro's market value was $361,177. This represents an increase of 1.80% over last month's total and an increase of 76% since the end of January 2016.

Market ValueCash DepositsSimple Return
Jan 31, 2016
$204,889.00$200,019.002.43%
Dec 31, 2016
$354,795.48$286,854.0423.68%
Jan 31, 2017
$361,176.60$293,694.9222.98%

Given the current market value of $361,177, my portfolio has delivered a simple return of 22.98% since inception. In comparison, DivGro's IRR (internal rate of return) is 11.43%. (IRR takes into account the timing and size of deposits since inception, so it is a better measure of portfolio performance).

Here's a chart showing DivGro's market value breakdown. Dividends are plotted at the base of the chart so we can see them grow over time.


Portfolio



Here is a snapshot of DivGro's state on the last day of January 2017:


I track the yield on cost (YoC) for individual stocks, as well as an average YoC for my portfolio. DivGro's average YoC decreased from 4.26% last month to 4.24% this month.

Another interesting statistic is percentage payback, which relates dividend income to the amount of capital invested. DivGro's average percentage payback is 10.28%, up from last month's 9.85%.

Finally, DivGro's projected annual yield is at 4.22%, down from last month's value of 4.31%. I calculate projected annual yield by dividing PADI ($12,398) by the total amount invested ($293,695).

Goals Review

I've set some challenging goals this year:
  1. PADI: Increase projected annual dividend income to $14,400
  2. Dividends: Earn $12,960 in dividend income
  3. Options: Earn $8,400 in options income
  4. Seeking: Write 64 premium articles for Seeking Alpha
  5. DivNet: Write 6 articles for The DIVNet
Here is a set of gauges representing the progress I've made towards achieving these goals. The last gauge is a reference – it indicates where the other gauges should be after 31 out of 365 days:


Thanks to recognizing some past dividend income following the consolidation of my Roth IRA into the DivGro fold, I'm happy to say that my Dividends goal is ahead of schedule. Similarly, I'm ahead of schedule with Seeking having published 7 premium articles in January. My PADI and DivNet goals need attention.

Looking Ahead

In February I'll continue to consolidate our investment accounts. My goal is to manage all our accounts using DivGro's strategy of dividend growth investing. When completed, DivGro will be distributed over five different accounts, one trust account at Interactive Brokers and four IRA's (a traditional and a Roth IRA for me, and a traditional and Roth IRA for my wife) at FolioInvesting. I expect the retirement account consolidation to be completed in March while finalizing the trust account at Interactive Brokers will take a while longer. Meanwhile, I'm happy to be trading options at Interactive Brokers now. The commissions are quite reasonable and allow for much more flexibility, including the ability to roll options forward and to close options early.

Please see my Performance page for various visuals summarizing DivGro's performance.

Thanks for reading! How did your portfolio perform last month? Please comment below.

14 comments :

  1. Happy 4th blog birthday. Blogs are like restaurants, most disappear in less than 6-months. Making it 4years is an accomplishment. I'm jealous of your options income, you're killing it Ferdi. Nice work!

    ReplyDelete
    Replies
    1. Thanks, Investment Hunting. You're so right -- I've seen many DGI bloggers come and go. Even the mighty Dividend Mantra is gone. The options income will be up and down (as you probably know)! We'll see how it goes this year.

      Delete
  2. That is amazing growth compared to last year, you would have to be happy with that. Imagine if you could double that next year as well. It would be quite nice. I hope the rest of your 2017 year is fantastic. Cheers

    ReplyDelete
    Replies
    1. I wish that would be possible every year, but, alas, I'm cutting down on my monthly contributions this year because my youngest son is in college now.

      Thanks for commenting and have a great 2017 yourself!

      Delete
  3. It looks like January was a great start to 2017 for you. $1k in dividends, $1.9k in options and PADI over $12k. Plus moving to IB where the fee structure is much better. Regarding the IB transfers are you able to do in-kind transfers so you don't have to sell and reestablish positions creating taxable events?

    ReplyDelete
    Replies
    1. About the move to IB -- I just moved the entire account from Scottrade to IB. The only requirement is that the account type stays the same. I had a margin trust account at Scottrade and created a margin trust account at IB. The transfer included long stock positions and short options (calls and puts). Plus, IB accepted the margin component as is.

      Delete
  4. Hi FerdiS,
    Congrats on the 4 year anniversary - it's great to see that you're still passionate about reaching FI!
    It looks like January was a great month for you with new capital invested and some dividend growth too. I like the monthly market breakdown chart too.
    I'm looking forward to seeing your February results now too! :)
    Best wishes,
    -DL

    ReplyDelete
    Replies
    1. Oh, I'm very passionate about reaching FI -- though I don't have so much time as most dividend growth investors (having started quite late). There's lots to do still but I'm enjoying the journey.

      Thanks for commenting, and all the best for you too!

      Delete
  5. Wow, $12K of my dividend income is impressive! Considering January isn't a big month for dividends, $1K of dividend income in January is great. I'm hoping to be able to get to that level with my dividends some day. Thanks for sharing.

    ReplyDelete
    Replies
    1. Hi, Christian Investor -- thanks for reading and commenting!

      The best advice I can give you is to hang in there and build your investment portfolio diligently. Over time, the compounding starts to work and you'll see stronger growth. All the best and happy investing!

      Delete
  6. Wow!

    I have only two questions:
    Where do you work?
    And what do you do?

    Where I come from, earning 93k $ after tax in a year is something only top 5% of people achieve.

    ReplyDelete
    Replies
    1. Please see: "About FerdiS of DivGro" at the top/right of my blog.

      Thanks!

      Delete

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