Quarterly Review of DivGro, Q1-2017

Welcome to my 17^th quarterly review of DivGro, my portfolio of dividend growth stocks. I adopted the strategy of dividend growth investing (DGI) just more than four years ago after being inspired by several do-it-yourself DGI bloggers. It has been quite a journey!

My quarterly reports summarize the actions I've taken during the preceding quarter. I include summaries of dividends received and I report on changes that would impact future dividend income.

In the first quarter of 2017, I transferred our trust account from Scottrade to Interactive Brokers, which provides a more flexible trading platform and lower commissions. I'm taking additional consolidation actions, including transferring our IRAs to FolioInvesting where I'll be managing them as part of DivGro.

I have aggressive goals for 2017, including a new goal of boosting DivGro's dividend income through options trading. I'm hoping to earn $8,400 in options income and use the money so generated to buy more dividend growth stocks.

In Q1-2017, I collected option income totaling $3,243, compared with Q4-2016's total of $4,485. While it seems like I'm well on my way of achieving my options income goal for 2017, I only count options income for closed or expired trades. I call such options income secured because I no longer have potential obligations to fulfill. So far in 2017, I've managed to secure $2,318 in options income, or 28% of my $8,400 goal.

Dividend Income

The following chart illustrates DivGro's dividend income by quarter:

This past quarter, I collected dividend income totaling $3,585, topping last quarter's total by 23.8%. I'm particularly happy with the increase from Q1-2016 of 65.7%. Also, I recorded past dividend income in the amount of $1,245, which are from stocks in our IRA's.

DivGro's average percentage payback is 10.55%, up from 9.85% at the end of Q4-2016. Percentage payback relates total dividend income to the total amount of capital invested.

Transactions

This quarter I deposited $3,000 in new capital, $1,451 in passive income, and $3,243 in options income.

"Passive" income is a bit of a misnomer, as I'm actively working on writing articles for  DivGro and Seeking Alpha. Nevertheless, the income associated with these activities is not guaranteed but depends largely on my readership. (Thanks!)

Additionally, I recognized $16,005 in consolidation cash deposits and $5,280 in past cash deposits. These terms need a little explanation. Consolidation cash is simply the cash available in the IRA's that now will be managed as part of DivGro. For stocks in the IRA's that I decided to keep, such as UnitedHealth Group (UNH), Verizon Communications (VZ), and Xcel Energy Inc (XEL), past cash represents the initial cash outlay to buy these stocks.

Following is a summary of my buys in Q1-2017. New positions are highlighted:

Company	Ticker	Date	Transaction
AGIC Equity & Convertible Income Fund	NIE	4 Jan	added 75 shares at $18.74 per share
Wal-Mart Stores, Inc	WMT	14 Jan	transferred 9 shares at $56.96 per share
Microsoft Corporation	MSFT	16 Jan	transferred 60 shares at $27.80 per share
Qualcomm Inc	QCOM	7 Feb	added 200 shares at $53.06 per share
T. Rowe Price Group, Inc	TROW	10 Feb	added 35 shares at $69.38 per share
Xcel Energy Inc	XEL	24 Feb	transferred 26 shares at $19.39 per share
Verizon Communications	VZ	24 Feb	transferred 16 shares at $28.96 per share
AT&T Inc	T	24 Feb	transferred 19 shares at $25.89 per share
Xcel Energy Inc	XEL	24 Feb	added 24 shares at $43.34 per share
Verizon Communications	VZ	24 Feb	added 84 shares at $50.46 per share
Stanley Black & Decker, Inc	SWK	24 Feb	bought 50 shares at $127.16 per share
General Electric Company	GE	1 Mar	bought 300 shares at $31.00 per share
AGIC Equity & Convertible Income Fund	NIE	17 Mar	added 179 shares at $19.13 per share
Main Street Capital Corporation	MAIN	17 Mar	added 120 shares at $37.35 per share
Vanguard High Dividend Yield ETF	VYM	17 Mar	bought 150 shares at $78.97 per share
UnitedHealth Group	UNH	25 Mar	transferred 19 shares at $85.98 per share

I closed several positions and reduced the number of shares in one case, either by choice or due to option assignment:

Company	Ticker	Date	Transaction
PennantPark Investment	PNNT	9 Feb	sold 785 shares for $8.27 per share
Reynolds American, Inc	RAI	17 Feb	sold 100 shares for $52.50 per share
Kimberly-Clark Corporation	KMB	7 Mar	sold 100 shares for $120.00 per share
Nuveen AMT-Free Quality Municipal Income Fund	NEA	14 Mar	sold 359 shares for $12.95 per share
Eaton Vance Tax-Managed Global Diversified Equity Income Fund	EXG	14 Mar	sold 724 shares at $8.38 per share

DivGro now contains 48 different positions, including 46 stocks, one closed-end fund (CEF), and one exchange-traded fund (ETF). Here is the distribution of DivGro's holdings by sector:

I'm showing CEFs and ETFs as "sectors" even though they're funds.

Dividend Adjustments

Last quarter, I reported projected annual dividend income (PADI) of $12,376 on investments totaling $286,854, for a projected annual yield of 4.31%. This quarter, PADI increased to $12,607 and total investments increased to $312,590, so now projected annual yield is 4.03%.

The following table shows the stocks in my DivGro portfolio that announced dividend increases in Q1-2017. I'm including the new annual dividend and yield on cost (YoC).

Company	Ticker	Increase	Annual Div	New YoC
Cisco Systems, Inc	CSCO	11.54%	$1.16	3.83%
Dominion Resources, Inc	D	7.86%	$3.02	4.14%
Eversource Energy	ES	6.74%	$1.90	4.63%
General Dynamics Corporation	GD	10.53%	$3.36	4.97%
Gilead Sciences, Inc	GILD	10.64%	$2.08	2.20%
Coca-Cola Company	KO	5.71%	$1.48	3.58%
Intel Corporation	INTC	4.81%	$1.09	4.68%
3M Company	MMM	5.86%	$4.70	2.94%
Realty Income Corporation	O	3.95% 0.24%	$2.53 $2.53	5.35%
Omega Healthcare Investors, Inc	OHI	1.64%	$2.48	6.63%
Raytheon Company	RTN	8.87%	$3.19	2.97%
STAG Industrial, Inc	STAG	0.71%	$1.40	7.60%
AT&T Inc	T	2.08%	$1.96	6.02%
T. Rowe Price Group, Inc	TROW	5.56%	$2.28	3.07%
United Parcel Service, Inc	UPS	6.41%	$3.32	3.26%
Valero Energy Corporation	VLO	16.67%	$2.80	4.55%
Wal-Mart Stores, Inc	WMT	2.00%	$2.04	2.84%

DivGro's average YoC is 3.98%, down from the 4.26% reported at the end of Q4-2016.

I received dividends from 50 different stocks this month:

1. Apple Inc (AAPL) :: $57.00
2. AbbVie Inc. (ABBV) :: $128.00
3. Aflac Incorporated (AFL) :: $21.50
4. Chubb Limited (CB) :: $16.56
5. Cummins Inc (CMI) :: $45.10
6. Cisco Systems, Inc. (CSCO) :: $78.00
7. Dominion Resources, Inc (D) :: $75.50
8. The Walt Disney Company (DIS) :: $177.06
9. Eversource Energy (ES) :: $28.50
10. Eaton Vance Tax-Managed Global Diversified Equity Income Fund (EXG) :: $117.72
11. Ford Motor Company (F) :: $200.00
12. General Dynamics Corporation (GD) :: $26.60
13. Gilead Sciences, Inc (GILD) :: $52.00
14. International Business Machines Corporation (IBM) :: $42.00
15. Intel Corporation (INTC) :: $57.20
16. Johnson & Johnson (JNJ) :: $43.20
17. Kimberly-Clark Corporation (KMB) :: $92.00
18. Lockheed Martin (LMT) :: $25.48
19. Main Street Capital (MAIN) :: $183.15
20. McDonald's Corporation (MCD) :: $25.38
21. 3M Company (MMM) :: $18.80
22. Altria Group, Inc. (MO) :: $45.75
23. Microsoft Corporation (MSFT) :: $331.60
24. Nuveen AMT-Free Quality Municipal Income Fund (NEA) :: $44.52
25. AGIC Equity & Convertible Income Fund (NIE) :: $253.46
26. Nike Inc (NKE) :: $8.46
27. Northrop Grumman Corporation (NOC) :: $14.40
28. Realty Income Corporation (O) :: $31.19
29. Omega Healthcare Investors, Inc (OHI) :: $186.00
30. Pfizer Inc (PFE) :: $96.00
31. The Procter & Gamble Company (PG) :: $66.95
32. PennantPark Investment (PNNT) :: $280.00
33. Qualcomm Inc (QCOM) :: $212.00
34. Reynolds American, Inc (RAI) :: $92.00
35. Raytheon Company (RTN) :: $17.58
36. STAG Industrial, Inc (STAG) :: $83.80
37. Stanley Black & Decker, Inc (SWK) :: $29.00
38. AT&T Inc (T) :: $329.55
39. Target Corporation (TGT) :: $84.00
40. T. Rowe Price Group, Inc (TROW) :: $57.00
41. The Travelers Companies, Inc (TRV) :: $19.43
42. UnitedHealth Group Inc (UNH) :: $110.93
43. United Parcel Service, Inc (UPS) :: $20.75
44. Valero Energy Corporation (VLO) :: $120.40
45. Vanguard High Dividend Yield ETF (VYM) :: $84.00
46. Verizon Communications (VZ) :: $250.32
47. Walgreens Boots Alliance, Inc (WBA) :: $16.50
48. Wal-Mart Stores, Inc (WMT) :: $159.04
49. Xcel Energy Inc (XEL) :: $225.93
50. Exxon Mobil Corporation (XOM) :: $48.75

Some of these payments are from stocks and funds I've sold in Q1-2017.

Market Value

At the end of Q4-2016, DivGro's market value of $414,850 represented a simple gain of 32.7% on $312,590 invested. Of course, this does not take into account the timing and size of cash deposits. DivGro's internal rate of return since inception is 15.16%.


I've started using the analysis and visualization tools available at Simply Wall St, a Sydney-based startup that gives investors access to institutional quality data and analysis reports presented visually.

The snowflake infographic represents Value, Future, Past, Health and Dividend scores calculated from the weighted average scores of stocks in my portfolio. It gives an immediate sense of the quality of the underlying portfolio or stock:

When sorted by total snowflake score, JNJ, QCOM, GD, RTN, and PFE top the list, while F, AAPL, GILD, CSCO, and STAG are at the bottom.

Simply Wall St provides an industry diversification infographic, which is interesting to study:



The thickness of lines in this infographic represents the size of investments. DivGro is overweight in Capital Goods and underweight in Transportation, HealthCare Equipment and Services, and Consumer Services.

Portfolio Statistics

I now monitor DivGro's performance monthly in Pulse articles. It is important to monitor the performance of long-term stocks because changes that could affect the stock's performance can easily "hide" behind solid long-term results. I'd rather not be surprised by such changes. You can read the latest pulse article here.

For my quarterly reviews, I review general portfolio statistics. First, let's look at the yield of stocks in my portfolio:

My closed-end fund, NIE, has the largest yield, followed by OHI, which is a REIT (real estate investment trust). The average yield of stocks in DivGro is 3.28%.

Next up is the dividend growth rate. For quarterly reports, I look at the 1-year dividend growth rate, which will change throughout the year as stocks announce dividend increases. It is important to strike a good balance between high yielding stocks and high dividend growth stocks.

I like seeing dividend increases about 7%, so I'm very happy to see about half of my DivGro stocks with a 1-year dividend growth rate exceeding 7%. The arithmetic average also is above 7%!

Let's look at the weight of individual holdings in DivGro. I prefer to see equal weights, but this difficult to achieve because I want to sell covered call options and to do so I need 100 shares (or multiples of 100 shares). Quite naturally, therefore, my portfolio will not be ideally weighted.

Next, let's look at the contribution of each position to DivGro's projected annual dividend income, which depends not only on the stock's yield but also on the size of the investment. Here, MAIN dominates, followed by QCOM and NIE:



Finally, let's look at the payback percentage, or how much of my original investment I've received back in the form of dividends. Generally, stocks I've owned for a longer time will larger paybacks, but dividend yield also plays a role: payback will grow faster for stocks with larger yields.



RAI's payback percentage just topped 20%, followed by MAIN and MO, which are close to 20%. The arithmetic average payback percentage is 7.33%. On my portfolio spreadsheet, I calculate a weighted average payback percentage, which currently is 10.55%.

Goal For Q2-2017

In Q2-2017, I'd like to transfer our taxable account from FolioInvesting to our trust account Interactive Brokers. Doing so will allow me to write more covered calls.

Thanks for reading and take care, everybody!