Welcome to the tenth annual review of DivGro, my portfolio of
dividend growth stocks!
I created DivGro in January 2013 to create the proverbial dividend-generating
machine. DivGro has grown beyond my wildest dreams and now generates dividend
income averaging $3,824 per month. With less than ten years to go before I retire, I plan to continue reinvesting all dividends and allow my portfolio to grow even more.
In annual reviews, I look at DivGro's performance as measured by dividend income, dividend increases, annualized returns, and rate of return. I also share some highlights of the past year.
Introduction
As Jesse Pound and Samantha Subin write:
"Sticky inflation and aggressive rate hikes from the Federal Reserve battered growth and technology stocks and weighed on investor sentiment throughout the year. Geopolitical concerns and volatile economic data also kept markets on edge."
Last year, I increased DivGro's projected annual dividend
income (PADI) from $39,327 to $45,885, an increase of 16.68%. If I continue to
increase PADI at the same rate every year for five years, DivGro's PADI should approach $100,000 at the end of 2027.
I'm very happy I switched to dividend growth investing in January 2013!
Buying shares of companies with a track record of paying regular and increasing dividends is a wonderful strategy. Much like rolling a snowball down a hill, the longer you're invested in dividend growth stocks, the larger your portfolio will grow and the more dividend income it will produce every year. Reinvesting dividends will speed up the process for a double compounding effect.
Let's take a look at DivGro's performance in 2022.
Performance
Dividend Income
The main goal of DivGro is to generate a reliable and growing dividend income stream.
In 2022, DivGro generated dividends totaling $47,646, an increase of about 26.33% over the 2021 total of $37,716.
Here are the dividend increases for the last five years:
| 2017-2018 | 2018-2019 | 2019-2020 | 2020-2021 | 2021-2022 |
| 37.06% | 25.70% | 17.54% | 25.63% | 26.33% |
That's a 5-year compound annual growth rate of 26.30%!
Dividend Increases
In dividend growth investing, regular dividend increases are just as important as dividend income. I use selection criteria that favor high-quality dividend growth stocks with safe dividends. In 2022, the following DivGro stocks paid or announced higher dividends:
| 1-Year Increase | Company | Ticker | Increase | Annual Div | New YoC |
| Outsized (≥ 20%) | FedEx Corporation | FDX | 53.33% | 4.60 | 3.07% |
United Parcel Service, Inc | UPS | 49.02% | 6.08 | 3.98% | |
AllianzGI Equity & Convertible Income Fund | NIE | 31.58% | 2.00 | 9.19% | |
Lowe's Companies, Inc | LOW | 31.25% | 4.20 | 4.54% | |
Canadian National Railway Company | CNI | ⟡21.93%⟡ | 2.16 | 2.71% | |
Cintas Corporation | CTAS | 21.05% | 4.60 | 1.17% | |
Automatic Data Processing, Inc | ADP | 20.19% | 5.00 | 3.24% | |
Virtus Artificial Intelligence & Technology Opportunities Fund | AIO | 20.00% | 1.80 | closed | |
Visa Inc | V | 20.00% | 1.80 | 0.88% | |
| Large (≥ 10% but < 20%) | BlackRock, Inc | BLK | 18.16% | 19.52 | 4.93% |
Mastercard Incorporated | MA | 16.33% | 2.28 | 0.69% | |
Accenture plc | ACN | 15.46% | 4.48 | 2.55% | |
The Home Depot, Inc | HD | 15.15% | 7.60 | 3.39% | |
Intercontinental Exchange, Inc | ICE | 15.15% | 1.52 | 1.62% | |
Snap-on Incorporated | SNA | 14.08% | 6.48 | 4.18% | |
Costco Wholesale Corporation | COST | 13.92% | 3.60 | 1.32% | |
UnitedHealth Group Incorporated | UNH | 13.79% | 6.60 | 3.80% | |
The TJX Companies, Inc | TJX | 13.46% | 1.18 | 2.67% | |
Anthem, Inc | ELV | 13.27% | 5.12 | 1.78% | |
Broadcom Inc | AVGO | 12.20% | 18.40 | 6.78% | |
NIKE, Inc | NKE | 11.48% | 1.36 | 1.66% | |
T. Rowe Price Group, Inc | TROW | 11.11% | 4.80 | 6.46% | |
NextEra Energy, Inc | NEE | 10.39% | 1.70 | 4.17% | |
QUALCOMM Incorporated | QCOM | 10.29% | 3.00 | 2.73% | |
Northrop Grumman Corporation | NOC | 10.19% | 6.92 | 2.12% | |
Union Pacific Corporation | UNP | 10.17% | 5.20 | 3.09% | |
McDonald's Corporation | MCD | 10.14% | 6.08 | 4.09% | |
CVS Health Corporation | CVS | ⟡10.00%⟡ | 2.42 | 4.61% | |
Mondelez International, Inc. | MDLZ | 10.00% | 1.54 | 2.52% | |
| Medium (≥ 5% but < 10%) | Amgen Inc | AMGN | 9.79% | 8.52 | 3.90% |
Microsoft Corporation | MSFT | 9.68% | 2.72 | 5.83% | |
The Toronto-Dominion Bank | TD | ⟡9.39%⟡ | 2.61 | 4.61% | |
Royal Bank of Canada | RY | ⟡9.38%⟡ | 3.83 | 4.28% | |
American States Water Company | AWR | 8.90% | 1.59 | 1.72% | |
Atmos Energy Corporation | ATO | 8.82% | 2.96 | 3.31% | |
PACCAR Inc | PCAR | 8.82% | 1.48 | 1.85% | |
Cummins Inc | CMI | 8.28% | 6.28 | 4.07% | |
Starbucks Corporation | SBUX | 8.16% | 2.12 | 3.13% | |
Archer-Daniels-Midland Company | ADM | 8.11% | 1.60 | 3.77% | |
Air Products and Chemicals, Inc | APD | 8.00% | 6.48 | 4.10% | |
Comcast Corporation | CMCSA | 8.00% | 1.08 | 2.86% | |
Medtronic plc | MDT | 7.94% | 2.72 | 3.22% | |
Stryker Corporation | SYK | 7.91% | 3.00 | 1.43% | |
The Bank of Nova Scotia | BNS | ⟡7.89%⟡ | 3.04 | 5.43% | |
Raytheon Technologies Corporation | RTX | 7.84% | 2.20 | 3.53% | |
Texas Instruments Incorporated | TXN | 7.83% | 4.96 | 4.56% | |
DTE Energy Company | DTE | 7.63% | 3.81 | 3.38% | |
Illinois Tool Works Inc | ITW | 7.38% | 5.24 | 2.37% | |
WEC Energy Group | WEC | 7.22% | 3.12 | 3.18% | |
Lockheed Martin Corporation | LMT | 7.14% | 12.00 | 3.87% | |
PepsiCo, Inc | PEP | 6.98% | 4.60 | 3.07% | |
Johnson & Johnson | JNJ | 6.60% | 4.52 | 2.91% | |
Xcel Energy Inc | XEL | 6.56% | 1.95 | 3.41% | |
Chevron Corporation | CVX | 5.97% | 5.68 | 6.06% | |
General Dynamics Corporation | GD | 5.88% | 5.04 | 4.17% | |
Public Service Enterprise Group Incorporated | PEG | 5.88% | 2.16 | 3.61% | |
Merck & Co., Inc | MRK | 5.80% | 2.92 | 3.79% | |
Hormel Foods Corporation | HRL | 5.77% | 1.10 | 2.67% | |
The Travelers Companies, Inc | TRV | 5.68% | 3.72 | 3.21% | |
Bristol-Myers Squibb Company | BMY | 5.56% | 2.28 | 3.93% | |
Digital Realty Trust, Inc | DLR | 5.17% | 4.88 | 4.42% | |
Honeywell International Inc | HON | 5.10% | 4.12 | 2.71% | |
Intel Corporation | INTC | 5.04% | 1.46 | 4.85% | |
The Procter & Gamble Company | PG | 5.00% | 3.65 | 2.81% | |
Aflac Incorporated | AFL | 5.00% | 1.68 | 4.21% | |
| Small (≥ 2.5% but < 5%) | AbbVie Inc | ABBV | 4.96% | 5.92 | 9.78% |
The Allstate Corporation | ALL | 4.94% | 3.40 | 2.86% | |
The Coca-Cola Company | KO | 4.76% | 1.76 | 4.26% | |
Apple Inc | AAPL | 4.55% | 0.92 | 4.01% | |
Altria Group, Inc | MO | 4.44% | 3.76 | 8.20% | |
Tyson Foods, Inc | TSN | 4.35% | 1.92 | closed | |
Sempra | SRE | 4.09% | 4.58 | 3.12% | |
Enbridge Inc | ENB | ⟡3.86%⟡ | 2.55 | 6.65% | |
National Retail Properties, Inc | NNN | 3.77% | 2.20 | 5.60% | |
Chubb Limited | CB | 3.75% | 3.32 | 2.72% | |
Gilead Sciences, Inc | GILD | 2.82% | 2.92 | closed | |
Cisco Systems, Inc | CSCO | 2.70% | 1.52 | 3.67% | |
Pfizer Inc | PFE | 2.50% | 1.64 | 4.49% | |
| Tiny (< 2.5%) | Main Street Capital | MAIN | ⟡2.38%⟡ | 2.70 | 12.47% |
Verizon Communications Inc | VZ | 1.95% | 2.61 | 5.31% | |
Pinnacle West Capital Corporation | PNW | 1.76% | 3.46 | 4.46% | |
Philip Morris International Inc | PM | 1.60% | 5.08 | 5.91% | |
American Tower Corporation | AMT | ⟡0.72%⟡ | 6.24 | closed | |
3M Company | MMM | 0.68% | 6.00 | closed | |
International Business Machines Corporation | IBM | 0.61% | 6.60 | closed | |
Realty Income Corporation | O | ⟡0.20%⟡ | 2.98 | 5.25% | |
W. P. Carey Inc | WPC | ⟡0.19%⟡ | 4.26 | 6.31% |
✧multiple increases
The table includes the new yield on cost (YoC) for positions still in my
portfolio.
I like seeing dividend increases of 7% or higher, and I'm happy to note
that 50 positions had dividend increases of at least 7% in
2022. The arithmetic average of the 87 increases above is 9.71%, up
from last year's 8.66% from 82 increases. Note that I've closed one of
these positions (AIO).
Annualized Returns
As mentioned earlier, the S&P 500 dropped 19.4% in 2022, while the Dow and Nasdaq dropped 8.8% and 33.1%, respectively. DivGro easily outperformed all three indexes, with returns of -5.61% (excluding dividends). I'm thrilled DivGro outperformed the broader market in 2022, but a negative return is never a pleasing result!
As a dividend growth investor, I aim to generate a reliable and growing dividend stream. On
that front, DivGro's position-weighted average dividend yield of 3.27% in 2022 easily beats the 1.64%
dividend yield of the S&P 500:
Source: S&P 500 Dividend Yield
Not many of my existing positions show positive gains for 2022:
Topping the list are Chevron (GOOG), Merck (MRK), Northrop Grumman (NOC), Archer-Daniels-Midland (ADM), and Lockheed Martin (LMT), all with returns exceeding 30%. At the bottom of the list, we find Intel (INTC), T. Rowe Price (TROW), Digital Realty Trust(DLR), QUALCOMM (QCOM), and AllianzGI Equity & Convertible Income Fund (NIE), all with negative returns of at least 40%.
Here is a chart showing the lifetime returns of all positions in my portfolio (including dividends, where applicable):
.png)
By far, Microsoft (MSFT) and Apple (AAPL) are DivGro's most profitable positions, with total returns exceeding 600% and 500%, respectively, as of 17 February 2023.
In 2022, DivGro added only 2 Home Runs, which are stocks in my portfolio that achieve total returns topping
100%. Here are those home runs with returns as of 31 December 2022:
Once a stock achieves home run status, it retains that status even if the
stock price drops and the total returns dip below the 100% mark. Also, if
I buy additional shares of a home run stock at a higher cost basis, the
calculated total returns could drop below 100%.
- Apple Inc (AAPL) — up 487% (73% annualized)
- Microsoft (MSFT) — up 447% (63% annualized)
- Chevron (CVX) — up 102% (61% annualized)
- UnitedHealth (UNH) — up 221% (40% annualized)
- Northrop Grumman (NOC) — up 71% (40% annualized)
- Archer-Daniels-Midland (ADM) — up 131% (37% annualized)
- Raytheon Technologies (RTX) — up 68% (36% annualized)
- Broadcom Inc (AVGO) — up 125 (35% annualized)
- AbbVie (ABBV) — up 210 (35% annualized)
- Aflac (AFL) — up 95% (31% annualized)
Rate of Return
DivGro's IRR (internal rate of return) provides the best measure of overall portfolio performance, as IRR considers the timing and size of deposits since inception. On 31 December 2022, DivGro's IRR was 13.7%, down from the 17.5% reported in 2021.
DivGro's IRR (internal rate of return) provides the best measure of overall portfolio performance, as IRR considers the timing and size of deposits since inception. On 31 December 2022, DivGro's IRR was 13.7%, down from the 17.5% reported in 2021.
Other Statistics
At the end of 2022, DivGro's average YoC was 41.7%, up from the 3.97% reported last year. Over time, as stocks I own stocks pay higher dividends, DivGro's average YoC should increase.
.png)
DivGro's payback increased from 26.4% at the end of 2021
to 31.1% at the end of 2022. Payback is the proportion of capital returned
as dividends. I consider it to be a reasonable measure of portfolio
maturity.
.png)
Main Street Capital (MAIN) tops the chart, mainly because the company pays a generous dividend, and
it is the stock I've owned the longest in my DivGro portfolio.
Here are some highlights of 2022:
2022 Highlights
Pageviews
DivGro's page views climbed to 3.45 million on 17 December 2022, an increase of 630,000 over the 2.33 million page views I had on 31 December 2020. That's an average of 1,731 page views per day in 2021.
Popular Posts
In 2022, I posted 100 articles on DivGro. This included 61 premium articles published at Seeking Alpha. Here are some of the most successful articles in 2022, based on page views:
Top 2021 DivGro Article:
• 1 Apr'22: 2021 Annual Review Of DivGro (4,314 pageviews)
Top 2021 Seeking Alpha Article:
DivGro's page views climbed to 3.45 million on 17 December 2022, an increase of 630,000 over the 2.33 million page views I had on 31 December 2020. That's an average of 1,731 page views per day in 2021.
 |
31 December 2021
average since inception:
901 page views per day |
 |
17 December 2022
average since inception:
949 page views per day |
Popular Posts
In 2022, I posted 100 articles on DivGro. This included 61 premium articles published at Seeking Alpha. Here are some of the most successful articles in 2022, based on page views:
Top 2021 DivGro Article:
• 1 Apr'22: 2021 Annual Review Of DivGro (4,314 pageviews)
Top 2021 Seeking Alpha Article:
• 23 Apr'22: The Dividend Kings Ranked By Quality Scores (89,051 pageviews)
Personal Highlights
In my annual reviews, I also like to share some personal highlights.
In 2022, Pixar released two animated feature films, Turning Red (on Disney+) and Lightyear (in theaters). Both films were almost entirely made from home, which is astonishing considering how many crew members work on these films. I have an Effects Artist credit on Lightyear.
Turning Read was nominated for Best Animated Feature Film at the 80th Golden Globe Awards and the 95th Academy Awards. The competition is strong this year, with Guillermo del Toro's Pinocchio widely expected to win everything!
In 2023, Pixar will release Elemental. I worked on effects development for Elemental but switched to another production to help with character and effects development.
In September, we became grandparents for the third time, welcoming Adrian into the family! Brother James turned two in December, and cousin Chloe turned one in October.
We are truly blessed!
2023 Outlook
After ten years of blogging about DivGro and sharing my portfolio publicly, I've decided to make a few changes. While the content of DivGro will remain intact, my Portfolio page will no longer be updated automatically. In fact, it will be a snapshot of DivGro as of 31 December 2022.
I plan to move DivGro to another platform where registered readers can continue to follow my journey of Dividend Growth Investing and Options Trading.
I'm continuing to work with Portfolio Insight, and we have some exciting features in development, including the creation of model portfolios.
Thanks for reading, and all the best with your investments in
2023!
What are you going to do with INTC now that they cut dividends by 66%?
ReplyDeleteI already trimmed my position prior to the cut. The remaining shares are involved in a covered call trade. Depending on the options premium available at expiration, I might write another call and continue doing so until the shares are called away. Covered calls are a way of generating income from shares one owns.
Delete