Sunday, January 13, 2013

Dividend Growth Portfolio, December and FY2012

We're well into the 2013 year now, and I've been neglecting my blog... Hopefully as January rolls by I will have more time to dedicate towards informative or update posts.

December (and early January) brought a flurry of activity for me. Some of it was fiscal cliff risk driven, and some of it was simple top ups or just taking advantage of dwindling market opportunities. Let me list my transactions for the month, then I'll go over them.

New Purchases
Coca Cola - $56.10
Kinder Morgan Inc - $72
CSX - $70

New Transfers In
Fidelity Spartan 500 Index Fund - $84.82

Western Union - $87.50

Intrinsic Dividend Changes
Boeing - $25.56 (quarterly dividend increase 10.2% from 44 cents to 48.5 cents)

November 2012 Annualized Dividend: $4237.20

+ $198.10 (from new purchases)
+   $84.82 (from new transfers in)
-    $87.50 (from sales)
+ $25.56 (from intrinsic changes)

December 2012 Annualized Dividend: $4458.18
End of 2012 Goal: $3800 to $4000
Whisper Goal: $4400

Index Fund
Now, the thing you're probably wondering about is the transfer in of the Fidelity Spartan 500 Index Fund, so let me go over that first.

Fidelity Spartan 500 Index Fund is an index mutual fund offered by Fidelity. This means its goal is to simply mirror the S&P 500, both by movement, and performance. This is accomplished by essentially having the fund invest in the components of the S&P 500, down to the exact weightings. For more on index funds, you can go here

Now, I've actually had the 401K account that currently holds the Fidelity Spartan 500 for some time, but in the past, with Vanguard, it was quite troublesome to keep tabs on what was being paid, when, how much per unit, etc. 2012 marked the first year with Fidelity, which allowed me to quantify this additional dividend source.

Fiscal Cliff
My lone sell this month was a fiscal cliff move. I was looking to trim risk ahead of year end fiscal cliff issues, and decided to sell a risky but profitable position in Western Union. I had originally bought it 2 months ago when it dropped below $12. It was sold just shy of $13.50 for a 12% gain in 2 months. This was purely a trade on my part, as the stock does not fit into my strategy at the moment (I'm already overweight financials)

The interesting thing was I was able to redeploy cash right before New Years as others sold stocks down in fear of fiscal cliff issues. I kept to my strategy of looking for dividend growth at a reasonable price, and this led me to add to my existing position in Coca Cola, as well as initiate a new positions in Kinder Morgan Inc (KMI) (the general partner of KMP, a pipeline MLP), and CSX, an eastern US class I railroad.

2012 Wrap Up
2012 turned out to be a pretty good year for investors. S&P 500 returned 16% with dividends reinvested. Dow provided 10.2%. Even the lowly TSX gave 7.2% gains with dividends. These were all substantially more than what you would have gotten with GICs.

My personal portfolio rose 13.7% in 2012. This beat my currency adjusted benchmark by ~4% (it rose 9.7%). My performance was particularly good in my TFSA, which rose 17.5%, and my non-registered CAD account, which was up 17%. My non-registered USD account was up 13.1%, and my RRSP was up 6.7%. All in all, a pretty good year.

By dividend metrics, the year was quite good as well. I started the year with a portfolio yield on cost of ~3.1%, and forward annualized dividend income of $3510. I ended the year with a yield on cost of 3.3%, and forward annualized dividend of $4458, an increase of 27%. Of the 27%, about 12% was intrinsic growth, and 15% was new funds. I received $3853 of actual dividend income in 2012. This was up 27% as well from $3030 in 2011, in line with my forward dividend growth.

2012 Goals, Results, and Comments

2012 Annualized Forward Dividend (AFD) Goal: $3800 to $4000, Met and exceeded: $4458
2012 Actual Dividends Received Goal: $3450, Met and exceeded: $3853
2012 Net Worth Y/Y Change Goal: +$37956, Met and exceeded: +$61693

For those unfamiliar with net worth calculations. It is the result of taking assets (stocks, funds, real estate, etc), and subtracting debts (mortgage, margin, loans, etc). For me, since I do not employ leverage in investing and do not own rental real estate, it is simply all my investments plus my equity in my primary residence.

I fully expect numbers to continue beating expectations so long as the economy doesn't tank. My projections are based on consistent long term growth rates, regardless of economic boom or malaise. I do expect Canadian real estate prices to be flat to down going forward, which will bring my annual net worth gains back into in line with long term trajectories.

2013 Goals
Here are my 2013 dividend growth portfolio goals

Annualized Forward Dividend Goal: $4700 to $5000, 23-25% higher than 2012 goals of $3800-4000
Actual Dividends Received Goal: $4200, 22% higher than 2012 goal of $3450
Net Worth Increase Goal: $41751, 10% higher than 2012 goal of $37956

Keep in mind, these are non-leveraged income growth goals, which will differ wildly from growth experienced by someone who is leveraging up (either via mortgage/rental property, or margin/stock).


  1. I was just thinking about buying some KO this month, and maybe some PEP as well. Congrats on exceeding all your goals last year. Best of luck for 2013 too. Btw, I predict your net worth this year will go up by $53K

  2. Nice job, Alex. Your net work increase is pretty staggering :) Good investments = good growth!

    1. last few yrs have been good for investing eh? im getting a little concerned these days tho!

  3. What value do you use for real estate in the net worth calculation? Do you use MPAC assessment value? original purchase price? or ...?

    1. thanks for reading. I regularly check MLS to get an idea of property listing prices in my building. i then derive the price per sqft, and to be conservative, i apply a discount on that, and calculate the value of my own place

  4. Quite a revealing pic of your finance, isn't it alex?

  5. thanks for reading. most of what is on this blog is a top level summary. i try to keep details out except where pertinent