Wednesday, January 15, 2014

Dividend Growth Portfolio, December 2013, Annual Summary

Its been a while since I posted anything on here. I feel I've been neglecting to update the status of my portfolio. 2013 has been a whirlwind year! I bet not many people predicted S&P 500 would be up over 30% with dividends reinvested. Its definitely been a good year if you were invested in the stock market. The sad part is, many people missed out, either by being too heavy in the Canadian market, or staying on the sidelines.

You know that saying, that your relative performance takes a heavy beating if you miss just the best 10 days of the last 10 years? Well.. imagine what happens if you miss the best year in the past 10 years... (best year since 1997 to be exact)

But all is not lost! After all, its a new year, and a new year means everyone starts fresh! Equities are not expensive. They are not cheap either, but there can still be value to be had, if you know where to look.

Some blue chip names that I consider to be currently attractively valued are: McDonalds, UnitedHealth Group, Rogers Communications, Southern Company, Philip Morris and Royal Dutch Shell.

Two additional names that are attractively valued but have a bit more clouds hanging over them are: Kinder Morgan and HCP.

Since it has been a while since I last updated this portfolio, I will list all the changes that have been made in the second half of 2013.

Most of them are just extensions of what I was doing for most of 2013, namely, going after blue chips getting sold due to the taper talk. One big move that I made was the liquidation of my entire Intel (INTC) position. In some ways, it was a very easy decision. I simply stuck to my rules. But in other ways, it was a very difficult decision to stomach.

New Purchases 
($ amount represents forward estimated yearly dividends of new shares)
Rogers - added 50 shares
Philip Morris - initiated new position of 90 shares
HCP - added 130 shares
Kinder Morgan - added 80 shares

Intel - sold entire position of 505 shares
Boeing - sold 12 shares

Intrinsic Dividend Changes 
($ amount represents change in forward estimated yearly dividends based on dividend increase)
McDonalds - increased dividend from 77 to 81 cents per share
TD - increased dividend from 81 to 85 cents per share
TD - announced 2 for 1 stock split and increased dividend from 85 to 86 cents per share
CN Rail - announced 2 for 1 stock split
Emerson Electric - increased dividend from 41 to 43 cents per share
Boeing - increased dividend from 48.5 cents to 73 cents per share

December 2013 Annualized Dividend: $5933.73

End of 2013 Goal: $4700 to $5000
Whisper Goal: $5500

YTD Dividends Received: $5003

2013 Dividends Received Goal: $4200
Whisper Goal: $4600

2013 Performance Review

  • Dividends received grew 29.8% over dividends received in 2012 from $3853 to $5003
  • Forward 12 month dividends at the end of 2013 (amount of dividends I expect to receive in the next 12 months with my current portfolio) grew 33.1% from $4458 to $5934
  • Of the 33.1%, 12.6% was intrinsic dividend growth, and 20.5% was growth from new funds, or re-balancing
  • Yield on cost grew from 3.33% to 3.84% as I added higher yielding names this year
  • My portfolio beat my hybrid benchmark for the 3rd straight year, returning 36.7% in 2013, vs 29.9% for the benchmark.
  • $10,000 invested with me in 2008 would have grew to $18,831, while the benchmark would have grew to $15,419, an annual out-performance of 3.4%
  • All of the above is done with zero leverage.

2014 Goals & Expectations

  • An adjustment of my goals will occur in 2014. All goals will be shifted higher from previously established trend lines, which will make meeting them more challenging, and interesting. Setting goals is important. Setting challenging yet reasonable goals is even more important
  • The goal for dividends received is $6100, a 21.9% increase from 2013 actuals
  • The goal for forward 12 month divs at the end of 2014 will be between $6900 and $7300, an increase of 16.3% to 23% from 2013 actual
  • I expect intrinsic dividend growth to run at a low double digit (10-12%) clip again for 2014
  • I expect dividend growth from new funds to be more subdued, perhaps in the mid to high teens (15-18%).
  • One major assumption is the expectations that Citigroup will finally reinstate a meaningful dividend. I expect 15-20 cents per share per quarter, which would contribute 1.3-1.7% to the 10-12% intrinsic dividend growth I'm expecting for 2014.
Pockets of Value
  • As mentioned above, I see some remaining pockets of value that are attractive at current prices. Here are a few to ponder about
  • UNH: 14x earnings, benefits from Obamacare, very low payout + steady cash flows = very strong 3-5 year dividend growth potential
  • MCD: 17x earnings, bluest of blue chips, did not have great years in either 2012 or 2013 while consolidating after giant runs in '10 and '11, very defensive should stand up well if market corrects
  • RCI.B: 13x earnings for Canada's premiere telecom provider, kept low due to potential Verizon entry in 2012. pretty good dividend growth potential to boot
  • SO: 15x normalized earnings for the cream of the crop in utility sector, battered in 2012 due to interest rates rising + cost overruns. Morningstar study show long term utilities' annual return in past 20 years has no correlation with rising or declining interest rate environment

As always, please do your own due diligence before investing in any assets.


  1. Nice to have you back posting! Always like to see your insightful thoughts on the markets. I got me some KMI and PM recently. Glad that you're bull on those. Your dividends are staggering! Congrats on the nice gains and growing dividends!

    PC aka Agent Fang

    1. thanks! at first it was so slow, but once i got past 2-3k, it really started to snowball. it truly does test my patience at times tho :)