Thursday, July 24, 2014

Dividend Growth Portfolio, June 2014 Update

Soooo... we're now past the half way point in 2014. It's felt like a really long 6 months. A lot has happened since New Years 2014.

The year started with tiny Latvia officially adopting the Euro, and becoming the 18th member of the Eurozone. We then had the Winter Olympics in Sochi, Russia, which was filled with typical Olympic controversies (judged competition scandals, ballooning costs of hosting). This was immediately followed by civil unrest in Ukraine, and the annexation of Crimea by a belligerent Vladimir Putin. Kind of made you wonder if they were just waiting for the Olympics to finish... And to think... its still only February...

Just as the world was trying to figure out Ukraine, MH370 went missing with 239 onboard, a Korean ferry capsized and killed 290, and 276 women and children were kidnapped and held hostage in Nigeria. We then had a fantastic World Cup, one of the highest scoring ever, which made it incredibly fun to watch. The climax was when Germany embarrassed the hosts 7-1 on home turf. Lucky for Brazil, Argentina did not win on their soil. Now that would have been really embarrassing.

Now, as July is wrapping up, we have Israel and Gaza going at it again, and yet another Malaysia Airlines hull loss. Honestly, I feel really bad for these guys. TWO hull losses in 4 months? I've never heard anything like it...

It is only July and I feel like we've had enough world events to last me half a decade. Fortunately not a lot has happened to my portfolio in this time. Just some minor tinkering here and there. Personally I believe the stock market overall continues to be at or near full valuation. This does not mean there are no good investments out there. It simply means you have to be more selective, and work harder to find the attractive investments.

If all else fails, blue chips are still within their full valuation band. Recall that one of Warren Buffett's most famous quotes is that it is better to buy great companies at fair prices than fair companies at great prices. You could certainly do a lot worse than buying KO at 22x or JNJ at 20x. These are the types of businesses that will provide above average returns even if you are unable to buy them at bargain prices.

That being said, someone who invests in individual stocks is always attempting to find undervalued companies to buy. Especially so if they are a dividend growth investor, because it allows you to pick up a larger income stream for a cheaper price. So here are 5 stocks which I believe are attractively valued, and could be your next potential investment.


  • Procter & Gamble
  • Baxter International
  • Rogers Communications
  • Enbridge
  • McDonalds

As always, please do your due diligence and independent research before making any investment decision. Past performance is no guarantee of future returns.

Now that we've gotten the chit chat out of the way, let's take a look at the Dividend Growth Portfolio's Q2 update.






New Purchases 
($ amount represents expected dividends in the next 12 months from new shares)

  • Kinder Morgan: purchased 60 additional shares of $KMI. Currently pays a quarterly dividend of 42 cents, which adds $100.80 to my annual dividend received
  • Baxter International: purchased 30 additional shares of $BAX. Currently pays a quarterly dividend of 52 cents, which adds $62.40 to my annual dividend received
  • Southern Company: purchased 40 additional shares of $SO. Currently pays a quarterly dividend of 52.5 cents, which adds $84 to my annual dividend received
  • Procter & Gamble: purchased 45 shares of $PG in a new position. Currently pays a quarterly dividend of 64.36 cents, which adds $115.85 to my annual dividend received
  • Enbridge: purchased 65 shares of $ENB.CA in a new position. Currently pays a quarterly dividend of 35 cents, which adds $91 to my annual dividend received

Sales

All three sales this quarter were the result of commencing my semi-annual re-balancing strategy. All of them are core holdings, but simply gained too much and became exceedingly overweight. Funds were shifted into more attractively valued investments.
  • Johnson & Johnson: sold 20 shares of $JNJ
  • General Dynamics: sold 15 shares of $GD
  • Canadian National Railway: sold 30 shares of $CNR.CA

Intrinsic Dividend Changes

  • Johnson & Johnson: $JNJ raised its quarterly dividend 6.1% from 66 cents to 70 cents
  • Exxon Mobil: $XOM raised its quarterly dividend 9.5% from 63 cents to 69 cents
  • Southern Company: $SO raised its quarterly dividend 3.4% from 50.75 cents to 52.5 cents

Summary

  • December 2013 Annualized Dividend: $5933.73
  • June 2014 Annualized Dividend: $6557.21
  • End of 2014 Goal: $6900 to $7300
  • YTD Dividends Received: $3389
  • 2014 Dividends Received Goal: $6100
  • YTD Intrinsic Dividend Growth: 5.25%
  • YTD Dividend Growth from New Funds and/or Re-balancing : 8.33%
  • 2014 Combined Dividend Growth Goal: 20%

That is now 14 consecutive quarters of increasing income since I began tracking in March 2011. I'm on pace to meet all of my 2014 goals! 

1 comment:

  1. Malaysia Airlines has the worst luck :( I hope it can get through this without having to restructure. Would be a shame for people to lose their jobs.

    Enbridge has had a spectacular run :) but 10 years from now it will probably be worth a lot more! I wouldn't be surprised if the stock splits again over the next couple of years. Since I already have ENB I'm considering buying some TRP for diversification :)

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