Actual Dividend Growth Portfolio

[gonelong]

I have been working the DGI strategy since 2010 or so. My income has grown pretty significantly every quarter and every year. I am adding money in both my 401K and IRA which will certainly help boost the income but it has also grown organically.

MMM was one of my first DGI buys in 2010 - 1/4 div was .525/share for $2.10 year. Div has grown to 1/4 $1.36/share or $5.44 year.

I bought it at $90 or so, it is at $202 currently - a back of the napkin calculation shows it has returned $21.54 in Dividends ... or about 24% of the original purchase price (in reality more than that since I have DRIP'd the divs and getting divs on those new shares). That drops my cost basis to under $68.46 so I am approaching at a triple on my first purchase under the strategy - not too shabby!

If I live long enough perhaps MMM will return my entire purchase price to me and still be paying me that big old dividend.

[Boston Red]

ADP gave those of us who own it a 14.5% raise. That's very, very nice.

[Boston Red]

How's the portfolio doing Jax?

[gonelong]

I can give you my $.02

For reference, I own about 50 stocks across my 401K, my RothIRA, and my wife's RothIRA. They are all intended to be dividend payers and most are selected with the anticipation they will be able to grow the dividend year over year. Many/most do. 2020 has been harsh on a few of them:

• I have had D (overweight -almost 3/2 position) and AMNF (3/4 position) cut their dividends by about 1/3.
• I have had CBRL (1/2 position) and DRI (1/2 position) "suspend" their dividends.
• Without my additional contributions my dividends for the year would be down from 2019 as dividend raises have been small this year for most of my holdings - but overall I am in real good shape. For now, I am holding all 4 - I have no plans to sell AMNF and will probably hold D and CBRL on a wait-n-see timeline. DRI is likely to get sold and redeployed at some point.

Most recent purchases were JNJ and MMM (added to them to get them to full positions). With the stocks purchased in my 401k and Roth(s) via contributions, DRIP, and dividend raises my yearly dividend income is up ~7.7% for the year.

Having those dividends continue to roll in as your overall balance drops through the floor is very comforting (at least to me). I had no problem staying with my Dividend Growth Plan through the drop this spring/summer.

GL

[kaldaniels]

I can give you my $.02

For reference, I own about 50 stocks across my 401K, my RothIRA, and my wife's RothIRA. They are all intended to be dividend payers and most are selected with the anticipation they will be able to grow the dividend year over year. Many/most do. 2020 has been harsh on a few of them:

• I have had D (overweight -almost 3/2 position) and AMNF (3/4 position) cut their dividends by about 1/3.
• I have had CBRL (1/2 position) and DRI (1/2 position) "suspend" their dividends.
• Without my additional contributions my dividends for the year would be down from 2019 as dividend raises have been small this year for most of my holdings - but overall I am in real good shape. For now, I am holding all 4 - I have no plans to sell AMNF and will probably hold D and CBRL on a wait-n-see timeline. DRI is likely to get sold and redeployed at some point.

Most recent purchases were JNJ and MMM (added to them to get them to full positions). With the stocks purchased in my 401k and Roth(s) via contributions, DRIP, and dividend raises my yearly dividend income is up ~7.7% for the year.

Having those dividends continue to roll in as your overall balance drops through the floor is very comforting (at least to me). I had no problem staying with my Dividend Growth Plan through the drop this spring/summer.

GL

I respectfully disagree (well I don't disagree per se as that is how you feel...I just don't feel the same) there as let's take the "drop" in March/April for an example. Every portfolio is different but if you have a portfolio of 50 stocks, you probably saw a drop of at least 25%. Maybe it was worse, maybe it was better (if so good for you). But during that time period let's assume (again, maybe you are better/worse) an average dividend yield of 4%...which is pretty generous, but maybe you got there due to the drop in stock prices. Well, with a yearly yield of 4% that means you probably only saw dividends add 1% to your portfolio value over that 3 month bad stretch.

So to sum up - your equities fell in value 25%, but you added 1% to your account...how is that comforting?

I think dividends are great. I just view them differently as I value that equity price a bit higher than some. The "comfort" in dividends to me is that quarter-over-quarter, year-over-year reinvestment that just solidifies your balance, coupled with dividend increases which provide a beautiful yield from the initial investment, but I'm a patient guy. But in a crisis, they just don't comfort me, as they are a drop in the bucket compared to the overall losses in the portfolio.

[JaxRed]

Catching up once again. As always, income increases every month. I'm going to just post June.

As of June 30 - $308.88
1 Year ago - $217.78
2 Years ago - $137.37
3 Years ago - $108.83
4 Years ago - $59.96

How's the portfolio doing Jax?

Hey just saw this. I've have been 100% diligent about contributing $100 monthly. I have not been diligent (as you can tell) about documenting the monthly changes.

So since's it's July now, and the snapshot above is a June 30 snapshot, let me give you yearly numbers as of June 30, except this year is July 30.


2020 - $600.63
2019 - $458.24
2018 - $362.27
2017 - $308.88
2016 - $217.78
2015 - $137.37
2014 - $108.83
2013 - $59.96

So as you can see, the program is doing exactly what it's supposed to do. Pump out an ever increasing income stream. The figures here represent 75% of her actual income flow. So that when it's withdrawal time she can spend 75% and reinvest 25%, and keep on growing (although more slowly).

My daughter is now 36. In theory she won't tap this for roughly 30 years. Obviously she has her own retirement stuff, and $1,200 a year is no where near enough to contribute. But it's a start.

In reality, my daughter will end up inheriting her parents program like this which is pumping out $24,000 a year right now. Although a recent change to tax guidelines really puts a hurdle to passing it on.

[JaxRed]

So follow up #1 - - I don't know that I've mentioned this in the thread before or not. I have a brother 10 years younger than me. So he's almost 59. Sometime in 2013 at a mini-family reunion (all the sibling are spread over N.A. - He's in Alaska, I'm in Florida). I mentioned that retirement finances was kind of my thing these days, and he said he had no retirement income or plan (he did have about $200K in 401k). I said if you ever want to start the ball rolling, let me know.

In July of 2014, he contacted me and said 'Let's do this'. It actually took until Feb of 2015 to get the money out of his 401k and into a brokerage IRA account that we controlled and to get it fully invested.

At that point his yearly income from the IRA was $6,862. So his IRA differs from my daughters in a couple respects. First - it has no almost no new money coming in. Since it started in 2016 he's only added $9,000. He contributes to his 401k, You can see with an initial amount of $200K and an income of $6,862 our yield was 3.431%. With the exception of a big chunk of ATT, all the rest was low paying 'regular' S&P kinda stocks. ATT is regular too, it just pays more.

CINF
CL
GPC
INTC
JNJ
KO
MCD
MMM
PG
T
VZ
XOM
MO
COP
CVX
GE

Living in Alaska, he was big on oil. Shortly thereafter I became convinced that oil was a terrible investment. I moved him out of CVX but he wanted to stay in COP and XOM. So, like I thought COP was a dog, and before we bailed on it, we lost over $7,500 in it, XOM has been a dog and even after reinvested dividends he is down $7,000. If he allowed me to, I'd bail on XOM right now. I think they will cut their dividend by a bunch before this time next year.

GE turned out to be a dog to my surprise. Lost about $6,000 on that one. We are out of it.

MO we are down $1,700, but we have no intention of leaving that one. All the rest have been pretty successful. So, as you can see it's not been a straight line as far as investments. For the people counting $$ he is pretty far ahead despite the stumbles listed above.

But what has worked to perfection is the income generation.

Feb 2015 - $6,862
Feb 2016 - $7,276
Feb 2017 - $8,479
Feb 2018 - $9,456
Feb 2019 - $10,903
Feb 2020 - $12,161
Jul 2020 - $12,655


Is my brother down total dollars since the start of Covid-19? Yes !!! Has it affected his income? No !! Not a single stock he has cut it's dividend.

[Boston Red]

Thanks for the updates. Sounds like it's generally going well!

[gonelong]

I respectfully disagree (well I don't disagree per se as that is how you feel...I just don't feel the same) there as let's take the "drop" in March/April for an example. Every portfolio is different but if you have a portfolio of 50 stocks, you probably saw a drop of at least 25%. Maybe it was worse, maybe it was better (if so good for you). But during that time period let's assume (again, maybe you are better/worse) an average dividend yield of 4%...which is pretty generous, but maybe you got there due to the drop in stock prices. Well, with a yearly yield of 4% that means you probably only saw dividends add 1% to your portfolio value over that 3 month bad stretch.

So to sum up - your equities fell in value 25%, but you added 1% to your account...how is that comforting?

I think dividends are great. I just view them differently as I value that equity price a bit higher than some. The "comfort" in dividends to me is that quarter-over-quarter, year-over-year reinvestment that just solidifies your balance, coupled with dividend increases which provide a beautiful yield from the initial investment, but I'm a patient guy. But in a crisis, they just don't comfort me, as they are a drop in the bucket compared to the overall losses in the portfolio.

From the perspective of my retirement plan I ask ... what losses?

We can't eat with the total value of our portfolios - we have to convert that to purchasing power. I already know how I am going to do that - my investments are pumping out dividend income (cash flows). For now, those cash flows are busy buying more retirement income. At some point I will be retired and will be using my dividend income (coupled with a pension, social security, etc.) to pay bills, get groceries, and go on trips.

Had I already been retired that ~25% drop in the market (and my portfolios) would have been just a news story. This event provided a data point for me - my dividend income was essentially unaffected. The stocks I have identified and purchased were able to keep on paying (and some raising) dividends through very difficult times.

No loss of income. I'd say that is comforting.

GL

[bucksfan2]

So follow up #1 - - I don't know that I've mentioned this in the thread before or not. I have a brother 10 years younger than me. So he's almost 59. Sometime in 2013 at a mini-family reunion (all the sibling are spread over N.A. - He's in Alaska, I'm in Florida). I mentioned that retirement finances was kind of my thing these days, and he said he had no retirement income or plan (he did have about $200K in 401k). I said if you ever want to start the ball rolling, let me know.

In July of 2014, he contacted me and said 'Let's do this'. It actually took until Feb of 2015 to get the money out of his 401k and into a brokerage IRA account that we controlled and to get it fully invested.

At that point his yearly income from the IRA was $6,862. So his IRA differs from my daughters in a couple respects. First - it has no almost no new money coming in. Since it started in 2016 he's only added $9,000. He contributes to his 401k, You can see with an initial amount of $200K and an income of $6,862 our yield was 3.431%. With the exception of a big chunk of ATT, all the rest was low paying 'regular' S&P kinda stocks. ATT is regular too, it just pays more.

CINF
CL
GPC
INTC
JNJ
KO
MCD
MMM
PG
T
VZ
XOM
MO
COP
CVX
GE

Living in Alaska, he was big on oil. Shortly thereafter I became convinced that oil was a terrible investment. I moved him out of CVX but he wanted to stay in COP and XOM. So, like I thought COP was a dog, and before we bailed on it, we lost over $7,500 in it, XOM has been a dog and even after reinvested dividends he is down $7,000. If he allowed me to, I'd bail on XOM right now. I think they will cut their dividend by a bunch before this time next year.

GE turned out to be a dog to my surprise. Lost about $6,000 on that one. We are out of it.

MO we are down $1,700, but we have no intention of leaving that one. All the rest have been pretty success. So, as you can see it's not been a straight line as far as investments. For the people counting $$ he is pretty far ahead despite the stumbles listed above.

But what has worked to perfection is the income generation.

Feb 2015 - $6,862
Feb 2016 - $7,276
Feb 2017 - $8,479
Feb 2018 - $9,456
Feb 2019 - $10,903
Feb 2020 - $12,161
Jul 2020 - $12,655


Is my brother down total dollars since the start of Covid-19? Yes !!! Has it affected his income? No !! Not a single stock he has cut it's dividend.

Thanks for this post. I have wavered back and forth at times on my investing philosophy. Now I am nowhere near retirement, nor do I need steady stream of cash coming in. I am looking for accumulation in terms of DRIP as well as growth. What I do find interesting about your mix is it looks like a Dogs of the Dow portfolio. There are also no utility stocks, a pretty common holding in a dividend income portfolio. GE is also a terrible dog that is a shell of its former self.

This may be more a philosophical investing question, not a dividend growth question, but one I thought I would throw out there. With the massive companies holding so much cash, think Apple, Amazon, Google, FB, Visa, etc. will more start ups be bought and and swallowed before they are allowed to hit the mainstream? It almost has the feeling like the next great innovation will come from a segment of one of the massive companies today. I don't know if that was true years ago, but it sure seems true today.

[kaldaniels]

From the perspective of my retirement plan I ask ... what losses?

We can't eat with the total value of our portfolios - we have to convert that to purchasing power. I already know how I am going to do that - my investments are pumping out dividend income (cash flows). For now, those cash flows are busy buying more retirement income. At some point I will be retired and will be using my dividend income (coupled with a pension, social security, etc.) to pay bills, get groceries, and go on trips.

Had I already been retired that ~25% drop in the market (and my portfolios) would have been just a news story. This event provided a data point for me - my dividend income was essentially unaffected. The stocks I have identified and purchased were able to keep on paying (and some raising) dividends through very difficult times.

No loss of income. I'd say that is comforting.

GL

Sure.

But to use your phrase “Your overall balance drops through the floor.” is never a comforting site for me. If asset prices decrease too drastically and/or for too long, dividends will get cut (not by everyone of course). I’m in it long term and haven’t panicked (kept investing), but being honest when the market lost 30-40% it puts a lump in my throat. History says the market will always bounce back, but it seems like we are in some strange “end stage capitalism” times where nothing would surprise me. Like I said, I’m bullish long term, but I don’t take anything for granted.

And I get it, different strokes....

[Boston Red]

PG has happily NOT been a dog of the DOW! That's the only one on the list I own (other than a very small bit of MO, which has actually been fine since it spun out PM, MDLZ and KHC since I've owned it and has continued to pay its healthy dividend).

[bucksfan2]

PG has happily NOT been a dog of the DOW! That's the only one on the list I own (other than a very small bit of MO, which has actually been fine since it spun out PM, MDLZ and KHC since I've owned it and has continued to pay its healthy dividend).

Not a dog of the Dow, part of the Dogs of the Dow, the ten highest yielding stocks in the dow. PG has been outside of that for a while, but is normally a mainstay.

[Boston Red]

Ah, sorry. Didn't realize it was a positive and not a negative! We need an embarrassed emoji around here!

[JaxRed]

Ah, sorry. Didn't realize it was a positive and not a negative! We need an embarrassed emoji around here!

Well it is kind of a negative. The concept was that a stock is high yielding because the price went down a bunch while the dividend remained the same. So it was a dog. But Dogs of the Dow theory says those are the best stocks to bet on because they are a good bet to rebound.

My brother's portfolio in no way is designed to be a Dogs of Dow portfolio. We do very little trading. It's designed to be buy, hold and forget. And most have done very well.