Friday, January 3, 2014

My Portfolio and Dividend Income Update

As previously mentioned, I have my investments (not including my 401k) split between two taxable accounts. Prior to June 2013, I had all my investments in one account. My focus in that account would shift from time to time but I had begun to focus on dividend paying stocks, especially after an ill-fated investment in a Chinese solar company a couple years ago. After doing more research into Dividend Growth Investing (DGI), I decided to split my investments into two accounts with my main account focusing on a DGI strategy. I’ll go into more depth on DGI strategy in future posts but it is essentially focusing on companies that have a track record of increasing their dividends every year and appear to have the capability to continue increasing their dividends going forward. This seems an especially attractive strategy to me as I am looking for additional income sources. Since I am getting married in a few months, I have begun to think about the possibility of raising a child and the prospect of having to support a family on just my income for some period of time. Having investments that can provide reliable additional income will give me piece of mind during this time. In addition, as I look forward towards financial independence, it makes sense to me to try and create a passive income stream that can support my family rather than accumulating assets which will be sold off over time to cover living expenses.

Why split my investments into two accounts? My original account was set to reinvest dividends into the companies paying them (dividend reinvestment plan or DRIP). One of the goals of my DGI account was to throw off additional income to help supplement my income to help raise a family. Until then, I will use the dividends to help pay down my fiancee’s student loan debt. As such, I do not want to DRIP the dividends. Instead, I will actively purchase the stock(s) that I feel provide the best value as I have sufficient funds for new purchases. My original account will continue to auto re-invest dividends. It will be the smaller account and will rarely (if ever) have additional funds added as new money will be focused on the DGI account.

DGI Account
Symbol Shares Current Value Yield
AFL 25 $1,653.50 2.24%
ARCP 89 $1,148.99 7.28%
BAX 24 $1,663.44 2.83%
COP 25 $1,749.00 3.95%
CSCO 80 $1,758.40 3.09%
DLR 34 $1,694.56 6.26%
DRI 31 $1,643.00 4.15%
GE 73 $2,005.31 3.20%
LEG 51 $1,566.21 3.91%
MCD 16 $1,544.64 3.36%
O 35 $1,320.90 5.79%
PEP 17 $1,398.08 2.76%
PM 19 $1,625.26 4.40%
TOTAL  $20,771.29 3.99%

Non DGI Account
Symbol Shares Current Value
AFL 25 $2,054.51
BAM 40 $1,611.37
DE 10 $912.32
Jan 2015 $15 F Call 1 $178.00
Jan 2015 $17 F Calls 4 $384.00
Cash  $1092.36
TOTAL  $6,232.56

2013 Dividends
Jul-13 $12.65
Aug-13 $31.40
Sep-13 $69.82
Oct-13 $60.14
Nov-13 $30.16
Dec-13 $52.79
Total $256.96

As you can see, my dividend income decreased 12.2% from October. There were a couple factors that caused this decrease. One was a sell of 25 shares of AFL during the 4th quarter. I reduced my stake in AFL as I had an overweight position. At this point, I am trying to avoid having too much of an overweight position in any company and selling 25 shares of AFL allowed me to also increase the overall yield of my portfolio. The other reason for the quarter over quarter decrease was PEP and DLR pay in October but push the 4th quarter dividend to January. DLR was a new purchase during the 4th quarter. Due to the timing anomaly, January looks to be my biggest month yet. As can be seen below, the forward 12 month income has steadily moved higher. The increases are attributable to moving fund from my other account, adding additional funds and a couple of swaps such as the AFL sell to move to a higher yielding security. AFL is the only position in the account which I held prior to starting the DGI strategy.

Forward 12 Month Dividend Income as of 1st of the month
Jul-13 $455.19 
Aug-13 $519.07 
Sep-13 $568.98 
Oct-13 $643.13 
Nov-13 $716.21 
Dec-13 $718.87 
Jan-14 $829.20 

I am very excited about my DGI account going into 2014. So far it has grown much faster than I anticipated. While I expect the growth to slow in 2014, I expect it to continue moving in the right direction.


  1. Looks like a solid plan. Once I get my DG/FI portfolio built up more I've thought of branching out a bit more. Eventually I'll need to open a new brokerage account just to diversify things on that front as well. The holdings should remain solvent in the event of a failure, but depending on how quickly things get resolved you could be without a significant portion of your dividend income. Those forward dividends are creeping up on $1k. That's a great hurdle to reach. As far as overallocation, I'm still not that worried about it since I'm still contributing lots of fresh capital. Best of luck in 2014 and congrats on the upcoming wedding. When's the date?

    1. Thanks PIP. I'm a long way off from worrying about having my money split up to protect against a brokerage failure but that is a great thing to consider prior to relying solely on passive income from your investments. $1000 in forward dividends will be a nice milestone but I am really excited about hitting $100/month avg dividend mark! I see you are right at $300/month which is an awesome amount of passive income coming in each month. You can look forward to 2-3 additional purchases before adding any new money. Very inspiring! Makes me want to get there all the quicker :-).

      The big date is May 24th! Now that it is 2014, it is finally registering with me how close that date is. So much to do! Also dawning on me how many expenses are coming my way shortly (even with help from parents).