Performance Review :: September 2018

Performance Review

One of the most anticipated recurring events across the Dividend Growth Investing (DGI) community is when everyone posts their monthly dividend income report.

However, I have noticed that there are rarely any updates about the overall performance of the portfolio inclusive of any unrealized capital gains or losses.

This may be due, in part, to the divide between focusing on the dividend return versus the total annual rate of return.

For many in the DGI community, there is the desire to buy and hold stocks for the long-term with the intent to never sell unless there is major fundamental change in the company or they cut their dividend. Therefore, the stock price itself is not as important as long as the dividends continue to roll in like clockwork.

While thinking about the above, I thought it would be fun to slice and dice my portfolio a little to conduct a brief performance review.

Excluding Long-Term Holdings

For this initial performance review, I have decided to exclude my holdings in Apple, Abbott, and AbbVie because I have held those for multiple years and have more substantial holdings.

Those three stocks would clearly be my best performers with unrealized gains of 932.23%, 261.58%, and 404.75% respectively.

The new positions in my rollover IRA will also be ignored for right now as those have just been purchased within the last week. The focus of this performance review will be on the DGI stocks that I’ve added since May when I initially began building a dividend portfolio.

Overall Performance

The focused DGI portfolio was established in May 2018, and since that time the portfolio has had a return of 8.85%.

Digging into the details a little more to examine the impact of dividends versus capital appreciation shows that approximately 53% of that return has come in the form of dividends.

Next we will take a closer look at the best and worst performing stocks within the portfolio.

Top 5 Performing Stocks

Based on overall percentage increase, the following five stocks are leading the charge:

Top 5 Performing Stocks

One of the things that stands out to me in looking at these top 5 performers is that they are largely considered “boring” companies and don’t necessarily receive a lot of attention across the DGI community.

Here is my current Yield On Cost (YOC) for each of these holdings as of market close on September 13, 2018:

  • Clorox :: 3.21%
  • Snap-on :: 2.20%
  • Williams Sonoma :: 3.16%
  • Target :: 3.61%
  • Kellogg :: 3.48%

Looking at the portfolio from a dollars perspective, you will see that the top five looks a little different:

Top 5 Performing Stocks

Only Williams Sonoma has made the top 5 performing stocks from both a percent gain and dollar gain perspective while Microsoft, Pepsi, Altria, and CMS Energy jump into the top spots.

Bottom 5 Performing Stocks

While it is nice to see gains and pat yourself on the back for the investments that are working out well, now let’s take a look at the five stocks that are bringing up the rear of the portfolio:

Bottom 5 Performing Stocks

Here is my current Yield On Cost (YOC) for each of these holdings as of market close on September 13, 2018:

  • Franklin Resources :: 2.73%
  • Cracker Barrel :: 3.19%
  • Prudential Financial :: 3.67%
  • Cummins :: 3.20%
  • AT&T :: 6.23%

The interesting point that caught my attention with the bottom five performing stocks is that three of them were on my September Watch List and one of them, Cummins, has been purchased twice in recent weeks.

Here is the bottom five from a dollars perspective:

Bottom 5 Performing Stocks

It is little surprise that the bottom five remains largely unchanged when viewing the percent vs. dollar laggards, with the lone change being that NextEra Energy has a lower dollar gain than AT&T.

Wrapping Up

There are many more ways that the portfolio can be sliced and diced to examine the performance, including the top and bottom dividend yields as well as yield on cost, top and bottom holdings by portfolio weighting, and top and bottom holdings by dividend growth.

We will dig into those numbers in future performance reviews, however I thought that starting with the top and bottom holdings by two of the more common metrics would be a good starting point.

How is your portfolio performing?

What are some of your best and worst performing holdings right now?

15 thoughts on “Performance Review :: September 2018”

  1. We DGIers do get a little overly focused on dividend income when total return is ultimately the end game. I like to look at the sum of yield plus projected dividend growth as an indicator of total return potential. If the dividend keeps growing the capital gains usually follow over the long term. It’s also one reason as the years have gone by that I have shifted a little more to lower yielding stocks with greater historical and projected dividend growth. Nice analysis. Tom

    1. Thanks Tom, it had struck me that it was something I don’t really see discussed a great deal across the DGI community so thought it would be fun to look at the portfolio from a few different perspectives.

      As you have done, I have tried to mix in some lower yields that have better growth prospects. I think that will be a good metric to look at coming up too–the relationship between the yields and the growth track records.

  2. DutchIndependence

    Always a good sign when your top 5 worst performing stocks incluse a positive position, nice work and amazing gains on ABBV, ABT and AAPL, must be nice!


    1. Agreed, and when I first started pulling together the post there were actually two in the bottom five that had positive returns. Unfortunately, CMI dipped at the close and fell into the red.

      Yeah I am really happy with the gains on AAPL, ABBV, and ABT and have extremely attractive cost basis on all three!

  3. Love the different kind of post. I did something remotely similar when I complained about my negative total return 😉

    I’ll put this on my list for a future post. My top performer in total returns is VFC btw. Stock appreciated about +30$ (not %!) since I bought it.

  4. Those are some nice returns for just a few months work, DivvyDad. Keep it up!
    I’m glad to see you review some performance aspects of your portfolio stocks, as I agree there is often tremendous focus on just dividend income, perhaps even at the expense of total return.
    My portfolio is skewed more to dividend growth compared to dividend income since I’m hoping to grow it’s value more quickly prior to needing the income.
    Every month I update a few performance metrics for my holdings as listed on my Portfolio page, and at the beginning of this year I did an annual performance review for 2017. I plan to keep doing this, and hopefully add more posts like you have here over time.
    For your 3 legacy holdings, perhaps you can calculate a CAGR for each, making it easier to add them to a comparison with your more recent portfolio additions (especially after you’ve held them for at least 1 year).
    Good stuff, DivvyDad. Thanks for sharing the numbers.

    1. Thanks ED, really appreciate the feedback. Did you post the annual performance review? I don’t recall seeing that as I read through the archives but will go take a look for that post.

      As you mentioned, I think once I get to next year and will have had a full year under my belt with the portfolio I will begin to look at things like CAGR and include the legacy holdings at that time (as well as the REITs that I am building up right now). I love analyzing the numbers so this is all right up my alley!

    1. Thanks Lanny, definitely will look to continue adding posts like this to dissect the performance of my portfolio in different ways. Glad you liked it!

  5. Great post, DivvyD! My best performers in the portfolio since I began investing about a year ago are Lowe’s at a 51.3% gain and Williams Sonoma at a 44.1% gain. My worst two performers at AT&T at a 5.6% loss and Abbvie at a 3.7% loss.

    1. Thanks Kody! That’s awesome to see you’ve had a great gain from WSM as well, I almost didn’t add that one to my portfolio but it has performed really well. And that Lowe’s gain is fantastic!

      Thanks for sharing your best / worst performers as well.

  6. BEN… that’s a rough one that’s got me too. They are flush with cash and will figure out a way to grow their declining revenues. It’s just a matter of time. In regards to the rest of your positions, well done! Looks like you are managing your portfolio very nicely!

    1. Thanks DP, and I share the long-term sentiment with you that I think it is a matter of time before they get things turned around and see better growth. I’d really like to add more at these levels but am being a little more cautious as their earnings growth is expected to be down in 2019 and there might be better buying opportunities ahead.

      Appreciate the feedback on the portfolio!

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