Performance Review :: September 2018

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:

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:

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:

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:

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?