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I’m excited to announce that I’ve created a variety of model portfolios to each follow a slightly different approach to dividend growth investing! The model portfolios are available within the Dividend Growth Insiders program.
Below you’ll find more info about the model portfolios I have created along with the rules I plan on following within the portfolios. I’ll also reveal one of the portfolios with the initial transactions to get it started.
5 Different Dividend Growth Model Portfolios
I’ve created 5 different portfolios to each track a slightly different approach to dividend growth investing. The portfolios are:
- Highest Dividend Growth Success Rating Portfolio - Within the Dividend Growth Insiders program, each company that is followed has a calculated “Dividend Growth Success Rating (DGSR)” based on a variety of financial growth and valuation metrics that I believe to be important to successful dividend growth investing. This portfolio is focused on purchasing the highest rated companies with the idea that these should offer the best long term return.
- Highest Dividend Yield Portfolio - This portfolio aims at investing in the dividend growth companies within the Dividend Growth Insider Database that have the highest current dividend yields. The idea behind this strategy is to follow along and see if investing in higher yielding companies may yield better long term results.
- Undervalued Dividend Stocks Portfolio - This portfolio focuses on purchasing stocks of companies that are currently undervalued. The portfolio finds undervalued stocks by using the Dividend Growth Insider Stock List of companies currently trading with a P/E ratio lower than their historical 10 year average P/E ratio. This portfolio should demonstrate that investing in undervalued stocks yields the best long term total returns.
- Highest Earnings Per Share (EPS) Growth Portfolio - This portfolio invests in the companies with the highest 5 year EPS growth rates. This portfolio should demonstrate the benefit of investing in those companies with the ability to grow their earnings the fastest.
- Dollar Cost Average Portfolio - This portfolio invests in 20 of the most popular dividend growth companies. Each month this portfolio will invest an equal amount among the 20 companies making up the portfolio regardless of valuation. The goal of this portfolio is to see if taking a strictly dollar cost averaging strategy into some of the most popular stocks will yield solid long term results.
Each portfolio was funded with $5,000 to start on August 1st, 2014. Each month another $1,000 will be contributed to each portfolio. Each portfolio will be built up to hold a total of 20 companies in total with roughly equal weightings in each company.
Within each model portfolios page, I will document all buy/sell transactions along with the funds dividends earned and total returns.
Within each model portfolios page, you can find more specific rules for that particular portfolio. Here is a list of general rules that I will follow for each portfolio:
- Each portfolio was funded with $5,000 on August 1st, 2014.
- Each month, another $1,000 will be contributed to each portfolio to be invested.
- New buys will be in roughly $1,000 increments.
- Dividends will be collected in cash and added to the next months contributions for new buys.
- Assuming a $4.95 trade commission on each portfolio using TradeKing ($9.95 commission for the Dollar Cost Average Portfolio using Motif)
- Buys will be made on the first Friday of each month.
- Each portfolio will be built up to 20 companies total with roughly equal weightings in each company.
- Within each portfolio page, I will report the trades made, dividends earned and total returns earned.
Here you can find the first model portfolio I have set up which purchases the top rated stocks from the Dividend Growth Insider database. I have created a calculation which gives each company a Dividend Growth Success Rating to identify a company’s long term investment prospects.
The first purchases for this portfolio included 18 shares of Aflac, 12 shares of Deere & Co., 13 shares of Wal-Mart Stores, 23 shares of Microsoft and 12 shares of T. Rowe Price. Check out the table below for the initial model portfolio.
|Deere & Co.||DE||85||12||1,024.47||84.96||1,019.52||20.5%|
|T. Rowe Price Group||TROW||83||12||936.87||77.66||931.92||18.7%|
Interested in Following Along with the Portfolios?
Updates for these portfolios will only be available to Dividend Growth Insiders.
Currently, I have a special offer of $4.99 for your first month of membership. Learn more about becoming a Dividend Growth Insider here!
United Technologies Corp. (UTX) is a manufacturing conglomerate that makes products for a variety of different industries.
Products in which UTX is involved in making include commercial and military aircraft engines along with helicopters. The company is also the world’s largest manufacturer and servicer of elevators and escalators. UTX also is involved in the production of heating, ventilating and air-conditioning (HVAC) equipment.
As you can see, United Technologies is involved in quite a range of industries. Also, the company is a true international company with around two thirds of revenues coming from outside the United States.
United Technologies Corp. is a quality company giving investors a good mix of diversification from their operations.
Recently, UTX announced pretty good 2nd quarter operating results. Total revenues were up 7% compared to the year-earlier time period. Looking at earnings, EPS came in at $1.84. This is a 7.6% increase compared to the $1.71 earned in the year-earlier period.
Looking forward, there is concern with a slowdown in new building in China which could adversely affect some of UTX’s divisions including elevators, escalators and HVAC equipment. However, the U.S. market is still firm and UTX should perform fine the rest of 2014 in other divisions.
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July seemed to be a slow month for dividend growth. Digging through dividend announcements, I only found 4 companies with dividend growth streaks that announced increases this past month. Happily, I am a proud owner of 3 of the companies making this a decent month for myself!
Let’s check out which companies were raising dividend rates this July 2014!
- ConocoPhillips (COP) - This oil company has a 13 year dividend growth streak. In July, COP increased their dividend rate from $0.69 to $073 per share. This is an increase of 5.8%.
- The J.M. Smucker Company (SJM) - Who doesn’t like some good jelly? Well the J.M. Smucker Company is a worldwide food company with products ranging from jellies to juices to coffee. The company sells brands such as Folgers, Smuckers, Jif, Crisco and more. This food products company has a nice 16 year dividend growth streak. The J.M. Smucker Company recently announced a 10.34% dividend increase. This raises their quarterly dividend payment from $058 to $0.64 per share.
Helmerich & Payne, Inc. (HP) provides contract drilling services in the oil and gas industry. The company operates primarily in the United States but also has some international operations in countries such as Colombia, Argentina, Ecuador, Tunisia, Bahrain and the United Arab Emirates.
Founded in 1920, Helmerich & Payne is one of the primary land and offshore platform drilling contractors in the world. The company has been a top industry performer for over 90 years and continues to maintain this reputation through innovation and quality service.
The company has roughly 300 U.S. land rigs, 9 offshore rigs and 29 international rigs reports as of Fiscal Year ended 2013.
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It’s no secret that the stock market has been on an upward terror over the past few years. And as prices continue to climb, many stocks are becoming less and less appealing to value minded investors as they become fair and overvalued.
As current stock valuations continue to climb, I am hearing more and more investors decide to accumulate cash since they are no longer finding any bargain or undervalued stocks worth purchasing.
But I’m hear to tell you that you don’t always have to buy undervalued bargain stocks. Dividend growth investors can and should consider investing in solid consistent industry leading companies even though they are not getting a bargain price.
Paying a fair value for dividend growth companies with solid reputations of being great companies is perfectly fine. In fact, I would encourage it. Don’t stop investing just because you can’t find any bargains. Find the fair value stocks and keep moving forward towards your investing and financial goals.
It’s OK to Invest in Fair Valued Stocks!
Recent history, due to the big stock market and economy crash of 2008/2009 has offered up some of the best investment bargains that many have ever experienced. Investors were able to pick up shares of their favorite companies at bargain basement prices.
As the years have passed since, prices have been on the rise and now the bargains are hard to come by. Sure there are still a few to find but an investor has to do a lot more digging to uncover the buried treasure. Instead, it is more common to find companies with valuations on the higher side making them not worth a current investment.
Investors became used to purchasing shares of companies at bargain prices. As prices have increased, investors are getting more and more scared to pull the trigger. Instead, many investors are shying away and instead choosing to accumulate cash waiting for the next great investing opportunity.
But I don’t believe that is necessarily the best strategy.
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Just over halfway through the year and I’m ready to do my semi annual dividend growth portfolio review.
At least twice a year, I believe you should do a full review of your dividend growth portfolio to make sure everything is going good. It’s important to review the investment decisions you make (buys and sells) to make sure you are sticking within your investing rules and process so that you can hopefully avoid making any investment errors. It’s also important to review the companies within our portfolios so that we know they are performing to our expectations and decide if we need to make any changes.
For my semi annual review, I like to compare my portfolio performance to the performance of the stock market as a whole. I like to review the buys and sells I made the first part of the year. And I also like to review the companies in my portfolio to make sure they are continuing to grow their dividends and meet my expectations.
My Dividend Growth Portfolio Performance
In order to judge the performance of my dividend growth investing portfolio, I first like to compare my results to that of the S&P 500 index. My goal is always to beat the index although I realize this won’t be possible 100% of the time.
My feelings are that I should be able to beat the index a majority of the time or else I would be better off just purchasing the index itself and not putting in the effort of researching and trading individual stocks.
However, I also have the goal of a growing passive income which owning individual dividend growth stocks provides me. Also, I enjoy the process of investing too much to just purchase an index fund. I truly enjoy the process of finding, researching and buying stocks.
But I’m competitive so I want to see how I’m doing against the S&P 500 index. Let’s take a look at my performance the first 6 months of 2014 and compare to the performance of the S&P 500.
The S&P 500 ended 2013 at 1,848.36. The market started off 2014 with a down month but it’s been climbing up each month after. The S&P 500 ended the first six months at 1,960.23. This gives the S&P 500 a return in the first half of 2014 of 6.05%. So far the market is on pace for another pretty good year.
While the S&P 500 is up to a pretty good first half of the year, I’m happy to say that the dividend growth strategy is serving me well as my own personal portfolio is beating the index by a couple percent! According to my calculations, my dividend growth portfolio has a total return of 8.77% for the first half of 2014.
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Visa Inc (V) is the world’s largest retail electronic payments network. Visa provides payment processing services to retailers as well as credit, debit and prepaid payment products. Visa also has one of the world’s largest global ATM networks which offers cash access in local currencies in more than 200 countries.
It seems more and more people continue get and use credit cards for their daily purchases. As more people use credit cards, companies such as Visa and Mastercard will benefit. Recently, for a few different reasons which will be detailed below, I decided to pick up some shares of Visa for my personal portfolio. For this reason I wanted to take this opportunity to review the dividend growth company for readers.
Dividend Growth and Current Yield
Visa Inc. had their stock IPO (initial public offering) just a few short years ago in 2008. Since the company’s IPO, they have been growing their dividend payment to shareholders every year. Visa currently has a 6 year dividend growth streak.
Visa has a dividend rate of $1.60. At the close of market on Friday July 11th, shares of Visa were selling for $217.00 per share. This gives Visa stock a current dividend yield of 0.74% (1.60/217). Many investors may be turned off by the lower dividend yield of Visa. In fact, for me the current dividend yield doesn’t meet the minimum yield of 2% I usually like to get with my dividend growth investments. But, as we’ll see later, Visa is a high growth company and I’ve decided that they can be forgiven at the present time for their lower yield.
Visa has a 5 year dividend growth rate of 45.93% compounded annually. The company’s most recent dividend increase was 40.40%. Since the company’s IPO, Visa has been growing their dividend rate like gangbusters.
It doesn’t take a genius to see that if the company can keep growing their dividend at such a high rate, the dividend can become quite significant for investors. Visa has been growing well lately and I believe they have a strong potential for growth at least through the end of the decade which I will hope continues to provide fairly high dividend growth.
Earnings Per Share Growth
Like their dividend growth, Visa has also been doing a great job growing their investor bottom line, EPS (earnings per share). In 2008, Visa announced earnings per share of $2.25. Their most recent EPS in 2013 was $7.59. The company has grown their EPS every year since their IPO. Visa has a 5 year compound annual earnings per share growth rate of 27.53%.
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This past week, I realized that I made a fairly novice mistake with my dividend growth investing. This mistake didn’t cost me to lose any money. However, I realized that I was worrying about something when in the grand scheme of things it was pointless to be worrying.
Last week, I made the decision that I was ready to make my first purchase of Visa (V) shares. I’ve been watching/interested the company for awhile and finally decided I was going to pull the trigger and add some shares to my portfolio.
I like Visa a lot. More and more people are switching from using cash to using credit cards to pay for everything they purchase. In my own house we use credit cards for everything. We are collecting points to use for air travel and as long as we pay our bills in full each month, we incur no additional interest charges or fees.
It is my belief that credit and debit card usage will continue to grow and become more popular worldwide. Visa is a dividend growth company set up to be one of the leaders in this electronic payment society.
Currently, Visa trades with a P/E ratio around 25. This is normally higher than I am willing to pay for any of my companies. However, Visa also offers high growth opportunities as they have had 5 year net income and earnings per share growth both over 20% compounded annually. I decided I was going to take the chance and pay a little higher valuation for Visa than I would normally be willing to accept on other companies.
So last Monday, I was ready to pull the trigger. But when I logged onto my brokerage account, I saw that Visa was up around 0.50% for the day. For some reason, it is difficult for me to psychologically make a purchase when a stock is having an up day. I decided I would wait until the next day when I figured the stock would come back down.
But Visa stock didn’t come back down. Instead, the stock continued to go up in price. I felt like I missed out. Last week, Visa stock climbed every day of the week for a total gain of 3.1%.
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Happy 4th of July weekend! Hopefully everyone’s having fun with their friends and family gatherings, bbq’s, fireworks and whatever else you do to celebrate!
Today I thought I’d help you figure out how to celebrate with some of your favorite dividend growth companies. Here are 7 dividend growth stocks that will help make sure you have a safe and fun holiday weekend!
Wal-Mart (WMT) - To get supplies for your holiday cookout, head on over to your nearest Wal-Mart retail store. You can buy all the supplies you need at Wal-Mart ranging from the food you’ll eat, the drink you’ll drink and the yard games you’ll want to play! Not only can Wal-Mart provide all your party needs, but they are a dividend growth company with 41 consecutive years of dividend growth!
Coca-Cola (KO) – While at the store, be sure to pick up some of America’s favorite beverages, Coke and Diet Coke. The Coca-Cola Company will help you stay hydrated throughout the day while you are having so much fun! You can enjoy drinking your Coca-Cola beverages knowing this company is a great dividend growth stock for your portfolio. They have 52 straight years of dividend growth.
PepsiCo (PEP) – If Coca-Cola isn’t your flavor, maybe you’d prefer one of the many drink choices PepsiCo has to offer. More important from PepsiCo though, don’t forget to pick up some of their famous Doritos which are sure to be a hit at your cookout! PepsiCo is another great dividend growth company with 42 years of growing dividends.
ConAgra Foods (CAG) - You can’t have a 4th of July cookout without great food. ConAgra can help make your cookout great. Try some of their Hebrew National brand hot dogs or some of their Manwich Sloppy Joe sandwiches! ConAgra has been increasing dividends for 6 years in a row.
Johnson & Johnson (JNJ) - Sometimes we have a little too much fun on the 4th! Whether you hurt yourself shooting off fireworks or maybe you have a little too much fun with the alcoholic beverages, Johnson & Johnson is here to help. Be sure to stock up on their Band-Aid brand bandages and some Tylenol for that morning after hangover! Johnson & Johnson has had 52 long years of increasing dividends!
Procter & Gamble (PG) - Unfortunately, when the fun is all over someone has to clean up the mess! Be sure to pick up some of the great Procter & Gamble cleaning products to help get your house back in clean tip top shape. Procter & Gamble has a near 6 decade long dividend growth streak. They have been paying growing dividends for an amazing 58 years!
Visa (V) - When your all done getting supplies from the store, you can use your Visa credit card to pay for it! Nothing is more American than buying stuff on credit! Whatever the cost, whip out that Visa and pay for your merchandise. Then take it home and prepare for a great time!
So get stocked up with some of these great dividend growth companies and have a great time this holiday weekend! Here’s wishing you a happy, fun and safe 4th of July!
Which dividend growth companies are helping you celebrate? Share with us in the comments below!
While June may not have had much activity in regards to dividend increases being announced, the dividend growth companies that did raise their dividends certainly didn’t shy away from large increases.
Of the 8 dividend growth companies announcing raises, 3 companies grew their rate by more than 20% and all but one announced at least a 10% increase.
Let’s check them out!
Lowe’s Companies Inc. (LOW) - Lowe’s Companies operates as a home improvement retailer with over 1,800 stores located throughout the United States, Canada and Mexico. Lowe’s Companies has a 52 year long dividend growth streak. This past June they announced a 27.78% increase in their dividend rate growing it from $0.18 to $0.23 per share.
Helmerich & Payne Inc. (HP) – Helmerich & Payne is a contract drilling company for the oil and gas industry in North and South America. They have a 42 year long dividend growth streak. Recently, Helmerich & Payne announced that they were increasing their dividend rate from $0.625 to $0.6875 per share. This is an increase of 10%.
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