stock researchJust 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.

I’m very pleased with my dividend growth investing total return results for the first 6 months of 2014.

My Dividend Growth Portfolio Actions in 2014

I knew heading into 2014 that I wouldn’t be quite as active on the buying front compared to 2013.  Changing family and personal situations have not allowed me to invest as much as I would prefer to.  However, I’m dedicated to continue to my dividend growth investing and am thus still trying to put away as much as my family can reasonably afford each month.

What I want to do is review my trades and make sure that I am doing a good job sticking with my dividend growth investing plan.  I want to make sure I didn’t take any unnecessary risks or make any trades that don’t agree with my investing strategy.

Very quickly, I can look over the trading activity in my portfolio and see that I made zero sales so far in 2014.  I’m a long term investor and I prefer not to sell the companies I own unless given a very good reason.  I’m happy to say that I had no reason to sell any stocks so far the first half of this year.

When reviewing my transactions from 2014, I find that so far I have made 3 buy transactions.  I purchased a restaurant, a telecommunications company and a credit card company.  Here are the companies I purchased in 2014 along with a little insight into my thinking and why I made these buys:

  1. Cracker Barrel (CBRL) - I’m a fan of the Cracker Barrel restaurants.  The company has a 12 year dividend growth streak and have been growing at a nice pace.  Most recently they increased their dividend rate by 33%.  Not only do they offer good growth opportunity but the company also offers a decent current dividend yield of a little over 4%.  For these reasons, I decided to jump in and grab some shares.
  2. AT&T (T) - AT&T is a dividend growth darling with 30 years of consecutive increases.  I decided to grab shares of AT&T because they offer a nice current dividend yield over 5%.  I also believe the valuation is pretty good when I picked up my shares and remains attractive still.  My one negative on AT&T is the slower growth.  However, with the higher starting dividend yield and as long as they continue growing the dividend rate at least in pace with inflation, I think I’ll be a happy owner.
  3. Visa (V) - Visa was my most recent purchase.  I fell in love with Visa after looking over the companies stellar financials.  They have high growth and zero debt on the balance sheet.  My belief is the demand for credit and debit cards along with the payment processing capabilities of Visa will continue to grow.  Visa has a 7 year dividend growth streak.

Reviewing my purchases over the first half of 2014 and I’m happy that for the most part I stuck to my investing plan.  I don’t think I will regret any of those purchases over the long term.

The one purchase where I did stray slightly from my rules was my Visa purchase.  Visa offers a lower yield (0.75%) compared to what I normally like to see from my companies but I decided to make an exception due to their high growth.  If I was still building my portfolios foundation, I would probably choose another company before turning to Visa.  But I have plenty of solid dividend growth companies with higher current yields in my portfolio currently where I figured it would be alright to take a flyer and pick up a company like Visa.

In summary, the first half of 2014 went well for me.  I beat the market in whole.  I purchased 3 new companies that I’m pleased to add to my portfolio.  I wasn’t forced to part with any of my stocks.  The only downside is I didn’t get to invest as much as I would have liked.  But I’ll continue to move forward and invest as much as I’m capable.  As my earning power increases in the future, I’ll continue to invest more and more going forward.

My Current Dividend Growth Portfolio

The last thing I want to do in my semi annual review is go over my entire portfolio to make sure no changes need to be made.  There are 3 things I want to look at with this review.

First, I want to review which companies in my portfolio have made dividend increases and which ones I expect to see an increase in the second half of the year.  For the companies that have made increases, I want to make sure those increases have met my expectations of at least keeping pace with inflation.

Next, I want to make sure that no company is trading at an excessively high valuation.  If I feel a company is trading at a excessively high valuation (30+ P/E) then I will probably consider selling the company.  When I sell a company because of high valuation, I will do so with the expectation that sometime in the future I will be able to buy the company back at a much lower more reasonable valuation.

Check out the picture to see all of my dividend growth holdings, their recent P/E ratios and their 2014 dividend growth rates.

For the most part, I’m fairly happy when looking over my current portfolio.  I own 22 total companies giving me fairly good diversification.  Also 13 of the 22 companies have already announced dividend increases so far this year.  I have expectations that the remaining 9 will increase their dividends in the last 6 months of the year.  There are a couple companies with low (below 3%) dividend growth.  These companies will need to be monitor to make sure dividend growth doesn’t lag too much through the years.

I’m also pleased to see that in my opinion no companies are valued excessively.  I don’t need to make any current selling decisions right now.


2014 Dividend Growth Investing Goals Progress Update

At the beginning of the year, I made some goals and what good are goals if you aren’t actively working to achieve those goals and following up with them through the year.  So lets take a look at my progress towards these goals so far.

My original goals are in black.  My progress updates are in red.

Here are my goals for 2014:

  • In 2014, I want to contribute at least $4,000 towards my dividend growth portfolio.  Due to some medical issues, there have been some financial changes in my family.  This means I will be able to save less than we did the previous year.  However, I think $4,000 is a reasonable goal and hopefully achievable.  We are well on pace towards achieving this goal.  So far this year I’ve contributed $3,000 towards my investment portfolio.  At the beginning of the year I wasn’t really sure what we’d be able to do as far as how much we’d be able to invest.  So far we are on track with the minimum I was hoping we could achieve.  I’ll continue investing and at this point expect to exceed this goal without problem.
  • Beat the S&P 500.  Really I have no control over this goal.  The market will value my companies how it wants and hopefully my strategy performs well in the upcoming year.  Like I said, I have no control over this goal but I have faith in my strategy and so far that faith is paying off.  Halfway through the year I am beating the S&P 500 by a couple percent.  Let’s hope this continues.
  • Earn more passive dividend income in 2014 than in 2013.  As long as I’m following my strategy and my companies are growing their dividends, this goal should be easily reached.  I keep track of my dividend income each month.  So far in 2014, I’ve earned more every single month compared to the same month from previous year.  This goal should be a given as long as I stick with the strategy.

The main point of my goals is to make sure I continue to make forward progress with my investing and overall financial well being.  As long as I continue to invest in high quality dividend growing companies, this should be no problem.  I’m pleased to see after this semi annual review that I am on track with my investing strategy and goals.

How did you do in the first part of 2014?  Are you on track to meet your goals?  Good luck!

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12 Responses to 2014 Semi Annual Dividend Growth Portfolio Review

  1. Nice work Dan. I’m glad to see you’re off to a solid start in 2014. Visa will be a great long term winner. I need to buy it myself.

    • Dan Mac says:

      Thanks Bryan, I’m pleased so far with 2014 and hopefully the second half will be even better! I still got a few expected dividend increases which hopefully won’t disappoint!

  2. Congrats on the good great year so far.

    Quick question. How do you calculate the return on your portfolio for the 6 month period if you had periodic investments during this period. Taking the starting and final balance doesn’t give the actual growth. Is it the IRR or XIRR formula in excel?

    • Dan Mac says:

      Hi Dividend Growth Journey. Yes I use the XIRR formula in Excel. I just did a google search to figure out how to do it.

  3. Paapaa says:

    Did you compare to SP500 price index without taking dividends into account? You should never compare to a price index – always compare to a total return index and always include dividends.

    • Dan Mac says:

      Thanks Paapaa, yes I compare to the S&P500 chart that I can access through my broker. Do you know where I can find the total return figures?

  4. Dan,

    I think it’s awesome you share your results so we can see well your plan is working!

    When you sell off your stocks when they approach your 30 P/E limit, do you just sell them or do you sell covered calls against them to make a little more?


    • Dan Mac says:

      Hi Patrick-

      Fortunately I haven’t been forced to sell anything off yet due to extreme valuations. If I do have to in the future, covered calls would definitely be a good idea. As of right now though I haven’t done any in my dividend growth portfolio.

  5. Looks like a great first half of 2014. I just added some more V this morning to my own portfolio. Keep up the good work!

    • Dan Mac says:

      JC, looks like you, me and Dividend Mantra were all buying V recently! I think it’s a great company that will be a great investment over the long run. While it doesn’t necessarily fit in with the rest of my portfolio due to the lower yield, I’m still content to own it for the companies long term potential. And it’s only a small portion of my entire dividend growth portfolio. It’s always good to know other dividend growth investors like the company as well!

  6. DivHut says:

    Thanks for sharing your recent update with your DG portfolio. You seem to have a pretty conservative portfolio with lots of high quality names. I’m happy to share quite a few with you. I’m also happy that you aren’t a yield chaser overloading your portfolio with MLPs and REITs.

    • Dan Mac says:

      Thanks DivHut-

      Yes my approach is definitely conservative. I’m a believer in buying companies I know and understand (usually the biggest best companies in the world) and owning for the long run. Growth may not be as spectacular but slow and steady can still pay off pretty well over the long term. I believe a buy and hold long term mentality of some of the world’s best companies will lead to pretty good wealth as my time passes.

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