OVERALL VIEW as of July 1, 2010
Two portfolios are tracked here, the Capital Gains Portfolio and the Dividend
Portfolio.
These are real portfolios, not hypotheticals or models. They contain stocks
purchased with my own money. No funds have been added to or removed from either
portfolio since it was created, other than dividends received. These are demonstration
portfolios designed to illustrate the results that can be achieved by applying the
principles in my books: SENSIBLE STOCK INVESTING; and THE TOP 40 DIVIDEND
STOCKS series.
SUMMARY REPORT CARD
SEE THE DETAILED REPORT CARD FOR EACH PORTFOLIO BELOW
_________________________________________________________________
CAPITAL GAINS PORTFOLIO REPORT CARD
Since inception, this Portfolio has grown 49% vs. the S&P 500's loss of 11%.
Begun in 2001, the Capital Gains Portfolio focuses mainly on stocks and ETFs with the
potential for strong price growth.
Performance since inception:
Stocks and ETFs held in Capital Gains Portfolio as of June 1, 2010:
During its history, one of the big reasons for the Capital Gains Portfolio's outperformance
is the technique of "going to cash" when market conditions are unfavorable. For
additional information about having your "stock money" in cash during unfavorable times,
see my free article, "Don't Be Rhinophobic," by clicking here.
Special Note: I provide market commentary and updates to my Timing Outlook in my
Free Newsletter. Use the box to the right to sign up for the Newsletter. A new Timing
Outlook is published approximately every other week. To read an FAQ about the Timing
Outlook, click here. To go directly to the Newsletter, click here. To read an article about
what it would take to lure me back into the market, click here.
____________________________________________________________________
DIVIDEND PORTFOLIO REPORT CARD
This portfolio (originally begun in 2002 with $40,000) was somewhat unfocused in the
beginning. It was gradually aimed toward generating increasing dividends, which has
become its permanent mission. I completely re-built this portfolio in 2008 using the
precepts of THE TOP 40 DIVIDEND STOCKS series.
A dividend portfolio has two key metrics. One, of course, is total performance. The other,
perhaps more important, is its ability to generate reliable and growing income
streams from dividends and distributions. These can be used either for re-
investment or immediate income.
Total performance since origination:
Generation of reliable and growing income streams:
As dividends increase and are reinvested, the yield on the original investment
will rise over time. This is known as yield on cost. Mathematically, yield on cost goes
up because the divisor in the definition of yield (yield = dividends / price) is fixed at the
original $40,000. But the numerator will increase steadily for the three reasons listed
above.
Stocks held in Dividend Portfolio as of July 1, 2010:
Accumulated dividends were used in February to begin a new position in Alliant Energy
(LNT). Under the rules governing this portfolio, when the accumulating cash reaches
$1000, the funds are re-invested in a company from the current edition of THE TOP 40
DIVIDEND STOCKS. In 2009, I purchased more shares of Abbott Labs with
accumulated dividends, and now in 2010, the new position in Alliant has been started. I
expect enough dividends to accumulate in 2010 to add one more purchase to the
portfolio later this year. There is $688 in cash right now, about 2% of the portfolio.
It is by means of such re-investments, along with annual dividend increases, that the yield
on cost will rise as described above. To learn more about the combined effect of initial
yield + the stock's annual dividend increases, read this article: "10 by 10: A New Way to
Look at Dividend Yield and Growth."
Dividend History and Projections for Dividend Portfolio:
Year Dividends Received Yield on Cost Increase from Prior Year
2008 $1316 3.3%
2009 $1568 3.9% 19%
2010 $1691 [indicated] 4.2% [indicated] 8% [indicated]
Next 12 Mos. $1816 [indicated] 4.3% [indicated] NA
The numbers for 2010 and for the next 12 months are indicated values, meaning that:
The 2010 edition of my dividend e-book, THE TOP 40 DIVIDEND STOCKS FOR 2010:
How to Generate Wealth or Income from Dividend Stocks, is now available. Click
here for more information. The Dividend Portfolio is run entirely according to the
principles and stocks presented in THE TOP 40 DIVIDEND STOCKS series.
Two portfolios are tracked here, the Capital Gains Portfolio and the Dividend
Portfolio.
These are real portfolios, not hypotheticals or models. They contain stocks
purchased with my own money. No funds have been added to or removed from either
portfolio since it was created, other than dividends received. These are demonstration
portfolios designed to illustrate the results that can be achieved by applying the
principles in my books: SENSIBLE STOCK INVESTING; and THE TOP 40 DIVIDEND
STOCKS series.
SUMMARY REPORT CARD
- The Capital Gains Portfolio has a total return of 49% vs. the S&P 500's loss
of 11% since the portfolio was created in 2001. That is 67% out-
performance compared to the index. It has not been a "lost decade" for this
portfolio.
- The Dividend Portfolio is also ahead of the S&P 500 since its creation in
2002. It has gained 5% in total value vs. the S&P 500's loss of 10% in the
same time period, which translates to 17% outperformance. But its real
purpose is to generate growing dividends. It is doing that: In 2009, the
portfolio took in 19% more dividends than in 2008, and it is on pace to take
in still more in 2010. These dividends are periodically re-invested in more
shares to accelerate the wealth-building process.
SEE THE DETAILED REPORT CARD FOR EACH PORTFOLIO BELOW
_________________________________________________________________
CAPITAL GAINS PORTFOLIO REPORT CARD
Since inception, this Portfolio has grown 49% vs. the S&P 500's loss of 11%.
Begun in 2001, the Capital Gains Portfolio focuses mainly on stocks and ETFs with the
potential for strong price growth.
Performance since inception:
- Portfolio begun April 1, 2001 with $50,000
- S&P 500 at beginning date: 1160
- Current value of portfolio (July 1, 2010): $74,401 (+49%)
- Current value of S&P 500: 1031 (-11%)
- Portfolio vs. S&P 500: +67%
Stocks and ETFs held in Capital Gains Portfolio as of June 1, 2010:
- None. The portfolio has been entirely in cash since early May.
- The portfolio's 4 former holdings--Apple (AAPL) , IBM (IBM), Spyder S&P 500
Tracking Index (SPY), and Vanguard Total Stock Market Tracking Index (VTI)--were
sold off during the early weeks of what has turned into a 15% tumble since the end
of April. In June, the market lost 5% while this portfolio increased in value slightly.
During its history, one of the big reasons for the Capital Gains Portfolio's outperformance
is the technique of "going to cash" when market conditions are unfavorable. For
additional information about having your "stock money" in cash during unfavorable times,
see my free article, "Don't Be Rhinophobic," by clicking here.
Special Note: I provide market commentary and updates to my Timing Outlook in my
Free Newsletter. Use the box to the right to sign up for the Newsletter. A new Timing
Outlook is published approximately every other week. To read an FAQ about the Timing
Outlook, click here. To go directly to the Newsletter, click here. To read an article about
what it would take to lure me back into the market, click here.
____________________________________________________________________
DIVIDEND PORTFOLIO REPORT CARD
This portfolio (originally begun in 2002 with $40,000) was somewhat unfocused in the
beginning. It was gradually aimed toward generating increasing dividends, which has
become its permanent mission. I completely re-built this portfolio in 2008 using the
precepts of THE TOP 40 DIVIDEND STOCKS series.
A dividend portfolio has two key metrics. One, of course, is total performance. The other,
perhaps more important, is its ability to generate reliable and growing income
streams from dividends and distributions. These can be used either for re-
investment or immediate income.
Total performance since origination:
- Origination date: April 1, 2002: $40,000
- S&P 500 at origination date: 1147
- Current value of portfolio (July 1, 2010): $42,147 (+5%)
- Current value of S&P 500: 1031 (-10%)
- Performance vs. S&P 500: +17%
Generation of reliable and growing income streams:
- Total dividends received in 2010 through end of June: $819 ($131 in June)
- Indicated total to be received in 2010: $1691 (source: E*Trade's Income Estimator)
- The actual dividends received in 2010 will be higher, for three reasons.
- The Income Estimator does not include dividend increases until they are
declared by each company. Therefore, dividend increases yet to be declared
in 2010 are not included yet. - Dividends on additional shares that will be purchased are not included yet.
- I may make a couple of changes to the portfolio to increase its yield. The
impact of these changes is not reflected yet.
- Indicated total to be received in the next 12 months: $1816
- Based on E*Trade's $1816 indicated dividends over the next 12 months...
- Yield on present value of portfolio ($42,147): 4.3%
- Yield on original value of portfolio ($40,000): 4.5% = "yield on cost"
- For comparison, S&P 500's current yield is about 2.5%
As dividends increase and are reinvested, the yield on the original investment
will rise over time. This is known as yield on cost. Mathematically, yield on cost goes
up because the divisor in the definition of yield (yield = dividends / price) is fixed at the
original $40,000. But the numerator will increase steadily for the three reasons listed
above.
Stocks held in Dividend Portfolio as of July 1, 2010:
- Abbott Labs (ABT)
- Alliant Energy (LNT)--new position established in 2010 with re-invested
dividends - AT&T (T)
- Chevron (CVX)
- Diageo (DEO)
- Emerson Electric (EMR)
- Kinder Morgan Energy Partners (KMP)
- McDonalds (MCD
- Realty Income (O)
- Pepsico (PEP)
- Royal Bank of Canada (RY)
- Sherwin Williams (SHW)
- Telefonica (TEF)
- Cash (2%)
Accumulated dividends were used in February to begin a new position in Alliant Energy
(LNT). Under the rules governing this portfolio, when the accumulating cash reaches
$1000, the funds are re-invested in a company from the current edition of THE TOP 40
DIVIDEND STOCKS. In 2009, I purchased more shares of Abbott Labs with
accumulated dividends, and now in 2010, the new position in Alliant has been started. I
expect enough dividends to accumulate in 2010 to add one more purchase to the
portfolio later this year. There is $688 in cash right now, about 2% of the portfolio.
It is by means of such re-investments, along with annual dividend increases, that the yield
on cost will rise as described above. To learn more about the combined effect of initial
yield + the stock's annual dividend increases, read this article: "10 by 10: A New Way to
Look at Dividend Yield and Growth."
Dividend History and Projections for Dividend Portfolio:
Year Dividends Received Yield on Cost Increase from Prior Year
2008 $1316 3.3%
2009 $1568 3.9% 19%
2010 $1691 [indicated] 4.2% [indicated] 8% [indicated]
Next 12 Mos. $1816 [indicated] 4.3% [indicated] NA
The numbers for 2010 and for the next 12 months are indicated values, meaning that:
- 2010's numbers are based on actual dividends already received, plus those to be
received under current dividend rates. As more dividend increases are announced,
and additional shares are purchased with accumulated dividends, the actual
dividends for 2010 will go up. - The next 12 months' numbers are based on current dividend rates. They will actually
be higher for the same reasons as just described.
The 2010 edition of my dividend e-book, THE TOP 40 DIVIDEND STOCKS FOR 2010:
How to Generate Wealth or Income from Dividend Stocks, is now available. Click
here for more information. The Dividend Portfolio is run entirely according to the
principles and stocks presented in THE TOP 40 DIVIDEND STOCKS series.
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