OVERALL VIEW as of February 1, 2010
Two portfolios are tracked here, the Capital Gains Portfolio and the Dividend
Portfolio.
These are not hypothetical or model portfolios. They contain real stocks
purchased with my own money. They include--not ignore--the frictional effects of
commissions and other transaction costs. No money has been added to or removed from
either portfolio since each was created, other than dividends received. They are
designed to illustrate the results that can be achieved by applying the principles in my two
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 a gain of 48% vs. the S&P 500's loss of 7%.
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 February 1, 2010:
As the stock market began to display upward momentum last March, and reinforced by
positive signals from my Timing Outlook, I began to re-enter the market in April, after
having been 100% cash for many months during the bear market of 2007-2009. The
predominant cash position during the market's crash created a significant performance
advantage for the portfolio. With gradual re-investments that began in April, this portfolio
became 100% invested (0% cash). In the last seek of January, an 8% trailing sell-stop on
QQQQ (a Nasdaq-tracking ETF), was hit, selling off about 6% of the portfolio.
Special Note: Use the box to the right to sign up for my free Newsletter. A new Timing
Outlook is published approximately every other week. To read an FAQ about the Timing
Outlook, 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.
Total performance since origination:
Dividend generation / Income stream:
As dividend increases are declared and dividends are reinvested, the yield on the
original investment will rise over time. This is known as yield on cost.
Mathematically, it goes up because the divisor (Price) in the equation, Yield = Dividends /
Price, is fixed at the original $40,000. But the numerator will increase steadily as (1)
companies raise their dividends; (2) the re-invested dividends are used to purchase
more shares; (3) the increased number of shares produces more dividends; and (4)
changes are made to the portfolio to increase its yield without raising the risk to its
dividends.
Stocks held in Dividend Portfolio as of February 1, 2010:
The Dividend Portfolio contains about $926 cash from incoming dividends. Under the
rules governing this portfolio, when the accumulating cash reaches $1000, the funds will
be 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.
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 for Dividend Portfolio:
Year Dividends Received Yield on Cost Increase from Prior Year
2008 $1316 3.3%
2009 $1568 3.9% 19%
2010 $1672 [indicated] 4.2% [indicated] 7% [indicated]
The numbers in the last line for 2010 are all indicated values, meaning that they are
based on current dividend rates and any increases already announced for 2010. As more
dividend increases are announced by the companies in the Dividend Portfolio, and as
additional shares are purchased with accumulated dividends, these numbers will go up.
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
the cover image to the right for more information. The Dividend Portfolio here is run
entirely according to the principles and stocks analyzed in THE TOP 40 DIVIDEND
STOCKS series.
Two portfolios are tracked here, the Capital Gains Portfolio and the Dividend
Portfolio.
These are not hypothetical or model portfolios. They contain real stocks
purchased with my own money. They include--not ignore--the frictional effects of
commissions and other transaction costs. No money has been added to or removed from
either portfolio since each was created, other than dividends received. They are
designed to illustrate the results that can be achieved by applying the principles in my two
books, SENSIBLE STOCK INVESTING and THE TOP 40 DIVIDEND STOCKS
series.
SUMMARY REPORT CARD
- The Capital Gains Portfolio has increased in value 48% vs. the S&P 500's
loss of 7% since the portfolio was created in 2001. That is 59% out-
performance compared to the index. The portfolio has delivered a
significant positive gain during a period when the market overall has
declined. 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 3% in total value vs. the S&P 500's loss of 6% in the
same time period. But its real purpose is to generate growing dividends. It
is doing that, with an indicated (that is, 12-month forward-looking) yield of
4.2% on the portfolio's original value. That yield is rising as dividend
increases are declared, new shares are purchased with incoming
dividends, and occasional stock swaps are made.
SEE THE DETAILED REPORT CARD FOR EACH PORTFOLIO BELOW
_________________________________________________________________
CAPITAL GAINS PORTFOLIO REPORT CARD
Since inception, this Portfolio has a gain of 48% vs. the S&P 500's loss of 7%.
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 (February 1, 2010): $73,841 (+48%)
- Current value of S&P 500: 1074 (-7%)
- Portfolio vs. S&P 500: +59%
Stocks and ETFs held in Capital Gains Portfolio as of February 1, 2010:
- IBM (IBM)
- SPDR Trust Series (SPY...an ETF that tracks the S&P 500 Stock Index)
As the stock market began to display upward momentum last March, and reinforced by
positive signals from my Timing Outlook, I began to re-enter the market in April, after
having been 100% cash for many months during the bear market of 2007-2009. The
predominant cash position during the market's crash created a significant performance
advantage for the portfolio. With gradual re-investments that began in April, this portfolio
became 100% invested (0% cash). In the last seek of January, an 8% trailing sell-stop on
QQQQ (a Nasdaq-tracking ETF), was hit, selling off about 6% of the portfolio.
Special Note: Use the box to the right to sign up for my free Newsletter. A new Timing
Outlook is published approximately every other week. To read an FAQ about the Timing
Outlook, 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.
Total performance since origination:
- Origination date: April 1, 2002: $40,000
- S&P 500 at origination date: 1147
- Current value of portfolio (February 1, 2010): $41,033 (+3%)
- Current value of S&P 500: 1074 (-6%)
- Performance vs. S&P 500: +10%
Dividend generation / Income stream:
- Total dividends received in 2010: $92
- Indicated dividends over next 12 months: $1672 (Source: E*Trade's Income
Estimator for this portfolio)
- The actual dividends received in 2010 will be higher, for three reasons. (1)
The Income Estimator does not include dividend increases until they are
declared by each company. Therefore, dividend increases to be declared in
2010 are not included yet. (2) Dividends on additional shares that will be
purchased with accumulating dividends are not included yet. (3) I may make a
couple of changes to the portfolio to increase its yield. The impact of these
changes is not reflected yet. - Based on E*Trade's $1672 indicated dividends over the next 12 months...
- Yield on present value of portfolio ($41,033): 4.1%
- Yield on original value of portfolio ($40,000): 4.2%
- For comparison, S&P 500's current yield is about 2.0%
As dividend increases are declared and dividends are reinvested, the yield on the
original investment will rise over time. This is known as yield on cost.
Mathematically, it goes up because the divisor (Price) in the equation, Yield = Dividends /
Price, is fixed at the original $40,000. But the numerator will increase steadily as (1)
companies raise their dividends; (2) the re-invested dividends are used to purchase
more shares; (3) the increased number of shares produces more dividends; and (4)
changes are made to the portfolio to increase its yield without raising the risk to its
dividends.
Stocks held in Dividend Portfolio as of February 1, 2010:
- Abbott Labs (ABT)
- 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)
The Dividend Portfolio contains about $926 cash from incoming dividends. Under the
rules governing this portfolio, when the accumulating cash reaches $1000, the funds will
be 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.
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 for Dividend Portfolio:
Year Dividends Received Yield on Cost Increase from Prior Year
2008 $1316 3.3%
2009 $1568 3.9% 19%
2010 $1672 [indicated] 4.2% [indicated] 7% [indicated]
The numbers in the last line for 2010 are all indicated values, meaning that they are
based on current dividend rates and any increases already announced for 2010. As more
dividend increases are announced by the companies in the Dividend Portfolio, and as
additional shares are purchased with accumulated dividends, these numbers will go up.
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
the cover image to the right for more information. The Dividend Portfolio here is run
entirely according to the principles and stocks analyzed in THE TOP 40 DIVIDEND
STOCKS series.
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