Update – I updated this article for 2014. See my updated Dividend Portfolio there.
I know it’s way past midyear, but we are way overdue for a dividend portfolio update post. The last time I took a close look at our dividend portfolio was earlier this year in January. Dividend income is one of the most passive ways to generate passive income and I think everyone should build a dividend stock portfolio. It’s way easier than being a landlord, that’s for sure.
For 2013, my only goal was to generate $9,000 in dividend income. Now that it’s been over 8 months, I think that one goal is not enough. I really should have another goal of at least keeping pace with the S&P500 index. Let’s see how I’ve done so far with our dividend portfolio.
Dividend Income So Far
For 2013, I have received $5,017 in dividends so far. I don’t think we are going to meet the $9,000 dividend income goal this year. There were some churns this year which threw off the dividend income a bit. Safeway went up very quickly and I took a profit. GE and AT&T dropped 10% in one day and set off my trailing stop order. ATVI isn’t really a dividend stock, so I sold it. I picked up Walmart, Kinder Morgan Energy, and Chevron with the proceeds.
For the record, we generated $6,791 in dividend in 2012.
Total Gain so far in 2013
The dividend portfolio started 2013 with $203,100.
Dividend yield = $5,017/$203,100 = 2.47%
Stock price increase = $23,117/$203,100 = 11.38%
Total gain = 13.85%
This looks great by itself, but it doesn’t stand up well when we compare it to the index funds. The Vanguard S&P500 fund gained about 16% so far. We are running behind almost 2%. That’s $4,000 in pizza and beer! On the other hand, we can also look at the Vanguard Dividend Appreciation ETF (VIG.) It gained 14.18% which is comparable to our 13.85%.
Let’s take a look at the numbers
The yellow highlights indicate closed positions.
The red highlights indicate positions I’d like to cut back on.
Cut some losses?
As you can see, some stocks are underperforming quite a bit. I highlighted these in red.
Shell – I probably will sell some shares when I see an opportunity. I have had these shares for a while and they don’t seem to be going anywhere. If I didn’t have so much invested with Shell, I’d probably be able to beat the Indexes.
Diebold – I still like DBD and will keep it a bit longer.
VWO – Vanguard Emerging Market ETF. This isn’t really a dividend stock and I’ll probably sell when the price recovers a bit more.
URA – Uranium… This isn’t a dividend stock either and it needs to go. I’ll sell this one before the end of the year so I can offset some gains.
Kinder Morgan Energy – As mentioned above, I just acquired KMP so I’ll give it a little longer.
Intel – I know I have way too many Intel stocks. I picked them up at a discount via the employee stock participation plan. I’ll probably sell some shares when the price is around $30. Otherwise, I’m happy to sit on them a while longer. The dividends are great considering the price I paid and I’ll have to pay a ton of tax when I sell.
I will keep working on our dividend portfolio for a few more years. If I consistently underperform VFINX and VIG, then it’s probably better to just go with the index funds. It will be even less work and will also eliminate some stress from my life. We also probably should reserve judgment until after 2013 is over. We’ll see how the rest of the year plays out as the dividends come in.
For the next few years, I will keep accumulating dividend growth stocks (companies that increase dividend payout overtime.) I will try my best to avoid churns in the future as well.
Do you have a dividend portfolio? How are you doing compared to the benchmarks?
If you need help keeping track of your finances, try using Personal Capital to manage your stock portfolio and net worth. It can help you keep track of your income, expenses, and net worth, all in one place. Personal Capital is geared for investors and has many great tools. See my review of Personal Capital and how they helped me save $750 in investment fees.
photo credit: Flickr by Chris Harley
For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.
Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.
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