Sadly, I have been neglecting our dividend portfolio this year. We have been so busy with our rentals that I haven’t paid attention to our other “passive income” streams. Fortunately, the sales of our rentals are now completed so I can give our dividend portfolio a thorough midyear checkup.
I have got to say the dividend portfolio is my favorite passive income stream at the moment. It doesn’t require a lot of maintenance and I know the dividends will keep rolling in. These companies are pretty solid and even if the price drops a bit, I’m pretty sure they will recover in time. Rental properties require much more active work. Let’s see how we did so far.
In 2013, we made $8,036 from our dividend portfolio in the taxable account. For 2014, I’d like to generate about $9,000 from our dividend portfolio and reinvest most of this.
My strategy for this portfolio is to invest in solid stocks with good track records of dividend growth. I plan to minimize trading and will sell only if the company cuts income or is imploding. I meant to update this spreadsheet every quarter, but life has been crazy this year, so I didn’t do it at the end of Q1. Anyway, here is the midyear update so we can see how our dividend portfolio is doing compared to VIG (Vanguard Dividend Appreciation ETF).
All right! We did pretty darn well so far this year. Our dividend portfolio is returning about 10% including dividend. As a comparison, VIG gained about 4.5% including dividend. I have been contemplating moving our investment to VIG if I can’t beat it (which I didn’t in 2013.) It’s looking good this year, though.
- Intel had a big run up recently and that gave the total ROI a big boost since it’s such a big percentage of our portfolio.
- Shell also did pretty well and that’s our 2nd largest holding. They also increased their dividend payout so that’s another great news.
- Eli Lilly went up over 20%. I’m not sure what happened there.
- National Retail Property REIT increased over 20%. I guess the property market is recovering all over the country.
- Mattel went down quite a bit. Apparently, the toys didn’t sell well during Christmas and the stock took a big tumble. Barbie is getting less popular and the new Entrepreneur Barbie probably isn’t going to help much.
Things look pretty good in general and I’m not overly concern about any investment in particular. Well, I highlighted a few investments in the last update so we’d better go over them again.
Intel is a big chunk of our dividend portfolio. I probably need to sell at least half and invest the proceeds in different stocks to diversify. I used to work for Intel and obtained these stocks at a discount via grants and the employee purchase plan. My average cost basis is $9.11 so I’m not looking forward to paying the capital gain tax.
2014 is a particularly bad year to pay tax for us because we just sold our rentals. Intel also seems to be doing better, so I’ll probably wait until 2015 to sell.
In 2012, Kraft Foods spun off into two companies – groceries and snacks. Mondelez International manages well known snack brands around the globe such as Oreo, Cadbury, and Trident. Kraft had a great track record of increasing their dividend payout, but it looks like Mondelez is struggling with their dividend a bit. The current dividend yield is only 1.6% and it is increasing very slowly. On the other hand, MDLZ did very well since the spinoff and gained 32% in 2013. I’m not sure what to do about this one… I’ll just hold on to it for now.
VWO and VPL
VWO and VPL are international ETFs from Vanguard. I like them, but they are not a good fit for this portfolio. I sold VWO to buy Target at the end of June. If I see another stock I really like, I’d probably trade in VPL.
All in all, it’s been a great half year for our dividend portfolio. We caught a lucky break and our two biggest positions, Intel and Shell, went up quite a bit. On the losing side, only Mattel had a significant drop and I’m not worried yet. I don’t DRIP so I have a little cash accumulating in this account and I’m thinking about adding more position in KMP.
Anyway, I’m very happy with our dividend portfolio so far, but I’m bracing myself for a correction. I don’t need to sell off anything when the stock market drops so I just need to prepare for it mentally. Note to self: Don’t panic sell.
Do you have any advice for our dividend portfolio?
Note: Our dividend portfolio is in our taxable brokerage account. In our retirement accounts, we invested in low cost index and bond funds.
Disclaimer: This is not a recommendation. My stock picking track record isn’t great so you need to do your own research. This post will help us keep track of the gains and dividends to see if they meet my passive income goal. If you need help with financial planning, consider signing up with Personal Capital. Personal Capital will help you keep track of all your investments in one place and can hook you up with a personal financial adviser as well.
Disclosure: If you sign up with Personal Capital, we may receive a referral fee depending on the size of your portfolio.
Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.
Joe also 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 DIY investors analyze their portfolio and plan for retirement.