One Year – Portfolio Review
As, some of my readers know, I didn’t start this blog until March of this year, but the thoughts for Divs4Jesus started back in September/October 2017. Officially, the first purchase for the Divs4Jesus Portfolio was made on November 6th 2017. I purchased 11 shares of OHI for $319.57.
My next purchase was the mining stock, VALE, in December. I went full tilt with the purchase, meaning it was a significant amount of money (approx. 10x my monthly deposit amount) and it all went in one spot. However, I had been tracking VALE for a while and liked what the company was doing to reduce debt and reorganize itself. Looking back now, a year later, it was a great bet. In fact, my best performer of the year at close to 30% return (dividends included).
The goal of this account though is steady, growing income. Unfortunately, due to the cyclical nature of the mining business I can’t expect to rely on this higher beta stocks that will ebb and flow with the economy. As such, I’ve spent rest of the first year diversifying the portfolio. I’d like have at least 33 different stocks so my risk is more spread out. To accomplish this, I’ve made it a goal to purchase a different stock every month. So far, I’ve accomplished this. Doing so has brought VALE down from 99% of the portfolio to around 45%. Ultimately, I think I’d like my portfolio not to be weighted more than 10-15% in any one stock. So, there’s still a long way to go to get VALE down to those percentage amounts.
As for the other purchases I’ve made throughout the year, I have my own set of values I use to screen the stocks, but am flexible if I think there’s a good deal to be had in any one month. Typically, I look for undervalued stocks, with low or manageable debt levels, who pay a dividend with a low/safe payout ratio. I do take risks on turnaround stories, VALE is a good example, but I’d say GME and NWL are also bets on turnaround or buyouts. I won’t go through every stock I know in this post, but I hope to one day do a write up on the purchases explaining why I’ve decided to make the purchase I did. Maybe I’ll even go back and do a good write up on the stocks currently in my portfolio as well. Let me know if you readers would like to see that.
As noted above, I have my own rating system I use to influence my picks. However, I also use a number of online screeners as well to help pick my stocks. In the future, I will have a couple posts detailing my screening process. I also may one day show you my own rating system, but for now I want to test it myself and see how useful it is before I profess its value to you guys!
Charting my performance
Below is a chart that has tracked my progress since the beginning, Nov 6, 2017, through November 6, 2018. In general, I don’t really care day to day whether I’m up or down, but ultimately, my goal is to not only achieve quality dividend returns, it’s also to at least match the broader market indexes. Well preferably to beat them. I think if I can accomplish such a feat I’ d consider it ‘money well invested.
So, as you can see from the chart below, since my first purchase I’ve had a positive unrealized return of 13.30% on my investments without taking into consideration dividend returns (only capital appreciation). The wild swings are mostly due to the high percentage of my portfolio which is invested in VALE. But I’ve slowly been diversifying away from such a high concentration, so over time hopefully the swings will be more muted. However, as we all know, the markets also been much more volatile than in the past few years, so only time will tell.
The steady climb in account value is due both to capital appreciation on the stocks as well as monthly capital contributions. Right now, I’ve averaged somewhere around $1,500.00 a month in contributions. Which typically go to the purchase of one new stock.
2.23x greater return than the S&P500 over 1 year
The one item that really stands out for me and gives me hope that I’m doing something right is that throughout my first year I’ve either beaten or stayed even percentage wise vs the S&P500. As of November 6, 2018, my total percentage return stands at 13.30% since inception (and that doesn’t include any dividend income!). The S&P500 over that same period has only returned 5.96%. 2.23x greater return than the S&P500. While I don’t expect to more than double the S&P 500 every year, I’m glad some of my bets paid off well in my first year. This provides a ton of motivation going forward.
I will do a separate post to analyze/summarize the dividends I’ve received after the end of the calendar year. I might also update this post so my YOY will be in sync with the calendar year as well.
Lastly, thanks to everyone whose stopped by and read my posts and commented with their thoughts. It’s much appreciated. I hope you’ve found some value in my posts. Cheers!