One Year – Portfolio Review

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).

Adding Diversification 

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!

Dividend DRIP

DRIPing

In the past I have preferred to accumulate all dividends that are distributed to me in my brokerage account. Then once a year or every other year I’d make a substantial position in a new stock. Typically, that stock or investment would be of higher risk. Mostly because, in a way, I felt like it was “free” money (as long as my underlying positions in the stocks where the dividends came from were performing well). Some of these ‘bets’ paid off and others did not.

However, since my focus now is more on accumulating a portfolio that will provide me with solid passive income in the some what distance future there is no need to make ‘bets.’ Instead, I’m better severed allowing all dividends to DRIP. Why is that??

The benefits

  1. It’s a more, set it and forget it attitude, if you will. I don’t have to worry about making a purchase or researching a stock. Automatically once a dividend is distributed my brokerage purchases the stock.
  2. It saves on brokerage fees. DRIP is feel for the stocks I own.
  3. In a way, I see it as lowering my cost-per-share in the underlying stock. For example if I purchase 100 shares of a stock at $15 a share my cost basis is $1,500.00. But if that stock pays me 10% yield and the dividends are DRIPed, one year out I have 110 shares (assuming no change in price for simplicity’s sake). So my cost/share would be down around $13.64 ($1,500/110). Of course that $150 in dividends were really mine to spend. So technically it’s not lowering my cost-per-share. But since my hands are never on the cash and I’m not physically putting in new capital to purchase shares but getting. I chose to view it as lowing my cost-per-share. However, for this site, I track portfolio percentage gains/losses with and without dividend payments. If I don’t show DRIP purchases as increasing my cost basis it would be double dipping the dividends included number. As such, I will need to show it.  Though now I think I will need to add a CASH basis calculation as well.
  4. Forced savings – if I took all the dividends as cash I may be inclined to use them for something other than investments.

As such, as of this May I have started DRIPs on all the stocks I own. Going forward I’ll record this in two different spots – in my Stock Purchases (noted as a DRIP) and  of course in my Current Portfolio.

Musings at the Six Month Mark

Six Month – Portfolio Review

I didn’t start this blog until March of this year, but the thoughts for Divs4Jesus started back in September/October 2017. In November 2017 I decided to jump in and create a dividend portfolio that I was fully selected by me. My first purchase on November 6, 2017 was in OHI – I don’t fully remember how it got on my radar but I had a couple dollars laying around in the account (I had transferred all other assets out of my trading account just prior in anticipation of starting this portfolio, as to start with a clean slate) and decided to put whatever cash was there ‘to use’ while I figured out where and how I wanted to proceed.

It took me until the middle of December to actually fund the account and when I did I went full risk dumping 99% of the money into VALE. VALE is a mining company I’d been following for a while that I’d been cautious about entering into, but while doing so, missed out on it coming off record lows and doubling multiple times. Obviously, I still believe it has legs to move forward.

Since then I’ve tried to diversify my account. Having a high beta mining stock being 99% of my portfolio made it susceptible to wild swings in both directions. I wanted to settle that down a bit. As such, each month I’ve made it a goal to purchase a new stock (with new capital contributions to the account). My goal, as stated in the About section is to eventually get to around 33 quality stocks. Hopefully in accomplishing such, I’ll be able to balance my portfolio so that it’s not so heavily weighted/reliant on any one individual stock or section. So in short that’s a bit of history.

Going forward my hope is to not just document my purchases but to add my opinions and thought processes as to why I’m making such purchases in the first place. But before we look to the future of this blog lets take a look back at my performance over the first six months.

Charting my performance

Below is a chart that has tracked my progress since the beginning (Nov 6, 2017) through May 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 spent invested.’

So as you can see from the chart below since my first ‘real’ purchase in mid-December 2017 I’ve had a positive unrealized return on my investment without taking into consideration dividend returns (only capital appreciation). The wild swings (up 20% to nearly brake even, 0%) is mostly due to the high percentage of my portfolio which is invested in VALE.  The steady climb in account value is due both to capital appreciation on the stocks as well as monthly capital contributions. Right now though growth in AV is more so because of the capital contributions, as I’m just starting out.

3.55x greater return than the S&P500 over 6 months

The one item that really stands out for me and gives me hope that I’m doing something right is that throughout the first six months I’ve either beaten or stayed even percentage wise vs the S&P500. As of May 6, 2018 my total percentage return stands at 9.62% since inception. The S&P500 over that same period has only returned 2.71%.  3.55x greater return than the S&P500. While I don’t expect this to be the norm and six months is a very short period of time, I’m happy with the results and hope to continue them through out the year.

6-Month vs SP500