For the past several years the ongoing joke about your day job was "Hey I got a raise this year! I got to keep my job." The economy has been recovering but its been very slow and a good number of those jobs have been low paying. However that is the day job / salary world and I have talked in the past about how we choose where we want our income to come from. So did you get a raise this year?
Personally I got a 10.69% raise. Not from my day job that I unfortunately still need but I got the raise from my portfolio via dividends.
I took an average of what each position paid in 2012 vs what they paid in 2013. I prefer this method vs my actual income I receive because I have a lot of portfolio growth in the account from deposits. In fact I will more then double my portfolio income which is great but that doesn't measure how well my stock picking and portfolio management has been.
I had to estimate some of these as some didn't pay a full year of dividends in 2012 while others that were afraid of dividend taxes stole a 2013 payment for 2012. I tried to be as fair as possible in comparing 2012 vs 2013.
I did not own all of these through the entirety of 2012 and 2013. My analysis here is just in grading how well the managers of each company worked for me. As a shareholder, that is what I am paying them for...
Regular Corporations (i.e Dividend Growers)
AAPL: +15.1%
AFL: +5.7%
HAS: +11.1%
IBM: +11.7% (Boring old big blue. They aren't a flashy dotcom company or making the latest must have Christmas gadget. They were able to give double digit growth of the dividend. Never believe people that say you can't get good growth with the biggest and oldest companies).
KO: +7.7%
MCD: +5.2%
MDT: +7.7%
POT: +112.0% (Crazy growth. Next year it will not grow much as the fertilizer sector is having some price wars going on right now. However I do not expect a dividend cut).
RKT: +42.2%
SPLS: +9.1%
STX: +37.7% (STX is easily the current crown jewel in my portfolio. I am also sitting on a 109% cap gain return with them though I will go into that in another post. I expect at least a 20% dividend growth rate next year due to continued share buybacks).
WMT: +17.5%
I look to my corporations for the majority of my dividend growth each year. They have low yields now but with their high growth I will have a great yield on cost and outpace inflation. At the same time I have high yielding low growth assets with my BDCs, REITs, Energy, and Bonds. Their higher yields will give me income now to buy more of the high growth stock so I get the best of both worlds.
When I look at just these companies? They averaged 19.78%. I'm pretty sure that is a record for me and I am more than pleased with how they performed.
BDCs
PSEC: +10.0%
TCPC: +7.0%
My BDC portion of my portfolio has done the best income wise. I average double digit yields here and I am getting great growth. Both have positioned themselves to have floating rate loans so their existing loans will rise in payment in the future. I couldn't be happier income wise with them.
REITs
ARCP: +2.60%
OHI: +10.0%
I'm rather disappointed in ARCP. They went for quantity of growth vs quality of growth and their numbers show it. I'm strongly looking at rolling back over to O which has had a nice pullback.
Energy
COP: +2.2%
NDRO: -17.0%
WHZ: -15.9%
COP is now under review. I've been disappointed in their growth. However its my only energy corporation and I want to have stability in my energy part of my portfolio. Speaking of which...
NDRO's trust structure puts the cost of building wells onto the trust and this is taken out by withheld distributions. Two months were lower but future months will be higher with increased production.
I'm pretty disappointed with WHZ as the estimates of production and costs where very off from the reality of when they went public. However at this point I believe them to have stabilized.
Bonds
BLV: -23.7%
JNK: -10.2%
PCY: -12.6%
No surprises here that the bond ETFs dropped year over year. BLV did not have a December capital gains payout as bond prices have been dropping all year in anticipation of increased rates. As older bonds mature and new ones are brought in we have less interest payments. I believe this trend will reverse next year when rates start to rise and then the ETFs will cycle into newer higher rate bonds. I expect share price to drop though.
So for 2013 I have hit my goal... 8% dividend growth. I want at least double the rate of long term inflation so that I can comfortably outlive my portfolio over the decades I will need to count on it.
Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.
Personally I got a 10.69% raise. Not from my day job that I unfortunately still need but I got the raise from my portfolio via dividends.
I took an average of what each position paid in 2012 vs what they paid in 2013. I prefer this method vs my actual income I receive because I have a lot of portfolio growth in the account from deposits. In fact I will more then double my portfolio income which is great but that doesn't measure how well my stock picking and portfolio management has been.
I had to estimate some of these as some didn't pay a full year of dividends in 2012 while others that were afraid of dividend taxes stole a 2013 payment for 2012. I tried to be as fair as possible in comparing 2012 vs 2013.
I did not own all of these through the entirety of 2012 and 2013. My analysis here is just in grading how well the managers of each company worked for me. As a shareholder, that is what I am paying them for...
Regular Corporations (i.e Dividend Growers)
AAPL: +15.1%
AFL: +5.7%
HAS: +11.1%
IBM: +11.7% (Boring old big blue. They aren't a flashy dotcom company or making the latest must have Christmas gadget. They were able to give double digit growth of the dividend. Never believe people that say you can't get good growth with the biggest and oldest companies).
KO: +7.7%
MCD: +5.2%
MDT: +7.7%
POT: +112.0% (Crazy growth. Next year it will not grow much as the fertilizer sector is having some price wars going on right now. However I do not expect a dividend cut).
RKT: +42.2%
SPLS: +9.1%
STX: +37.7% (STX is easily the current crown jewel in my portfolio. I am also sitting on a 109% cap gain return with them though I will go into that in another post. I expect at least a 20% dividend growth rate next year due to continued share buybacks).
WMT: +17.5%
I look to my corporations for the majority of my dividend growth each year. They have low yields now but with their high growth I will have a great yield on cost and outpace inflation. At the same time I have high yielding low growth assets with my BDCs, REITs, Energy, and Bonds. Their higher yields will give me income now to buy more of the high growth stock so I get the best of both worlds.
When I look at just these companies? They averaged 19.78%. I'm pretty sure that is a record for me and I am more than pleased with how they performed.
BDCs
PSEC: +10.0%
TCPC: +7.0%
My BDC portion of my portfolio has done the best income wise. I average double digit yields here and I am getting great growth. Both have positioned themselves to have floating rate loans so their existing loans will rise in payment in the future. I couldn't be happier income wise with them.
REITs
ARCP: +2.60%
OHI: +10.0%
I'm rather disappointed in ARCP. They went for quantity of growth vs quality of growth and their numbers show it. I'm strongly looking at rolling back over to O which has had a nice pullback.
Energy
COP: +2.2%
NDRO: -17.0%
WHZ: -15.9%
COP is now under review. I've been disappointed in their growth. However its my only energy corporation and I want to have stability in my energy part of my portfolio. Speaking of which...
NDRO's trust structure puts the cost of building wells onto the trust and this is taken out by withheld distributions. Two months were lower but future months will be higher with increased production.
I'm pretty disappointed with WHZ as the estimates of production and costs where very off from the reality of when they went public. However at this point I believe them to have stabilized.
Bonds
BLV: -23.7%
JNK: -10.2%
PCY: -12.6%
No surprises here that the bond ETFs dropped year over year. BLV did not have a December capital gains payout as bond prices have been dropping all year in anticipation of increased rates. As older bonds mature and new ones are brought in we have less interest payments. I believe this trend will reverse next year when rates start to rise and then the ETFs will cycle into newer higher rate bonds. I expect share price to drop though.
So for 2013 I have hit my goal... 8% dividend growth. I want at least double the rate of long term inflation so that I can comfortably outlive my portfolio over the decades I will need to count on it.
Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.
Good work POUF. It looks like you made a lot of progress this year. Are you planning on scaling back your bond exposure, or just rebalancing to keep your percentages?
ReplyDelete-Bryan
I am under weight right now at 11.62%. Normally I like 25% bonds. However since I expect it to drop next year I am holding off a little bit I'll build up other parts of the portfolio and add them later.
ReplyDeleteNow I could be wrong that it'll drop next year. Thats why I am not cutting my positions. They are still giving nice enough income. Kind of a hedging my bets and playing both sides sort of thing.
Nice work there Pulling. I am starting my own blog again ... take that for a new years resolution.
ReplyDeleteA 10%+ raise sure is nice. Now if only I can find a way to get that from my employment income every year too so I can juice up the investments even more. The only bond exposure I have right now is through some MF's in my 401k which I'm really not all that excited about but I know I need to keep some exposure there. Personally I liked what ARCP did even if the DG was a bit on the low side. Considering how much growth they went after I'm fine with them trying to be a bit more conservative in the distributions. Although the Cole acquisition should go through soon which will further bump up that dividend rate.
ReplyDeleteI do have a large position of bonds in my 401k and IRAs. At times I see it as dead money not doing anything but its there for diversification. I have my 401k follow a permanent portfolio type strategy to offset my active investing portfolio on this blog.
DeleteARCP is going internally managed in January. That was a big beef I had with them so I am hoping they shape up.
Nice collection of dividend increases, I'm especially impressed by the BDCs. I continue to research BDCs but am still on the fence because I'm looking for long term holdings plus I don't understand them yet. They definitely treated you well.
ReplyDeleteThe vast majority of my fixed income is held in a 401k style employer account as well. I only have access to funds in that account so I figured I'd use it for allocation purposes. Actually most of my fixed income is in a special fund for federal government employees that is not allowed to lose principal, but pays interest similar to a 10 year T-note. I'm more comfortable with that over regular bond funds until rates rise a bit.