September Dividends and Portfolio Update

It has taken me a while to get this posted but.. in addition to the dividends posted last time, the following dividends arrived before the end of the month.

National Oilwell Varco Inc. Co $46.00

Ventas Inc. Common Stock $109.50

Union Pacific Corporation $55.00

In total, dividends paid for September equaled $871.62, a 34.3% increase over last year’s September total of $648.98. And it was so much easier than owning a rental like I used to own.  It paid about the same but with a lot more hassle.

There were some trades made recently. Caterpillar was sold to make way for some new purchases. Also, I unloaded my 50 shares of Wal-Mart at an opportune time allowing me to sell my shares for $63.78 just before the big swoon Wal-Mart experienced last week. Call it dumb luck. Added were shares in Financial Institutions Inc. at $24.85 per share ONEOK Inc. at $38.70 per share and AbbVie Inc. at $56.25 per share.  I’m normally not this active on trades but the recent pullback was too tempting not to do some purchasing. Details (# of shares, etc.) can be seen under the PORTFOLIO menu choice at the top of the screen. These new purchases add $379 to the portfolio’s yearly income which now stands at an estimated $9,511 per year.

The additional purchases has put the portfolio’s net cash position in the hole by $4998.10. New money will be added or additional sales made to bring that figure back to zero so that overall return calculations are not impacted. Money will be transferred from the High Yield Enhancers Portfolio cash balance.

My what a different a few weeks makes.  The Million Dollar Portfolio is back in the black by 10.2% with a current value of  $236,936 as I type this.

Dividends for the month (so far)

Well the paychecks are rolling in.  $898.57 so far for the month.  Some are from positions I sold previous to posting this portfolio like Ford, and ConocoPhillips.  Here they are:

Ford $45.00

ConocoPhillips $74.00

Southern Company $54.25

Johnson & Johnson $56.25

Unilever $56.57

Spectra Energy $64.75

Emerson Electric $47.00

Exxon Mobil $73.00

Chevron $85.60

American Electric Power $92.75

3M $30.75

Compass Minerals $49.50

Realty Income $47.50

Old Republic $92.50

Hershey Company $29.15

The beauty of all these little paydays is that they keep happening no matter what the Dow and the S&P are doing. The value of the portfolio has improved since I first reported. It’s now $222,525.18 with a cash balance of $3,120.25.


Launching the million dollar portfolio

Well it’s not a million just yet.  It’s currently $218,554.80 as of this labor day weekend. The stocks in this portfolio have been purchased over time since December of 2013 so it has been assembled in a little less than 2 years. Compared to the cost basis, the overall portfolio is up slightly at 1.7% which is not surprising given the current correction.

But I am ignoring all that.  I am taking a snapshot of the value as of this weekend and unavailing the plan to grow this to a million. This is a portion of my real retirement savings and therefore it is a real money portfolio.

Why do this?  For three reasons really.  1) I want to watch the theory unfold in real-time; to prove it can be done by the DIY’ r. 2) I believe this will be a learning process for all but especially for me. 3) Last but not least; to keep me honest.  It’s easy to flit from one strategy to another so documenting it here will keep me on track as I report progress.

Here is the math behind the million dollar goal. I used the following calculator to back into the numbers.

Years: 15
Percent Yield: 10.3
Initial Balance:  $217,254.60 (stocks), + $1,300.19 (cash) = $218,554.80
Monthly Contribution: 0

Final Balance: $1,002,819

Yearly growth amounts as follows:
1 : 241,919.66
2 : 267,782.38
3 : 296,409.99
4 : 328,098.06
5 : 363,173.79
6 : 401,999.33
7 : 444,975.56
8 : 492,546.22
9 : 545,202.48
10 : 603,488.02
11 : 668,004.64
12 : 739,418.5
13 : 818,466.94
14 : 905,966.16
15 : 1,002,819.58

Of course that paints a linear path which will never happen. Some years may be above and some years may be below the path but maybe in the long run the average will work out. Now let’s talk about the inputs.

Why 10.2% you ask?  Well the idea is to achieve a 5% average annual growth rate on the stocks themselves along with a ~5.2% average dividend growth rate for the portfolio. Yes, I backed into these numbers because I wanted this to happen in 15 years however the over all return is close the long term historical return of the stock market. No one knows with precision what the next 15 years will bring so why not “set the bar” and go with it.

The figures above assume no new money is added to the portfolio.  New money might be added to the portfolio but only when the opportunity presents itself (like the current environment). On average, the stock market experiences a 10% pull back once a year. Of course that is an average and this current pullback was long overdue.

If new money is added, the return calculations will adjusted so that the true and correct compound rate of return is tracked. The current portfolio spins off $9,136 dollars a year in dividends which will be reinvested once a quarter. This averages to a dividend yield of 4.2% for the portfolio as a whole as it is currently configured. Of course, dividends are not considered new money.

Currently the portfolio has 33 stock positions. Soon a link in the menu bar will appear showing the actual portfolio but for tonight… I gotta run.

Thanks for visiting…