June 2017 was a busy month for me! I made quite a few purchases, but only added one new holding in CAH. The rest of my purchases were just to strengthen my existing holdings. I even sold some early purchases (F, APU, BUD, BP, and ORI) to further align my portfolio with my dividend growth strategy.
At this point, I was entirely enjoying building a dividend growth portfolio. I couldn’t get enough. I would read every blog I could find. I kept coming across one idea that didn’t exist in my portfolio, but did make a lot of sense…
ETFs and Mutual Funds
I have no upper hand when it comes to picking a stock. I look for good dividend histories, realistic and healthy yields, and healthier payout ratios. I don’t dwell on entry price and I don’t predict market behavior.
How could I reconcile that I was picking stocks, yet had no advantage to picking stocks? Broad-market ETFs were the answer. I prefer ETFs over mutual funds because there is no minimum initial investment, but the expense ratio is still very low. My choice of ETF is the Vanguard Total Stock Market (VTI). VTI isn’t necessarily a dividend grower, but it pays dividends and generally increases dividends over time.
VTI exposes me to stocks I normally pass by, like Amazon, Facebook, Nvidia, energy stocks, and many others. My goal is to have about 50% of my taxable account in VTI and the other 50% in individual stocks. I have a little bit of catching up to do.
I am writing this looking back from September 2017.
41 shares of F (Ford Motor Co) @ $11.04/share ($452.64)
I no longer cared as much about the high yield. I took a $45.10 loss on F over the last eight months, but am happy to take the tax deduction and move the funds into a dividend grower.
12 shares of APU (Amerigas Partners) @ $44.18/share ($530.16)
My experiment with high-yield MLPs came to an end. I couldn’t wait to close this position after it cost more in tax preparation than the dividends even produced. I believe Amerigas is a leader in its industry, but I will stay away from MLPs in the future.
14 shares of BP (British Petroleum) @ $34.18/share ($487.91)
I am already heavily invested in energy through my Roth IRA (VGENX). I also happen to work in the energy industry. I reduced my energy exposure and shifted the funds towards lower-yield, higher-growth dividend stocks.
5 shares of BUD (Anheuser Busch InBev) @ $113.27/share ($566.36)
I sold BUD for nearly what I payed for it and shifted it into companies with more predictable, increasing dividend payments.
5 shares of ORI (Old Republic) @ $19.77/share ($98.85)
ORI’s dividend increases are slow or non-existent. This simplifies my portfolio by one more stock.
24 shares of VTI (Vanguard Total Stock Market ETF) @ 124.75/share ($2,994.00)
I consider my dividend portfolio as a savings account that will eventually pay out regular income that I can live off of. VTI is much more boring than buying Visa or Microsoft, but I like boring. The market is at all-time highs, but it has been at all-time highs for quite a few years now. I’m comfortable adding to VTI any time and with any amount. I’m trusting in the greater hive mind of the entire market with VTI. Most likely I’m no smarter than the collective market!
1 share of PFE (Pfizer Inc.) @ $32.78/share ($32.78)
My dividend payments are coming in steadily. I wish I started dividend growth investing a long time ago. At first, each dividend payment was $2-3. Now, many of them are $7-10 each.
I picked up another share of PFE. I love thinking that each share bought with dividends will produce its own small dividend. And those dividends will eventually produce their own small dividends. It’s sort of like a Mandelbrot Effect.
4 shares of IFF (International Flavors & Fragrances Inc) @ $136.50/share ($546.00)
IFF already made up a chunk of my portfolio, but I wanted to roughly double it. The price tag was quite a bit higher this time around, but it’s better to get in the market than to wait and try to time the market. I have no problem buying companies at their all time highs.
10 shares of MSFT (Microsoft Corporation) @ $71.60/share ($716.00)
It was time to cement Microsoft as one of my favorite companies to own. I relied on previous research and didn’t spend too much time researching this time around. I felt great adding these shares.
2 shares of PFE (Pfizer Inc.) @ $32.23/share ($64.46)
I had a few bucks left over after buying MSFT. I went with PFE this time. My PFE holding is starting to become significant, just from buying 1-2 shares at a time.
7 shares of V (Visa Inc) @ $95.62/share ($669.34)
After buying Visa last month, I couldn’t wait to buy some more. I could buy Visa every month.
1 share of PFE (Pfizer Inc.) @ $32.78/share ($32.78)
Another addition to my low share cost trio of PFE/HRL/CSCO. All good dividend growers and solid companies.
1 share of PFE (Pfizer Inc.) @ $33.01/share ($33.01)
Dividends keep piling up and I keep adding shares of PFE/HRL/CSCO.
7 shares of LOW (Lowe’s Companies, Inc.) @ $76.56/share ($535.92)
I already owned a nice holding of LOW and decided to add more. Share prices had just taken a hit and it seemed like a good time to buy more of the company that has been increasing dividend payments for longer than my lifetime.
8 shares of RSG (Republic Services, Inc.) @ $64.30/share ($514.40)
I believe in RSG and the waste industry and wanted to make it one of my larger holdings.
2 shares of HAS (Hasbro, Inc.) @ $110.76/share ($221.52)
My inital Hasbro investment was a bit on the small side, but it quickly became my best return on investment. I added more even though I thought the share price was high. I’ve learned to love companies at their all-time highs. They must be doing something right.
2 shares of CSCO (Cisco Systems, Inc.) @ $31.84/share ($63.68)
Another addition to my PFE/HRL/CSCO trio. These are growing into substantial dividend payers for me.
10 shares of CAH (Cardinal Health Inc) @ $79.64/share ($796.40)
My only new stock holding of the month (aside from my new ETF focus). I’ve had my eye on CAH for a long time. They had a dividend increase coming soon and I got in before it was announced. The previous increase had been a whopping 16%, but the coming increase was a (slightly) smaller 3%. I believe the healthcare industry has perpetual upside as time goes on, so I will happily continue to hold and add to this holding. As of Sept 2017, the yield is 2.75% and the payout ratio is 37%.
3 shares of DIS (Walt Disney Co) @ $106.78/share ($320.34)
Disney has performed well for me, but I hadn’t added since my initial purchase. I was turned off by the small yield and worries about their ESPN branch. The price had pulled back a bit from highs, and I decided I needed to bolster my Disney position. I believe Disney will be around a long time. That is a company I plan to hold and add to.
1 share of KO (The Coca-Cola Co) @ $45.02/share ($45.02)
With a little bit left over after my DIS purchase, I decided to add one more share to KO. I know it may not have the massive growth potential, but I feel great anytime I invest a little more money into a company like KO.
8 shares of VVC (Vectren Corp) @ $58.68/share ($469.44)
Another one of my earlier investments, I had been watching VVC’s share price grow the whole time. I love the saying, “Water the growers and pull the weeds.” I’m slowly building all my initial ~$500 investments into $1,000 holdings.
2 shares of EMN (Eastman Chemical Company) @ $84.87/share ($169.74)
I made my weak initial investment in EMN into a slightly stronger one.
7 shares of VTI (Vanguard Total Stock Market ETF) @ 125.20/share ($876.43)
Another no-brainer “catch-up” contribution to VTI.