Post a CommentLast year I did some in-depth research to find long term sustainable dividend stocks and have been doing updates on this Ultimate Sustainable dividend portfolio since then in the attempt to show how well such a portfolio can perform over the long term but also show how I would manage such a portfolio. I have said it before, I do not believe in stocks that you can hold “forever”. Thus, even in a long term portfolio such as this one, I will end up making some trades from time to time. Today, I am making the first such trade that you can read about later on. I did discuss the search for a new stock to add in our free mailing list recently, if ever you would like to receive those types of updates, please join, it’s free:
Keep in mind that this portfolio was built by selecting 20 stocks out of thousands. The goal is not to pick the 20 best dividend stocks but rather to pick a diversified, high quality portfolio that will keep dividends increasing over time.
Here are the holdings as of last night to start off (please note that currently, dividends are not reinvested automatically through a DRIP strategy):
Ticker Name Shares Sept 13 Prices Sept 13 Values Mar 13 Prices Mar 13 Values
OMC Omnicom Group Inc 25.7 38.91 $999.99 $49.14 $1,262.90
MSFT Microsoft Corp 38.4 26.04 $999.94 $32.67 $1,254.53
JCI Johnson Controls Inc 34.8 28.74 $1,000.15 $32.06 $1,115.69
PEP PepsiCo Inc/NC 16.5 60.54 $998.91 $64.34 $1,061.61
ETN Eaton Corp 25.4 39.31 $998.47 $50.23 $1,275.84
DOV Dover Corp 19.5 51.2 $998.40 $64.59 $1,259.51
ITW Illinois Tool Works Inc 23 43.41 $998.43 $56.69 $1,303.87
XLNX Xilinx Inc 32.2 31.08 $1,000.78 $36.94 $1,189.47
SJM JM Smucker Co/The 14 71.65 $1,003.10 $76.29 $1,068.06
BLK BlackRock Inc 6.6 151.22 $998.05 $203.00 $1,339.80
TROW T Rowe Price Group Inc 19.9 50.36 $1,002.16 $63.96 $1,272.80
OXY Occidental Petroleum Corp 12.4 80.45 $997.58 $99.98 $1,239.75
COP ConocoPhillips 15.4 64.76 $997.30 $77.76 $1,197.50
MUR Murphy Oil Corp 19.5 51.33 $1,000.94 $59.09 $1,152.26
XOM Exxon Mobil Corp 14 71.65 $1,003.10 $86.86 $1,216.04
ADI Analog Devices Inc 30 33.28 $998.40 $39.42 $1,182.60
LLTC Linear Technology Corp 34.1 29.33 $1,000.15 $33.78 $1,151.90
HAS Hasbro Inc 27.8 36.03 $1,001.63 $35.68 $991.90
MAT Mattel Inc 37.9 26.375 $999.61 $33.53 $1,270.79
INTC Intel Corp 48.2 20.76 $1,000.63 $27.49 $1,325.02
Cash 2.27 $315.88
Total USDP $20,000.00 $24,447.71
Dividends Received
Obviously, dividends will continue to be volatile, and have waves since most of these companies pay quarterly dividends. Still, having a bigger amount than in December is one more sign that we are on the right track:
Ultimate Sustainable Dividend Portfolio News
Ticker Name News
BLK BlackRock Inc Dividend increase from $1.375 to $1.50, a 9.1% increase
TROW T Rowe Price Group Inc Dividend increase from $0.31 to $0.34, a 9.7% increase
ADI Analog Devices Inc Dividend increase from $0.25 to $0.30, a 20% increase
Returns
In a rising market, it’s very impressive and perhaps even surprising to be able to outperform the S&P500 total return index. So far so good…
Trades
For the first time since initiating the portfolio, I am ready to open a trade which will be done on today’s close. Please remember that the two main deficiencies from this portfolio that I had discussed were:
-over exposure to the oil/commodities sector
-lack of international diversification
I’m also looking to avoid at all costs holding stocks that slow down their dividend growth.
Stock coming out
The stock that I am taking out is Murphy Oil Corp (MUR) which seems to be doing ok but it has failed to raise dividends in the past 18 months which is by far the worst performance in the current portfolio. That is also convenient since it will reduce my exposure to oil stocks.
Stock Being added:
Today, as discussed in the newsletter, I am adding Aflac (AFL) which has an incredibly strong profile, adds an insurance company that has strong exposure to Japan which is good diversification. See the numbers for both here:
Ticker Name Industry Price Dividend Yield P/E Payout Ratio
MUR Murphy Oil Corp Oil Comp-Integrated 59.09 1.86 10.86 28.71
AFL Aflac Inc Life/Health Insurance 46.07 2.87 7.29 28.11
That is all for now, let me know if there is anything you’d like to see added in these reports!
Great ideas. I’m looking forward to adding some of these when I bump up our Roths this summer.
3 Things I always like to look at with companies like this are payout ratio (Which you included), current yield, and tangible book value growth, maybe with dividends added in so you see total compensation to the shareholder.
Intangibles are too much trouble, so I don’t like them. A Patent can be super powerful, but it’s usually intricately tied to the business, so it’s true power is in how it helps the company generate profits. And goodwill is just useless. So I’ve heard looking at book value growth is a good way to measure a company (Maybe this was from Buffet?).
Keep it up.
[...] 1. Ultimate Sustainable Dividend Portfolio – March 2012 Update – New Trade @ IS. [...]
@Robert, that is very interesting, what kind of number would you typically be looking for and how do you interpret the results of the tangible book value growth? Also, where do you get those numbers?
I enjoy your column very much.
Is it possible to include in your monthly review
The following:
Industry,yield,& payout%.
It would also be helpful if from your symbols we could bring up the stock itself.
Thanks
@Dave – have you seen industry yield elsewhere? I would not think it would be that easy to work with since some companies are so not focused on dividends but I’ll have to keep it in mind! Thanks
I didn,t say industry yield,—I said industry, and yield.
@Dave – Ah.. then yes, of course:) Sorry:)
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