Dividend Income is still part of a retiree’s model portfolio
and this will be true for a while. Once
inflation rears its head, we may have some bond choices but right now we are
stuck with dividends. One of the
problems with a dividend strategy is these stocks are going up in price which
places more risk on a dividend portfolio.
Moreover, when stock prices climb, dividend yield on the best of the
stocks declines. Let’s look at how
2013 is shaping up.
Dividend
stock prices on the increase:
In 2011, the available pool of dividend stocks yielding
above three percent was pretty vast. If
you look at the list of stocks I picked in 2011 (see 2011 dividend machine
page) you will notice significant price increases since then. That portfolio of stocks is up over thirty
percent since 2011. Not every stock is
up but most are.
In 2012, the available pool of dividend stocks was
somewhat less due to stock price increases that eliminated some stocks because
they no longer yielded greater than three percent. Yet that portfolio too is up nearly twenty
percent since 2012.
In 2013, stock prices have been very strong
especially among those stocks that provide dividend income. This makes it harder to find stocks that
will preserve your capital as well as provide income. The eleven stocks in the 2013 portfolio are
up a little over four percent.
Dividend
yields on the decrease:
The 2011 dividend stocks I picked cost about
$207,000 and are now worth about $276,000.
That portfolio delivers about $8,875 per year of income. The yield on the invested capital is 4.28%
but on the current portfolio value, the yield is 3.21%. As prices increase the dividend yield
decreases. Most of these companies that
increased their dividend, which is one of the fundamentals we income investors
require, yet the dividend increases are less than the stock price
increases. I am not complaining, I am
simply pointing out how 2012 was more of a challenge than 2011.
In 2012, the dividend stocks also cost about
$208,000 and are now worth about $248,000.
That portfolio delivers about $8,110 per year of income. The yield on the invested capital is about
3.88% with the yield on the current portfolio value at 3.26%. You can clearly see that picking good
stocks for yield hungry investors was harder than in 2011.
2013 has proved to be a challenge; however, I
changed my technique just a little.
Instead of randomly selecting dividend stocks (all of which still have
to meet my four dividend machine criteria), I have selected stocks that I like
for some reason. I also strive to get
closer to 4% income.
So far in 2013, I invested $45,910. The portfolio value as of midday today
5/28/2013 is $49,128 which is a gain of 7%.
Dividend income from this group of stocks is $2,034 which is a yield of
4.43% on the basis and 4.14% on the current value.
Dividend
Stocks are still good for retirees:
My take on this analysis, is to continue to use
discipline, including my four dividend machine criteria to pick stocks. While stock prices are high and your risk of
capital preservation is higher, as long as the alternatives are few, this is a
good strategy.
See the table below for in-depth analysis of the
2013 dividend machine portfolio. For
more information on the 2011 and 2012 dividend stock picks, please see the
pages at the top of this blog.
2013 DIVIDEND MACHINES
Bought 100 Shares
|
|||||||||||
Basis
|
$
45,910
|
Current Dividend
Income
|
$
2,034
|
||||||||
Value
|
$
49,128
|
Yield on Basis
|
4.43%
|
||||||||
$ Gain
|
$
3,218
|
Yield on Current Value
|
4.14%
|
||||||||
% Gain
|
7.01%
|
||||||||||
Stock Prices Updated
Intraday 5/28/2013
|
Stock Quotes Provided
by MSN Money
|
||||||||||
Basis
|
Symbol
|
Post Link
|
Div
|
Last
|
52
Wk High
|
52
Wk Low
|
EPS
|
||||
$
46.13
|
BCE
|
$ 226
|
46.42
|
48.06
|
39.12
|
3.11
|
|||||
$
45.36
|
DRI
|
$ 200
|
52.83
|
57.93
|
44.11
|
3.27
|
|||||
$ 33.27
|
SYY
|
$ 112
|
34.82
|
35.62
|
27.46
|
1.73
|
|||||
$
31.21
|
MGRC
|
$ 96
|
32.54
|
33.64
|
22.93
|
1.75
|
|||||
$
57.50
|
RTN
|
$ 220
|
66.73
|
67.44
|
49.03
|
5.82
|
|||||
$
59.84
|
COP
|
$ 264
|
62.53
|
64.77
|
50.62
|
6.15
|
|||||
$
33.02
|
VVC
|
$ 142
|
35.07
|
37.57
|
27.46
|
1.92
|
|||||
$
44.84
|
CINF
|
$ 163
|
47.93
|
50.6
|
34.82
|
2.98
|
|||||
$
33.94
|
MCHP
|
$ 141
|
36.32
|
37.97
|
28.92
|
0.62
|
|||||
$
21.35
|
INTC
|
$ 90
|
23.92
|
27.75
|
19.23
|
2
|
|||||
$
52.64
|
AZN
|
$ 380
|
52.17
|
53.45
|
52.91
|
4.51
|
|||||
Find stocks, mutual
funds, options, indices, and currencies.
|
|||||||||||
DATA PROVIDERS
|
|||||||||||
Copyright © 2013
Microsoft. All rights reserved.
|
|||||||||||
Quotes are real-time
for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
|
|||||||||||
Fundamental company data
and historical chart data provided by Thomson Reuters (click for
restrictions). Real-time quotes provided by BATS Exchange. Real-time index
quotes and delayed quotes supplied by Interactive Data Real-Time Services.
Fund summary, fund performance and dividend data provided by Morningstar Inc.
Analyst recommendations provided by Zacks Investment Research. StockScouter
data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index
membership data provided by SIX Telekurs.
|
|||||||||||
Japanese stock price
data provided by Nomura Research Institute Ltd.; quotes delayed 20 minutes.
Canadian fund data provided by CANNEX Financial Exchanges Ltd.
|
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TheMoneyMadam
