Sunday, June 30, 2013

DIVIDEND PERFORMANCE mid year results 2013

CCA stock 10 year chart





Do you know how much cash flow your income portfolio generates?




Periodic portfolio evaluation is critical to investing success.   Investors tend to look at portfolio value.  




Income investors should not start with portfolio value because the most important measure of an income portfolio is how much money did the investments actually create?  Portfolio value is second to income.

 

The end of June marks half way through 2013.   This is the time to check on our portfolios.   You need to find out how much cash flow your income investments create.   



The example provided below uses the various portfolios I have created over the life of this web/blog.    Look at them so you can see how to track your dividend investments.   Then, take the time to measure the cash flow your own income portfolio generates. 

 

Measure Portfolio Income:



Measuring your portfolio income is more important and more difficult than you may think.  You need to follow these steps to gather the necessary data.




List all your income investments.   This list will include dividend stocks, bonds, and rental properties.    If you have mutual funds and you receive income from the fund, include those under stocks.  If you have privately held REITS or individual rental properties (not traded on the stock exchange,) include those under rental properties. You can list annuities as a separate category sort of like social security or if you have control over your annuity holdings, you could put them into the bond or stockpile. 


Calculate your income portfolio’s value using 6/28/2013 values.  Do not try to update the values until you have your data put together.   You may have multiple accounts and you may not be able to use the broker’s account value because not all the investments in that account are for income. However, you should go to the effort.  You need to determine the value of your  investments that are targeted for income. 



Add up the income created year to date using your brokerage statements and those from your private rental properties. All brokers provide dividend income and interest income and that will help you track you income.  However, premiums from covered calls, which I consider an important source of income, are more difficult to add up.

You see covered call premiums are capital gains and they are lumped in with the capital gains from selling stocks or mutual funds.  Note the example I provide below measures only dividend income.  Start with dividend income before you try to add in the income created by selling covered calls.


Real estate income is probably the easiest to find, as the rents tend to go right into your checking account.  Do not muck up your work by adjusting for tax effects at this time.




DIVIDEND MACHINE PORTFOLIOS FROM 2011, 2012 AND 2013



I apply the same measurements to my personal portfolio as I do to the theoretical portfolios profiled in this web/blog.  In this blog, I track three dividend portfolios.   I have not added in bonds or covered calls.   You can review my 2011, 2012, and year to date 2013 portfolios in the pages at the top of this blog post.



Review the three tables below; they present both the income and capital gains from these three theoretical dividend stocks portfolios.   You can do the same tracking on your portfolios and I strongly encourage you to begin tracking your income.




2011 DIVIDEND MACHINES Bought 100 Shares of 52 companies over 52 weeks

Basis

 $  207,336

Current Dividend Income
 $  8,999
Value

 $  253,585

Yield on Basis
4.34%
$ Gain

 $    46,249

Yield on Current Value
3.55%
% Gain

22.31%

Prices as of 6/28/2013 


The 2011 portfolio was complete in December 2011.   Since then, every stock has paid income.  Currently the portfolio pays almost $9,000 per year.    Both dividend income and portfolio value have increase.  Income has increased but not as much as stock value.





2012 DIVIDEND MACHINES  Bought 100 shares of 48 companies over 52 weeks

Basis

 $  208,821

Current Dividend Income
 $  8,110
Value

 $  242,595

Yield on Basis
3.88%
$ Gain

 $    33,774

Yield on Current Value
3.34%
% Gain

16%

 Prices as of 6/28/2013


The 2012 portfolio includes 48 stocks picked over the calendar year 2012.  Again both income and value have increased, yet the portfolio provides only a little over $8,110 a year.   This is $1,000 less per year than provided by the 2011 portfolio.  The portfolio gain over the 6 months since the portfolio was complete, is a hefty 16%.   Impressive, but our goal is income and I think 2012 is not as good a portfolio as 2011.


As time goes by, we will compare the results.




2013 DIVIDEND MACHINES Bought 100 Shares of 13 companies to date

Basis

 $      55,939

Current Dividend Income
  $   2,476
Value

 $      58,253

Yield on Basis
4.43%
$ Gain

 $        2,314

Yield on Current Value
4.25%
% Gain

4.14%

 Prices as of 6/28/2013

The 2013 portfolio is a work in progress.    The goal was to improve on 2012 and the yield has improved.    Capital gains are modest.   I think this portfolio is better than either the 2012 or the 2011 portfolios because it creates more income.   



Income is what it’s all about!



TheMoneyMadam

Enhanced by Zemanta