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  • October 2022: Dividend Growth Portfolio Update

    Table of Contents Portfolio Update Dividend Income Growth (YoY) Quarterly Comparisons Projected Annual Dividend Income (PADI) The GOAL of my dividend growth portfolio is to balance increasing share value (Growth) while simultaneously building and producing passive income (Dividends) that can be used during retirement. Currently my portfolio is concentrated more on growth with a dividend yield of 3.15%. As I near retirement I will look to produce more income and less growth. Typically, I deposit $2,000-$4,000 monthly into this portfolio, with $24,500 deposited YTD. This portfolio is in addition to my tax deferred ROTH TSP. Currently, I reinvest all dividends utilizing DRIP. As I gain more dividends, I will hand select targeted reinvestment and withdraw the correct percentage to cover anticipated taxes. Looking to start your own portfolio? Check out my Ultimate Dividend Investing Guide, Start Here! All Charts are from my Dividend Portfolio Tracker, available in my store Portfolio Update Its been a few months since I've posted an update for my portfolio so this will be a mix of the last few months. Overall I will focus on October. I did hit the milestone of $70,000 invested in this portfolio! I've been adding $3,000 a month for the last several months. October was the same. I used to the $3,000 to purchase shares in the following positions: Realty Income Stock ($O) x 6 SCHD ETF ($SCHD) x 22 Exxon Mobile Stock ($XOM) x 5 Starbucks Stock ($SBUX) x 7 The last two months I've opened new positions in Starbucks and Exxon Mobile in my portfolio. I also reconsidered my target allocations, resetting most individual companies to 2% and increasing SCHD to 30%. I've stopped contributing to DGRO and plan to sell that position VIA a covered call to concentrate that profit into SCHD. Ultimately, SCHD will make up 50% or more of my portfolio long term. These new positions added $105.64 to my portfolio's passive income or just shy of $9 a month. October wasn't a bad a month for my portfolio overall. It returned 10.31% during October compared to the 8.8% of the SP500. I'm still down around -12% (-9% including dividends) which is decently better than the SP500 return of -18.59%. My portfolio remains down for Year to Date (YTD). My allocation has returned -9.64% YTD which is less than the overall SP500 return of -14.17%! Got to love less volatility! We all hope the market continues regain ground through the end of the year to end positive. I will continue to make monthly contributions and buy stocks that are undervalued first. Dividend Income Growth (YoY) My dividend income continues to surpass expectations with a 100% increase in dividend income (October 2021 Vs. October 2022). I won't even calculate the comparison for 2020 since that's the year I began tracking my dividends. Yearly passive income received also surpassed 2021 totals and we still have five more months of dividend payments. My 2022 total passive income is $1,310.86 compared to $757.19 for 2021. That's a 73.12% increase! One thing I have considered is modifying my portfolio to bring in consistent dividend income month to month. Currently the quarters have my largest dividend payments. This would require me to close some positions and start new positions in dividends in the months I'd like to raise. This is really a quality-of-life issue since it would require me to budget quarterly income over several months instead of a more balanced payment schedule. Below is the last two years of dividend payments. Quarterly Comparisons Quarterly income continues to grow as expected. One month into Quarter 4 and I've received more dividends that all of 2020 combined and close to the entirety of of Quarter 1 2021. I'm hoping to push above $500 total for this quarter. Projected Annual Dividend Income (PADI) Lastly, my projected annual dividend income is now $2,125.41 or $177.12 a month! 16 of my 17 positions pay dividends (Disney being the non-payer). I hope this update hope this update helps break down the power of dividends and inspires some of the new dividend investors. Stay the course and be patient! Happy Investing!

  • Exchange Traded Funds: SCHD vs DGRO

    DGRO is Blackrock's iShares Core Dividend Growth ETF and SCHD is Charles Schwab's U.S. Dividend Equity ETF. Both pay dividends at a reasonable rate. As of Mid-August 2022, DGRO and SCHD ETFs both constitute 20% of my portfolio. This article is going to compare both ETFs to see if owning both makes sense or one reigns supreme. First let's take a look at the easy stuff: SCHD Dividend Yield: 3.20% DGRO Dividend Yield: 2.20% SCHD Expense Ratio: .06% DGRO Expense Ratio: .08% Positions in SCHD: 104 Companies Positions in DGRO: 414 Companies Table of Contents SCHD Overview SCHD Holdings DGRO Overview DGRO Holdings Fund Overlap Past Performance Passive Income Conclusion SCHD Overview SCHD actively screens potential stocks and attempts to track to the Dow Jones Dividend 100 Index. SCHD screens stocks based on the following criteria: All index eligible stocks must have sustained at least 10 consecutive years of dividend payments Have a minimum float-adjusted market capitalization of $500 million USD They meet minimum liquidity criteria Once those criteria are met the further screen the results: Cash flow to total debt Return on equity Dividend yield 5-year dividend growth rate SCHD Holdings To weight the index, they restrict individual holdings to no more than 4% of the index. Additionally, no sector can be weighted more than 25%. SCHD's top 10 holdings consist of: Merck Stock, Pepsi Stock, IBM Stock, Coca-Cola stock, Amgen Stock, Pfizer Stock, Cisco Stock, and Texas instrument Stock. SCHD's top 10 holdings represent 38%~ of the total fund. DGRO Overview DGRO actively screens and attempts to track the MorningStar US Dividend Growth Index. The index attempts to identify stocks that have been consistently growing their dividends. They must meet the following additional requirements: They must pay qualified dividends (Great for taxes) Have at least five years of uninterrupted dividend growth Payout ratio less than 75% Interestingly, the fund states the managers are only required to invest 80% of the fund in these screening requirements. The other 20% can be investing in futures, options, or other money producing instruments. DGRO Holdings DGRO's top 10 holdings consist of Apple Stock, Microsoft Stock, Proctor & Gamble Stock, JP Morgan Chase Stock, Johnson and Johnson Stock, Home Depot Stock, Pfizer Stock, Merck Stock, Coca-Cola Stock, Broadcom Stock. DGRO's top 10 holdings represent 24%~ of the total fund. Fund Overlap The following information was determined using the Fund overlap tool on ETFRC.com. This is a great tool to use if you are comparing multiple funds. Overall, 54% of SCHD's holdings are in DGRO. This doesn't necessarily mean that DGRO would be the go-to ETF since SCHD has a better screening methodology. Below is a list of the Top 25 holdings that overlap in both funds. This overlap is key to review if any of these holdings are key reasons why you are choosing one fund over the other since they are held by both. You would need to dive deeper to find another reason for choosing one fund over the other. Another, area to consider is unique holdings in each ETF. SCHD is primarily focused on high quality dividend blue chips where DGRO is focused on lower dividend yield companies with more growth. Below are the top 10 unique holdings in each ETF. We can see that DGRO's top 10 focuses on heavy hitters like Apple, Microsoft, Intel, and more. This would most likely lead to greater ETF stock price appreciation compared to SCHD. The tradeoff comes with dividend yield where SCHD is a full percent higher. Past Performance Next, we'll take a look at past performance of each fund. I used Portfolio Visualizer to perform the back test. The following information was used: Dates: 2014-2022 (Limited by DGRO inception date) Initial Investment: $10,000 Monthly Contribution: $250 Dividend Re-investment Program (DRIP) - Enabled Portfolio 1 is 100% SCHD Portfolio 2 is 100% DGRO Portfolio 3 is 100% VOO The portfolio's have a similar ending balance with SCHD edging out the other two by a half a percent~ in CAGR. SCHD also had a best worst year by half when compared to VOO. If you chose to not reinvest your dividends, like in retirement, VOO would be the ETF with the best performance. Ultimately, SCHD is the best fund if you are choosing to dividend invest for retirement. It has the best overall return with dividends and will provide the highest passive income. The income values are listed below: Passive Income SCHD's passive income is 32% larger than DGRO and 53% larger than VOO. This is a significant increase if you're looking for passive income. At $1,000,000 invested you would receive the following annual dividends based on current yield: SCHD - $32,000 annually / $2,660 per month DGRO - $22,000 annually / $1,833 per month VOO - $14,300 annually / $1,191 per month It's easy to see that SCHD has the superior passive income potential. Conclusion WINNER: SCHD Ultimately, choosing the perfect ETF comes down to your individual investing goals and your current portfolio. Personally, I plan to sell my VOO and DGRO holdings and consolidate into SCHD since the performance metrics are nearly identical and the passive income potential for SCHD is far greater. The final choice will often come down to the individual holdings in each fund. I hold Apple, Microsoft, and Home Depot as individual holdings in my portfolio already. If I didn't have those positions, I would consider a smaller position in DGRO to add these dividend growth stocks to my portfolio. I hope this gave you a better understanding of how each ETF compares. Happy Investing! Disclosure: I have long positions in SCHD, VOO, and DGRO.

  • July 2022: Dividend Growth Portfolio Update

    Table of Contents Portfolio Update Dividend Income Growth (YoY) Quarterly Comparisons Projected Annual Dividend Income (PADI) The GOAL of my dividend growth portfolio is to balance increasing share value (Growth) while simultaneously building and producing passive income (Dividends) that can be used during retirement. Currently my portfolio is concentrated more on growth with a dividend yield of 3.05%. As I near retirement I will look to produce more income and less growth. Typically, I deposit $2,000-$4,000 monthly into this portfolio, with $15,500 deposited YTD. This portfolio is in addition to my tax deferred ROTH TSP. Currently, I reinvest all dividends utilizing DRIP. As I gain more dividends, I will hand select targeted reinvestment and withdraw the correct percentage to cover anticipated taxes. Looking to start your own portfolio? Check out my Ultimate Dividend Investing Guide, Start Here! All Charts are from my Dividend Portfolio Tracker, available in my store Portfolio Update The family I decided to take a much overdue vacation in May/April. We took our normal investment allocation and spent it towards this trip. Well worth it I might add. Life is about balance and memories. Remember to take time for you and your family! Additionally, my job took me somewhere remote where I had no internet service for nearly two months. I finally got back to civilization in late June, early July. That's why you haven't seen my normal monthly updates! This month I contributed $6,000 to my portfolio to make up for June and July simultaneously. I added positions below to rebalance my portfolio: Apple Stock x 2 DGRO ETF x 21 Disney Stock x 8 Home Depot Stock x 1 Microsoft Stock x 5 Realty Income REIT x 13 SCHD ETF x 12 Visa Stock x 1 I nearly doubled my Disney holdings this month after going back and forth all month. Disney remains my biggest loss so I decided to average way down because I continue to trust that Disney will return its dividend in another few years. If not, I still believe Disney will appreciate before I retire. These new positions added $115.45 to my portfolio's passive income or just shy of $10 a month. My portfolio returned to the green side toward the end of the month. Overall, from mid-July my portfolio returned 7.98% compared to the SP500 return of 9.11%. My portfolio remains down for Year to Date (YTD). My allocation has returned -9.64% YTD which is less than the overall SP500 return of -14.17%! Gotta love less volatility! We all hope the market continues regain ground through the end of the year to end positive. I will continue to make monthly contributions and buy stocks that are undervalued first. Dividend Income Growth (YoY) My dividend income continues to surpass expectations with a 298% increase in dividend income (July 2021 Vs. July 2022). I won't even calculate the comparison for 2020 since that's the year I began tracking my dividends. Yearly passive income received also surpassed 2021 totals and we still have five more months of dividend payments. My 2022 total passive income is $830.57 compared to $757.19 for 2021. That's a 9.69% increase! One thing I have considered is modifying my portfolio to bring in consistent dividend income month to month. Currently the quarters have my largest dividend payments. This would require me to close some positions and start new positions in dividends in the months I'd like to raise. This is really a quality-of-life issue since it would require me to budget quarterly income over several months instead of a more balanced payment schedule. Below is the last two years of dividend payments. Amazing that I only received $5.25 two years ago for July. Quarterly Comparisons Quarterly income continues to grow as expected. One month into Quarter 3, I've received 43% of the dividends when compared to 2021. I expect to post more than $400 in dividends by the end of this quarter. Projected Annual Dividend Income (PADI) Lastly, my projected annual dividend income is now $1,846.02 or $153.84 a month! 16 of my 17 positions pay dividends (Disney being the non-payer). This is up from $1462 I posted as my PADI in my March portfolio update. I hope this update hope this update helps break down the power of dividends and inspires some of the new dividend investor. Stay the course and be patient! Happy Investing!

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