After giving you all the facts about how my dividend portfolio has done over the past 6 months, I figured it was time to update my spreadsheets to determine whether I am sticking with my 3 dividend producing stocks and the catch-all ETF.
My Current Dividend Portfolio
I took a four step approach to create my dividend portfolio.
- First I listed all the Dividend Aristocrats.
- Then I cut all those stocks whose P/E ration was either in line, equal or worse as compared to the industry standard.
- Next I looked at yield and
- Lastly, I looked at Price to Book.
I ended up with 4 stocks that I wanted to pursue,
- LLY – Lilly (Eli) & Co
- CTL – Centurytel Inc
- CB – Chubb Corp
- SWK – Stanley Black and Decker
I also picked up the Index-ETF just so I could have a small piece of all 44 Dividend Aristocrats. So my plan is to repeat those four steps. I will drop/add as necessary but I am going to keep investing in either 4 or 5 stocks (plus the etf). Even if I decide not to continue investing in a certain stock, I won’t be selling my position.
Stocks on the Dividend Aristocrat List
S&P provides us with the S&P Dividend Aristocrats Index.
The S&P 500® Dividend Aristocrats index measures the performance of large cap, blue chip companies within the S&P 500 that have followed a policy of increasing dividends every year for at least 25 consecutive years.
This first step narrowed the thousands of stocks to 43.
Price to Earnings for Dividend Aristocrat List
Next I looked into comparing P/Es
Right off the bat, I eliminated those stocks in Red. They were eliminated because I didn’t like their P/E and/or their operating margin is too small as compared to its peers.
The non-highlighted ones, didn’t grab my attention and considering I have enough ones that do, I figured I would move forward. Speaking of those that caught my attention, they are highlighted in Blue and MUST be further researched. If you notice their P/Es are substantially lower then their industry standard or they have an operating margin which is higher than its peers.
As you can see 3 of my 4 previous picks are still blue! But one is red! I will stop investing in SWK.
Comparing Dividend Yield
Next up is comparing the dividend yield of all my choices which are left. While I am not chasing yields, per se, it would be nice if the yield matched or exceeded those choices which are left.
This only eliminates one stock, BCR, with a yield less than 1%.
Price to Book
Price to Book should be near one.
This metric allowed me to eliminate 3 more choices.
My Current Dividend Producing Portfolio
- SDY (The ETF)