In February I wrote about wanting to start investing in dividend producing stocks and then I immediately wrote about creating my dividend portfolio.  Well since it has been six months I am going to review my process and review my results.

Creating my Dividend Portfolio

I went through my own process to determine what stocks I would be buying:

  1. I listed all the Dividend Aristocrats.
  2. Next, I cut out those stocks whose P/E and Operating Margin was either in line, equal or worse as compared to the industry standard.
  3. Next I looked at Yield.  While I wasn’t yield chasing, if the yield was horribly compared to the remaining peers, why purse it further.
  4. Lastly, I looked to Price to Book

Some Quick Definitions When Creating the Dividend Portfolio

  • Dividend Aristocrats are those dividend paying American companies that have increased their dividend for the past 25 years.
  • P/E is Price is “a valuation ratio of a company’s current share price compared to its per-share Earnings.”
  • Dividend Yield a “Financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock. Dividend yield is calculated by dividing Annual Dividends per Share by Price Per Share”
  • Price to book is a ratio used to compare a stock’s market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter’s book value per share.

My Income Producing Portfolio

I ended up with 5 stocks that I have been investing a tiny amount each month.  I looked at a bunch of different online brokers and I ended up with the old school Sharebuilder.com.  Why? Automatic investing, fractional shares, instant transfers from my ING account, and free dividend reinvestments.  Sharebuilder is horrible when selling, but I don’t plan on doing that for a long time.  So for $12/month I get 6 automatic investments (I only use 5) making each trade $2.50 (Get a Free $25 for opening a new Account by emailing me).

I am going to invest once more next week (6 months total) but here are my results:

Dividend Producing Stock Portfolio

dividend Producing Stock Gains

My portfolio is up 3.73% from March 1st to August 10th as compared to the SPY which is up .86%.  That being said, I am not comparing it to the SPY.  I just want to slowly create a non-qualified portfolio which produces passive income.

Moving Forward

In my next post I am going to re-create my elimination process to make sure those companies are being invested in still meet all my requirements.  I have no intention of selling any position, I will continue to let them participate in the free dividend reinvestment. I also want to increase my monthly contributions, but don’t think I can just yet (I am not near my optimum cash position yet), so 100 bucks or so per month is it.

 

Thoughts?