2019 December Dividend Summary

Well folks, that's a wrap for 2019.  According to Forbes, the last trading session for 2019 "...capped off a strong year for the stock market: In 2019, the S&P 500 rose by 29%, the Nasdaq by 35% and the Dow Jones Industrial Average by 22%. Both the S&P 500 and Nasdaq posted their biggest one-year gains since 2013, while the Dow’s performance was its best since 2017." Quite a year indeed and few would complain about their portfolio's climb in valuation if they were anywhere near or above the 29% return for the S&P index, especially in light of the average annual return for the S&P since 1957 which is roughly 8%.  Without further ado, let's take a look at the dividend income for this past month as well as where the portfolio stands in terms YoY and YTD dividend trends, portfolio diversification and total value.

December 2019 Dividend Summary

As is the case each year, December seems to be pretty heavy month in terms of dividend receipts for the portfolio and is often the record setting month within each calendar year as purchases made earlier in the year accumulate by year's end (i.e. I purchased MMM in August, but just received the first dividend resulting from the timing of that purchase in December).  In all, 28 separate companies + 4 mutual funds paid the portfolio a dividend in December.  Only 2 of the 28 companies initiated new rate increases with the December payment - both AVGO and EMR with 22.6% and 2.0% increases, respectively.

YTD Dividend Chart for 2019

This chart above really shows the resulting impact of having really focused on dividend paying stocks, preferably with consistent dividend growth YoY.  Since late 2015 and into 2016, when I began making a conscious effort in buying reasonably valued dividend growth stocks, the income the portfolio has generated has really climbed.  To me, this graph really does say a lot and it is really fun to see the progress it reflects as each year progresses.

2019 Q4 Rate vs. Volume Impact

Second based quarter of the year in terms of the favorable rate variance of 2.5%.  See the next section below for further discussion of the 2019 rate variance. The favorable volume variance of 11.3% for Q4 is certainly nothing to complain about, but was the lowest quarterly volume percentage increase of 2019; Q2 2019 was the highest at 26.4% (and I believe largely due to the single annual dividend payment received from BAYRY which was the first dividend received from BAYRY since initiating the position in 2018).

2019 YTD Rate vs. Volume Impact

After starting the year strong with an 8.5% rate growth for Q1 2019, the following quarters really weighed that metric down to where the portfolio ultimately landed at 2.4% rate increase for 2019.  Said another way, had the portfolio remained unchanged from the prior year (meaning no additional capital was added nor dividends received reinvested), the dividend income produced by the portfolio would only have increased by 2.4% which managed to slightly exceed the 2.1% CPI inflation for the twelve months ending November 2019, but far from stellar. I don't recall the source offhand but I believe the average long term annual dividend growth rate is between 6 and 7% annually, which is about what the PIV portfolio experienced in 2018.  This past year, dividend cuts by GE and KHC didn't do the portfolio any favors.  On the bright side, the favorable impact of dividend reinvestment and additional capital contributions to the portfolio contributed to a 19.2% increase in dividend income compared to 2018.

Portfolio Value as of January 3, 2020

Portfolio value (excluding cash): $331,988

This a 29.1% favorable increase in value compared to the balance of $257,125 on 12/26/2018.  The favorable variance does include the impact of contributions made to accounts during the past year and used to purchase additional equity shares.

# of positions: 53 positions in individual companies + 4 mutual funds

Current GICS Allocation Chart
Below is a current snapshot as of portfolio's allocation among the 11 industries per the Global Industries Classification Standard (GICS) as of the close of 2019.  As I've mentioned previously, I have no specific goal in mind with respect the to allocation below when it comes to buying stocks - as the saying goes "let the chips fall where they may."

Looking Forward to 2020

Looking forward to this next year, I would say crossing the $10,000 in annual dividend income will be a breeze in 2020.  However, I must admit that I am not giddy over the current market valuation as a whole.  There maybe a few select equities here and there that may seem reasonably priced, but gone are the days (But for how long? Who knows.) where much of the market could be bought at what appeared to be reasonable valuations in light of future prospects and relative to other cash or fixed income investments.  With the elections in 2020 I suspect we'll see some volatility in the next 12 months but how much remains to be seen.  If valuations drop while all else remains fairly constant, I could easily see the portfolio investing $20-40K of additional capital (incl. dividend reinvestment) for equity share purchases, but if current valuation multiples remain the status quo, than activity in 2020 will likely reflect what it was in the latter half of 2019.  In any event, happy new year and lets all press on making the best of what ever may come our way this year.