This Dividend Growth Portfolio (DGP) exists to demonstrate the results that can be achieved
by following sound dividend growth investing principles.
The main goal of the DGP is to
generate reliable growing dividends.
The dividend stream has increased each year
since the Portfolio was created in 2008, more than doubling in that time.

  • Dividends received in 2013 were up 18% over 2012.
  • Dividends  received through the first three months of 2014 are >15% more
    than during the same period in 2013.
  • The DGP generates twice as much cash as a similar investment in the S&P 500.


  • The Dividend Growth Portfolio is a real portfolio with real money. Its inception date  
    was June 1, 2008. It is not a hypothetical nor "cherry-picked" portfolio selected with 20-20 hindsight. It has
    been managed in real time with real money since its creation. It resides at E*Trade.
  • The opening amount was $46,783. No new money has been added since creation.
  • The DGP exists for demonstration purposes only. I do not suggest or recommend that
    anyone exactly follow my purchases or sales. I do not present it as "best."
  • The DGP's specific numeric target is to achieve a 10% yield on cost within 10
    years. In other words, I want the DGP to be generating dividends at a run-rate of $4678 annually by June 1,

                                         DETAILED REPORT CARD

(1) Generation of reliable and growing dividend stream:

This portfolio had a terrific year in 2013, and it is off to a good start in 2014. In 2013,
ividends exceeded 2012's by 18%. Current projections are for dividends in 2014 to exceed
2013's by more than
7%, and I expect that projection will grow over the next several months.
By the end of the year, I would not be surprised to see the total dividends for 2014 exceed
2013's by 1
0% or more.

Here is a table of the dividends produced each year by the Dividend Growth Portfolio. Years
2008-2013 are actual numbers.
The numbers for 2014 and Next 12 Months are projections
based on current information.
I use the "Income Estimator" at E-Trade to make the

Year       Dividends Received      Increase from Prior Year        Yield on Cost            
2008              $  998                                                                             2.1%                             
2009              $1568                                        57%                             3.4%
2010              $1799                                        15%                             3.8%
2011              $1960                                          9%                             4.2%
2012              $2179                                 
       11%                             4.7%
2013              $2582                                        18%                             5.5%

2014              $2
767 [projected]                       7% [projected]          5.9% [projected]        
Next 12 Mo.  $28
48 [projected]                      NA                               6.1% [projected]     

The Income Estimator currently projects a total of $2767 in dividends for the calendar year
2014. This is a preliminary estimate, as several of the companies in the portfolio have not
announced their dividend increases for 2014 yet.

Not only do the dividend
projections go up from increases declared by each company, they
also rise from reinvested dividends that buy more shares of stock. I expect to make two
reinvestments in 2014 (one was already made in January). As these purchases
become known to the Income Estimator, they also cause the projections to go up.

Note on the dividends in 2008: Because I created the Portfolio during the first half of 2008, the dividends for 2008 are
less than they would have been for the entire year. That accounts for the low 2.1% yield on cost at the end of 2008, as
well as the 57% jump in dividends from 2008 to 2009. Later years are more representative of what one may expect in
annual dividend increases. Growth rates will usually be in the 10% to 15% range each year.

(2) Achieving goal of 10% yield on cost within 10 years:

As dividends are increased and reinvested, the yield based on the original investment
. This is known as yield on cost (YOC). The portfolio's annual YOC is shown in the right-
hand column of the table above.

Mathematically, YOC rises steadily, because the "original price" in the equation
yield on cost = dividends / original price stays fixed at $46,783. But the numerator (the
dividend amount) increases over time for three reasons:

  1. Companies increase their dividends. The Estimator accounts for dividend
    increases as they are announced by each company. Therefore, dividend
    increases yet to be announced in 2014 are not included in the Estimator's
  2. Additional shares to be purchased with reinvested dividends will pay
    dividends themselves. Until the new shares are purchased, the Estimator does
    not know about them. I expect to make two more purchases in 2014 as dividends
    flow into the account.
  3. Other changes may be made to the portfolio that will affect the dividend
    stream. Again, the effects of these changes are not known to the Estimator until
    they are made.

Thus, actual dividends to be received should be greater than those currently projected for the
three reasons just stated.

Here in graphical form is the history and current projection for the cash run-rate of the
Dividend Growth Portfolio's dividend stream as of the end of
March, 2014:

I estimate that the run-rate on the day the portfolio began was $1400/year. The goal (shown
by the red
Goal line) is to reach 10% yield on cost at the end of 10 years, or a run-rate of
$4678 on June 1, 2018.

Notice that the red
Goal line curves upward. This is typical of compounding numbers,
because the growth accelerates from year to year. The blue Run-Rate line is also curving
, demonstrating the compounding from dividend increases and reinvestments.

From this graph, I can tell that I am on track to meet the portfolio's goal by 2018. The slight
flattening of the blue line in 2014 is a bit deceiving, for the reasons stated above: Right now,
the run-rate for 2014 is an early estimate
based on information known at this time.

(3) Portfolio reviews:

I recommend conducting two formal strategic "Portfolio Reviews" per year. The next review  
will occur this month (April, 2014).

In January, I published a wrap-up of the DGP for 2013:
Snowball Down a Hill: My
Dividend Growth Portfolio 2013-14 Report.

Last October, I published a review for this portfolio:
Dividend Growth Portfolio: Semi-
Annual Review.

In 2013, the DGP celebrated its 5th birthday. I published this article at the beginning of June:
Happy Birthday! The Dividend Growth Portfolio Turns 5.

(4) Reinvestment of dividends:

Under the rules governing this portfolio, when the accumulated cash from dividends
reaches $1000, the cash is re-invested. The purchase may be of more shares in a company
already owned, or it may be used to initiate a position in a brand-new stock.

I have already made a dividend reinvestment in 2014. In January, I purchased 27 shares of
Microsoft (MSFT) for about $1000. I expect to make two more dividend reinvestments in
2014. The purchase of MSFT increased the number of stocks in the portfolio to 17.

(5) Portfolio changes:

As mentioned above, from time to time I make changes to the portfolio to improve it. In
January, I decided to sell Intel (INTC), because their dividend had been frozen for seven
quarters, and I want stocks with rising dividends. With the proceeds from the sale, I made
two purchases. I bought a new stock for the portfolio, Coca-Cola (KO), and also added to the
portolio's stake in Philip Morris (PM).

(6) Dividend Growth Portfolio as of April 1, 2014:

The DGP has 17 positions. The cash will be reinvested when it hits $1000 (probably in May)
from incoming dividends.


(7) Total performance since inception:

The principal goal for this portfolio is to create a dividend stream that grows to 10% yield on
cost after 10 years (i.e., by June 1, 2018). All of my investments and decisions are made
with that goal in mind. The progress towards that goal was displayed above.

But a secondary metric of interest is total return. Here is the total performance of the
Dividend Growth Portfolio compared to
SPY (an ETF that tracks the S&P 500) since
Both the DGP and SPY are shown with dividends reinvested.

As of the end of
March 2014, the DGP has gained 56% in total returns compared to SPY's
gain of 5
1% since the inception of the DGP.
Dedicated to the success of the individual investor
April -- Dividend Growth Portfolio Update
Price $40.00
Price $40.00
Price $40.00