2017 Dogs of the Dow Quarterly Update

Last December, I made a post about THE GREAT 2017 DOGS OF THE DOW EXPERIMENT. The purpose of the experiment was to test one of the most popular investment strategies that’s been floating around since it’s creation in 1991 by Michael B. O’Higgins, a money manager based out of Miami, FL.

The basic idea is to take the list of stocks in the Dow 500, sort them by highest dividend yield and the top 10 stocks will be the Dogs of the Dow. In this investment model, it means those 10 stocks are undervalued because their dividend yields are among the highest in the Dow. Does it work? Not Always, but it’s fun to see if it does this year.

During the week that I was working on the post, I purchased $500 in each of the 2017 Dogs.

3 shares of IBM @ 165.90 5 shares of CAT @ 92.80
9 shares of MRK @ 58.80 15 shares of PFE @ 32.50
6 shares of PG @ 84.05 3 shares of BA @ 155.78
17 shares of CSCO @ 30.20 10 shares of VZ @ 53.40
5 shares of XOM @ 90.40 4 shares of CVX @ 117.65

Let’s take a look and see how they have been doing for the last 3 months or so.

IBM

IBM has fared well in the last 3 months since I’ve purchased them. I’m currently up 5.75% and have received a $4.20 dividend payment already.

The first round of news came from their reported earnings beat on January 19th that started them on an uptrend to where they currently are located. They have since been upgraded by various stock firms.

CAT

CAT benefited from the initial surge when Donald Trump took office. It shot up towards $99 a share but has since dropped below my initial cost. It’s currently down -1.5% overall. I have received a single dividend of $3.85 and also made the mistake of DRIPing another share at it’s all time high price of 98.80.

CAT posted earnings towards the end of January where they beat EPS but missed on revenue (Source). Coupled with the weaker guidance from their conference call, CAT dipped hard. Pile on top of that allegations of tax fraud, we can see why they’ve been having a hard time lately.

MRK

MRK has been doing well for itself with shares up over 7.9% since I purchased them. I have also received a single dividend in the amount of $4.23.

They posted mostly middle of the road earnings where their EPS was inline but they missed revenue for the quarter. (Source)

PFE

Pfizer has been another positive return so far for the Dogs of the Dow. It’s currently up 5.48% since they were purchased and add on top of that the $4.80 dividend that they paid in March, it’s looking pretty healthy return-wise.

They reported some not-so-great earnings that saw them missing both EPS and revenue. (Source) In the beginning of February, they announced a $5B accelerated share buyback program. (Source) It seems like the market doesn’t care much as they have been on a tear since February.

PG

With a total return of 7.4% and a single dividend payment of $4.02, Proctor and Gamble is setting itself up to be the love of my life. I’ve always heard great things about PG and knew that they would always be part of my portfolio. With the Dogs of the Dow Experiment I was able to make that a reality. I’ve already DRIP’d one share and would love to add even more if it happens to ever dip again this year.

On the news side of things, PG released positive earnings in January. (Source) There was also news of Nelson Peltz’s Trian Fund taking a 3.5 billion stake in P&G which sent shares soaring. (Source)

BA

BA has been on fire ever since Donald Trump took office and are currently up 14% in total return plus the $4.26 dividend payment in March.

They posted positive earnings (Source) Even though they posted tepid guidance for the next year, the market has been full on bullish with the stock.

CSCO

This tech stock has so far given me a total return of 12.7%, plus a dividend payment of $4.42.

Cisco beat EPS and revenue but still found the stock sliding downward. (Source) It has crawled back up in share price and has been looking pretty healthy overall.

VZ

Verizon is one of the laggards of this experiment with a total return of -6%. 

If we look through their newsfeed, it looks like the decline started with missing EPS on earnings. (Source) There was also talks of a Verizon/Charter collaboration and in a more somewhat controversial subject, Verizon has decided to bring back unlimited data. Analysts are saying it will be bad for the entire sector as a whole. Of course, it will be great for consumers. Only time will tell what happens. I wouldn’t count VZ out quite yet. I don’t think they’re going anywhere.

XOM

Another disappointment in the Dogs has been XOM which is currently sitting at a total return of -8% since it was purchased.

A lot of it has to do with the turbulent nature of oil right now as it dipped below $50 and continues to go down. I’m not too familiar with the intricacies of oil but our reliance on fossil fuels isn’t going anywhere anytime soon. In other news, they also missed earnings. (Source)

CVX

The last one on the list is another underperformer. So far this year, CVX has a total return of -7.8%

The analyst is mostly the same as XOM above since they’re both oil energy stocks. They too missed earnings (Source) On the plus side, revenue is up 7.7% Y/Y so its not all doom and gloom.

Conclusion

Of course, we should go ahead and show the Dow Jones Year-To-Date returns for a fair comparison

dow_jones_2017_1qtr

(Source)

Looks like 6 of the 10 stocks from the experiment are beating the YTD for the Dow. Not terrible but not great. I’ll update everybody once again halfway through the year and see if our laggards can get their butt in gear and start making me some money!

 

Cheers!

Dividend Portfolio Update for February 2017

dividend portfolio money jar

 

The market has been on a tear since Donald Trump has taken office and my portfolio is no different. Below is a screenshot of my gains for the month of February and there’s no way you can hate against it. While not all my stocks have done amazing, there’s definitely been quite a few that have stood out.

feb2017_portfoliogains

To name just a few:

AAPL is up 16% CSCO is up 11.5%
BA is up 12% PFE is up 11%
CAH is up 13% V is up 7%

Of course, short term gains don’t mean too much when we’re looking at establishing a high quality dividend portfolio, but it’s still brings a smile to my face when I see my balance go up over $1,200 bucks in a month. Can this bull market continue or will we see it regress? Only the shadow knows…

Deposits

As usual, I auto-deposited $200 each pay period into my Robinhood account. This sets me up to have $400 every month to purchase high quality dividend stocks without having to put up any effort.

I also added a one time deposit of $625 for the month. This is $375 more than my stated Goals for 2017. I’m also working towards paying off my car loan this year. I’m hoping my tax rebate this year will pay for the majority of the car off. This will let me take the payment I would normally use for the car payment and use that money to purchase even more high quality dividend stocks.

Total: $200 + $200 + $625= $1,025

Dividend Payouts

VZ 10 shares @ $0.58 = $5.78
T 25 shares @ $0.49 = $12.25
CVS 7 shares @ $0.50 = $3.50
SDIV 101 shares @$0.12 = $12.17
OHI 20 shares @ $0.62 = $12.40
PG 6 shares @ $0.67 = $4.02
AAPL 5 shares @ $0.57 = $2.85
CAT 5 shares @ $0.77 = $3.85
HCN 15 shares @ $0.87 = $13.05
CLDT 150 shares @ $0.11 = $16.50
Total for February:  $86.37

Not too bad for passive income. 

Let’s go ahead and talk about about this month’s purchases now.

Stock Purchases

I mostly DRIP’d the companies that paid out dividends to me this month. I opted not to DRIP a few of the REIT’s this month since my position in them is pretty high and I’m getting a little low on cash in the account. Also the same with AAPL since they’ve been skyrocketing lately on the news that Berkshire bought even more shares. Oh well, let’s see what I purchased. 

  • 1 shares CVS @75.97

CVS is a well known pharmacy company that operates retail drugstores, online retail pharmacy websites and its retail healthcare clinics.They’re currently trading at a P/E Ratio of 17 after a recent dip on news that they lost a contract. I still believe that CVS is here to stay and they are currently paying a 2.4% dividend yield. They have a 32 year history of paying dividends and are currently classified as a Dividend Contender with 14 years of increasing dividends. They currently sit around a 42% EPS payout ratio which means that the dividend is pretty safe. They also have a 5 year dividend growth rate of over 27%!  The board just announced an 18% increase to the annual dividend which means each share of CVS returns $2.00 in dividends a year. This adds $1.72 to my annual income!

  • 1 share of T @ 41.99

Most people know AT&T since it’s a Dividend Champion with 33 years of increasing dividends. They currently sit around a 4.6% dividend yield with a dividend growth rate of 2.2% While not the most aggressive dividend stock, they are by far a pretty reliable. Things to watch out is they’re over 80% on their EPS payout ratio.  This adds $1.96 to my annual income!

  • 1 share of VZ @48.40

Another communications stock? Yep, it’s alright to buy shares of companies that are in direct competition with each other. I don’t think VZ or T are going anywhere anytime soon. Verizon also sits at a 4.6% dividend yield and is considered a Dividend Contender with 12 years of increasing dividends. They sit at a slightly higher Dividend Growth Rate of 3% compared to T but their EPS Payout Ratio is at a more comfortable 67%. This adds $2.31 to my annual income!

  • 1 share of XOM @82.75

Exxon Mobile is a 34 Year Dividend Champion currently sitting at a 3.6% dividend yield with a 3-year DGR of 6.6% Their eps payout ratio is higher than I’d like to see from them but they still keep paying out the dividend. This adds $3.00 to my annual income!

  • 20 shares of GILD @ 68.42

GILD is a biotech company that just recently started paying dividends. They dipped pretty hard recently so I decided to add some more shares. They currently sit at a 3% dividend yield. This is one of my more riskier plays so I don’t recommend going in them if you’re a beginner. This adds $20.80 to my annual income!

  • 1 shares of PG @ $90.66

PG is a 60-Year Dividend Champion that currently sits at a 2.9% dividend yield. There’s a reason why PG sits on top of a lot of dividend bloggers “always buy” lists. They’re a solid company that is worthy of anybody’s portfolio. This adds $2.68 to my annual income

  • 1 shares of OHI@ $31.50

OHI is a 14-Year Dividend Contender with a dividend yield of 7.5%. The have an average DGR of 8% but are high when it comes to EPS Payout Ratio. I’ll have to keep an eye out for them as well. This adds $2.48 to my annual income

  • 1 shares of CAT @ $98.80

This was a DRIP’d purchase of a 23-Year Dividend Contender. Their yield sits just over 3% with an average DGR of 9.6%. Their payout ratio is higher than I would like as well. But this adds $3.08 to my annual income.

All these stock purchases have added a grand total of $38.03 to my annual income.

Stock Sells

None.

Conclusion

We’ve added $38.03 to my annual income in this month alone. While the majority of my purchases were just DRIP’s, I’m still happy with the outcome. The portfolio won’t be exciting for a few months until the car gets paid off, but after that the sky is the limit!

I hope everybody else had a good month. See ya next time!