With 2015 now officially out of the starting blocks it’s time that we take a look at the progression my net worth has experienced. Even though a dividend growth investor’s total amount of assets doesn’t mean much on a month-to-month basis, it’s always exciting to see your net worth grow. On top of that, you guys get an unprecedented view into the rollercoaster ride that investing is.
If you remember correctly, December’s performance wasn’t too great with the markets tumbling and me splurging on a brand-new Nvidia GTX 970 graphics card the month before. Luckily, though, my employer came to the rescue with a nice annual bonus. As a result, I was able to grow my dividend portfolio for the first time above the €10,000 mark. On top of that, my entire net worth was now knocking on the door of the €50,000 threshold.
Guess what? By the end of the month, my portfolio decided to stop knocking, but to simply kick down the door and waltz in. US stocks miraculously recovered and my final paycheck for 2014 arrived, pushing my total net worth to an all-time high of €53,274. That’s an increase of €3,756 or over 7.5% in only one month’s time, an incredible result if nothing else considering how volatile the markets have been lately.
To put the absolute growth of the past thirty days into perspective, you could say that my net worth skyrocketed with almost two months’ worth of after-tax income. Considering that I earn about €12 net an hour, that’s 313 hours or a full 40 days of labour tied up in my bank account and investments. Who ever said that saving and investing doesn’t buy you freedom?
Let’s take a look at my portfolio, shall we? I once again would like to point out that all numbers below are denominated in Euros because that is my home currency. Foreign stocks were converted based on the last-known exchange rate using my dividend tracking spreadsheet.
Dividend growth stocks
Like I wrote three paragraphs ago, it wasn’t until last month that I had over 10,000 Euros invested in stocks that pay an ever-growing dividend to their shareholders. Because it took me about four months and a nice chunck of previous savings to get to that magic number, it’s crazy to think that I’ve now already crossed €15,000. I guess you could say that the frequent dividend payments of December really motivated me to push things forward.
Because last month’s income was incredibly high and because I decided to follow up on the advice of Dividend Family Guy to re-evaluate the amount of cash in my emergency fund, I had quite a lot of spare change lying around to add high-quality companies to my portfolio. As a result, I went on a stock buying rampage to make the most out of my free broker transactions until the end of 2014.
British distiller Diageo (LON:DGE) took a small hit right before the end of the year, so my trigger-happy right index-finger couldn’t resist to click the big “confirm transaction” button. As a result, I’m now the happy owner of 41 shares of Guinness’ and Kilkenny’s brewer, and Johnnie Walker, Captain Morgan, Baileys and Smirnoff’s distiller.
Right afterwards I completed another purchase on the LSE. Like most other dividend growth investors over the past few days, I was happy to add to my Unilever (LON:ULVR) position. Unilever now makes up the largest position in my portfolio and I believe it deserves the number one spot. The British consumer goods manufacturer has such an incredible line-up of products and such long-term growth potential, especially in the developing markets, that I’m sure it will remain among dividend growth investors’ favourites for a long time.
Since oil and commodity prices kept falling I furthermore decided to average down on my existing BHP Billiton (LON:BLT) position. The British mining company saw its share price decimated in 2014 because its profits are highly reliant on the principle of supply and demand in the commodities markets. My decision to buy 24 more shares of BLT might have been premature though, with oil prices sinking lower and lower every day.
Last but not least, American telecommunications giant Verizon’s (NYSE:VZ) drop in share price by mid-December didn’t go unnoticed either. As a result, I added 20 shares of AT&T’s biggest competitor to round-out and diversify my exposure to US telecommunications.
The cost basis for each position includes the price of the shares, a 0.25% stock market tax and brokerage fees.
|Ticker||Company||Shares||Cost basis||Mkt. value||Gain|
|BLT||BHP Billiton plc||48||928.94||799.41||-13.94%|
|DE||Deere & Company||7||452.61||513.87||+13.54%|
|JNJ||Johnson & Johnson||6||473.79||537.23||+13.39%|
|PG||Procter & Gamble||9||575.36||694.62||+20.73%|
|RB||Reckitt Benckiser plc||10||630.34||690.81||+9.59%|
|RDSB||Royal Dutch Shell||20||585.25||536.40||-8.35%|
|KO||The Coca Cola Company||17||540.05||619.41||+14.70%|
|VZ||Verizon Communications Inc.||20||785.07||806.50||+2.73%|
Over the past couple of days, the exchange-traded funds I hold, have done what they were supposed to do: track the market and deliver near-market performance returns. I know that’s rather dull in comparison to the excitement that dividend paying stocks hold, but I’m really happy that my portfolio allocation is turning out great.
The worldwide ETF and emerging markets fund did particularly well, with the Europe one still not sure whether it wants to go up or down. Overall, a 7% gain from my last purchase at the end of july is pretty impressive. Let’s hope these index funds continue to hum along.
|Ticker||ETF||Cost basis||Mkt. value||Gain|
|IWDA||iShares Core MSCI World||4,982.96||5,584.95||+12.08%|
|IEMA||iShares MSCI Emerging Markets||1,214.59||1,302.48||+7.24%|
|IMAE||iShares MSCI Europe||3,561.94||3,549.92||-0.34%|
January will probably be one of the last months that my “other” category is bigger than both my dividend portfolio and exchange-traded funds combined. That’s because I decided to reduce my emergency fund by €2,000 and because I’m limited to yearly contributions of only €940 to my pension fund. My savings account, however, continues to yield 3.15% annually, but I’m not adding any fresh money to it.
|Name||Cost basis||Current value||Gain|
|Pension fund||950.00||961.77||+1.22% and 30% tax break|
|Savings account||N/A||18,159.03||+3.15% guaranteed yearly|
What a month! Some of you might have noticed my optimism in my 2014 goals recap or when reading my very ambitious 2015 goals, but December has confirmed my belief that financial independence is the right way to go. Both my net worth and passive dividend income are growing exponentially, setting me up for a worry-free financial future.
In my daily dealings I’m often a very careful person and as such, I worry quickly. Sometimes I fear my portfolio diversification isn’t up to snuff, or I worry about my exposure to oil, or about the depreciating Euro. I’m still trying to learn not to worry too much.
Recently, for example, I researched how free-floating exchange rates hardly have any real impact on return over longer periods of time. It’s nice to know that all the time I spent reading books and articles turns out to be right and amounts to real-life results. Seeing other people implement dividend growth investing succesfully is one thing, but to do it yourself is another.
That’s why I was really happy with December’s outcome. Even though these small wins don’t mean much over the long-term, they help tremendously to keep my spirits up – almost as much as the support I receive in the generous comments on this blog or in the sometimes overwhelming stream of e-mails.
Thank you for reading.