Phew, it sure has been a long time since I’ve updated my blog! Thankfully I have a day off work today, so I decided to take advantage of the bad weather to inform you guys on my progress. First up is an overview of my net worth after the first quarter of 2016.
In the past I used to publish net worth updates every single month, but from now on I’ll stick to quarterly updates. There’s two main reasons for this change of heart.
First, my total net worth doesn’t matter all that much since I’m a dividend growth investor first and foremost. That means I try to steadily grow the passive income of my portfolio rather than the underlying capital. Of course, I could be making awesome progress with regards to dividends, but have a stinky total return due to capital loss, so it’s not as black and white – hence the quarterly updates.
Second, it’s harder being a long-term investor if you’re confronted with the perception of a wildly volatile portfolio. Indeed, the total value of my holdings varies daily, sometimes by €1,000 on any given day. And let me tell you, that’s tough psychologically. By reviewing your portfolio on a less frequent basis you take away the daily swings and thus the perception that your investments are volatile.
So let’s see what Q1 in 2016 brought us!
Compared to the end of 2015 my net worth grew by a staggering 7,970 Euros! Most of the increase obviously comes from my excellent savings rate, but a large chunk can be attributed to the performance of the stock market. Even though January and February were dreadful months for most indices, March picked up the pace and pushed my dividend portfolio and exchange-traded funds to new heights – perception is key, as you can see.
As a result, my overall net worth grew by 11.06% in the past three months, yay! On top of that it’s the first time ever that I, just barely, cross the 80,000 threshold. I’m slowly closing in on that illustrious six figure mark! My habit of consistently saving and investing any excess cash is paying off big time.
When you take into account that I earn about €12 an hour after taxes, that’s a massive 664 hours or 90 days of work-free capital in the bank. And that capital is now working for me, slowly building my wealth over time until I reach financial independence. Compound interest at its finest!
Dividend growth stocks
Returning visitors know that dividend growth stocks make up the bulk of my portfolio because I enjoy building a stable and passive stream of income. At the moment I’m using all dividends to fuel the compounding effect of my investments and I’ll continue to do so until I decide to retire early and live off of them.
As a result, I initiated three buys over the past couple of months, all of them in the healthcare space funnily enough. The passive income I currently receive isn’t nearly enough to initiate full positions, so of course I also add in my hard-earned and easily-saved money.
First up was Swiss-based pharma giant Novartis (VTX:NOVN), which experienced a bit of weakness in the past couple of months – and still does, for that matter. Some of Novartis’ products aren’t putting out the numbers the company expected, which weighs on the bottom-line a bit. On top of that the Swiss Frank is also hurting the pharmaceutical’s performance.
Second, I bought a larger chunck of GlaxoSmithKline (LON:GSK), the British healthcare company that recently swapped its oncology business with the aforementioned Novartis. Even though Glaxo’s numbers aren’t too rosy, they’re slowly turning around with a ton of new products in the pipeline. What pushed me to increase my stake in GSK is management’s decision to pay a special dividend this year on top of the already high yield, signalling strong belief in the company’s cash-flow rich future.
And third, I bought another beaten-down stock, namely Sanofi SA (EPA:SAN). French Sanofi mostly focusses on cardiovascular solutions, diabetes, oncology and vaccines, and is a leading player in all of these areas globally. Currently, however, earnings growth is a bit lacking, even though the company is well-placed for the future. That’s why I took advantage of its 4+% yield.
You can find the gains in absolute and relative numbers for each company in the table below. The cost basis for each position includes the price of the shares, a 0.27% stock market tax and brokerage fees.
|Ticker||Company||Shares||Cost basis||Mkt. value||Gain|
|BLT||BHP Billiton plc||110||1,908.56||1,086.69||-43.06%|
|DE||Deere & Company||7||452.61||474.14||+4.76%|
|HOME||Home Invest Belgium||30||2,682.00||2,996.70||+11.73%|
|JNJ||Johnson & Johnson||20||1,769.41||1,899.28||+7.34%|
|NG||National Grid plc||100||1,332.11||1,245.86||-6.47%|
|PG||Procter & Gamble||23||1,594.66||1,660.70||+4.14%|
|RB||Reckitt Benckiser plc||10||630.34||849.57||+34.78%|
|ROG||Roche Holding AG||5||1,233.71||1,082.66||-12.24%|
|RDSB||Royal Dutch Shell||110||2,956.64||2,394.70||-19.01%|
|S32||South 32 Ltd.||48||20.04||47.13||+135.20%|
|KO||The Coca Cola Company||17||540.05||691.88||+28.12%|
|VZ||Verizon Communications Inc.||20||785.07||984.50||+20.82%|
I’ve said it before and I’ll say it again, the ETFs below have been doing exactly what they were designed to do. By tracking the MSCI World, emerging markets and Europe indices rigorously, these exchange-traded funds have experienced respectable growth in the past few months, especially the MSCI World ETF. If you’re a new investor looking for a long-term set-it and forget-it approach, I can’t recommend index funds enough.
|Ticker||ETF||Cost basis||Mkt. value||Gain|
|IWDA||iShares Core MSCI World||6,217.44||7,054.04||+13.46%|
|IEMA||iShares MSCI Emerging Markets||1,214.59||1,203.12||-0.09%|
|IMAE||iShares MSCI Europe||3,561.94||3,586.88||+0.70%|
The last part of my portfolio constist of a tax-efficient pension fund and good ol’ boring savings accounts. As I’m currently still rebuilding my emergency fund I added another €1,000, while my pension fund receives automtic payments to hit the €950 upper limit for 2016.
|Name||Cost basis||Current value||Gain|
|Pension fund||2,094.99||2,202.68||+5.14% and 30% tax break|
Living frugally, saving as much as possible, and investing those savings remains the holy trifecta of financial independence. Without putting in much effort myself, my net worth continues to make big strides forward, as this update clearly shows. It’s incredible to see how fast you can get a snowball rolling as long as you remain focussed and stick to your strategy.
After the last net worth update, where I lost a bunch of money in the stock market, it’s funny to see the numbers tick back up to previous levels and surpassing what I had projected for myself. Onward and upward!
Thank you for reading and for your support.