With 2016 officially over it’s high time to see where my portfolio and net worth ended up. Due to a lack of enthusiasm for blogging and other priorities the past couple of months I missed the third quarter update, so I’ll just combine both in one big post and explain what’s changed since June.
During the past six months all sorts of things have happened, mostly with very little financial impact. However, my portfolio saw some major changes. Brexit and the US presidential elections had a profound impact on currency exchange rates thus boosting my foreign holdings higher, oil and commodities gained in price again with those sectors right in tow, and the first hints of increasing interest rates are starting to surface with an impact on debt-heavy sectors.
Nevertheless, my portfolio did what it had to do: throw off dividends and generate a steady passive income stream. Meanwhile it soared to new heights with an increase of 6,250 Euros compared to September. That’s a decent chunk of change, especially when considering that I bought a new mountainbike during the same period – thank you December stock market rally.
As such, the total gain for Q4 comes out at 6.68%. With my net worth growing ever larger that number continues to drop each month, but that’s maths for you. Compared to the beginning of the year I gained 28,175 Euros or 39.36% thanks to my savings habit and a little help from the stock market.
Dividend growth stocks
The big advantage of dividend growth investing lies in the fact that you regularly receive dividends in the form of cash payments from your investments. These payments can then be used to buy more stocks and further fuel your future passive dividends, thus effectively boosting the compounding effect of your investments even faster.
Of course, re-investing my dividends isn’t enough to move the needle significantly. The majority of my portfolio and income growth comes from new savings, which allowed me to purchase new stocks 12 times in the past six months.
I almost exclusively added to already existing positions, mainly because I saw continued value in them or because they fell out of the market’s favour for a variety of reasons. As an added benefit I was able to rebalance my portfolio slightly since a lot of sectors had gained or lost quite a bit the past couple of months. Just take a quick look at the oil and commodities sectors and you’ll see what I mean.
In the health care sector I decided to add to Swiss Roche Holding AG (VTX:ROG) and French Sanofi SA (EPA:SAN). Both companies’ stock price tumbled for a couple of weeks without any direct threat to their dividend payments, so I jumped on them. My portfolio now contains an additional 5 Roche and 15 Sanofi shares.
On top of that I purchased into Danish pharmaceutical Novo Nordisk (CPH:NOVO-B), which saw its market value almost halved in the span of a couple of weeks because of a weakened outlook. Investors seemed to scatter after management announced it no longer expects double digit growth like in the past. However, Novo Nordisk’s decline meant a good entry yield for the first time in years for such a high quality diabetes stock, so I decided to initiate a new position of 90 shares over the course of three months to reduce the risk of any further volatility.
Closer to home I continued buying into Ageas NV (EBR:AGS), a Belgian insurer that was beat down excessively by the market during the summer months. In my last portfolio report I had already acquired 70 shares, but in July and August I bought another 80 more. I furthermore bought 13 shares of brewer AB Inbev (EBR:ABI) and 15 shares of Home Invest Belgium (EBR:HOMI) on what I estimated to be a short period of weakness in the market and a compelling price for both companies.
The last couple of purchases pertain to industries that are strongly impacted by rising interest rates. Future earnings of Spanish utility Enagas SA (BME:ENG), British utility National Grid plc (LON:NG) and telecom operator Vodafone plc (LON:VOD) are likely to be under pressure when interest rates increase, but since they operate in a well-regulated environment, have decent earnings or show a sign of earnings recovery, I believe their relatively high-yielding dividends are safe.
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||1,690.75||-11.41%|
|DE||Deere & Company||7||452.61||707.73||+56.37%|
|HOME||Home Invest Belgium||45||4,099.42||4,365.00||+6.48%|
|JNJ||Johnson & Johnson||20||1,769.41||2,208.35||+24.81%|
|NG||National Grid plc||300||3,816.01||3,284.85||-13.92%|
|PG||Procter & Gamble||23||1,594.66||1,856.77||+16.44%|
|RB||Reckitt Benckiser plc||10||630.34||780.11||+23.76%|
|ROG||Roche Holding AG||10||2,2388.60||2,251,33||-5.75%|
|RDSB||Royal Dutch Shell||110||2,956.64||3,067.90||+3.76%|
|S32||South 32 Ltd.||48||20.04||93.30||+365.58%|
|KO||The Coca Cola Company||17||540.05||673.69||+24.75%|
|VZ||Verizon Communications Inc.||20||785.07||1,011.32||+28.82%|
In August I decided to liquidate my ETFS, mainly because performance was on par with my dividend growth portfolio. The advantage of diversification through the index funds became smaller and smaller as I bought into more dividend paying companies.
Besides equities I also have some other investments, one of which is a tax-advantaged pension fund and another one that basically is a savings account. The pension fund continues to receive automtic payments to hit the €940 upper limit for 2016, while any excess cash goes towards the savings account and the emergency fund.
|Name||Cost basis||Current value||Gain|
|Pension fund||2,820.00||3,067.62||+8.78% and 30% tax break|
We’re finishing 2016 with the six figure finish line in sight! I’d call that amazing progress even though I had hoped to cross it before the end of the year. Saving as much as possible and investing those savings into high quality dividend stocks to create a truly passive income stream therefore remains my number one priority for 2017.
Just like 2016 has shown tremendous progress towards financial independence, I’m sure that 2017 will be even better. Of course, you can’t predict stock markets, but my own savings capacity and the dividends my holdings throw off on a regular basis are either within my own control or relatively certain variables.
At least they’re more consistent than my recent writing efforts, ha!
To finish this post off, I wish you all the best for the new year. I hope your family’s health is top notch, that friendship flourishes, and that your professional and financial dreams become a reality. Please let me know in the comments how your 2016 was and which goals you hope to achieve in 2017!
Thank you for reading and for your support.