Snowball Down A Hill: My Dividend Growth Portfolio

I like to open each year on Seeking Alpha with a report on my public demonstration Dividend Growth Portfolio [DGP]. I keep it out in the open so that people can see how one person (me) executes a dividend growth strategy and what its results are. It is important to emphasize the primary goal of this portfolio. It is to produce reliable growing dividends. In the words of its Constitution: "The goal of the Dividend Growth Portfolio is to generate a steadily increasing stream of dividends paid by excellent, low-risk companies. The numerical target is for the portfolio to deliver 10 percent yield on cost within 10 years of inception. I am more interested in the ability of this portfolio to produce income than its sheer size."

With 2013 in the books, this portfolio had a terrific year. Dividends received in 2013 exceeded 2012's by 18% to $2582, and its YOC increased from 4.7% to 5.5%. Because no new money is added to the DGP, all of the progress toward the goal comes from dividend increases, dividend reinvestments, and portfolio management. With compounding, a 17% CAGR is entirely achievable. The actual increase in 2013 was 18%. I am fully aware that there are dividend ETFs, such as SDY, that have delivered greater total return since the DGP began. However, the mission of the DGP is to generate reliable and increasing dividends. Its current yield is about 4.0%, compared to SDY's current yield of around 2.2%. Furthermore, SDY's distributions have not been reliable in terms of amount or growth.

Source: Seeking Alpha

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