2017 Portfolio review

Half year analysis Pursuit 2 Freedom2017 Portfolio Review

Welcome to my 2017 portfolio review. Another year has passed. The 2nd year of my investing journey. And what a year it has been. I just learned that this is the 1st ever year in a 90 year history in which the S&P500 posted positive returns in every month of the year. We are in the middle of a raging bull market that is already staying alive for 8 full years. We don’t know where it is going we don’t know if it is ending soon. What we do know is that we keep investing in strong dividend paying companies that keep growing the dividend. That is what this journey is about. Finding those gems that keep paying and increasing dividends far into the future.

My purpose of this article is to take a look at the performance of my portfolio during the past year. To evaluate what happened and if I’m still on track for my goals and to look at my strategy to see if it needs adjusting for the near future.

 

Performance

In 2017 I held 13 stocks in my portfolio. One of my stocks went through a merger. 4 stocks lost value in 2017, 9 gained in value. In the tabel below you can see the unrealized and realized gains of 2017.

Ahold Delhaize (AH) and Tanger Factory Out Centers Inc (SKT) did not pay me a dividend yet. AH only pays once a year in May and I bought them after the payment. I just missed the last quarterly payment of SKT for 2017. So both companies will start paying in 2018.

To visualize the total return of the portfolio I added the following graph.

The graph shows the return of my portfolio (in green) compared to the benchmark return, in this case the AEX (in blue). This is the first year I lost when comparing to the AEX. That is mainly due to SBRA and OHI who lost quite a bit of value. Especially SBRA. Since I don’t have that much different stocks yet the influence on the results is quite big.

I also calculated the Internal Rate of Return (IRR) of the portfolio. This is the return calculated annually for the portfolio since inception. It takes into account the dates of Euro additions to the portfolio. The IRR of the portfolio is currently 11,3%. In other words, on average I made 11,3% annually since inception.

This is higher than my aim, but then again, we are in the middle of a bull market. So I expect the percentage to drop in the future.

 

New additions to the portfolio

I purchased 3 new companies during 2017, Ahold Delhaize (AH), Hormel Foods Corp (HRL) and Tanger Factory Outlets (SKT). CCP merged with Sabra and my CCP stock was changed for Sabra stock during the year.

 

Dividends

The main purpose of the portfolio is to generate an ever increasing stream of dividends. For that purpose the dividend results are much more important than the gains / losses of the portfolio. Therefore I added an extensive table that displays all important information regarding the dividend.

As you can see I divided the stocks according to the currency in which they trade. Calculating dividends back to Euro’s is not the best thing to do to calculate dividend growth because it gives a false image of the results of the company. When displaying like this you can see the real results of the stocks.

The average current yield of the portfolio is 4,4%. It is higher than my target of 4%. Further I have a target of a minimum dividend growth of 3%. As you can see 4 stocks failed to meet my minimum growth. PG and EMR are both busy with a turn around of the business to generate more profits in the future. When looking at the results in the past I have confidence that the companies succeed in realizing better results in the future. The question is how long it takes before those better results will show up.

Wal-Mart had a similar turn around but the company is much further in the process. It is already seeing better results so I expect more of the company the next year.

Abbott did really well last year. So I was actually quite surprised that the company only raised dividend with 1,9%. To be honest, I don’t really understand why.

Hormel Foods is the company with the biggest increase. A whopping 17,2%! That’s what I like to see. Although it’s of course also a lower yielding stock. I trust that the company will catch up with growth percentages like this.

Unilever was a positive surprise. It seems that the takeover bit of KHC gave the management the spirit to raise stockholders value. In doing see they increased the dividend a very nice 10,6%.

 

Portfolio spread

In the table below you can see the weighting of each stock in the portfolio. It varies from 12,4% to 4,2%. I’m still in the accumulation phase so when more stocks will be added to the portfolio the weightings will drop. I would like to see them drop to around 5% on average as a first target.

Conclusion

All together I’m very happy with the performance of my portfolio so far. I did not beat the index this year due to losses on my Healthcare REITS. But I don’t consider this a big problem. I believe in the story and am confident that this will be rectified.

I missed my target for dividends this year. This is mainly because I bought my Ahold share after the dividend date which is only once a year. Besides that I still have 2k in funds that have not been allocated yet.

Later this month I will post a blog post especially tailored towards the goals I had set for 2017 and if I did meet them or not. For now, this is how my portfolio performed!

How was your year of 2017? Are you happy with the results of your portfolio? What do you think of the new year we just started? Don’t hesitate to leave a comment!

 

6 thoughts on “2017 Portfolio review”

  1. I do agree that generating income is the primary criteria. However, capital gains is a nice thing to have. 5-Year CDs in Ally Bank pay 2.35% in dividends. IMO it is the additional long term gains that make the deal sweeter. You do hold a diversified portfolio. Congrats on an awesome 2017.

    1. I can only completely agree with you. I always try to find companies that grow dividend and value. Of course with focus on dividend, but 20 years can make a huge difference if value goes up as well!

      Thank you for the comment!

  2. Hi P2F,
    Great review! I was thinking how I should report my realized gains from a stock I sold and you gave me some ideas 🙂
    Great job at growing your portfolio quickly during the year as well!
    I wouldn’t worry about the buy of AH after their dividend date. Usually, if the company only pays once a year, its price drops after the ex-dividend date so I think you bought it on a better price and didn’t lose anything 😉
    -BI

    1. Great to give you some inspiration!

      Thank you for the comment! Not worried at all about AH. Just a pitty that I missed the dividends and that is the biggest reason why I missed my yearly target in 2017.

  3. Hello, P2F. I like your review. I think it’s important to view the performance of the individual holdings. I recently did the same for my portfolio. Like you, I had a few stocks that dragged down my return (including OHI), but it was a great 2017 overall. Wishing you even better returns in 2018!

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