Monday, July 27, 2015

How I manage my dividend portfolio

I have received quite a few emails recently, asking me how I manage my dividend portfolio. In general, I focus on several things that I believe are important in managing a dividend portfolio.

1) Researching and analyzing companies

I try to make sure I have analyzed each company I own at least once every 12 – 18 months. This includes the analysis I post on this site. I do not post each stock analysis, since many of the companies I own are not attractive for a purchase. Hence I don’t post as many stock analyses as I actually do.

I obtain my information from multiple sources, including annual reports, financial websites, press releases, company presentations etc. I also have a spreadsheet, where I basically update the annual numbers I find helpful once per year for each company I am monitoring.

When I research companies, I look for the type of company that can be potentially bought and then left unattended for 12 – 18 months. I spend most of my time dedicated to a company on analyzing it. This is the most important thing, along with buying at a reasonable price.

Some potential sources for investors include company’s website,, Morningstar, Yahoo Finance/Google Finance.

2) Buying companies

I have a watchlist set-up in Yahoo Finance, where I have included the ticker symbols for a list of companies I own or would like to own one day. I screen this list regularly using the criteria I have discussed before. While quality is important, I also believe that valuation is important as well. In addition, I also check for large percentage moves, and then research what might have caused that. Steps 1 and 2 help me be prepared in the case I see an opportunity. This prep work also helps me decide which company/companies to purchase when I have cash to invest.

In general, I can scan the list of companies I am interested in for attractive valuations all I want. In reality, it makes better sense to do that a few days before I expect to have cash coming in.

When I get a list of attractive companies for purchase, I bump it up against a list of portfolio holdings I maintain. This helps me decide what company to buy. For example, even if I find Johnson & Johnson (JNJ) and Kinder Morgan (KMI) to be a good additions today and cheaper than other candidates, I would not buy them because they are the largest positions I have. As you can see, buying companies does not take as much time as analyzing those companies in the first place.

However, I only try to buy shares in companies I have analyzed in the past year or so. If I find an attractive company to buy, but I have not analyzed it, I would go back to step 1. Only then would I buy it.

3) Monitoring

I monitor dividend news, M&A activity, annual results, and skim through quarterly results. I monitor my companies using a variety of sources.

My broker, Interactive Brokers is really good about providing notification about upcoming earnings releases and about upcoming dividend payments or changes in dividend information. If I am interested in a company, I would simply purchase one share and then monitor it using Interactive Brokers. This is a method that Warren Buffett uses in order to keep track of anywhere between 1500 to 2000 companies.

Otherwise, I have found that subscribing to company RSS feeds for Earnings/Financial Releases could be helpful too.

To be honest, that monitoring is helpful mostly for information purposes. I do not act based on news stories or press releases. The only exception is when I read about a dividend cut – I sell immediately after that news and then reassess the situation. The other exception occurs when a company has recently announced a dividend raise, and I remind myself to make sure my entry screen has included the most up-to-date information.

4) Ignoring noise

The most important thing for me is to ignore noise. There is a lot of information out there, which will fill up your time, but will not provide much actionable insight. This includes reading opinion articles on the companies you own in the mainstream press, which usually do not provide much factual information. It also includes just reading every press release or news story regarding a company you own.

I will be honest that in my free time I do not watch reality TV, or sports. Rather, I read a few blogs on investing and dividend investing. I also scan the WSJ, Yahoo Finance, Forbes etc. I find learning about companies to be fascinating and a stimulating endeavor, which pays dividends. I also like to learn more about business, taxation etc. I generally try to read things from subjects or individuals with different perspectives than me. That’s how I managed to motivate myself and learn more about tax-deferred accounts.

However, I know that If I check the quotes on my portfolio every day, or if I check for news every day, I am overdoing it. Dividend investing is a slow process for building wealth. Therefore, I should not get OCD and rush into things. I remind myself to take it slow and easy. After all, I can only make a few purchases a month. The most money in dividend investing is made after making an investment, and then sitting on that investment for several years, not by constantly checking the stock price, news stories, or research reports.

However, I myself spend a lot of time on noise as well. I read blogs and comment. In some ways, reading intelligent analysis done by others could be helpful, because it could open the opportunity to learn about a company I may have previously not researched. On the other hand, it could be a time sink to read 20 - 30 blogs daily and check comments. As usual, a tradeoff is involved. This is why it is important to limit attention to a few sites from different topics, rather than read that everyone is purchasing W.P. Carey (WPC) or T.Rowe Price (TROW) on twenty different sites.

I know many investors spend time commenting on articles or blogs or message boards. I am not sure if this time is spent wisely from an investment perspective. I am referencing the countless articles on Seeking Alpha where someone would call dividend investors stupid, and then you would have hundreds of comments supporting the strategy. These are the types of discussions I try to avoid.

Another thing I do not do is constantly check how my portfolio has done relative to a benchmark like say the S&P 500. I think that checking this every month is counterproductive, since it does not provide any actionable insight. In addition, I am more likely to sit out any temporary short-term period of relative underperformance relative to a benchmark, and stick to my strategy. If I kept checking performance monthly, I am more likely to get scared and abandon my strategy, which would be a stupid move. This gives me an edge relative to the average Wall Street money manager, who needs to keep their job and thus is afraid to take risks or think differently. As most of you know, my goal is to live off the dividend income generated by my portfolio and not have to worry about selling off chunks of my portfolio in retirement. I also do not want to focus too much on irrelevant monthly changes in prices, which are mostly noise. Therefore, I am more concerned whether my quarterly dividend income is increasing relative to the previous quarter. In the grand scheme of things, a portfolio of companies that each manage to grow earnings and pay rising dividends should provide a return that is very close to the return on a broad stock market index such as the S&P 500. It is funny that I don’t consider comparing my performance to S&P 500 helpful, yet I have done much better since 2007 by focusing on my own strategy, than simply putting it all in an index fund of some sort. In addition, my annual dividend income has been increasing every year since then as well.

5) Conclusion

As you can see, monitoring a dividend portfolio can either take a lot of time, or not if time is used efficiently. It all depends on how effectively you use your time, and how you prioritize.

To me the most important thing is to only buy companies I have analyzed in the past 12 – 18 months at fair valuations. It is important to look at the companies I own at least once every 12 – 18 months. It is also important to keep diversified, and not drown myself in the information noise available out there.

I believe that for most dividend growth companies I end up buying, things happen slowly. Therefore, I do not believe in constantly checking on those companies. The biggest amount of time is spent in accumulating initial knowledge about a company. After that, this knowledge is usually updated once per year or so. The ultimate success for the investor is dependent on the fundamentals improving, earnings growing, and dividends getting raised. As a passive investor, I cannot affect fundamentals one little bit (although in the case of Diageo (DEO) I am actively trying). My goal is to let management do its work and try to buy stakes in their companies at fair valuations whenever I get cash.

While I do check things like dividend increases weekly, I have gone previously for several months without checking a single thing. My portfolio was still there after this exercise, and I had a nice amount of dividends received waiting to be deployed somewhere.

The truth of the matter is that I do not know which of the 60+ companies I have a stake in will do great, and which will burn and lose money. I do know that by patiently holding on to my stocks in a diversified portfolio, by avoiding excess trading, by patiently reinvesting dividends into best ideas I have and by adding money each month, I will achieve success and reach my goals.

Full Disclosure: Long DEO, JNJ, KMI, TROW, WPC

Relevant Articles:

- Dividend Champions - The Best List for Dividend Investors
How to become a successful dividend investor
Buy and Hold means Buy and Monitor
Generate Retirement Income with Dividend Stocks
How to retire with dividend stocks


  1. Nice insight into how you manage all the work needed for investing successfully. Thanks for sharing, DGI.

    My "work-flow" is much the same at present. However, I chiefly use the Financial Times to collect my forward EPS and dividend data. I find it the most reliable, detailed and navigable.

    IBs update service sounds very good indeed. My broker (an execution only one) does not do anything of the sort. But that would be very valuable information to have! Save you having to hunt it down yourself!

    1. Hi DD,

      I really like Interactive Brokers, since they are saving me money on commissions. They also save a lot of time in addition to cost.

      When I reviewed WPP a couple years ago, I mostly went through old annual reports for historical data. Though I think morningstar had a decent historical record of UK companies too. The FT is a very good publication, but I am not willing to increase investment costs too much.

    2. Good post. Thank you. I too really like Interactive Brokers for much the reasons you mention.

    3. I must admit to being a cheapskate and avoiding the fees FT charge in order to access their data. If they change their website though (which I suspect will occur sooner rather than later) I may find myself struggling to access their data and thus looking for a new resource. I will have a root around to see how Morningstar looks. I have used them for stock split data before.

  2. DGI,
    Great update to "monitoring" your dividend growth portfolio! I am curious as to what information you enter in to the spreadsheet that you mentioned in paragraph one? I am updating my spreadsheet, and wonder what criteria you follow along to "check up" on your existing and potential holdings? Thanks!

    1. I think what to put in the spreadsheet depends on what you find useful. However, I use several different tools in addition to the spreadsheet, as mentioned above.

      I find it useful to have shares owned, percentage of portfolio in a company, percentage of income derived from company, EPS, DPS, last analysis etc.

  3. DGI,
    An excellent article on why investing should be slow and 'boring'. I like your comment on trying to influence the fundamentals of DEO. :)

    1. The interesting fact is that I use or have used the products/services for a large portion of companies I own. This is similar to the concept of "circle of competence" that Buffett talks about and the Peter Lynch principle of buying what you know.

  4. Excellent article, thanks for sharing with us how you manage your dividend portfolio. I have a lot of learn still.

    1. I think as long as you subscribe to the following Charlie Munger saying, you will prosper in life:

      "Go to bed smarter than when you woke up"

      Good luck in your dividend investing journey!

  5. Very good. I find Morningstar to be great for looking into companies. Once you've screened through David Fish's list (which has a lot of the same info as Morningstar) you can screen again with them and check out other valuable information. Seeking Alpha is mainly noise, except you may learn something new about the company you didn't catch.

    I'm too early in the game to be hitting it to hard because the dividend income just isn't there to reinvest so it gives me more time to slow down and research.

    1. The list from David Fish is invaluable. If I were him, I would license it out, and create a mutual fund/etf on it.

  6. I learn something new with each article you write. Thank you.
    I started dividend investing and away from indexing and bonds in 2012. I am very overweight in 2 stocks that pay half of my yearly expenses from dividends. I am trying to reduce the overweight positions by buying other stocks from dividends with equivalent yield. I am 73, and this seems like a slow process. Would you go ahead and sell and diversify or continue the plan? I know you don't know my total situation, but any thoughts will help.
    Thanks, Paul

    1. Hi Paul,

      Thanks for reading the site. Unfortunately, I cannot provide individual investment advice on this site. This is because I am not a financial advisor, and because I do not know anything about your personal situation, knowledge of investments, cost basis etc...


    2. is there any reason that yahoo changed its format regarding tracking portfolios and is there another site that i can use to tract my portfolio. ( purchase date, amount, shares in, div. percentage increase, etc,etc.

    3. I use google docs a lot.

      Yahoo Finance has been going downhill for the past several years. I used to spend a lot more time there 7 - 8 years ago - not anymore.

  7. One question, do you reinvest the dividends or sweep them to a money market and reinvest in a new name?

    1. This article (and those articles referenced in it) answers the question:

  8. Thanks for sharing. It's always good to learn how others manage portfolios. I agree with you on having earmuffs when it comes to market noise. If we all listened to so called experts, nobody would ever invest. Keep up the good work!


Questions or comments? You can reach out to me at my website address name at gmail dot com.

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