- This is my actual Retirement Portfolio scaled to a $1M portfolio. Initially presented on 7/24/2014 here on Seeking Alpha to demonstrate its performance and how I actively manage it .
- I sold ED and used the proceeds to increase my AGNC position as the valuation of AGNC was irresistible. This increased my portfolio's dividend income..
- MO paid their quarterly dividend of $0.52 on 10/10/2014 and I reinvested all of it. My updated portfolio reflects the new shares and the increased income from MO.
- AGNC paid their quarterly dividend of $0.65 on 10/27/2014 and I reinvested all of it. My updated portfolio reflects the new shares and the increased income from AGNC.
- AGNC will now pay a monthly dividend of $0.22 and went Ex-dividend on 10/29/14. The pay date is 11/7/14. KMR went Ex-dividend on 10/29/14 and the pay date is 11/14/14.
Updating my personal retirement portfolio:
"My main objective here is to be transparent from July 22, 2014, going forward. I will update my readers with any changes to my portfolio when appropriate. I will report the current dividend income and show how the reinvested shares increase from quarter to quarter, thereby increasing the income."
My first article regarding my retirement portfolio was published on 7/24/2014.
At the time my portfolio consisted of the securities below:
American Capital Agency (NASDAQ:AGNC ) = 40.3% = $403,000 = 17,230 shares, price = $23.39 the current annual dividend= $2.60= Income= $44,798
Altria Group (NYSE:MO ) = 38.3% = $383,000 = 9,134 shares, price = $41.93 the current annual dividend= $1.92= Income= $17,537
Prospect Capital (NASDAQ:PSEC ) = 21.4% = $214,000=19,705 shares, price = $10.86 the current annual dividend= $1.325 = Income=$26,109
Total value of the portfolio = $1M Total Income =$88,444 = a yield of 8.8%
In my second article regarding my retirement portfolio I sacrificed some income for growth by selling approximately one-third of my PSEC position (in my SEP IRA) and a small amount of my AGNC position to buy KMR shares. I decided that taking some money off the table regarding PSEC was the prudent thing to do. I forgot to mention in that article that AGNC paid a quarterly dividend that was reinvested, so even though I sold some shares of AGNC, my total AGNC shares increased as the reinvested shares outweighed the sold shares. This was an oversight on my part, failing to mention the reinvested AGNC shares. However they were reflected in the chart that was provided. AGNC paid their dividend on 7/29/2014, in between the first and second articles.
In my last update on 9/4/2014, I sold our entire PSEC position in our retirement accounts and used all the proceeds to buy KMR. This action caused our retirement income to decrease and our risk to decrease. Even though currently (NYSE:KMR ) has been undergoing a sector sell-off, I feel it is a buying opportunity.*
My portfolio as of the close on 8/29/2014 was yielding 7.5%:
(click to enlarge)
My current portfolio as of the close on 10/31/2014 is yielding 7.4%. The details will be explained below.
MO paid a quarterly dividend of $0.52 which was reinvested. The MO shares increased from 9,134 to 9,236. AGNC paid a quarterly dividend of $0.65 which was reinvested. The AGNC shares increased from 17,509 to 18,242 currently. KMR went ex-dividend on 10/29/14 and will pay a share dividend on 11/14/14. The amount of the KMR share dividend that will be paid on 11/14/14 can be calculated now by using the factor 0.015033 presented on the Kinder Morgan website. Therefore the KMR shares of 2,302 x .015033 = 34.6 shares + 2,302 shares = 2,336.6 total current shares.
Additionally, AGNC went ex-dividend on 10/29/14 and the pay date is 11/7/14.
The monthly $0.22 dividend x 18,242 (current AGNC shares) will result in a payment of $4,013 which will be reinvested. That will result in more shares and therefore more dividend income. A rough estimate of the added income would bring the total income to approximately $80,900.
I sold ED and used the proceeds to increase my AGNC position. The sale of ED and the purchase of AGNC was prior to AGNC's Ex-Dividend date, therefore all AGNC shares were eligible for the dividend payment.
In my original article on 7/24/14, I presented my retirement portfolio scaled to $1M. The original yield was 8.8% because I owned PSEC (yielding approximately 12.2% at the time) and it comprised 21.4% of the portfolio. Here is the original portfolio:
Retirement portfolio as of July 22, 2014 close: I list the percentage allocation, dollar amount, share count, closing price, annual dividend and the income.
American Capital Agency (NASDAQ:) = 40.3% = $403,000 = 17,230 shares, price = $23.39 the current annual dividend= $2.60= Income= $44,798
Altria Group (NYSE:) = 38.3% = $383,000 = 9,134 shares, price = $41.93 the current annual dividend= $1.92= Income= $17,537
Prospect Capital (NASDAQ:) = 21.4% = $214,000=19,705 shares, price = $10.86 the current annual dividend= $1.325 = Income=$26,109
Total value of the portfolio = $1M Total Income =$88,444 = a yield of 8.8%
My portfolio has gone through several changes since 7/22/2014. To summarize the main changes, the yield has decreased because I have replaced PSEC with KMR. The risk has decreased because KMR ( soon to be KMI, with a lower yield) is a more stable dividend growth company compared to PSEC, which is a very high yielding BDC with little dividend growth and a potential dividend cut looming.
MO was initially generating an Income of $17,537 and is currently generating an income of $19,208. The income has increased 9.5%. This is due to the 8/21/14 dividend increase coupled with a dividend reinvestment.
AGNC was initially generating an Income of $44,798 and is currently generating an Income of $48,159. After the AGNC dividend payment on 11/7/14 is reinvested the income is projected to be approximately $48,619. I am projecting a reinvestment price of $23/share.
The initial retirement portfolio was generating an Income of $88,444 on a portfolio valued at $1M. Currently my retirement portfolio is generating an income of $80,455 on a portfolio valued at $1,083,595. AGNC will pay a dividend of $4,013 on 11/7/14. The portfolio has increased in value by approximately 8.8%. A dividend growth portfolio's main objective is for dividend and income growth, however with dividend and income growth comes share price appreciation which results in above average total returns.
* I had written a draft prior to AGNC paying their dividend and wanted to wait so my update would be more accurate, at the time KMR was in the midst of a sell- off and those were my thoughts.
Disclosure: The author is long AGNC, MO, KMR. (More. ) The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: This is my portfolio. I am not recommending anyone buy the stocks I own. Please do your own due diligence to decide which investments meet your individual goals and income needs. I take 100% responsibility for my decisions to buy or sell stocks and for managing my portfolio. I advocate all investors do the same with their investments and portfolio. " Each investor's BUY, SELL, or HOLD decision is based on one's risk tolerance, time horizon, and dividend income goals. My personal holdings may not fit each investor's current investing strategy."