Yesterday
was Friday and I have to decide, like every Friday, what kind of stock I should
put into the dividend yield passive income portfolio (DYPI). After I screened
my current holdings, one thing become soon clear: I needed to increase my low
volatility stocks with a beta ratio of less than one.
So I looked
around at some stocks which every long-term dividend growth investor should own
– A must have investment. Finally my choice fell on Procter & Gamble.
Procter
& Gamble (PG) is a consumer goods company. The company
operates in five segments: Beauty, Grooming, Health Care, Fabric Care and Home
Care, and Baby Care and Family Care. Linked is a nice company profile from the
“Dividend Growth Investor” as of February 2012.
Procter has
a current P/E ratio of 22 and forward price-earnings are expected at 16. Earnings
growth for the company is expected at 8.59% for the next year and 8.31% for the
next five years.
Procter
& Gamble is no shooting star at the capital market. The company suffered a
little bit under the current debt crisis and the after-effects from the financial
crisis in 2008. High unemployment rates hit the company’s business model.
People need to save money and choose cheaper products. But PG is
still well diversified and generates offshore sales of around 50% of total
revenues.
Competitors
from the personal products industry are Colgate, Kimberly-Clark, Estee Launder or
Avon Products. Below this peer, Procter is one of the highest valuated
companies but also one of the stocks with the highest-quality.
I put 25
shares with a total amount of $1,700 into the dividend yield passive income
portfolio. The new stake will generate around 50 bucks in dividends per year.
The total income from all 12 stocks is now around $644.91 per year. The income
comes from dividends of invested capital of $16,776.05.
The yield
on cost amounts to 3.84% and the current average yield amounts to 3.82% due to
the fact that the portfolio has small capital gains.
My
portfolio is up 0.39% since October 5, 2012 when I funded it with $100,000
virtual. From this date measured, the Dow Jones index is down 3.89%, the
S&P 500 has a performance of -1.77% and the NASDAQ is down 2.93%.
So I'm not
proud of this result because in markets that are going sharply up the strategy
will underperform the market because I buy slowly stocks. Every week I put one
position with an amount of around thousand dollars or so into the
DYPI-Portfolio.
For the
time being I have around $83,535.95 of free cash for further investments. I
like to place this money until next year into the portfolio and try to increase
the dividend income to the total annual amount of 3-4k.
This
shouldn't be a big problem. All I need to do is to buy stocks with a yield around
3%-4%. Why I do this?
I like to
show you that if you invest money over a long period of time and you hold these
investments, not some investments - the best investments with growth and
dividend growth which is fairly valuated, you will make money.
Buying
dividend stocks this not a one-way strategy to high returns. You could make big losses with stock trading. But if
you have a long investment horizon and you have invested money into the best
dividend growth stocks than your investments should deliver a good return on
over the long-run.
Procter
& Gamble is one of my biggest positions in my real private portfolio. I have
around 4% of my net worth invested in this company which I own for several
years. My biggest position is still Philip Morris.
If I grow
up my portfolio I need to buy additional Procter shares in order to keep the
position at the same level. 50% of my portfolio is hedged with stocks like
Procter & Gamble. Coca Cola, PepsiCo, Kimberly-Clark, Altria, Nestlé etc.
are other stocks I love. All these are well-diversified companies with strong
brands and global market presences.
What do you think about Procter & Gamble? would you buy the stock now. Do you own
Procter & Gamble? Let me know, write a comment in our box below!
Here is the current portfolio:
Sym
|
Name
|
P/E Ratio
|
Dividend Yield
|
Buy
|
# Shrs
|
Income
|
Value
|
|
TRI
|
N/A
|
4.36
|
28.90
|
50
|
$64.00
|
$1,448.00
|
||
LMT
|
Lockheed Martin C
|
10.62
|
4.49
|
92.72
|
20
|
$83.00
|
$1,862.60
|
|
INTC
|
Intel Corporation
|
9.17
|
4.14
|
21.27
|
50
|
$43.50
|
$1,038.25
|
|
MCD
|
McDonald's Corpor
|
16.96
|
3.19
|
87.33
|
15
|
$43.05
|
$1,352.70
|
|
WU
|
Western Union Com
|
6.81
|
3.09
|
11.95
|
100
|
$42.50
|
$1,359.00
|
|
PM
|
Philip Morris Int
|
17.1
|
2.84
|
85.42
|
20
|
$48.58
|
$1,699.00
|
|
JNJ
|
Johnson & Johnson
|
23.17
|
3.39
|
69.19
|
20
|
$48.00
|
$1,405.40
|
|
MO
|
Altria Group Inc
|
16.79
|
5.28
|
33.48
|
40
|
$68.00
|
$1,274.00
|
|
SYY
|
Sysco Corporation
|
17.23
|
3.33
|
31.65
|
40
|
$43.20
|
$1,278.40
|
|
DRI
|
Darden Restaurant
|
12.99
|
4.09
|
46.66
|
30
|
$55.80
|
$1,353.90
|
|
CA
|
CA Inc.
|
11.49
|
4.42
|
21.86
|
50
|
$50.00
|
$1,109.50
|
|
PG
|
Procter & Gamble
|
19.45
|
3.17
|
68.72
|
25
|
55.275
|
$1,718.00
|
|
$644.91
|
$16,898.75
|
|||||||
Average Yield
|
3.82%
|
|||||||
Yield On Cost
|
3.84%
|
