Every
Friday I plan to put one new stake into the DYPI-Portfolio. As of now, 24 companies are part of the portfolio and I have
$65,609 in cash for further acquisitions. With this capital I plan to increase to total number of stock holdings to 50-70 by the end of this year. The DYPI-Portfolio was funded virtual
on October 03, 2012.
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| Dividend Yield Passive Income Portfolio (Click to enlarge) |
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| Latest Portfolio Transactions (Click to enlarge) |
The new
Coke position will give me additional $44.80 of yearly dividend income. It represents a yield on cost of 2.88 percent. The full portfolio income is estimated at
$1,267.47. I plan to boost the passive capital income to $3,000 to $4,000 by the
end of this year. All I need to do is to keep the yield on cost of the portfolio over 3 percent. This plan developed to a tough fight because the yields going
rapidly down for high-quality stocks. The reason is a very strong gaining stock
market.
If the
prices still rise, I needed to make a longer break or must cut my own target.
For the time being, the current yield on cost is still over 3 percent at 3.64
percent but the actual portfolio yield is now below 3.4 percent.
The
difference is reasonable with a small capital gain from the existing portfolio
holdings (6.96 percent). This is still in-line with the performance of the
market and major indices. Because of the high cash amount (65 percent of the mony is not invested), the
full performance is only 2.63 percent or $2,409.95.
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| Portfolio Performance |
The disadvantage
of this strategy is that I will lose performance when the market goes
strongly up. This happened over the past months.
Why Coca
Cola? Coke is a leading beverage company, engages in the manufacture, marketing,
and sale of nonalcoholic beverages worldwide. The company primarily offers
sparkling beverages and still beverages. KO is the dominating player followed by PepsiCo which is still part of my portfolio.
Coca-Cola
is one of the safest long-term dividend growth stocks. The board from Coca-Cola managed to raise dividends over a period of 51 consecutive years. The beta
ratio is very low (0.5). This figure is an expression of the high
diversification and global presence of the company - KO generates 57% percent of
its sales in Americans countries, 11.76% in Europe and 18.11% in Asian
areas. Coke is also one of the world’s top brands with a very sustainable
operating margin of 22.45 percent.
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| Dividends and Earnings per Share of Coca-Cola) |
The drawback is that KO shares are highly priced. The current P/E is 19.71 and the yield at 2.88. Compared to other high-quality dividend growth stocks it’s in my view still a good ratio. Remember: The low yields from long-term bonds are not far away.
Coke’s
future earnings are expected to grow in a range of 8 percent. The dividends
should top this growth rate because of the smaller amount of outstanding shares (KO still
purchases own shares for $3 billion).
Here is the
income perspective of the Dividend Yield Passive Income Portfolio:
|
Sym
|
Name
|
P/E Ratio
|
Dividend Yield
|
|
Buy
|
# Shrs
|
Income
|
Value
|
|
TRI
|
12.58
|
4.1
|
|
28.90
|
50
|
$64.25
|
$1,613.00
|
|
|
LMT
|
Lockheed Martin C
|
11.07
|
4.65
|
|
92.72
|
20
|
$86.00
|
$1,854.80
|
|
INTC
|
Intel Corporation
|
10.16
|
4.09
|
|
21.27
|
50
|
$44.25
|
$1,068.75
|
|
MCD
|
McDonald's Corpor
|
18.53
|
2.96
|
|
87.33
|
15
|
$44.10
|
$1,495.05
|
|
WU
|
Western Union Com
|
8.61
|
3.09
|
|
11.95
|
100
|
$45.00
|
$1,467.00
|
|
PM
|
Philip Morris Int
|
17.66
|
3.59
|
|
85.42
|
20
|
$65.58
|
$1,827.40
|
|
JNJ
|
Johnson & Johnson
|
20.49
|
3.08
|
|
69.19
|
20
|
$48.80
|
$1,583.80
|
|
MO
|
Altria Group Inc
|
16.42
|
5.12
|
|
33.48
|
40
|
$69.20
|
$1,347.20
|
|
SYY
|
Sysco Corporation
|
18.56
|
3.23
|
|
31.65
|
40
|
$43.60
|
$1,354.40
|
|
DRI
|
Darden Restaurant
|
13.97
|
3.95
|
|
46.66
|
30
|
$57.90
|
$1,481.10
|
|
CA
|
CA Inc.
|
12.97
|
3.92
|
|
21.86
|
50
|
$50.00
|
$1,272.00
|
|
PG
|
Procter & Gamble
|
17.56
|
2.9
|
|
68.72
|
25
|
$56.20
|
$1,908.50
|
|
KRFT
|
Kraft Foods Group
|
18.35
|
3.98
|
|
44.41
|
40
|
$80.00
|
$2,010.80
|
|
MAT
|
Mattel Inc.
|
19.05
|
3.05
|
|
36.45
|
40
|
$51.60
|
$1,685.60
|
|
PEP
|
Pepsico Inc. Com
|
19.68
|
2.79
|
|
70.88
|
20
|
$43.00
|
$1,540.80
|
|
KMB
|
Kimberly-Clark Co
|
21.22
|
3.23
|
|
86.82
|
15
|
$45.45
|
$1,398.90
|
|
COP
|
ConocoPhillips Co
|
8.85
|
4.47
|
|
61.06
|
20
|
$52.80
|
$1,181.40
|
|
GIS
|
General Mills In
|
17.13
|
2.79
|
|
42.13
|
30
|
$38.85
|
$1,387.20
|
|
UL
|
Unilever PLC Comm
|
20.74
|
3.03
|
|
39.65
|
35
|
$43.89
|
$1,442.00
|
|
NSRGY
|
NESTLE SA REG SHR
|
20.45
|
2.89
|
|
68.69
|
30
|
$63.15
|
$2,200.50
|
|
GE
|
General Electric
|
18.34
|
3.04
|
|
23.39
|
65
|
$46.80
|
$1,523.60
|
|
ADP
|
Automatic Data Pr
|
22.68
|
2.55
|
|
61.65
|
25
|
$41.50
|
$1,612.00
|
|
K
|
Kellogg Company C
|
23.31
|
2.81
|
|
61.52
|
25
|
$43.75
|
$1,555.00
|
|
KO
|
Coca-Cola Company
|
19.81
|
2.68
|
|
38.83
|
40
|
$41.80
|
$1,553.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$1,267.47
|
$37,364.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Yield
|
3.39%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield On Cost
|
3.64%
|
