Saturday, January 3, 2009

* Progress Update - December 2008

Once again it is time for a goals/progress update. December finally provided some relief from a dividend cut standpoint. My only cuts were in ETFs/CEFs and resulting from currency conversions. This allowed me to lower my exposure to high-yield and high risk securities. I am pleased to say that my annualized dividend income increased for the month, keeping alive the string of 13 consecutive months of increases dating back to December 2007 when I began tracking it. 2009 will be a challenge to keep the string going. I anticipate additional dividend cuts in the near-term.


My goals were defined in this December 1, 2007 Investing Goals post. I am pleased to note that both of my goals were achieved in 2008 - not may investors can say that. Below is an updated version of the table found in the original post.
Description Dividend
Income
Annualized
Yield
on Cost
2027 Goal 110,000 20.00%
2017 Goal 30,000 10.00%
2008 Goal 4,000 4.90%
December/2007 3,054 5.00%
Purchases YTD 4,424 0.91%
Div. Changes YTD (47) -0.01%
Sales YTD (1,795) -0.62%
December/2008 5,636 5.28%
Purchases 237 -0.10%
Div. Changes (75) -0.07%
Sales (108) -0.06%
November/2008 5,582 5.51%
The above information covers the current month and year-to-date through the current month.

Click here for a Detailed Historical Progress Table.

For the month, annualized dividend income increased $54, and Yield on Cost (YOC) decreased -0.23%. These changes were driven by new purchases, dividend changes and sales. Let's examine each of the these categories:

Purchases: The $237 increase in annual dividend income and -0.10% increase in YOC related to the following purchases (yield at the time of purchase):
  • $47 KMB (4.39%)
  • $36 CLX (3.53%)
  • $47 BLV (4.76%)
  • $36 CVX (3.64%)
  • $21 AFL (2.54%)
  • $50 SYY (4.16%)
As a result of my focus on quality and lowering my portfolios risk, all the above purchases lowered my YOC. As noted in earlier updates, I generally expect YOC to drop each month since most new investments will yield less than my current YOC, and dividend increases will not be sufficient to offset it.

Dividend Changes: The ($75) decrease in annual dividend income and (0.07%) decrease in YOC related to the following dividend changes (a=dividend stated in annual terms, q=quarterly, m=monthly):
  • $18 MCD $0.375q>$0.50q 0.02%
  • ($18) PID $0.55q>$0.44q -0.01%
  • ($1) VIG $1.05q>$1.03q -0.01%
  • ($1) VYM $1.56q>$1.44q -0.01%
  • ($5) VNQ $3.08q>$3.00q -0.01%
  • ($5) VFH $1.34q>$1.33q -0.01%
  • ($1) MFC $0.21q>$0.20325q 0.00%
  • ($6) TEG Correct Share Count 0.00%
  • ($1) BLV $4.00a>$3.89a 0.01%
  • ($55) ETO $2.339a>$2.15a -0.05%
The decrease in MFC was due to currency conversion resulting from a strengthening U.S. dollar compared to the Canadian dollar. The TEG change corrects an errant share amount entered into my spreadsheet.

Sales: The ($108) decrease in annual dividend income and (0.06%) decrease in YOC related to the following sale:
  • ($108) : AOD : (0.06%)
As previously discussed, I am over-allocated in AOD and ETO from a dividend income standpoint. Over the next several months I plan to reduce my allocation in each by selectively selling a portion of my holdings. This will position me to better withstand a dividend cut from them.

That's it for this time. The next monthly progress update will be on Saturday, February 7th.

(Photo: sanja gjenero)

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