Baby DivHut Dividend Income Portfolio Update Q1 2017

Every quarter I like to review baby DivHut’s portfolio and dividend income. With the first quarter of 2017 already in the books it’s time to see how his portfolio has fared. Generally speaking there is not much change in his portfolio on a month to month basis as fresh capital is not always available to make trades for him every month. Still, with dividend reinvestments, stock spin offs and a couple small buys I made, his portfolio continued to grow in size from last quarter. Of course, the aim of his portfolio is not necessarily to achieve capital appreciation rather dividend growth with the ability to generate an ever increasing passive income stream. With that being said, let me point out some of the changes to his portfolio from last quarter.

 

During the first three months of the year I initiated two new positions to baby DivHut’s portfolio adding 3M Company (MMM) and The Procter & Gamble Company (PG). I also continued to average down his cost basis of V.F. Corporation (VFC). Other than dividend reinvestment this was the only ‘action’ his young portfolio saw during the first quarter. Comparing his last quarterly update to this current update his portfolio gains increased a whopping 53.5%. I guess that figure is a testament to how much the market has jumped since the start of 2017. As I mentioned earlier, gains are always nice to see but the real goal of this portfolio is dividend income.

 

Let’s take a look at baby DivHut’s current holdings, sector allocation and dividend income for Q1 2017.

 

Portfolio

SymbolDescriptionQuantityCost BasisMarket ValueCost/ShareGain or Loss
ABBVABBVIE INC2.0210$125.30$128.98$62.00+$3.68
2.94%
ABTABBOTT LABORATORIES9.0403$339.01$393.52$37.50+$54.51
16.08%
CATCATERPILLAR INC15.3407$1,025.89 $1,446.93 $66.87+$421.04
41.04%
EMREMERSON ELEC CO COM37.6830$1,961.78 $2,223.30 $52.06+$261.52
13.33%
GISGENERAL MLS INC COM6.0154$354.62$347.27$58.95(-$7.35)
(-2.07%)
ITWILLINOIS TOOL WKS INC6.2776$527.52$846.66$84.03+$319.14
60.50%
JNJJOHNSON & JOHNSON8.4172$844.65$1,024.88 $100.35+$180.23
21.34%
MMM3M CO1.0000$191.07$191.50$191.07+$0.43
0.23%
PGPROCTER & GAMBLE CO2.0000$182.50$177.24$91.25(-$5.26)
(-2.88%)
ULUNILEVER PLC - ADR13.3084$528.69$666.75$39.73+$138.06
26.11%
VFCV F CORP29.6658$1,865.19 $1,656.83 $62.87(-$208.36)
(-11.17%)
YUMYUM! BRANDS INC14.5119$763.98$940.66$52.65+$176.68
23.13%
YUMCYUM CHINA HLDGS INC COM14.3245$324.66$469.13$22.66+$144.47
44.50%

Total Investment Balance $10,513.66

Gain or Loss $1,478.80

 

Year to date dividend income is $66.18 which is on track to surpass his 2016 total.

 

Sector Allocation

SectorSector %Market Value
Industrials44.78%$4,708.39
Consumer Cyclical29.17%$3,066.62
Healthcare14.72%$1,547.38
Consumer Defensive11.33%$1,191.26

 

Of course, this portfolio is not complete by any means. There are quite a few stocks I would like to add to his portfolio over the coming months and years in sectors he already owns as well as some others like finance and utilities to name a couple. In the meantime, as I mentioned above, I’ll let all dividends received automatically reinvest and I’ll average down his cost basis on any stocks in the red when I can.

 

What do you think about baby DivHut’s portfolio and sector allocations? Please let me know below.

 

Disclosure: Long all above

42 thoughts on “Baby DivHut Dividend Income Portfolio Update Q1 2017

  1. Looks like BDH is off to a great start. I can’t remember but did you go with just a regular taxable account for BDH or is this specifically an education account like an ESA/529? With our daughter somehow already 9.5 months old we really need to start doing some savings for her. I’m a bit hesitant to just do a taxable account since we’ll have to pay taxes on it along the way although it does offer the most freedom. Either way we need to get something started to really take advantage of the power of compounding.

    • Hi JC,

      So far so good for BDH 🙂 We opened a regular taxable custodial account instead of a savings account. I wanted the portfolio to come with no strings attached just in case college is not an option down the road. The way college expenses keep rising and the value of a degree keeps declining I’m not sure what the university landscape will even look like in a couple decades. The way the system is working today is clearly broken as thousands upon thousands of young people are churned out of a system leaving them saddled with an enormous debt. While only a TV show, this clip sums it up best. Time to get a move on for your little one. Time waits for no one and even the smallest amounts you invest for your daughter will reap the benefits compounding time. Taxes won’t be a worry for a while still. The portfolio has to earn a minimum in income to quality for paying taxes. Thank you for commenting.

      • Thanks for sharing the update on Baby Div Hut’s portfolio – a lucky little fellow indeed.

        I will agree that college expenses keep rising, but the statement “the value of a degree keeps declining” is misleading, if not entirely inaccurate. The actual disparity between salaries of those with an undergraduate degree and those with only a high school diploma is over 17k annually – and that was in 2014. This disparity is greater than at any other time in our country’s history.

        http://www.pewsocialtrends.org/2014/02/11/the-rising-cost-of-not-going-to-college/

        Do the math, and over a lifetime this becomes significant. I think one needs to be smart about how they take on their tuition payments/housing choices…but the benefits are clear.

        • Hi anonymous,

          Thanks for sharing that link. While this may sound generic I think the best investment anyone can make is in themselves. Take a chance to create something on your own and don’t necessarily fall into a trap of extreme debt just to get a degree. College education falls along the same lines of things that we “should do” instead of things that we ought to do. Finish high school, go to college, buy a house, invest in retirement accounts at work, retire at 65 (or older), etc. That path hasn’t been working out so well in recent years and who knows what it will be like in two decades time. I’m not against college or saddled with student loan debt. I went to both undergraduate and graduate school. I just question the future of the whole system way down the road. Thank you for your comment.

  2. BDH is a lucky baby. His parents start early to give him a great launch in life.

    13 stock is already a great diversification. I just wonder why tech is not in there. Agreed, little dividend, great upside on the other hand.
    Amber tree recently posted…2 cars is frugalMy Profile

    • Hi At,

      Thank you for those kind words. For now, I’m starting with a base of the “boring” staples and industrial plays and eventually I’ll expand the portfolio to potentially include some tech or other names not in my own portfolio. I’m really going after long term dividend stability and growth rather than capital appreciation. Slowly but surely the portfolio will expand. This is just the beginning 🙂 Thank you for stopping by and commenting.

  3. Great diversification. 13 stocks for 10k portfolio. Wow…

    We only have 2 stocks and 1 ETF for our kids’ portfolio. We focus on cash flow growth and not so much capital gains.
    It will be interesting to compare going forward our performances. We will keep on following

    • Hi Patrick,

      Even though the portfolio is about $10k these days, I wanted to really spread the money around and diversify a lot. Some might think the $10k is spread too thin but that will change over time as I add to current positions in the portfolio. Like you, I’m going after passive income growth rather than capital appreciation though the portfolio has gained quite a bit in a relatively short period of time. Look out for my quarterly updates. Thank you for sharing your thoughts.

  4. BDH IS ON FIRE! Love that portfolio and the names that are within the portfolio. It is so great to see BDH’s parents doing everything they can to get the dividend snowball rolling as soon as possible. Looking forward to watching and seeing this portfolio grow and further diversify 🙂

    Bert
    Dividend Diplomats recently posted…Lanny’s Q1 2017 Goals UpdateMy Profile

    • Hi DD,

      As you already know the biggest advantage BDH has is time. We knew before he was born that we’d be setting up a dividend growth portfolio and I’m happy that we actually did soon after he ‘popped out.’ These quarterly updates will be fun to report as it can serve as a great benchmark for his passive income growth over time. Thank you for your continued support.

    • Hi DD,

      The portfolio has performed quite well even though he was born at a time when the markets were already being considered frothy. Just goes to show that market timing is impossible as we churn higher and higher. His account is a regular taxable custodian account. Thank you for stopping by and commenting.

    • Hi Jay,

      Always happy to share all our real world dividend income portfolios. These days I think every parent can put something aside for their children as investing costs and minimums have come way down. With services like Robinhood around anyone can make a GE, KO or HRL buy once a month and build up a portfolio one share at a time. Thank you for your kind comment.

    • Hi IH,

      Thank you for those kind words. The day I found out Mrs. DivHut was pregnant my mind was already thinking about the future and taking advantage of all the time my baby potentially has. We always talk about time being the greatest factor for creating impressive compounding returns and who else but a newborn baby has the most potential time of all. The focus will continue to be on increasing his passive income stream year in and year out while riding out any bumps along the way. As always, I appreciate your comment.

    • Hi BHL,

      So far so good. This is still a very new portfolio that will expand over the coming years and decade as we help build an ever growing passive income stream for baby DivHut. I appreciate the comment.

  5. Your baby is so lucky that you’re creating a passive income stream! For a smallish portfolio, you’re already reasonably diversified. Of course, it would be better to get some more sector coverage, but that will come with time, I’m sure!

    Take care and happy investing!
    FerdiS recently posted…Monthly Review: March 2017My Profile

    • Hi FerdiS,

      Exactly. This portfolio is just two years old and as it grows and we add more cash I will definitely be buying into other stocks and sectors. For now, and always really, the focus will be on continually growing his passive income stream. Thank you for stopping by and commenting.

  6. Solid progress DH. How do you keep track of contributions to different portfolios? Do you have separate accounts? Did you start a 529? I would like to start one for my daughter, but i am not entirely sure about the logistics.
    dividendgeek recently posted…Loyal 3?My Profile

    • Hi dividendgeek,

      Baby DivHut’s account is totally separate from any of my other accounts. It is a standard, taxable, custodial account. Setting up an account for your daughter should be pretty straightforward. You have to decide what type of account you want to create for her and just begin investing. Every state has different laws regarding 529 accounts so read up on what it entails for your home state. I decided to create a regular custodial account because I wanted the portfolio and passive income it generates to come with no strings attached. Thank you for your continued support.

    • Hi DG,

      I laugh with Mrs. DivHut when we read a story about a stock he owns. He is totally clueless but that should all change as he gets older. School is in session and I plan to teach him about the power of being a stock owner and dividend investing. My brother says I should keep this portfolio secret till he’s 30 or 40 even 🙂 I hope he’ll be a mature 18 when the time comes for him to take control of his account. Time will tell. Thank you for stopping by and commenting.

    • Hi MH,

      Industrial stocks are the classic cyclical plays that go from boom to bust cycles every few years. I plan to stick with all the industrial names in his portfolio for the long haul and plan to add some financial stocks as well one day. His portfolio is by no means complete and only spread among four sectors. This will change. Thank you for sharing your thoughts.

    • Hi FV,

      Thank you for those nice words. The reality is that anyone should be able to start an income producing portfolio for their children. With zero commission trades offered by Robinhood and other services that allow fractional share purchases building up a portfolio is easier and cheaper than ever before. Anyone can make a GE, KO or HRL buy once a month or every other month and build up a portfolio one share at a time. As always, I appreciate your comment.

  7. Glad I came over to check out the BDH portfolio!

    I am happy to see it as we are very close to getting out little one’s Vanguard account rocking and rolling. What broker are you using for this account? Are you able to keep fees down and reinvest for cheap/free?

    Thanks for sharing and BDH will be happy as hell when he realizes that when he thought you were being a jerk dad raising him and not letting him have fun like he wanted that you were building this. Great job!
    Save Splurge Deny Debt – Cameron recently posted…My Debt Story: From $0 to $100,000 in a HurryMy Profile

    • Hi SSDD,

      Congrats on soon opening up an account for your little one. I’m always happy to read about other parents taking advantage of time to slowly build up an investment portfolio for their children. Kudos! We use Capital One Financial (Sharebuilder) for all accounts reported on DivHut. Trades are $2 to buy under a grandfathered deal they had for Costco members and all reinvestments are free and can buy fractional shares. As he gets older I plan to really teach him about money, investing, patience and the power of time on returns. I hope he won’t think I’m too strict with him. Thank you for commenting.

    • Hi Dan,

      Thank you for those well wishes. I mention baby DivHut every now and then. I do these quarterly updates as not much changes in his account on a month to month basis. These updates allow me to share his portfolio progress as well as the passive income it generates which is the primary goal of his account. Thank you for commenting.

    • Hi Vivianne,

      Glad you like this portfolio. I think it should serve baby DivHut well for the next two decades. Of course, there are other sectors I’d like exposure to and I’ll be adding new stocks to his portfolio over the coming years. As always, I appreciate your comment.

  8. This is an excellent starting portfolio of solid, steady, conservative companies. You are setting up a good foundation of companies to build off of. Baby Div Hut is off to a great start – I’m looking forward to seeing what his portfolio will look like years from now, especially the effects of dividend growth compounding. Thanks for sharing.
    A Christian Investor recently posted…Monthly Report: March 2017My Profile

    • Hi ACI,

      That was the plan… to start of baby DivHut’s portfolio with more conservative staples and industrial plays to build a base. I really value the ‘boring’ steady dividend payers over the high flying growth stocks for now. Of course, over time, I will be adding new names to the portfolio. Perhaps a QCOM, SBUX, MSFT or even AAPL one day. One step at a time. The bottom line is that we were able to create a dividend growth portfolio for him from birth which will help him utilize the effects of time and compounding returns. Thank you for commenting.

  9. You’ll have to make sure this blog stays up and running until baby DivHut is old enough to read and understand it. If I were a teenager being told about this account for the first time reading through all these posts and comments from when I was a little baby onward would be really, really cool. I would cherish that information almost has much as all the money in that account! (Well, almost as much!)

    Scott
    Two Investing recently posted…5 financial metrics you should ignore when investingMy Profile

    • Hi TI,

      So true. It would be amazing to read the posts and comments from all of you regarding his account that was set up from birth many, many years down the road. Of course, I’ll continue to enjoy baby/toddler DivHut as long as I can in the meantime and take it one year at a time. I do look forward to teaching him the values of investing, time, dividends, patience, etc. Thank you for stopping by and commenting.

Leave a Comment

CommentLuv badge