Baby DivHut Dividend Income Portfolio Update Q4 2016

Every quarter I like to review baby DivHut’s portfolio and dividend income. With the start of the new year it’s time, once again, to look back at the fourth quarter of 2016 and see how the 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 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.

 

First, baby DivHut enjoyed his very first stock spin off when he received 14.3245 shares in Yum China Holdings, Inc. (YUMC) as a result of his Yum! Brands, Inc. (YUM) ownership. Next, I added 2 shares each of AbbVie Inc. (ABBV) and General Mills, Inc. (GIS) to further diversify his relatively small portfolio. All holdings are set to automatically reinvest dividends.

 

Let’s take a look at baby DivHut’s current holdings, sector allocation and dividend income for 2016.

 

Portfolio

SymbolDescriptionQuantityCost BasisMarket ValueCost/ShareGain or Loss
ABBVABBVIE INC2.0000$124.02$122.28$62.01(-$1.74)
(-1.40%)
ABTABBOTT LABORATORIES8.9858$336.63$369.14$37.46+$32.51
9.66%
CATCATERPILLAR INC15.2221$1,014.17 $1,440.77 $66.62+$426.60
42.06%
EMREMERSON ELEC CO COM37.3804$1,943.84 $2,151.99 $52.00+$208.15
10.71%
GISGENERAL MLS INC COM2.0000$122.43$121.96$61.22(-$0.47)
(-0.38%)
ITWILLINOIS TOOL WKS INC6.2469$523.46$769.37$83.80+$245.91
46.98%
JNJJOHNSON & JOHNSON8.3644$837.96$959.65$100.18+$121.69
14.52%
ULUNILEVER PLC - ADR13.2169$524.21$543.88$39.66+$19.67
3.75%
VFCV F CORP27.4367$1,750.61 $1,440.98 $63.81(-$309.63)
(-17.69%)
YUMYUM! BRANDS INC14.4460$759.65$931.62$52.59+$171.97
22.64%
YUMCYUM CHINA HLDGS INC COM14.3245$324.66$373.30$22.66+$48.64
14.98%

Total Investment Balance $9,224.92

Gain or Loss $963.28

 

Grand total for 2016 dividends: $230.37 an increase of 271.3% from 2015.

 

Sector Allocation

SectorSector %Market Value
Industrials47.29%$4,362.13
Consumer Cyclical29.77%$2,745.89
Healthcare15.73%$1,451.06
Consumer Defensive7.22%$665.84

 

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

38 thoughts on “Baby DivHut Dividend Income Portfolio Update Q4 2016

  1. Wow, $230 in annual dividends already?! Thats fantastic progress. Baby DivHut is lucky to have parents who are putting this money away for the future. Congrats on the progress so far and keep up the great work. I am planning on starting a portfolio for my daughter soon. Will be sharing some details in the coming days.

    Best wishes
    R2R
    Roadmap2Retire recently posted…Correction – Passive Income UpdateMy Profile

    • Hi R2R,

      The plan is to keep contributing to his account whenever possible and reinvest all dividends automatically to help push that compounding machine along. Look forward to reading about your own investing plans for your daughter. Thank you for stopping by and kind words.

    • Hi Jay,

      I feel very fortunate to be able to contribute to a long term dividend growth portfolio for my child. It is something I dreamed about doing before I became a father and I’m happy that Mrs. DivHut was on board with this plan from the start. It will be amazing to see the real world results of a dividend portfolio that was started from birth. As always, I appreciate your comment.

  2. This is an awesome idea! Get them started early! I’m sure it will be much easier to explain the advantages of saving/investing when he can see that his portfolio has been killing it for years!

    • Hi AW,

      We always speak about the effects of time and compounding on returns. Who has potentially more time on Earth than a newborn? Starting a dividend growth portfolio from birth will be a very interesting “experiment” of sorts as I’ll be able to see first hand the amount of passive income his dividend growth portfolio can churn out in a couple decades. Thank you for commenting.

    • Hi ODOT,

      Awesome! I just love reading about parents getting their kids involved with saving and investing. What a smart idea to print out images of the companies to present to a child for making picks. Then, when going out, I can imagine the excitement when your child actually sees the company they have invested. Kudos for being a financial educator for your children. As always, I appreciate your comment.

    • Hi IH,

      We are always learning from one another here. It’s great. Dividends, options, custodial accounts, whatever. I appreciate your kind words and feel very blessed to be able to create this passive income portfolio for my child. Every quarter I’ll post these updates to track his portfolio and dividend income progress. Thank you for sharing your thoughts.

  3. Great job Dad! You have truly setting Baby Divhut for success later on in life.

    I searched the site, but didn’t see that you talked about Baby Divhut’s trading account. Which brokerage did you use? It’s set as a custodial account right? Do you pay taxes on the dividends received like you do in your normal account?

    I’ve meant to setup an account for my little piglet but haven’t gotten around to it yet 🙁

    Thanks!

    Blake
    The Dividend Pig recently posted…Money in the Trough – Buying Dividends – January 2017My Profile

    • Hi TDP,

      I went into some detail about how I set up the account in this post, “Starting A Dividend Growth Portfolio At Birth.” I discussed why I chose to go with a custodial account rather than a 529 which many parents choose to do. I use Sharebuilder, now CapitalOne Investing for his custodial account. It has the same commission rates as I do with my own accounts which is $2 a trade from a grandfathered promotion they had for Costco members. In 2015 there were zero taxes paid as the amount of dividends coming in was not enough to generate a 1099. 2016 might be different but that’s OK. I’ll gladly pay the taxes on his dividends as the account comes with no strings attached unlike a 529. Hope this answered some of your questions. Time to set up an account for your little one. Thank you for stopping by and commenting.

        • Hi TDP,

          If university trends continue as they have been the last couple of decades I seriously question the value of a college education based on the tuition paid. Some might say an education is priceless but I still think that a value must be applied. After all, what’s the point of a degree that gets you into debt for the next twenty or thirty years after graduation. Keep fighting the good fight!

  4. Great job starting so early, DivHut! Baby DivHut is a lucky kid. To me, the portfolio looks reasonably diversified for such a small portfolio. On thing you may want to consider, for the time-being, is to invest in a dividend ETF — just to get better diversification until the portfolio grows more.

    Take care and happy 2017!

    • Hi FerdiS,

      Starting early is the name of the game. I think we all wish we would have started earlier with our own dividend growth portfolios. After all, we know about the value of time on a long term investment and the effects of compounding over a multiple decade period. Thank you for your dividend ETF suggestion. Have a great 2017!

    • Hi Vivianne,

      I don’t expect to see triple digit year over year gains forever, but I’ll take them when I can get them. As long as I can continue to show progress each year I’ll be happy to present this passive income portfolio to my child. As you stated, the options are unlimited which is why I decided to open a custodial account instead of a 529 as most parents do. Let time and compounding work their magic for the next two decades. As always, I appreciate your comment.

    • Hi DD,

      Slowly but surely the plan is to grow the portfolio and teach baby DivHut that it’s OK to enjoy some of the dividend fruits from time to time as long as he doesn’t cut off a branch or chop the whole tree down. I enjoy these quarterly updates as I can see first hand the dividend rewards he is already reaping. Thank you for stopping by and commenting.

    • Hi DC,

      Thank you for those nice words. It’s now my job to teach baby DivHut about saving and investing when he gets older. If he turns out anything like myself or Mrs. DivHut we’ll be happy. Thank you for sharing your thoughts.

    • Hi DL,

      I will be sharing these updates every quarter as not much changes with his portfolio on a month to month basis. As he gets older I will teach him about the benefits of dividend investing and what it means to crate a passive income stream. Of course, one step at a time. I still am enjoying the baby stage of his life. Thank you for commenting.

    • Hi Charlie,

      It’s all a learning experience, once he’ll be able to understand what I’m telling him 🙂 The plan is to keep his portfolio growing over the years and keep his passive income stream ever growing. Often times “cuts” occur after a spin off as the spun off entity usually picks up the “cut” of the parent. I do expect YUMC to start paying dividends eventually and collectively should amount to similar dividend prior to the spin off. As always, I appreciate you stopping by and commenting.

    • Hi DD,

      In his short life I am quite happy with the portfolio and dividend income I was able to create for him. Of course, this is just the start of a long, multi-decade journey but I’m happy to be able to take advantage of his single biggest asset, time. Thank you for commenting.

    • Hi TCF,

      I feel very proud and fortunate to be able to start a dividend growth portfolio for my son. It will be fun to see how his dividend income will compound over the next decade or two. Thank you for stopping by and commenting.

    • Hi jm,

      That’s the long term plan. I hope to put up year over year growth every year for at least the next two decades. After that, we’ll see how he wants to manage the portfolio. Thank you for commenting.

    • Hi weenie,

      We all know the greatest asset anyone has is time and who has more time potentially than a baby. I’m happy to have started this portfolio for him and it’s exciting to see that dividend income roll in. As always, I appreciate your comment.

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