Every quarter I like to review baby DivHut’s portfolio and dividend income. With the second 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 small buy 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 one change to his portfolio from last quarter which was a single purchase of General Mills, Inc. (GIS) in early April. Still, with one small buy, his portfolio value continued to increase and his dividend income stream grew as well which is on track to surpass the 2016 total. Simply staying the course and reinvesting dividends has helped push that little snowball along.
Let’s take a look at baby DivHut’s current holdings, sector allocation and dividend income for Q2 2017.
Portfolio
| Symbol | Description | Quantity | Cost Basis | Market Value | Cost/Share | Gain or Loss |
|---|---|---|---|---|---|---|
| ABBV | ABBVIE INC | 2.0405 | $126.59 | $146.98 | $62.04 | +$20.39 16.10% |
| ABT | ABBOTT LABORATORIES | 9.0949 | $341.41 | $440.56 | $37.54 | +$99.15 29.04% |
| CAT | CATERPILLAR INC | 15.4560 | $1,037.70 | $1,652.56 | $67.14 | +$614.86 59.25% |
| EMR | EMERSON ELEC CO COM | 37.9863 | $1,979.87 | $2,259.05 | $52.12 | +$279.18 14.10% |
| GIS | GENERAL MLS INC COM | 6.0323 | $355.59 | $323.51 | $58.95 | (-$32.08) (-9.02%) |
| ITW | ILLINOIS TOOL WKS INC | 6.2776 | $527.52 | $916.91 | $84.03 | +$389.39 73.81% |
| JNJ | JOHNSON & JOHNSON | 8.4708 | $851.72 | $1,122.72 | $100.55 | +$271.00 31.82% |
| MMM | 3M CO | 1.0057 | $192.25 | $210.78 | $191.16 | +$18.53 9.64% |
| PG | PROCTER & GAMBLE CO | 2.0160 | $183.88 | $176.70 | $91.21 | (-$7.18) (-3.90%) |
| UL | UNILEVER PLC - ADR | 13.3978 | $533.72 | $719.73 | $39.84 | +$186.01 34.85% |
| VFC | V F CORP | 29.8870 | $1,877.65 | $1,694.59 | $62.82 | (-$183.06) (-9.75%) |
| YUM | YUM! BRANDS INC | 14.5750 | $768.33 | $1,071.12 | $52.72 | +$302.79 39.41% |
| YUMC | YUM CHINA HLDGS INC COM | 14.3245 | $324.66 | $534.59 | $22.66 | +$209.93 64.66% |
Total Investment Balance $11,269.79
Gain or Loss $2,168.90
Q2 dividend income: $70.09
Year to date dividend income: $136.27 which is on track to surpass his 2016 total.
Sector Allocation
| Sector | Sector % | Market Value |
|---|---|---|
| Industrials | 44.72% | $5,039.29 |
| Consumer Cyclical | 29.28% | $3,300.30 |
| Healthcare | 15.18% | $1,710.25 |
| Consumer Defensive | 10.82% | $1,219.94 |
Looking at his sector allocation above I know I’d like to boost his healthcare holdings and may initiate several new positions as I have done recently in the pharma/biotech space. I know there are still gaping holes in his overall portfolio such as no finance, tech, energy, utilities or hyper growth companies listed. I’m sure that will change over time. My main goal with his portfolio, at this stage, is to set up a very strong base of “boring” stable companies and later add some “flashier” names into the mix. There are still many more consumer staples I’d like to add and even a utility or two before that will happen. Baby DivHut is only two and at this point I’m very satisfied with the progress made so far.
What do you think about baby DivHut’s portfolio and sector allocations? I would appreciate any suggestions for potential stock picks as well. Please let me know below.
Disclosure: Long all above
Very nice, growth,we need to start planning for my kids
Hi Desidividend,
Slowly but surely. For a two year old he’s got a pretty good start and I can only imagine what the next decade or two or three even will generate in terms of passive income. Thank you for commenting.
Holy cow! Your baby is doing better then me! Look at those awesome cost basis numbers! You are really setting this kid up for success! I’m going to have a hard time keeping pace with this portfolio.
Hi DD,
This portfolio was started in the spring of 2015, a time when everyone was calling for a correction, valuations were high and stock prices too expensive. In other words, I just started the portfolio for him after he was born, no matter where the market was or where we were in an economic cycle. I don’t time the market. In time I’m sure you will be able to create an impressive dividend portfolio as long as you are consistent with your buying and don’t panic sell during those inevitable 10%, 20% or 30% or more declines. This is probably a great real world example about not timing the market. Just start. As always, I appreciate your comment.
Awesome portfolio! Starting the snowball rolling early for your child is one of the best moves you can make. My account was started for me when I was 6 years old back in 1993 with some shares of IBM and MCD. I held those two stocks and 24 years later the results are tremendous!
Hi MDD,
I’m just taking advantage of baby DivHut’s greatest potential asset, time. Starting early is probably the single best thing a parent can do for a child when building up a dividend income portfolio. Awesome story about your real world compounding returns with IBM and MCD. I can only imagine the crazy growth as well as dividend income those two stocks delivered over the last 24 years. Thank you for stopping by and commenting.
Woohoo! Your kiddo is doing awesome! Keep it up!
Hi MSD,
Thanks for those encouraging words. It will really be interesting to watch this portfolio grow over the next two decades. Thank you for commenting.
Hey DivHut,
Since you have a long term investment horizon on this portfolio, why would not include a few dividend paying techno stocks with stronger growth potential? (thinking of AAPL, MSFT for example).
Cheers,
Mike
Hi DG,
No doubt I’ll be looking at the higher growth stocks down the road as his portfolio is lacking any serious growth stock. That being said, the current focus is on building a solid base of the steady, long term dividend payers and growers first. In time, I’ll be adding the likes of SBUX, MSFT maybe even a QCOM. Thank you for sharing your thoughts.
Love those three names! (part of my portfolios 😉 hahaha!)
DivGuy recently posted…The Question Haunting Me or How I Decided to Quit a 6 Figure Job to Live Passionately
Hi DG,
Believe it or not, I have been looking at QCOM for a couple months now for my own portfolio. Would be my first tech holding if I ever pull the trigger.
Looks like babydiv hut is well on his way to have a great start in life. Earning a few thounds a year in dividend at the start is a great headstart.
Amber tree recently posted…Calculate your FI date
Hi At,
Starting a dividend growth portfolio from birth was something I discussed with Mrs. DivHut before he was born. I’m happy that we’re able to start him off on his DGI journey early in life. As always, I appreciate your comment.
That kid will be eternally thankful to you no doubt about that!
Hi CD,
I sure hope so. It will be my duty to teach him about investing, patience, dividends and compounding early in life. As a child I don’t expect him to fully understand what we have done for him but, no doubt, as a teenager (I hope), or as a young adult he’ll appreciate the time and effort put into this portfolio. Thank you for stopping by and commenting.
Similar to real kids…they sure do grow fast! Keep feeding that baby divhut portfolio Keith. Cheers to continued growth and compounding! AFFJ
A Frugal Family’s Journey recently posted…Collection of RECENT BUYS (June 2017 Summary)
Hi AFFJ,
We’ll be feeding that portfolio as much as we can. For now, all his investments are set to automatically reinvest dividends to keep it compounding for those months we don’t add any fresh capital. Last quarter we made just one buy but those dividends kept rolling in and buying new shares. Thank you for commenting.
Fantastic growth across the portfolio. Great work Keith.
Investment Hunting recently posted…Lending Club Month 5 Update
Hi IH,
Thanks for those kind words. As I commented above, these results are partly due to my belief in not trying to time the market. Back in 2015, experts were calling for a correction, valuations were high and stock prices too expensive. It was a “bad” time to invest. Of course, look where we are today and see that amazing growth in just two years. The bottom line with baby DivHut’s portfolio is that I’m planning to take advantage of his single greatest asset, time, by being invested at all times. As always, I appreciate your comment.
OMG that is so amazing. It’s such a nice feeling to know that you’re baby is going to be on a very strong financial footing when older. We always see compounding examples starting at age 25 and maybe age 20. But starting at 2 is almost unimaginable (although readily quantifiable).
Portfolio looks good for baby Div Hut. I think every parent should be doing this for their kids. Awesome man.
Dividend Portfolio recently posted…June Dividend Income Report
Hi DP,
That’s the plan with his portfolio. We want to be able to give him any financial advantage we can and long term dividend growth investing is one of the best ways that we know how. This portfolio is actually two years old. We started investing in the spring of 2015 after he was born. I hope he maintains this portfolio well into adulthood as it will be interesting to see real world compounding in a 30 or 40 year old portfolio. Thank you for sharing your thoughts.
Hi DivHut,
Love the baby portfolio – such a great way to provide for your child!
Best wishes,
-DL
Dividend Life recently posted…June 2017 Income Fund update
Hi DL,
Appreciate the kind words and well wishes. I hope to teach him real world investing lessons with his portfolio as he gets older. Thank you for stopping by and commenting.
Your kid is one lucky son of a gun! Portfolio gains are really incredible right now, congrats!
American Dividend Dream recently posted…Dividend Income Update – October 2016 through June 2017
Hi ADD,
The portfolio has done pretty well over the last two years. As you already know, I don’t time the market. I just invest when funds are available and this was evident back in 2015 (the start of this portfolio) when everyone was looking for a correction to occur, oil prices were in the dumps, valuations were high, stock prices expensive and uncertainty about the upcoming U.S. election. Just invest. Stay invested. Ride out the storms and let time work its magic. Thank you for your comment and well wishes.
Looking good so far. I know in your portfolio, you are favoring the healthcare sector. So it only makes sense you want to add more here since the current prices give a decent amount of value. That and the sector allocation could use a little more anyway. Looking forward to seeing what you purchase next for it.
Dividend Daze recently posted…Dividend Update – June
Hi DD,
I’m still considering health for my own portfolio in July, if decent values exist, and, of course, I’m still looking to expand baby DivHut’s exposure to health and other sectors as well. In time I’m positive his portfolio will expand. After all, he’s only two and there should be plenty of time for more ‘exotic’ holdings down the road. As always, I appreciate your comment.
Great starter portfolio for the little one. They are going to be very happy in a few decades in your choices, especially as this thing gets larger and larger 🙂
Hi DD,
Thanks for those kind words. Slowly but surely we’re building up his account. Last quarter we only made one buy but whenever there is some extra cash we funnel it towards his account. While I don’t want time to fly by, which it is, I am curious to see how time and compounding returns will be generated after a couple decades. Thank you for commenting.
Wow, baby DivHut is killing it!
We are planning to start an investment account for baby GYM too, but will have to wait until the little one is born. We have RESPs here in Canada and the government provides a grant bonus when you contribute. Win win! Anything like that in the states?
Hi GYM,
Once your little one is born the best thing you can do is start an investment portfolio. There’s nothing better than taking advantage of time which babies potentially have the most of. I’m not aware of any bonuses that are granted in the U.S. for savings/retirement accounts. They just come with tax advantages. Thank you for sharing your thoughts.
Huge fan of this series. Keep it up, DivHut!! As you know, Ive started my own Baby R2R portfolio recently and once it has grown a wee bit, will start tracking and sharing the progress on a quarterly basis.
Best
R2R
Roadmap2Retire recently posted…Quarterly Update – Q2 2017
Hi R2R,
Awesome! As long time dividend growth investors we always talk about the effects of time and compounding on returns and now with real world portfolios started from birth for our children we’ll be able to see those effects over the coming decades. Look forward to following the little R2R portfolio. As always, I appreciate your comment.
This is my favorite update to read each quarter. I love what you are doing for Baby Divhut one day. It is amazing and I cannot wait to do something similar for my kids. Baby Divhut may not realize this yet today, but one day, will appreciate everything you have done to set the table for a prosperous future.
Bert
Dividend Diplomats recently posted…The Power of $50,000 in Dividend Income, Explained
Hi DD,
It will be up to me to teach him about investing, compounding, time and more which I hope will translate into an appreciation for what we have started for him. Maybe include baby DivHut’s results in your June round up??? Thank you for stopping by and commenting.
DH,
The great thing is, you started for him so early, you almost don’t even need to add too much more and he will be set ! He is a lucky baby . Well done!
-Brian
Brian recently posted…2017 June Dividends are here, a new record !!
Hi Brian,
That is true. Even with a modest sum of starting capital, given enough time the portfolio should grow nicely on its own. That’s the beauty of taking advantage of time. The earlier you start the less capital is required to achieve a certain result. As always, I appreciate your comment.
Dhut,
It is very cool you are providing him with a revenue stream before he knows what revenue is. I am thinking of doing the same for my future kid(s), but I have yet to decide on whether going with a 529 is the the move I want to make. The upside of the 529 is tax savings. However, you only get index / mutual / ET funds to choose from in most and if the money is NOT used for education the kid can only convert it to a Roth IRA (which is not bad, but is less available). On the other hand building an account like this is taxable, but hey the money is there are ready to roar in 18(+) years.
– Gremlin
Hi DG,
It was a pretty easy decision for me to make regarding what I wanted for baby DivHut. It all came down to a choice of foregoing tax benefits in exchange for a portfolio that came with no strings attached. Sure, as the portfolio grows and generates meaningful dividends down the road, taxes will have to be paid but the account could be used for anything he desired without early withdrawal penalties, the limited investment options as you have mentioned nor the requirement to use the money exclusively for educational purposes. Jason Fieber of Dividend Mantra wrote a great piece explaining his reasons for Holding 100% Of His Equity Investments In A Taxable Account rather than a ROTH or other retirement vehicle. The essence of the article can best be summed up in one sentence he wrote, “I’m going to be accessing my dividend income extremely early in life.” Giving baby DivHut at least twenty years of investing and compounding growth gives him a pretty good chance to do the same should he choose to. Thank you for commenting.
DHut,
I am remember reading that article and figured that was your reasoning. Honestly, I lean towards it myself when the time comes to do the same thing. Hard to ignore the tax benefit, but I do agree that money available immediately as needed might work to teach them some responsibility and show them how to live below their means to build their own wealth machine.
Thanks for the reply,
Gremlin
Dividend Gremlin recently posted…Recent Buy, July 2017
Hi DG,
The way I see it, when baby DivHut is a young adult (20s, which is way before I or most people start) he can begin his own tax advantaged account to supplement his already two decade old taxable portfolio. In a perfect world that could really set him up very nicely financially when he is much, much older.
HUT –
Nice balanced and even keeled portfolio, if I could say so myself. Very safe investments you have for Baby Hut’s portfolio, that should be VERY successful. Nice work.
-Lanny
Dividend Diplomats recently posted…The Power of $50,000 in Dividend Income, Explained
Hi DD,
All according to plan so far. I wanted to build up a large solid base of boring, stable long time dividend payers and raisers first, which I’m still not done doing, and then add the more ‘exotic’ higher growth names down the line. There are still so many solid staples I’d like to see in his portfolio first among other sectors. All in time. Thank you for stopping by and commenting.
Hey DivHut!
“a very strong base of “boring” stable companies” – Those are my favorite type. Those “boring” companies produce good dividends and I don’t have to worry about them in my portfolio. The most stocks I can set and forget, the better my life will be. That’s how I’ll make dividends as close to “passive income” as possible. =)
Keep up the awesome baby divhut progress,
Andrew
Wallet Squirrel recently posted…CoSchedule Review: The Social Media Calendar I chose over Buffer & MeetEdgar
Hi WS,
I think most long term DGI investors covet the “boring” companies and know what they can contribute to a portfolio that is held for multiple decades. Thank you for continued encouragement.
Congratulations on increasing your dividend income. Our retirement will be 75% derived from dividends (the rest will be social securities, any extra earned will go into savings). It always makes my day when I get a payment.
Thanks for sharing exact numbers, it really gives so much context.
Question, is there a website that tells you exactly which sector a particular stock is in? I’m in Canada.
Hi SDG,
Thank you for your kind words about baby DivHut’s recent results. I’m glad you can find value with these updates. I find these updates make it easy to quantify and track my own dividend income progress. I find that Yahoo! Finance will give a good account of the sector and industry a particular stock. Here’s SBUX for example: http://ow.ly/Rjjh30dLQng Thank you for commenting.
Hi Divhut,
Seems like a solid portfolio to me.
Baby Divhut is lucky to have such parents!
Cheers,
Greedy Dwarf
Greedy dwarf recently posted…Why Warren Buffett calls himself 15% Phil Fisher
Hi Gd,
Glad you like baby DivHut’s current portfolio. As I always say, it’s a work in progress and will definitely grow over the coming years. Thank you for stopping by and commenting.