Since I started my blog I asked myself, every year the same question about my Vrijheid Fonds, ‘What is my portfolio’s weighted average dividend growth rate?’
In this blog post I did some calculations in January 2015. In this blog post you can read my 2016 update.
Since April 2016 I made 4 new purchases so far (excl. mutual funds). My Vrijheid Fonds now consists of 21 stocks (excluded some mutual funds). When you having fun, times flies they say. Now lets see how my weighted average growth rate and yield have changed since April 2016.
For all my individual stocks I calculated the 3-year DGR. I use the 3-year DGR, because I think this give the most realistic long-term rate. And therefore it is a good indicator for future performances. Of course I look at the full data set of all my stocks to see if there are irregularities. For this, I thankful use the David Fish files for the Dividend Aristocrats.
Data mining
After some data mining and some calculations, here are the results for 2017:
My weighted average dividend growth rate on my Vrijheid Fonds is at this moment 4.45%. My weighted dividend Yield is 3.20%. And my Beta is 0,717.
# Stocks | DGR – 3 yrs | Yield | Beta | |
2015 | 13 | 6.92 | 3.66 | 0.685 |
2016 | 20 | 6.86 | 3.57 | 0.649 |
2017 | 21 | 4.45 | 3.20 | 0.717 |
Every metric I calculated is lower than 2016 L. Lets look a little bit further why this is the case.
If we look at the stock market, we van see that we have been hitting all time highs till the beginning of April. The newspapers are full of it (a sign for a coming correction?). These all time highs also have influences on the dividend yield (in the all time lows). So no surprise that my weighted average dividend yield is lower in 2017 than 2016.
As long as my weighted average yield is above the inflation rate I’m happy. And yes, this is still the case.
The decline of my weighted average DGR is mostly due to the oil stocks (they didn’t raise there dividend) and the weight of the European stocks in my Vrijheid Fonds. In 2017 the weight of my European stocks is lower than in 2016. These are the two main reasons why my DGR 3-years is lower than last year. And you guessed it, I don’t like this decline. I will dive into this and look for some possible buy options. Do you, as reader, have an idea, please let me know.
My Beta shows a small increase, but is still below 1, which is good.
What does it all mean?
Now that I know all this, lets play around with these numbers a bit.
As I mentioned my weighted average dividend growth rate on my Vrijheid Fonds is 4.45%. And, my weighted dividend Yield on my Vrijheid Fonds is 3.20%. If we add these two metrics together, we can use this number to calculate how much my income could essentially grow without doing anything. 😉 Of course this new metric can be used as an expectation.
For 2017 I have a projected income for my Vrijheid Fonds of € 3,030. This means that approx. € 135 will be added this year, just by doing nothing. That sounds good!
I think this is a great way of looking at my Vrijheid Fonds. Imagine what the numbers will be if you do this for more than 20 years. So this shows again that buying stocks earlier in your life (and consistently keep adding stock each year) the 8th wonder of the world (compound interest) has a giant impact on the value of your portfolio.
I use these metrics also in my decision making for new purchases. My rule is: A new stock must have a higher Yield than the average yield of my Vrijheid Fond or have a better DGR.
Do you calculate your weighted average DGR and Yield? Do you use it in your decision-making?
Please leave a comment; I am looking forward to it.
Thank you for stopping by and taking the time to read my post.
Cheers,
Pollie
Very nice Pollie, I love these kinds of analyses. Looks like our project dividend incomes are about the same by the way.
I track my dividend yield as well. In fact it is part of my Q1 report that I launched today: http://www.tallinvesting.com/2017/04/goals2017-q1/
Cheers,
Tall Investing
I love these analyses (and data mining) also.
I can’t wait to read your Q1 report.
Cheers,
Pollie
Nice analysis. Gives some good insights. Can you also give some insight in how you calculated the numbers? I’m curious how you put things together!
I calculate these numbers by using the morningstar.com website, David Fish monthly CCC-list, the nasdaq website, gurufocus website and a app for the actual stock prices.