Last year I asked myself ‘What is my portfolio’s weighted average dividend growth rate?’ In this blog post I did some calculations in January 2015.
In January I calculated my weighted average dividend growth rate of my Vrijheid Fonds. This was 6.92%. My weighted average Yield came to 3.66%. And my weighted Beta was 0.685. At that time my Vrijheid Fonds consisted of 13 stocks (excluded some mutual funds).
Since January 2015 I made 12 new purchases so far and sold two companies. My Vrijheid Fonds consists of 20 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 January 2015.
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.
After some data mining and some calculations, here are the results for 2016:
My weighted average dividend growth rate on my Vrijheid Fonds is at this moment 6.86%. My weighted dividend Yield is 3.57%. And my Beta is 0,649.
It has been a really bumpy ride on the market in the last 12 -15 months. Especially the oil and commodity prices went down. And yes this has affected my Vrijheid Fonds. Luckily I managed to keep the metrics in the same range. This is mainly due to the new purchases I made. I’m especially glad that I managed to lower my Beta.
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 6.86%. And, my weighted dividend Yield on my Vrijheid Fonds is 3.57%. 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 2016 I have a projected income for my Vrijheid Fonds of € 2,450. This means that approx. € 169 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.