Weighted Average DGR and Yield of my Vrijheid Fonds

As I wrote in my post in January of this year, the best method to calculate the average dividend growth rate is the Compound Growth Rate. This is also the method used by Dave Fish in his monthly Dividend Champions spreadsheet. And I’m a huge fan of Dave fish his work, especially his monthly spreadsheet.

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%. At that time my Vrijheid Fonds consisted of 13 stocks (excluded some mutual funds).

I’m always looking to improve my investment skills. Stephen Covey called it Sharpen the Saw. I think it is important to keep education your self. That’s why I follow webinars, read books, articles on the internet and follow blogs from fellow DGI’s, It gives me new ideas and sometimes new perspective on issues. I really love this!

Besides all this, I try to reflect on my investment decisions at least every 6 month. With a good (and full!!) glass of beer and some quietness in my house (and this is very rare with two young kids 😉 ), I will sit down and look back on the decisions I made and why I made them. Looking back at these decisions, with today’s knowledge, is very useful. And I think that is makes me a better investor.

During this reflecting I noticed that I do not use my weighted average growth rate and yield. In my Pollie-code I use DGR of 1 year and Yield, just for individual stocks. I do not compare the DGR and Yield of a possible new purchase, with my portfolio weighted average growth rate and yield. The question is, will my investing results be better if I will use these metrics? Well after some research I discovered that this question is not easy to answer. There are to many factors, which are of influence. One of these is, of course the stock price. Because the price is not stable, it is impossible to compare these metrics. And because my Vrijheid Fonds changed over this period of time, this is also of influence. But lets look at the numbers.

This year I made 7 new purchases so far. Lets see how my weighted average growth rate and yield have changed since January.

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.

Today my weighted average dividend growth rate on my Vrijheid Fonds is 6.56%. And my weighted dividend Yield on my Vrijheid Fonds is 3.54%.

My Vrijheid Fonds has 6 more stocks than in January. If I now calculate the weighted average DGR for the same stocks as in January, this metric is 4.85%. So I can conclude that my weighted average DGR has declined. But with the 6 new stocks, of which 5 have a really higher DGR (3 year), my weighted average DGR has not declined that much.

On the basis of the numbers above, my conclusion is that it is useful to compare the DGR (3 year) of individual stock with my portfolio weighted average DGR. With new purchases I will look for stocks with a higher DGR (3 year) than my portfolio. By doing this, I will keep my snowball rolling and let it keep picking up speed. And that’s what a DGI wants.

If I look, with the same eyes, at the Yield, I can conclude the same.

Yes, some new knowledge. And during the writing of this post I realized that I read something similar in a post of a fellow DGI. One of the Dividend Diplomats (two great guys with great content on their website, if you haven’t read a post from them before, I can recommend their website) has the rule that a new stock must have a higher Yield than the average yield of its portfolio or have a better DGR.

I think I will use the above-described metrics as some sub metrics of the Pollie-code.

Do you calculate your weighted average DGR and Yield? Do you use it in your decision-making?

I like to hear from you!



6 thoughts on “Weighted Average DGR and Yield of my Vrijheid Fonds

  1. D4s

    Thanks for sharing! I never thought about using the 3yr growth rate. I will grab the data from the CCC list and run it through my spreadsheet to see what the numbers look like.

      1. Div4son

        I use the 5yr div growth and current yield for my decisions (plus a host of other metrics and graphs). However, I don’t use the div growth indicator for my whole portfolio as a weighted average after buying.
        It may be something that is useful to see how things are going.

  2. ambertreeleaves

    interesting metrcis to use to see if it is worth to add a stock to your portfolio. With hindsight, would you still add those stocks? The 5 with a higher DGR probably yes, what about the other one?

    What would you do if you”run out” of stocks to add? Or let me phrase it differently: what is the number of stocks you consider ideal to have?

  3. JC @ Passive-Income-Pursuit

    My yield is automatically updated in my portfolio and I have a second spreadsheet that calculates all of the dividend growth rates for each position in my portfolio for the last 1,3,5 and 10 year periods and then calculates a weighted average for my overall portfolio. I don’t really look at what my portfolio is currently and the DGR when it comes to new investments. Although it might be something I glance at before hitting the buy button moving forward. Generally I’m just looking for something that offers a solid value on my capital and a high likelihood to increase dividends at an acceptable rate moving forward. There’s lots of moving parts when it comes to the investment process so it’s hard to cover everything.

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