Lets look at development over the past year of some metrics of my Vrijheid Fonds.
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 the original calculations back in January 2015 and for the posts in the following years, just click on the corresponding year 2016 and 2017.
Since April 2017 I made 6 new purchases so far (excl. mutual funds). And as of today my Vrijheid Fondsn ow consists of 24 stocks (excluded some mutual funds). Now lets see how my weighted average growth rate and yield have changed since April 2017.
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 2018:
My weighted average dividend growth rate on my Vrijheid Fonds is at this moment 3.66%. My weighted dividend Yield is 3.58%. And my Beta is 0,714.
# 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 |
2018 | 24 | 3.66 | 3.58 | 0.714 |
If we look at these numbers we can see that my weighted average Yield and Beta got better, but that my weighted average dividend growth rate has deteriorated 🙁 . Lets look a little bit further why this is the case.
If we look at the stock market development in his year (April 2017 – April 2018), we can see that all lot of stocks is trading lower. And these lower stock prices result in a higher yield. So it is no surprise that my weighted average dividend yield is higher in 2018 than 2017.
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 has two reasons. Firstly it is mostly due to the oil stocks (they didn’t raise there dividend) and secondly because most stocks hasn’t raised their dividends as much as in earlier years. This is probably a sign that we are approaching the top of the economy. And yes, 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 very small decrease and 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 Fondsis 3.66%. And, my weighted dividend Yield on my Vrijheid Fondsis 3.58%. 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 2018 I have a projected income for my Vrijheid Fonds of € 3,422. This means that approx. € 125 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 thatbuying stocks earlier in your life (and consistently keep adding stock each year) makes that 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. I will use these metrics together with my Pollie-code to determine the buy-worthy of a new stock. And yes preferably a new stock has a better DGR-3 year than my current weighted average DGR 3-years.
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
I think I already said it before. I really like your matrix but I still haven’t defined it for myself. I’m preoccupied with buying and expanding instead of analyzing my existing portfolio.
It is important to keep donating new capital and build your snowball.
Keep up the good work!
I took a year off of calculating my weighted average DGR but am starting the calculation here for 2018. It is interesting how much you portfolio’s DGR has slowed over the years. I guess it just shows you the benefits of diversifying, so you aren’t exposed to one industry’s slowdown like you highlighted.
Bert
I’m curious how your DGR has changed over the years.
Good question, I haven’t looked at it yet, I keep track of my average dividend increase at the end of the year but haven’t dived into those numbers. I’m mostly occupied with expanding and balancing my portfolio without looking at current performance. As I think all my stocks will still rock in 40 years (as of now).
Nice post to think about though!
DI