March was a good month for the stock market after a slow start to the year. It’s also a strong month for dividend income which helped my portfolio reach a new all-time high. Here’s my dividend income and Income Fund update for March 2016.
The following chart shows the cumulative dividend income so far this year compared to previous years.
With a total of $1,648 so far this year, I easily beat last March’s total ($1,449) and I’m closer to beating April’s total from last year ($1,790) so that’s a good start to the year.
The chart below shows a breakdown of the total income of $965.
Individual stocks contributed $237 or 25% of the total. All four of my core Vanguard Funds paid distributions this month for a total of $716 (74%) and interest from the cash reserves in my Money Market account made up the remaining $12.
The Vanguard fund distributions were a little lower than they would have been due to my exchange of VTIAX to VIHAX last month. The new fund didn’t have a full quarter of dividends to distribute. Over the long-term I expect this fund will pay higher distributions than VTIAX because of its dividend focus although total return will likely be lower.
Dividend income from stocks
23 stocks paid dividends this month as detailed below.
Last March my individual stocks paid $174 from 21 stocks. Since then I’ve bought some shares in both VDE and NHC and I’ve added a total of around $7,000 of new stocks over the last 12 months. I bought $1,995.77 of additional shares in VPU and VDE using my Cash Reserves during March and I also sold out of my DOW, WPPGY and DEO positions.
I’ve included the dividend growth of each stock on a 1-year trailing basis in the table. This doesn’t include dividend payments projected out over this year so the growth percentage will look higher than it really is for companies such as BBL that will pay lower dividends going forward. Dividend growth is calculated from the last 4 payouts compared to the 4 before that. The yield calculations are annualized, or extended forward a year based on the current dividend payment against the market value.
On average, dividends of the stocks I hold have increased by nearly 10% over the last year with BBL and CVX showing the lowest dividend growth of 3% or less. A couple of stocks such as LB and MAR had dividend growth over 25%. The income from LB includes a special dividend of $2 per share; the underlying yield is about 2.3% although the company pays special dividends more than most companies in my portfolio.
Dividend income from funds
I received income from all four Vanguard funds this month as shown below.
|Fund||Income ($)||Div Growth (%)|
|High Dividend Yield Index (VHDYX)||373.48||13.5|
|International High-Dividend Yield Index (VIHAX)||58.87||–|
|High-Yield Corporate Bonds (VWEAX)||241.24||0.1|
|Long-Term Investment-Grade Bonds (VWESX)||42.31||6.4|
The two bond funds pay their distributions monthly and the distributions are taxed as normal income and not the lower qualified dividend rate that dividends receive.
At 13.5%, dividends from VHDYX look like they have grown faster than the average of my individual stocks too but it’s not an accurate comparison because the values have been calculated differently.
My Income Fund
Here’s an overview of my Income Fund and the current asset allocation as of March 2016.
I’m still slowly rebalancing to my target asset allocation although I’ve started to speed it up. Compared to last month, cash has decreased by 3%, stocks have increased by 5% and bonds decreased by 1%.
The following table shows the detailed asset allocation.
My long term plan is to limit individual stocks to 10% of the total, but I’ll be achieving this for the most part by adding new capital to the mutual fund components rather than selling individual stocks. However, I am slowly selling out of some stocks as I want to reduce the number of individual positions to simplify my portfolio.
Likewise the bond funds are targetted for a 15% weight, and currently I’m only re-investing any capital gains that they pay. VWESX is at its target weight of 5%, but VWEAX is still heavily over-weight at the moment. It decreased another 1% this month to 21.7% with the final target being 10%.
Cash is overweight too although it dropped from 16.4% to 13.5% this month.
My Income Fund increased in value from $221,690 to $236,992 this month, a new record high, helped largely by the stock market although I added $5,192 of new capital.
The new capital I added ‘purchased’ 51.366 shares of my Income Fund and the end of month share price increased by $4.4275 to $101.9418.
|Date||Price ($)||Change||YTD Change||Value||Cost Basis||VTSAX YTD|
I’ve been tracking my fund performance like an Index Fund since the beginning of the year and the underlying monthly investment performance in March was 4.54%. I’m comparing this performance to VTSAX which gained 6.53% in March, excluding dividends. Year to date performance is 1.94%, compared to 2.04% for VTSAX.
Just for fun here’s a typical “growth of $10,000” chart with my investments compared to VTSAX.
VTSAX has a different composition than my portfolio so I expect different results. It contains US-only stocks and includes small-cap stocks whereas my investments contain US large-value stocks, international value stocks and (volatile) US bonds. I’ll add dividend payments to this chart too once more have been paid out. Does the relative performance matter? Not to me; it just helps put a boundary on the results to put it into perspective.
I received some more unexpected income this month so I didn’t draw down quite as much of the fund’s Cash Reserves as I was expecting to. This is certainly a nice problem to have though so I’m not complaining!
In total this month I bought $6,795 of VHDYX and $3,112 of VIHAX using some of my Cash Reserves as well as new money from my monthly salary. My goal over the next three months is to get VHDYX and VIHAX to the target 2:1 ratio; at today’s prices that means adding another $14,500 from cash into VHDYX and I plan to dollar-cost-average that starting in April through June.
I’m also switching from weekly to monthly purchases for the core funds although I’ll have some money spare each month for a manual purchase. I will also start purchasing a small of VWESX monthly to maintain its allocation.
Quote of the Day
The secret of getting ahead is getting started.