Dividend Fund: 1st Quarter Review

We are about to be at the end of April, yet my 1st quarter review is just ready to be released! What's with the hold up? Well unfortunately I don't really have a good answer for that, but here we go!


Before we head any further I wanted to review the goals that I set for the fund entering Q1 of 2018. All the goals are for the full year 2018. Hopefully this will give some insight into some of the moves that I made in Q1.

  • Total Portfolio Value of $30,000

  • Gain of 10% for 2018

  • Total Estimated Yearly Dividend Income >$1350

Now let's go ahead and move onto some of the moves I made in the quarter.



The portfolio has changed a bit since we visited it last in the 2017 Wrap Up. There has been a few subtractions, as well as a few new additions that I want to go through.


  1. RGR

  2. CSS

  3. VFC

  4. CAFD

I sold out of 4 positions in February (all within 2 days) and all of them I sold for very different reasons. I took a hard look at my fund at the start of 2018 and realized that there were some holdings that didn't quite make sense for me.

First was RGR, which was literally sitting at break even for me when I sold it. It's not that RGR is a bad company, quite the opposite in fact, but I really don't see any huge catalysts for the company in the near future and with a dividend under 2% I really need to see some growth.

Second up was CSS. This is another company that I was simply break even on when I sold. To be honest I should have moved out of this one in 2017 but got greedy and kept it in the portfolio. While this dividend was sitting at around the 4% mark, the company has not been showing much potential for growth and honestly are in an industry that has a ton of competition.

Third there was VFC. This company actually made some moves that really wanted to make me stick around for awhile, but I was up almost 50% on my investment and decided to take the gains. I didn't have a very substantial position, but sometimes you have to move on with the profits if it doesn't look like you are going to add shares anytime soon. I decided to put the funds elsewhere before I lost out on some of the gains.

Finally there was CAFD. Now this one I really hurt myself with and honestly was a great learning moment. For those of you that do not know, CAFD is a LP whose parent companies had announced earlier in the year that they were exploring strategic options (aka selling). I held on for a couple of dividend payments, at a nice 9% yield, and instead of selling at a nice ~20% gain ended up breaking even as a sale finally went through for the original price that I paid. Was it worth the extra couple of dividend payments? Not quite. You live and learn.

In summary the sales of the 1st quarter were primarily just to do a bit of housecleaning and make sure that the portfolio was focused on the goals that I had set to end Q4.



During Q1 I made 17 purchases! Yes I said 17! That sounds like a lot even to me, not to mention that I actually added just over $7000 dollars in new contributions! If that doesn't sound like a lot think of this; that is actually over 50% of my 2018 starting portfolio value!

Enough with the exclamation points though, let's move on to the purchases.


  1. ORI

  2. BGFV

  3. T

  4. F

  5. MPW

  6. BP

  7. CHL

Now I am not going to run through the additions one by one (that would take forever) but what I will do is make a general note about the group. First off all of these companies have nice yields that I believe are safe. Yes I even mean BGFV. Second I purchased more of every one of these companies when I believed they were at a price that allowed for at LEAST 10% to be made over the course of the next year.


  1. 0MI

  2. ARCC

  3. STAG

  4. KIM

For me, OMI really presented an interesting opportunity and I placed about 4% of my funds into it. While I am currently under water to the tune of about 17% (ouch!) I am still not afraid to hold onto the company as the current yield is hovering around 7%, with 19yrs of growth, and I believe that the concerns about future revenue growth have been overdone. Yes the growth will not be groundbreaking, but I do believe that there has been an overreaction about their most recent acquisition and those growth concerns. Like I said, I'm not betting the house on this, but think it is a risk worth taking over the long run.

BDC's, or business development companies, are companies that make their money by handing out high yield loans to companies that can't get the same kind of payouts from a bank. These types of companies really interest me when someone is looking to up the yield of their portfolio. What's my choice then? ARCC. This is the largest BDC which means that they can do large deals that smaller companies cannot, which is great in a rising interest rate environment. Currently their majority of loans are floating rate and most of their debt is fixed. This may actually allow for more money to be made as the rates rise! Add a possible EPS increase with an almost 10% yield and I think I am in love.

The final two additions to my portfolio are REITs, a sector that I really had not dove into with the exception of Medical Properties Trust (MPW). The two REITs that I had been eyeing for a long time and finally sunk my teeth into were STAG and KIM. These stocks couldn't be further from each other and that is precisely the reason that I added them both.

KIM, is involved with US shopping center (UH OH!) and holds a lot of companies that I really like. With just 13 tenants over 1% the diversity is there.  Also check out a couple of those top companies: TJ Maxx, ROSS, Home Depot, Whole Foods, Wal-Mart...that's a pretty quality bunch. Now there is some fear that is driving the price down, involving closures of stores such as Payless Shoe Source, Toys R Us, and Sears. This though is a very small portion of the portfolio and I believe actually just presents opportunity to buy.

STAG. Yes that really is the ticker of my second REIT addition. There's no stag party here but there may as well be for the price that I was able to pick up shares at. STAG is an industrial REIT that currently yields just under 6%. It's primary offerings are warehouses which couldn't be more boring. That being said there is nothing that I like more in an investment than boring. The price recently has taken a hit as the retention rate for 2017 was a mere 59%. This was explained by the CEO to present opportunities for higher rent. It's up to you to decide whether you believe that or not, but I certainly do as the retention rate has been right around 70% since their initial IPO. Add to this a diversified portfolio that has no single company accounting for over 3% of revenue, no industry over 15%, and warehouses in 37 states and I am sold.



We had to talk about it sometime I guess and that sometime is actually right now. The first quarter of 2018 was the Dividend Fund's first losing quarter in it's short history. The final tally was a loss of 6.64%. This was due primarily to the fact that I held onto a lot of positions that were way overpriced (in terms of P/E) and they, along with the market, corrected themselves. Add to this the continued faltering of my BGFV position and it turned out to be a rough quarter.

A quick note of transparency: this was well below the -1.17% return of the S&P 500. While the rough start has really put a damper on the goal of 10% gain, I am still optimistic that the fund will be able to turn it around!

While the fund did find itself on the losing side of the coin for the first quarter of 2018 there were a couple of tremendous things that did happen. These things included obtaining a yield on cost (YOC) of over 5.5% at a much safer rating (according to my D30 analysis) than I had before. I also increased my YOY dividend income from 44.99 to 273.99. This may not seem like huge sums of money, but a 600% increase is a staggering sum to me!

On top of the dividend income increase I also saw some of the companies that I have invested in increase their dividend. I will spare you all the details of what companies increased as you can Google my portfolio holdings if you are curious.


going forward

Moving into the 2nd quarter of 2018 I have set myself up for some very nice success in my opinion. The goal of a 10% gain will be, and always will be, the toughest goal to obtain. This I believe will pick up as my heavy investments in Q1 into the REIT sectors that have gotten demolished will return to produce solid gains over the next three quarters. Also the higher YOC that I have obtained will help immensely in the drive towards 10%. 

The second goal that I would like to address is the $1350 of estimated yearly dividend income. Currently the fund sits at just over $1100 and I believe that I will no doubt be able to hit my target. Income of $1350, when compared to my goal of $30,000 of total value, is a 4.5% YOC. This allows me to have some leeway on my future investments, that will probably include some blue chip stocks.

Finally is the issue of the $30,000 of total value in the fund. This is mainly just an issue of finances and consistency. While I am not likely to have another quarter of $7000+ contributions, I will be consistent in contributing to the cause. Obviously a major downturn in the market could cause me to miss this mark, but I think that I have set myself up for success here as well.


As always, thanks again for reading and feel free to leave any comments below!