Sunday, March 23, 2014

WMD Portfolio

For tracking purposes, I am launching the WMD Portfolio - a journey in search of Wide Moat Dividends.

This is an idea tracking portfolio, rather than just tracking ideas as tickers its more interesting to simulate the process to see weight and growth over time, and so I will track purchases and sell of shares that would cost around $1,000 at time of hypothetical purchase.

WMD Portfolio Stock selection process identifies equities with the following characteristics:
  • Wide Moat - stocks selected for the portfolio should exhibit a durable competitive advantage to protect the company's shares and the ability to payout dividends
  • Income - A higher than average dividend yield. At the time of this writing the current yield for S&P 500 stocks is around 1.9%, the WMD Portfolio generally looks for companies with the ability to pay at least 50% more than the current S&P 500 yield
  •  Safety - Low payout ratio  (generally less than 60% of earnings and free cash flow) of their overall profits as dividends. This is to protect the dividend in the event of downturns.
  • Dividend growth - stocks selected for this portfolio should be able to support a dividend growth rate that combined with their current yield exceeds 10 percentage points. For example, a stock paying 3.5% dividend yield should be able to grow its dividend by at least 6.5% or more each year
The primary metrics that I will use to measure the performance of the WMD Portfolio are as follows:

  • Total Return: the combined return of the stocks’ capital gains plus the dividend income received
  • Current Yield: the “look through” yield of the portfolio as a whole
  • Dividend Raises and Cuts: tracking the total number of the Portfolio companies’ dividend raises and cuts over time
Portfolio Selections:

  1. Coca Cola
  2. GlaxoSmithKline
  3. IBM
  4. Raven Industries
  5. Tupperware
  6. Spectra Energy
  7. Occidental Petroleum
  8. Diageo
  9. Rolls-Royce Holdings
  10. Exxon Mobil

1 comment:

  1. Nice looking concentrated portfolio. Do you plan to add any new names to this relatively small portfolio? I hold a couple names in common with yours. Thanks for sharing.