Annual Review 2018

The year ended and it’s time to look back and review 2018. First of all it was a remarkable year for me, because we enjoyed our first year with Baby DivRider! This included a two month parental leave for me and 12 months for Mrs. DivRider. We enjoyed the time surfing and travelling along the atlantic coast (picture above) in that time, which was an awesome experience. This also meant a reduction of earnings for both of us. On the other side, if you’re a resident of Germany you’re entitled to receive quite a big financial support from Germany in that time.

We also bought a nice apartment with a beautiful view of the Rhine Valley. This used up all my cash reserves from 2017. But we’ve managed to get a 15 year 2% fixed rate mortgage, despite financing nearly 100% of the property costs, which is really good. Now we’ll pay only a little bit more than renting before. Considering more than doubling the living space and a much higher living quality and a relative high repayment rate, the only regret is not doing this earlier.

With all the drained cash flow and associated buying costs, I was only able to put another $3450 to work. But selling some shares of my speculative investments and some of my dividend portfolio increased my dry powder which lead to multiple buys over the year which also increased my forward dividend income.

I’ve prepared some tables and graphs with all important informations:

Capital Contribution

My initial plan for 2018 was to increase my capital contributions quite a lot, but after using all cash for buying our real estate there was nearly nothing left. Going forward, I’ll try to contribute $1000+ every month for 2019. It would be nice to add more, but there are quite some home improvements I want to realize this year.

Portfolio Changes

These values come straight from my broker and differ a little bit of my own calculations, mostly because of including the fees and some unpublished options plays, which I list separately for myself.

Stock Transactions

As you can see, I went a little bit crazy at the end of the year. I even used a little bit of my margin (interest at 3.5%) to take advantage of the biggest sale in a long time. If I want to reduce the margin, I could further liquidate my speculative portfolio.

Sells

I sold CELG because I wanted to further clean up the portfolio. I’m still convinced of the future projects, maybe I’ll buy BMY to get some exposure to CELG again (and to receive dividends this time).

I also sold OHI because I wanted to reduce the exposure to skilled nursing facilities (I also hold SBRA). Shortly after my sell the situation at OHI brightened up (tenant issues seemingly resolved) and SBRA got hit by the same issues. I still think SBRA is the better choice because of the better dividend payout ratio.

I got one assignment of a SBRA put option from 2017, which led to a purchase of 100 shares in April which I sold shortly after for a small profit. I further decreased my exposure in November after reading the Q3 report and the newly published tenant issues.

I sold SKT because I’m not convinced anymore that my portfolio needs exposure to outlet centers.

I reduced my exposure to GILD, because I don’t see the near term growth kicker and I wanted to free up some cash to purchase other more visible opportunities.

Buys

ABBV, BATS (BTI), BLK, CVS, FDX, GNTX, ITW, MO, NVDA, PM, T, TROW, V, VER

I tried to balance between sectors, high and low yielding stocks and I used to grab the opportunities when prices were attractive. Please ask, if you’re interested in the reasoning for a specific stock.

Dividend Income

I’ve received $2289 in dividend income in 2018! That’s nearly $191 a month. Note that this tracked income got already deducted by the withholding tax (mostly 15%). As I’ve to pay 26.38% tax in total on my dividend income, but reduced by some tax exemption and the already paid withholding tax, this isn’t the final net value.

The year over year comparison of my dividend income is misleading as I’ve adjusted the portfolio quite a lot over the years which resulted in a constant decrease in portfolio dividend yield. Going forward, I think this will be more “pointing upward”. But this is the result of my personal journey into the world of dividend growth investing until now and there is no denying in the (sometimes costly) things I’ve learned. I’m still relatively young and my journey will continue decades, so I forgive myself for my early mistakes.

Looking at 2019, I hope the volatility continues and gives us more buying opportunities like we saw in december. The only problem: my shopping list is quite long and my cash reserve is quite low. But I think that’s always the case in a downturn stock scenario. The key is to keep adding when valuation is attractive and to identify the highest quality for the lowest price. I also hope to give a portfolio review on a quarter-by-quarter basis for this year.

Also a big thanks to “Dividend Growth Machine” at Seeking Alpha which inspired me to do my review this way.

8 thoughts on “Annual Review 2018

  • January 12, 2019 at 11:47 pm
    Permalink

    Hey DivRider, congrats on the baby and the new apartment! Still great you found a little extra cash to put to work in your investments. Love the dividend income chart – looks like you’re well on your way!

    Cheers, Frankie

    Reply
    • January 13, 2019 at 12:35 am
      Permalink

      Hey Frankie,
      thanks for your nice comment! It’s not a straight line, but I also hope that I’m well on my way!
      Thanks for stopping by!

      Reply
  • January 13, 2019 at 5:47 am
    Permalink

    Fantastic work. Keep up the good work. Keep that forward dividend growing and you’re winning!

    Reply
    • January 13, 2019 at 7:33 pm
      Permalink

      BHL, thanks for stopping by. And yes, that’s definitely the plan!

      Reply
  • January 15, 2019 at 8:52 pm
    Permalink

    Congratulations on your first year with Baby DivRider and the new home, sounds like it will work out really well and you have a beautiful view to enjoy! My father was born in Molme and we still have quite a bit of family scattered across Germany; unfortunately I have only visited on work trips so have never had much time to explore.

    With buying a home it looks like you still did a great job of adding some new capital and shuffling things around a little bit. You made some nice buys there at the end of the year and were certainly busy!

    Look forward to seeing what 2019 holds for you!

    Reply
    • January 15, 2019 at 11:28 pm
      Permalink

      Hey DivvyDad, thanks for stopping by! And nice to know you’ve relatives in Germany. I know the problem of not having enough time to visit all distant family members.
      Yes, end of year buying activity was crazy. Now I’m happy with my purchases but on the other side I’ve capped my buying power in 2019 a little bit because I’ve to bring my margin back to zero. I’ll go into this when I’m writing about my goals in 2019.

      Reply
  • May 11, 2019 at 7:58 am
    Permalink

    Hey DivRider! I was disappointed you couldn’t post much in 2018, but now I understand why. You’ve been quite busy. Congrats on the addition of Baby DivRider to the family, and the new homestead.
    Good to see the portfolio lives on, and that you have designs for it to continue well into the future.
    I enjoyed the annual review… all the charts, tables… and those colors! Awesome.
    Looks like ESV and KMI did most of the damage in 2018, but perhaps they can turn things around and be your big winners in 2019.

    Reply
    • June 17, 2019 at 12:29 am
      Permalink

      Hi Engin,

      please excuse my late reply. Thanks for your comment and your appreciation. I also like it very much.
      I recently sold ESV as they eliminated their last leftover dividend. This was one of the last failed oil bets in my portfolio. I should have cleaned them much earlier, but it is like it is. After decades of investing I don’t think the earlier losses will matter any more. Provided that I don’t repeat them, of course. KMI seems to be on a different page. Large insider buys in the last months, improving metrics. But I’m not quite sure what to do with this holding, but it’s much likely that I will reduce or sell it completely.

      Thanks for stopping by!

      Reply

Leave a Reply

Your email address will not be published.