Friday, January 10, 2020

Goals & Metrics for my Dividend Growth Portfolio

When I set my 2019 stretch goal to increase my forward dividend income by $3,300 while achieving a dollar-weighted average organic dividend growth rate of at least 5.5%, I half expected to fall short. Both aspects of the goal seemed aggressive and then I got off to a slow start to the year conducting only one transaction over the first three months of 2019. Although I can't identify a turning point, around May I decided to start deploying cash more regularly, which resulted in a personal high 24 transactions in 2019, including five sells. Three of the sells related to closing out positions that hadn't raised their dividends in years (H&R REIT, Keg Revenue Royalties and Life Storage Inc.). When the dust settled, I'm happy to report that my forward dividend income was up by $3,317 and my weighted average organic dividend growth rate was a strong 6.8%.

After thinking about it over the holidays, I chose to set an even more aggressive goal for 2020, aiming for an increase of $3,600 in my forward dividend income. Similarly ambitious, I'm targeting dollar-weighted average organic dividend growth of 6.0% in 2020. Although the dividend growth goal is less than I achieved in 2019, I think it's more of a long-term target given I don't expect to be sell any positions in 2020. Plus, I felt like I spent the last couple months of 2019 chasing dividend growth, which is something I prefer to avoid in 2020.

There are two other goals I want to work toward during 2020.
- At least one quality blog entry per month. My thoughts here are that if I keep renewing the domain name, I might as well use it regularly, rather than just as a transaction journal. For context, a quality entry would provide some benefit to readers, so this one wouldn't qualify.
- By this time next year, I want to produce an outline of how I'd fill a week without work. Not the dream week of sipping drinks on a tropical beach, but the outline of how I would spend my days when/if money weren't an issue.

Since I had some quiet time over the holidays, I calculated some portfolio metrics for 2019 that I thought would be fun to share.
- My internal rate of return on my portfolio in 2019 was 17.8%. This was lower than the benchmark return of 24.6% I get from calculating 67% of the Canadian dividend aristrocat ETF 'CDZ' and 33% of the US S&P dividend ETF SPY (the actual weights of Canadian and U.S. holdings in my portfolio). This result is consistent with my past experience that shows in years when the market is up, I tend to underperform, while I outperform in years when the market falls. I also realized my benchmark is not time-weighted with the inflows of my portfolio, which confounds the under/out performance.
- The value of my portfolio rose by 28.1% in 2019; much higher than anticipated. Canadian Apartment REIT and Microsoft were two of my best performers north and south of the border respectively.
- The dividend yield of my portfolio was 3.9% in 2019, lower than 4.2% in 2018 and 4.0% in 2017.
- Cash represented 1.6% of my portfolio at year end 2019, lower than the 2.7% at year end 2018.
- My holdings raised their dividends 47 times during 2019, with Realty Income doing so 5 times, and Kinder Morgan providing the largest percentage increase (25%).
- The only two companies in my portfolio that didn't raise their dividends in 2019 were Alaris Royalty and RioCan REIT (which I'll give away my last shares to charity in 2020).
- I ended the year with an all-time high 40 positions, up from 38 at the end of 2018. The plan is to slowly see this number decrease going forward.

Here's hoping all of you met your investment goals in 2019 and wishing you the best of luck in 2020!


  1. Looks like a good year all round, DIH. Keep it up and all the best in 2020.


  2. DIH,

    Looks like a great year to me. You beat your stretch goal which is always a plus and that 6.8% weighted growth rate is fantastic. Is that weighted by position sizing or dividend weight? Either way that's pretty fantastic. Best of luck in 2020! Adding $3,600+ to your forward dividends will be huge.

    1. The weighting is by dividend size. Thanks for the comment JC.


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