On July 23, 2015 I left a job that had a pension benefit. I had worked there for seven years, but I was not vested in the pension. I had the option of taking all of my contributions and doing with them as I pleased. I opted to move the contributions to my IRA and set up the nonPension portfolio. The primary goal of the portfolio is to generate a perpetual dividend income stream of $560 per month starting in December 2035. If the primary goal is not achieved, the goal is to generate $560 per month in income through dividends and selective sales to last for the rest of my life.
When I left the job two years ago, my contributions totaled a little over $21,000. From November 2015 through August 2016, I invested in 43 securities, $500 at a time, once a week. Since August, I sold four stocks and bought six more, so I have 45 stocks in the portfolio now. Two of my stocks had spin offs in the time that I have owned them. One of those spin offs has been sold since, and the other remains in the portfolio over in the corner, generating about 9 cents per month. It will eventually be sold.
The market was going through a minor correction from late 2015 through early 2016, so many of my stocks were picked up at a bargain. As a result, my portfolio has outperformed the S&P 500 during the time the nonPension portfolio has been in existence. The nP portfolio is up 31% over the past two years, compared to the S&P which is up 21%.
In about 18 years, the nP portfolio will have to generate $560 per month in income. Currently the portfolio generates about $73. The income stream needs to double every six years or so in order to reach its goal, or if you prefer, it needs to increase by over 11% per year. This is a big goal to reach for, but my hope is to make changes to the portfolio periodically to try to keep the portfolio on track. Changes during 2017 have included selling stocks with gains and low dividend increase rates as well as purchasing stocks with higher dividends or higher dividend increase rates.
What are some of the disappointing events over the past two years?
Viacom Inc. (VIAB) cut its dividend in half in 2016. In April 2016, VIAB looked like a great deal to me with a dividend yield of 3.9%. By September the quarterly dividend went from 40 cents to 20 cents. The stock's contribution to the income stream diminished a lot. VIAB will be up for sale in the near future if the price rises high enough. If the dividend starts going up before the price goes up higher enough, it may stay in the portfolio.
Macy's, Inc (M) had a significant fall in price in 2017. I also bought M in April 2016. At the time, the price was at a relatively low $41. Just a year before, the price was as above $60. Today it has fallen even lower to $23. Dividend payments have stayed the same since May 2016, which is disappointing, but the dividend rate is well over 6%, so I am riding M out. I trust that either the company's prospects will turn around, and I will collect the nice dividend in the mean time, or the nP portfolio will survive even if M fails. I have already lost half of my investment in M on paper. Losing the other half would likely not be the worst thing to happen to the portfolio between now and 2035.
CSX Corporation (CSX) soared in price after I sold it in 2016. I bought CSX at $27 and sold at $34, thinking the price had moved to sky-high valuations. At the time I suppose that I had no idea just how high the sky was. CSX shares now trade at around $52. Unfortunately, I do not have a time machine to go back and keep my shares. CSX is not currently on my buy list, but it will be again one day when and if the price comes down to more reasonable levels.
Caterpillar Inc. (CAT) started raising its dividend again after I sold it in 2017. For a number of years CAT held its dividend at the same rate. I thought surely it will start rising again soon. After holding CAT in the nP portfolio for over a year, the dividend rate was still the same, and I decided to sell. Just weeks later the dividend rate was increased. The increase was small, but I think it signals a move back to a pattern of regular increases. CAT's price is currently too high for me to buy it again right now.
Decisions cannot be made with knowledge of what future events will be. We cannot know if our decisions will be good or bad until after they are made. We can only attempt to make the best decisions we can at the time and live with the consequences, good or bad.
Below is a list of the stocks currently in the nonPension portfolio.
| Ticker | Shares | Share Price | Value |
| AAPL | 5.094 | $150.27 | $765.50 |
| ABBV | 9.531 | $74.63 | $711.30 |
| ADM | 12.628 | $41.26 | $521.03 |
| ADNT | 1.000 | $68.71 | $68.71 |
| AMGN | 3.100 | $180.21 | $558.65 |
| AMP | 5.140 | $136.34 | $700.79 |
| BA | 4.198 | $212.14 | $890.56 |
| BBY | 16.579 | $54.14 | $897.59 |
| BG | 9.261 | $79.63 | $737.45 |
| CAH | 7.123 | $76.29 | $543.41 |
| CCL | 11.295 | $67.00 | $756.77 |
| EAT | 10.377 | $36.22 | $375.85 |
| EMN | 7.233 | $85.65 | $619.51 |
| GEO | 23.322 | $29.99 | $699.43 |
| GILD | 6.166 | $73.76 | $454.80 |
| GLW | 27.968 | $31.85 | $890.78 |
| HBI | 24.170 | $23.55 | $569.20 |
| HOG | 12.505 | $48.26 | $603.49 |
| HPQ | 37.907 | $19.15 | $725.92 |
| INTC | 14.377 | $34.73 | $499.30 |
| IP | 13.756 | $56.64 | $779.14 |
| IRM | 15.237 | $35.00 | $533.30 |
| JCI | 10.178 | $44.19 | $449.77 |
| JPM | 8.265 | $90.89 | $751.21 |
| KSS | 11.728 | $40.46 | $474.51 |
| LAMR | 7.000 | $72.76 | $509.32 |
| LM | 16.564 | $40.26 | $666.87 |
| M | 12.749 | $23.36 | $297.82 |
| MPC | 16.623 | $55.34 | $919.92 |
| OHI | 16.168 | $33.48 | $541.30 |
| PAG | 11.080 | $44.32 | $491.07 |
| PFE | 15.564 | $33.48 | $521.09 |
| PRU | 6.298 | $111.74 | $703.74 |
| PSX | 6.198 | $82.85 | $513.50 |
| QCOM | 9.417 | $53.85 | $507.11 |
| R | 10.380 | $72.48 | $752.34 |
| SBUX | 8.000 | $57.98 | $463.84 |
| T | 16.141 | $36.51 | $589.31 |
| TGT | 7.268 | $54.84 | $398.59 |
| UNP | 6.219 | $104.85 | $652.06 |
| VIAB | 12.373 | $36.04 | $445.92 |
| VZ | 10.472 | $44.23 | $463.17 |
| WFC | 10.287 | $54.17 | $557.22 |
| WHR | 3.070 | $191.22 | $587.05 |
| WRK | 15.621 | $58.70 | $916.95 |
| WYN | 7.186 | $103.06 | $740.59 |
| Cash ($) | $115.90 | ||
| Total Value | $27,932.66 | ||
| Two Years Ago | $21,346.15 | ||
| Increase | 30.86% | ||
| S & P 500 | 2472.51 | ||
| Two Years Ago | 2051.82 | ||
| Increase | 20.50% | ||
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