👉 Portfolio Update: Year-to-Date

⚡ So Where Are We?

It’s officially been 6-months (or so) since we began building the $2M Dividend Growth Portfolio — and I’m eager to share with you all a detailed breakdown of my positions and my thoughts for the remainder of the year.

This year has been accompanied by war, political turmoil, failing banks, the rise and adoption of AI, and much more. I’ve had to adapt quickly, while keeping in mind my long-term investment theses.

As you can see above, the Dividend Growth Portfolio is broken up into four (4) unique sections — dividend growth stocks, long technology, long risky, and the S&P 500.

Let’s dive deeper into the holdings and performance of each section together.

👉 Dividend Growth Stocks: +4.7% YTD

At first glance, it’s disappointing to see this section of the portfolio lagged the performance of the S&P 500 by -10% YTD.

However, this comes to no surprise as these names thrived during 2022 while investors were instead focused on defense during volatile times.

I want to remind everyone the reason for this section — and why it makes up the largest weighting — is because of the passive income that comes with buying and holding these companies over the long term.

As you can see above, my dividend yield on cost is 3% at the moment — which means every year (for the foreseeable future) I’ll make at least a 3% cash-on-cash return on my investment.

Considering this is a dividend growth portfolio, this yield on cost will continue to increase over the years — eventually climbing to 10% by the end of the decade (assuming the names I’ve chosen continue to pay and raise their dividends).

That’s a 10% annual cash-on-cash return paid back to me for as long as this portfolio exists. This is how patient dividend investors not only experience price appreciation over time, but eventually get back paid the entirety of their original investment.

I’m eager to build a portfolio that resembles a similar growth story over my lifetime. It’s 3% now, but will soon be 10% — then 25% and eventually 50% if I’m patient enough. Allowing me to collect my entire investment back every two years.

Feel free to click the above image for a zoomed-in version.

Reflecting upon some of this section’s biggest winners and losers:

• Broadcom (AVGO) was an obvious play given the rise of AI and was originally pitched to you all almost 12 months ago as shown here.

• Lowe’s (LOW) and Home Depot (HD) remain healthy compounders despite their recent pullbacks post-Covid.

• Verizon (VZ) hasn’t exactly performed the way my analysis had hoped, but I’ll remain a shareholder given their free cash flow potential.

• Academy Sports and Outdoors (ASO) really swung back the other way on me — something I’m not worried about in the short-term.

I’m sure this section of my portfolio will continue to change over the coming years — and as always, you all will be the first to know when things do change.

👉 Long Technology: +43.5% YTD

Sheesh!

This section of the portfolio really carried the team this year — as we saw “Mega Cap Big Tech” become one of the most beloved trades by Wall Street.

As you all know, my dividend growth portfolio is much more than just dividend growth stocks. I’m 27-years-old and absolutely have an appetite for Big Tech and don’t want to miss out on the innovation (and profits) they bring to the world.

The investment thesis of this section of the portfolio was simple — cash flow over everything. 

And when the calendar turned in January, big names like Google, Amazon, Salesforce, and Tesla were obviously undervalued from a cash flow perspective.

But now the question is “If Mega Cap Big Tech has been the most-crowded trade of the year, should I remain a shareholder in these names?”

I say yes.

At the end of the day, all of these companies are doing everything they can right now to build deep moats around artificial intelligence and exploit the technology for profit. AI has an insane barrier to entry from a CapEx perspective ($10s of billions) — something these names can comfortably afford.

I’ll remain a happy shareholder in each of them until something proves otherwise. With that being said — I’ll likely add Nvidia and maybe a few others to the list over the coming weeks. I’ll keep you all posted.

Reflecting upon some of this section’s biggest winners:

• I made this video about Salesforce, Google, and Amazon back in December because of their cash flow potential in 2023 — always follow the cash flow.

• Apple turned into a “safe haven” of sorts when the banks began to fail in March, then crushed earnings and the rest is history.

👉 Long Risky: +21.3% YTD

This section of the portfolio also outperformed the S&P 500 — and boy did we have some winners and losers.

As a refresher, the companies inside of this section check one of two boxes:

• The company is newly free cash flow positive or is supposed to become free cash flow positive in the coming 1-2 years

• The company is undervalued in relation to some sort of ongoing trend or unique observation that I’ve made (Crocs, for example).

The outperformance of this section of the portfolio was mainly driven by two themes — undervalued mid-cap tech & cybersecurity.

As you all might remember from this deep dive I shared in 2021, I’m hyper-bullish on the cybersecurity industry — and Palo Alto Networks is the reigning champion in their industry. Therefore, Palo Alto Networks makes up the largest “slice” of this section with Crowdstrike close behind.

From an undervalued mid-cap tech perspective, at the start of the year names like Snowflake, Datadog, Shopify, Cloudflare, and Monday.com were grossly undervalued in relation to industry averages.

Happy to see they rebounded accordingly.

Other interesting names include On Holding (analysis linked here), and Crocs (analysis linked here) — both of which I’m uniquely excited about for various reasons. I plan to add both Axon Enterprise (AXON) and Chipotle Mexican Grill (CMG) to the “risky bets” section above in the coming weeks. More to come.

Finally, Hims & Hers Health (HIMS) is a company I’m long-term bullish on despite the weird sell-off they’ve experienced over the last few months. For more context, here’s a deep dive analysis I shared on the company to Seeking Alpha before they skyrocketed by more than +100% because of their adj. EBITDA beat and raise in Q1.

The reason these names remain a healthy 25% total weighting in my portfolio is because 1) when I’m right, I’m really right and 2) everyone needs a little risk in their portfolio!

⚡ How I Analyze My Dividend Growth Portfolio

Above I shared a screenshot from StockUnlock.com — and I wanted to take a moment to both introduce you to their platform as well as encourage you to check them out for yourself.

They’re an advanced portfolio analysis tool that not only concisely breakdown your dividend income (something I really like) — but also the fundamentals of your holdings.

They also give you the ability to back test your portfolio against the S&P 500 over a 20+ year time horizon — helping you get a better idea on historical performance. My portfolio is in green and the S&P 500 is in blue.

If you’re a serious investor like myself and track your portfolio as closely as I do mine — I truly believe StockUnlock would be a great subscription to add to your rotation.

When you’re ready to give them a try, click this link!

And that’s a wrap! Half of 2023 has finished and I’m incredibly excited as to where things are headed for the remainder of the year. As always, if you have any questions never hesitate to reply to these emails and share your thoughts.

Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.