Mongkol Onnuan
Introduction
It is time to summarize another quarter. The fourth quarter of 2022 saw the S&P 500 up 7% and helped the S&P 500 to finish 2022 roughly 20% below its opening mark. While October and November were excellent months, we saw December was not, and the index declined sharply, which is characteristic of this volatile year. The index is volatile and is affected in the short term by macro events that change the mood of investors and traders. The combination of war in Europe with higher inflation and interest rates is challenging the business environment and the markets.
In the coming quarter, we will see the market seeking direction. Inflation has been declining for six months, and despite higher rates, the job market seems resilient. The war in Ukraine is having a more limited toll on the European and American economies as countries are finding a new balance without relying on Russian energy. We should expect the Federal Reserve to keep battling inflation, and the interest rate will probably be higher. The high level of uncertainty as investors still fear a recession is increasing the chance for us to see a volatile market.
In Q4, my dividend growth portfolio performed in line with the market. The results don’t surprise me, as dividend growth stocks tend to be more resilient with lower volatility. Thus, they declined less in previous quarters yet tend to enjoy recovery. In the long run, I should expect it to grow slower when the market is booming, but the lower volatility is a plus when the uncertainty is higher. I am not focusing on the total return in this portfolio but on its income.
I enjoyed several dividend increases during the quarter. Therefore, my dividend income has also been growing organically. My main goal is to achieve a growing stream of dividends, giving me more financial freedom. In Q4 2022, my dividend income increased by 16.6% YoY, and I am delighted with this achievement as I allocated fewer funds to my dividend growth portfolio than I planned initially.
I plan to keep executing my investment thesis. I will keep allocating funds to my portfolio monthly. I will invest in stocks I believe are cheap or fairly valued. I will strive to achieve a higher dividend income and a high total return. I see no reason to amend my investment thesis, as it has worked for me over the past decade.
I see any sign of volatility as an opportunity to buy a future income at lower prices. If the market is volatile due to a recession or any other reason, I will stick to the cheapest blue chips, which are usually expensive. Their dividend is generally extremely safe, and any price change is a possible opportunity. I will also try to take advantage of significant drops and buy some of the stocks I find expensive now. I wish you all a great quarter.
Investment Allocation
My dividend growth portfolio used to be more than 83% of my assets. To balance it, I allocated more funds to my other accounts. I want to balance it to hedge against possible strategy failures. Being overconfident in the financial world can lead to devastating results. Therefore, I am trying to allocate my funds and ensure that my assets stay diversified.
My current goal is to make my dividend growth portfolio around 50% of my assets and to do it while I keep increasing its value and achieving a 10% dividend growth. I am a believer in diversification. In the future, I believe that when I buy a house as an investment or to live in, it will lower the percentage of the dividend growth portfolio in my assets.
My dividend growth portfolio is very well-diversified and contains a collection of 79 blue-chip companies. While I am proud of my achievements as a young investor, I must stay humble and diversify my investments wisely. The more I learn about investments, the humbler I become.
I already maxed out my Roth IRA in 2022. I have medium-term accounts that may serve as a down payment on a house. These two measures helped me diversify my holdings. While the Roth IRA, the pension, and the dividend growth portfolio are long-term investments, I plan to keep the rest of the accounts liquid.
Author
My Goals
Since I started setting goals, I have managed to achieve most of my goals. My goals for 2022 were mainly achieved, yet I still didn’t read as much as I wanted. My goals in 2023 are to achieve at least 10% of dividend growth and diversify my investments, maximize my Roth IRA contribution, read at least twelve books, and travel abroad at least twice. I keep track of my goals so I can achieve them.
By setting goals, you can organize your time better. I highly recommend it to everyone. It allows you to see your progress during the year. Just select some challenging but achievable goals, and make sure they are quantifiable. I believe I will achieve all my goals for 2023 as I already ordered my first vacation for the year and maxed out my Roth IRA for the year.
Sector Allocation
My brokerage account is my most significant asset, so I keep allocating money there according to my optimal sector allocation. As I am still accumulating, I don’t mind buying stocks from sectors I am over-allocated. I don’t want to ignore my optimal allocation.
I probably will not add to sectors exceeding the optimal allocation, like the energy sector, unless an outstanding opportunity arises. I will probably invest more in sectors I lack exposure in the coming quarters. I usually write articles regarding companies that I find attractive. I bought shares in some of them, while others are still on my radar.
In Q1, I will try to add some more dividend growth companies in the information technology and financial sectors.
| Sector | Current | Goal |
| Consumer Staples | 16.7% | 17.0% |
| Health Care | 12.4% | 12.5% |
| Industrials | 13.3% | 12.5% |
| Financials | 10.9% | 12.5% |
| Information Technology | 10.6% | 12.5% |
| Consumer Discretionary | 9.7% | 10.0% |
| Real Estate | 7.7% | 8.0% |
| Energy and Materials | 10.6% | 8.0% |
| Communication Services | 5.1% | 4.0% |
| Utilities | 2.9% | 3.0% |
My Portfolio
The following table shows the current holdings in my brokerage account. All the companies below are part of my dividend growth portfolio. Alphabet (GOOG) (GOOGL), Amazon (AMZN), Meta Platforms (META), and Disney (DIS) don’t pay dividends. However, they enjoy steady growth in their free cash flow. This metric is the basis of any dividend payment.
As a long-term investor, I don’t mind waiting until they are ready to share some of this wealth with their investors. Alphabet, Amazon, and Facebook have already started buyback programs. I hope that both will offer dividends in the years to come. Disney will hopefully reinstate the dividend soon. I kept a small portion of my Disney position as it was my first position (I don’t recommend having emotions in your decision-making process, but sometimes we can’t help it).
| Industry | Company | Ticker | % of portfolio | % of income |
| Information Technology | APPLE INC | (AAPL) | 3.06% | 0.69% |
| Health Care | ABBVIE INC | (ABBV) | 1.16% | 1.47% |
| Health Care | ABBOTT LABORATORIES | (ABT) | 2.13% | 1.27% |
| Consumer Staples | ARCHER-DANIELS-MIDLAND CO | (ADM) | 1.67% | 0.99% |
| Financials | AFLAC INC | (AFL) | 2.47% | 1.88% |
| Financials | AMERIPRISE FINL INC | (AMP) | 1.26% | 0.62% |
| Consumer Discretionary | AMAZON.COM INC | (AMZN) | 1.45% | 0.00% |
| Financials | BANK OF AMERICA CORP | (BAC) | 1.58% | 1.31% |
| Health Care | BECTON DICKINSON & CO | (BDX) | 0.58% | 0.27% |
| Health Care | BRISTOL MYERS SQUIBB CO | (BMY) | 0.55% | 0.57% |
| Financials | CITIGROUP INC COM | (C) | 0.56% | 0.76% |
| Health Care | CARDINAL HEALTH INC | (CAH) | 1.46% | 1.23% |
| Industrials | CATERPILLAR INC | (CAT) | 2.92% | 1.79% |
| Information Technology | CISCO SYSTEMS INC | (CSCO) | 0.56% | 0.57% |
| Health Care | CVS HEALTH CORPORATION | (CVS) | 0.34% | 0.30% |
| Energy | CHEVRON CORPORATION | (CVX) | 2.70% | 2.82% |
| Communication Services | WALT DISNEY CO | (DIS) | 0.38% | 0.00% |
| Real Estate | DIGITAL REALTY TRUST INC | (DLR) | 1.23% | 1.82% |
| Utilities | DUKE ENERGY CORPORATION HOLDING COMPANY | (DUK) | 0.40% | 0.50% |
| Industrials | EMERSON ELECTRIC CO | (EMR) | 1.87% | 1.29% |
| Energy | ENTERPRISE PRODUCTS PARTNERS LP | (EPD) | 1.96% | 4.87% |
| Industrials | EATON CORPORATION PLC | (ETN) | 1.26% | 0.80% |
| Industrials | GENERAL DYNAMICS CORP | (GD) | 0.95% | 0.63% |
| Consumer Staples | GENERAL MILLS INC | (GIS) | 1.26% | 1.07% |
| Communication Services | ALPHABET INC CLASS C CAPITAL STOCK | (GOOG) | 2.11% | 0.00% |
| Information Technology | INTERNATIONAL BUSINESS MACHINES CORP | (IBM) | 0.56% | 0.82% |
| Health Care | JOHNSON & JOHNSON | (JNJ) | 3.32% | 2.81% |
| Financials | JPMORGAN CHASE & CO | (JPM) | 1.60% | 1.49% |
| Consumer Staples | KELLOGG CO | (K) | 0.27% | 0.29% |
| Consumer Staples | KIMBERLY CLARK CORP | (KMB) | 1.56% | 1.73% |
| Energy | KINDER MORGAN INC | (KMI) | 1.08% | 2.07% |
| Consumer Staples | COCA-COLA COMPANY (THE) | (KO) | 1.64% | 1.53% |
| Industrials | LOCKHEED MARTIN CORP | (LMT) | 0.35% | 0.30% |
| Consumer Discretionary | LOWES COMPANIES | (LOW) | 0.40% | 0.26% |
| Consumer Discretionary | MCDONALDS CORP | (MCD) | 3.05% | 2.27% |
| Health Care | MCKESSON CORP | (MCK) | 0.73% | 0.13% |
| Health Care | MEDTRONIC PLC COM | (MDT) | 0.91% | 1.01% |
| Communication Services | META PLATFORMS INC | (META) | 1.04% | 0.00% |
| Industrials | 3M COMPANY | (MMM) | 0.99% | 1.48% |
| Energy | MAGELLAN MIDSTREAM PARTNERS LP UNIT REPSTG LTD PARTNER | (MMP) | 1.01% | 2.60% |
| Consumer Staples | ALTRIA GROUP INC | (MO) | 1.04% | 2.80% |
| Energy | MPLX LP COM UNIT REPSTG LTD PARTNER INT | (MPLX) | 0.78% | 2.31% |
| Real Estate | MEDICAL PROPERTIES TRUST INC | (MPW) | 0.99% | 2.88% |
| Health Care | MERCK & CO INC | (MRK) | 0.85% | 0.73% |
| Information Technology | MICROSOFT CORP | (MSFT) | 1.82% | 0.68% |
| Industrials | MSC INDUSTRIAL DIRECT CO INC CL A | (MSM) | 0.61% | 0.79% |
| Utilities | NEXTERA ENERGY INC | (NEE) | 0.52% | 0.34% |
| Consumer Discretionary | NIKE INC CLASS B COM | (NKE) | 0.98% | 0.34% |
| Industrials | NORFOLK SOUTHERN CORP | (NSC) | 1.94% | 1.23% |
| Information Technology | NVIDIA CORP | (NVDA) | 1.26% | 0.04% |
| Real Estate | REALTY INCOME CORP | (O) | 2.54% | 3.70% |
| Real Estate | OMEGA HEALTHCARE INVESTORS INC | (OHI) | 1.28% | 3.99% |
| Consumer Staples | PEPSICO INC COMMON STOCK | (PEP) | 2.68% | 2.29% |
| Health Care | PFIZER INC | (PFE) | 0.36% | 0.41% |
| Consumer Staples | PROCTER & GAMBLE CO | (PG) | 1.72% | 1.36% |
| Consumer Staples | PHILIP MORRIS INTERNATIONAL INC | (PM) | 2.32% | 3.79% |
| Financials | PRUDENTIAL FINANCIAL INC | (PRU) | 1.90% | 2.98% |
| Information Technology | QUALCOMM INC | (QCOM) | 0.93% | 0.75% |
| Industrials | RAYTHEON TECHNOLOGIES CORPORATION COMMON STOCK | (RTX) | 0.77% | 0.55% |
| Consumer Discretionary | STARBUCKS CORP | (SBUX) | 0.81% | 0.53% |
| Financials | CHARLES SCHWAB CORP | (SCHW) | 0.64% | 0.22% |
| Utilities | SOUTH JERSEY INDUSTRIES INC | (SJI) | 0.41% | 0.46% |
| Consumer Staples | SMUCKER J M COMPANY | (SJM) | 0.59% | 0.51% |
| Utilities | SOUTHERN CO | (SO) | 0.81% | 1.01% |
| Consumer Staples | SYSCO CORP | (SYY) | 0.61% | 0.49% |
| Consumer Discretionary | TARGET CORP | (TGT) | 1.83% | 1.61% |
| Financials | PRICE T ROWE GROUP INC | (TROW) | 0.91% | 1.19% |
| Consumer Staples | TYSON FOODS | (TSN) | 0.50% | 0.48% |
| Information Technology | TEXAS INSTRUMENTS INCORPORATED | (TXN) | 0.68% | 0.62% |
| Industrials | UNION PACIFIC CORP | (UNP) | 1.64% | 1.29% |
| Information Technology | VISA INC CL A COMMON STOCK | (V) | 1.71% | 0.45% |
| Consumer Discretionary | VF CORPORATION | (VFC) | 1.17% | 2.53% |
| Real Estate | VICI PROPERTIES | (VICI) | 0.39% | 0.58% |
| Energy | VALERO ENERGY CORP NEW | (VLO) | 0.52% | 0.49% |
| Communication Services | VERIZON COMMUNICATIONS | (VZ) | 1.60% | 3.24% |
| Utilities | WEC ENERGY GROUP INC | (WEC) | 0.74% | 0.78% |
| Consumer Staples | WALMART INC COMMON STOCK | (WMT) | 0.88% | 0.45% |
| Real Estate | W P CAREY INC COM | (WPC) | 1.28% | 2.12% |
| Energy | EXXON MOBIL CORP | (XOM) | 2.59% | 2.71% |
I currently own 79 companies in my portfolio. Over the quarter, I added to existing and new positions. I am not worried at all about the number of positions I hold. These blue-chip companies don’t need me to follow them daily. I wouldn’t mind keeping them even if the stock market is closed for a decade.
Acquisitions Made in Q4 2022
Information Technology- Microsoft is an attractive investment. Its CEO is a great leader with excellent capital allocation capabilities. The company keeps growing, and I find it a haven in the volatile information technology sector.
Consumer Discretionary- V.F. Corporation is a leading house of brands. The company has enjoyed growing demand for outdoor clothing and successful brands like Vans. The inflation and the lower desire for discretionary spending have hurt the stock. Yet the current valuation is very attractive.
Communications- Verizon is a highly compelling buy when its dividend yield exceeds 7%. While there is not much growth, there is a lot of stability and having a 7% dividend with 2% growth is not a bad idea when looking for safe and stable options.
Sales Made In Q4 2022
Over the past quarter, I have not sold stocks in my portfolio over the past quarter, as they all maintained or increased their dividends.
What Am I Looking For?
When I look at my portfolio, I see a great collection of companies. I feel more confident about some companies yearly and less optimistic about others. That’s why diversification is critical. I am always looking for the weaker links in my portfolio, and I try to measure the effect of a possible dividend cut on my income.
In Q1, I will follow the information technology and financial sectors closely. You probably recognize the chart below, as it is part of my stock analysis. Using this mostly art contributes to my analysis thesis. I mostly keep looking for Type 2 stocks as they offer the best combination of growth and income.
Author
Conclusion
Q4 2022 was another strong quarter for investors due to steep increases. I managed to maintain the dividend income growth during the quarter. In the next quarter, I will keep executing my investment thesis as I invest in companies monthly. Hopefully, I will be able to achieve my goals and get closer to my long-term objectives.
The war in Europe and inflation across the globe have taken us into a challenging business environment. We see that there is still a risk of recession due to higher interest rates. The short-term risks are influencing the market heavily. However, I constantly learn that there is always a reason to avoid investing or be scared. Investors should ignore the noise and keep executing their plans. I wish you all a great 2023. I hope you all stay safe and healthy.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
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