Annual Performance Review (2017)

Welcome to the first annual performance review of my dividend Portfolio.  I’ve actually kept track of my portfolio performance over the past 3 years, which I’ll share with you shortly, but since the blog was only created 6 months ago this will be my first opportunity to post about annual performance as a calendar year comes to a close.

I feel it’s important to evaluate the portfolio as a whole, comparing it to a reference to gauge its performance.  In this case, the reference is an index, the S&P 500 stock index.  Since most stocks with long dividend histories tend to be large cap stocks, using the S&P 500 index seems appropriate.  If my portfolio is lagging the index, I might examine my holdings further, looking for the cause of the under-performance.  Is it an individual stock or two facing a significant temporary setback, or a fundamental issue with my overall stock selection?  Could it be that I’m underweight in the best performing sectors?  Maybe I’m beating the index, and I determine I want to stay the course.  In any case, having the performance data can help me to steer the portfolio in the right direction.

Of course, I want to beat the index over time, otherwise one could argue that I’d be better off just investing in the index.  However, even if I don’t beat the index, I like the control I get with building my own portfolio and thus controlling which stocks are part of it.  I can decide if I want to skew the portfolio for growth instead of income, or vice versa.  I can also overweight sectors that I like (tech, healthcare, financials, industrials), and underweight those I don’t (utilities, telecom, energy).

I’ve also tracked the performance of the individual stocks for 2017.  This way I can potentially feed the strongest stocks if their prospects are still bright, and perhaps weed out the weaker ones by replacing them with better alternatives.


2017 Portfolio Performance

Let’s start by looking at the performance of my entire portfolio for 2017.  I’ve calculated the Internal Rate of Return (IRR) by keeping track of all cash inflows and outflows from the portfolio.  Inflows are essentially fresh capital I’ve invested, while outflows are proceeds from stock sales, or dividends that are not re-invested.  The IRR takes into account the timing of my inflows and outflows, as well as the re-invested dividends.

For 2017 my portfolio return was 18.79%.  Not too shabby, right?  Unfortunately, this lagged behind the S&P 500 Index, which posted a 2017 return of 21.93% including dividends.

Note – I’ve obtained my S&P 500 return numbers from here.

In fact, for 2 of the past 3 individual years, I’ve trailed the index, as you can see in the table below.  However, I’m beating the index over the entire 3-year period.  The difference over the 3-year period (0.43%) doesn’t look like much, but the overall number is an annualized rate or compound annual growth rate (CAGR), so those small differences can actually result in large $ deltas if I can maintain the advantage over many years.


2017 Individual Stock Performances

In the table that follows, stocks that aren’t shaded at all were in the portfolio at both the start and end of the year.  I expect this to be the norm for most of the portfolio stocks.

Stocks shaded in blue were sold in their entirety during 2017, and thus no longer part of my portfolio.  Most of these stocks were in the portfolio to start the year.  However, that’s not always the case.  For instance, LB and GWW were both purchased, and sold, in 2017.

Stocks shaded in red were new additions to the portfolio in 2017 that remained in as the year came to an end.

As you can see, I added 7 stocks to the portfolio, while removing 5 stocks.

I calculated the IRR for each stock (see “+ reinv. div.” column) and ranked them from highest to lowest based on this column.  For those stocks that weren’t in the portfolio for the entire year (i.e. those shaded in blue or red), I use a simple return.  If I had used the IRR calculation in these cases the percentage returned would have been noticeably incorrect, especially for those stocks with short holding periods.

There are percentages in two columns.  The first column (price appreciation only), shows the return of the stock from the beginning of the year (or the first day I held the stock in 2017), to the last day of the year (or the last day I held the stock in 2017).  This just shows how the stock performed price-wise over the time period I owned it.  The second column (+ reinvested dividends) shows the percentage return given price appreciation, plus the timing of reinvested dividends, plus the timing of any buys and sells during the year.

In most cases, when I don’t make additional buys or sells of the stock during the year, the second column percentage will be slightly higher than the first column by the stock yield (+ or – a bit given the timing of the reinvested dividends).  However, in those cases where I did make additional buys or sells of the stock during the year, the return can be affected rather dramatically, based on the size & timing of my transaction.  Thus, I wanted to highlight those stocks, as it can help explain some of the larger than normal differences in my return versus that of just the stock price return.

A few stocks in which I made timely transactions included SWKS, WPC, QCOM, TGT, HRL & O.  In three of these cases, I turned a negative return into a positive one.  With TROW, I actually reduced my return percentage a bit with an untimely transaction.

From the table you can see I had 11 stocks with at least a 30% return, led by a 60.07% return from ABBV.  I also had 8 stocks with a negative return, with SCG being the worst by far at -43.57%.

Recall the total portfolio return was 18.79%.  So, 19 of the stocks finished with a better individual return, and the other 24 finished with a lower return.


Here are the return percentages for the individual holdings in chart form, offering a different way to look at the data…



Despite trailing the S&P 500 for 2017, I was certainly happy with my Portfolio return.  Additionally, I kept my lead since the beginning of 2015 with respect to CAGR when comparing to the S&P 500.

Most of my transactions involving existing positions during the year led to improvements to my return, so I’m also happy with that.  If transaction decisions were leading to poorer performance, then I’d have to question my methodology.

I’d expect some of the best stocks from 2017 to potentially cool off in 2018, while some of the worst performers might be poised for a better 2018.  In fact, some my 2017 laggards are already off to a good start after the first week of trading in 2018.

As I continue to hold many of these stocks over time, you’ll see occasional Performance Check posts on them, detailing their returns for me over longer periods of time than just a single year.  So, keep your eyes peeled for those.  I’ve already offered up 4 of those in the past few months for these stocks: PG, AFL, RPM & PEP.

I’d love to get your feedback on the annual review… Too much info?  Need more?  Do any stock performances stand out to you?  Also, let me know if you keep track of your portfolio in a similar manner, and if so, how did your portfolio performance end up in 2017?


Bonus Section

(Added in response to a comment from Dividend Dozer!  Thanks for inquiring.)

For interested readers, this section shows my table of spreadsheet data (inflows & outflows) used for the IRR calculation for my entire dividend Portfolio in 2017.  The IRR formula used is also below.

The only data needed for the calculation is in columns A & B, which is the transaction date, and the dollar amount of the transaction, respectively.  Buys are inflows to the portfolio, while sells, and paid dividends that are not re-invested, are shown as portfolio outflows.

The info in columns C & D is not needed, but I keep it to help me recollect what the transaction was.

As for the formula, it’s this simple: =XIRR(B97:B136,A97:A136,0.1), which I paste into a cell where I want to show the portfolio return.  One must alter the cell locations in the formula to match those where your data is contained in your spreadsheet.

For the data in my table, you should get 18.79%, assuming your ‘portfolio return’ cell is formatted to be a percentage with 2 decimal places.

If you end up calculating your 2017 portfolio return, I’d love to hear how you did.




12 thoughts on “Annual Performance Review (2017)

  1. Nice recap. I liked the level of detail.

    It’s very helpful to see how different holdings perform vs. each other as well as a broader index like the SP 500.

    One thing I’d like to know further on please: what are your thoughts on account allocation (taxable, non-taxable, pre-tax/roth, etc.)? How do account types play a part of your respective plan?

    I’m actually finishing up our 2016 vs. 2017 review from a passive income perspective. I might add net worth growth, but I’m still determining what to cover.

    Thanks for the post. – Mike

    1. Hi Mike. Thanks for your comments. I’m glad you liked the post.
      I like to contribute to both taxable and non-taxable accounts to allow for greater flexibility (or tax diversification) once I no longer have income from my job. If I quit working prior to being eligible for Social Security, having money in taxable accounts will offer me more options for providing a monthly income for myself until I can collect SS. Currently I contribute to both a standard 401(k) as well as a Roth 401(k) offered by my employer. Right now it’s about a 64%/36% split for 401(k) vs. Roth 401(k) contributions. Of course, I also contribute to my Dividend portfolio when I can, which is in a taxable account. I hope that answers your question.
      I’ll be looking forward to your review post. Take care.

  2. Excellent post!

    For those stocks you owned for only a portion of the year – you calculated the price appreciation during the ownership period, and then did you extrapolate that gain or loss over a full twelve months?

    Did you also weigh those gains/losses differently then when calculating your overall return?

    I love the analytics you put into this post. I’d love to see more like this in the community. It’s a great way to stay honest with ourselves!

    I personally would love to see more details (especially formulas) – I bet a lot of people don’t even try to calculate their actual return because it gets a bit messy with purchases and sales throughout the year.

    1. Hi Dozer, let me see if I can answer your questions…
      For the stocks I owned for only a portion of the year, the individual return percentages are only my return during my ownership period. Think of them as Year-To-Date (YTD) numbers. This return does not extrapolate over the full 12 months. It would if I used the standard IRR function, which assumes an annualized return. However, doing this would provide returns that would look exaggerated since the formula assumes 1 year, but my holding period is less than 1 year.
      Things are more straightforward when calculating the entire portfolio return since the portfolio is “held” for the entire year, if you will. It just takes into account all the inflows & outflows of the underlying individual holdings.
      I’ll add a bonus section to the end of the post showing you my IRR calculation for the entire portfolio in 2017… I think you’ll find it easy to follow, and the formula to be simpler than one might think. Try implementing it for your portfolio in 2017. I’d love to hear how your portfolio performed.

    1. I find calculating the numbers to be exciting, as I get to know exactly how I did, even though I already have a sense of it. In addition, it gives me some insight regarding the effectiveness of the timing of my buys and sells. Thanks for stopping by and commenting, TITM!

  3. Another great post ED! Your analysis is sharp, and I like the fact that you are so transparent. I didn’t realize ABBV (which I have been watching for awhile but don’t yet own) was such a strong performer in 2017. And I hadn’t really paid attention to the fact that XOM and CVS (both of which I do own) had done so poorly last year.

    Another factor is your relative success in buying and selling. I haven’t really sold anything yet, even though I know in many cases my capital could be deployed more effectively in other holdings. Do you have a specific selling strategy that you employ for this portfolio?

    My dividend portfolio also slightly lags the market (it really is hard to beat the market!), but it is something I really enjoy. I am hopeful that over the longer term the returns will be stronger. Looking forward to the next ED post!

    1. Thanks, DF. I find calculating the numbers and examining the results to be enjoyable. I agree… beating the market is difficult.
      Regarding having a specific sell strategy, I can’t say I’ve got a written list of criteria. In general, I’d probably sell if the dividend was cut, or hadn’t been raised for a while (like I did with FNGN last year). I’d sell if it looks like the business is deteriorating due to poor management, or has poor future prospects. I’d also sell if I found a better alternative.
      I don’t think I’m married to any of the stocks in my Portfolio. As long as they continue to perform, then they usually stay in the Portfolio. It would be hard for me to say I’ll never sell a stock, as things change over time, and what might have been a good investment at the time of purchase, may not be after some time has elapsed. Thus, I’m always evaluating what’s going on with my holdings looking for other stocks that can challenge their worthiness within my Portfolio. If I think I have a better alternative, I’m not opposed to making a switch.
      Last year I swapped PX for APD, and I made a decision to sell GWW rather than keep both FAST and GWW in my Portfolio.

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