Buy and Hold Forever Dividend Stock Update

After a couple of years I've finally gotten around to updating the Buy and Hold Forever Dividend Portfolio.

To refresh your memory as well as mine, the idea was to find a couple of dividend stocks from most industries, on the basis of familiarity rather than research. That is, the criteria for stocks making it into the portfolio were: the stocks were in the news at the time and/or their products were ubiquitous. Absolutely no research was done other than to make sure that the stocks picked paid a dividend.

The point of this exercise was to see how well a relatively uninformed investor could do if his investment thesis was that buying and holding dividend paying equities forever isn't dead, as most of the talking heads have been telling us since the financial crisis began.

At the time the experiment was initiated, SPY was designated an alternate and benchmark buy and hold forever dividend portfolio.

Changes to the portfolio since the last update

Verizon (VZ) spun off shares of Frontier Communications (FTR) in 2010. These were added with no cost basis.

Berkshire Hathaway bought Burlington Northern (BNI) and inBev bought Anheuser-Busch (BUD). The original cost basis of each acquired stock was rolled into a new holding (UPS replaced BNI and TAP replaced BUD). The realized capital gains were put into cash. However, to track these gains more easily, I instead put them into the Lehman Short Treasury ETF (SHV) at a 0 cost basis (so their gains would show up and not simply count as cash deposits).

Part of the reason (besides my laziness) why it has taken so long to update the portfolio is that keeping track of all the dividends was just too time consuming and boring in the spreadsheet I had created. It left no time for anything else. Improvements to Google Finance, fortunately, now allow dividends to be tracked automatically. So I've changed the spreadsheet to incorporate this. Unfortunately, I haven't figured out how to share a Google Finance portfolio, so we're still left with spreadsheets (which means that I still have to do manual updates).

The Results so Far

Since inception, the buy and hold portfolio is up 29.19%. The original cost basis was around $15,400. That has grown to over $21,600. The dividends received so far total about $1,720, or just over 11% of the original cost basis. That's a yield of about 3.48% per year (3.167 years--November 2008 to January 2012)--nothing to brag about but it will be interesting to see how this grows as time passes.

SPY, on the other hand, is up a little more: 29.61%. The original cost basis of $15,550 has grown to $21,184. Dividends received total around $1,029 or 6.6%, for a yield of about 2.08% per year. This too should grow as companies raise dividends.

The spreadsheet is below and can also be accessed here.

I'll try to update more often, now that it's easier.

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