The 2023 stock market has started off to the races.
The S&P 500 index is up 8.28% year to date and the NASDAQ 100 index is up a whopping
15.77%.
That is crazy growth to start the year.
The bull market seems to be back from the dead after a miserable 2022 (undertaker clip).
This leaves investors asking the question: is the bull market here to stay or will the
bear market return with vengeance?
In today’s video, I’m going to give my thoughts on the recent growth, the future
of the market, and share the overall progress of my long-term dividend growth stock portfolio.
Let’s roll the intro.
My name is Zach and you should leave a like and subscribe to the channel if you enjoy
the video.
Every month I analyze the progress of my portfolio.
These videos help me reflect on my investing strategy and hopefully provide value for others
as well.
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Now let’s dive into my portfolio.
My current value sits at $115,180.
With $93,523 initial dollars invested to fund the account, this puts my total return at
23.16%.
Nearly all my stocks are up over the past month.
Microsoft is my top position, currently valued at $25,730 or around 22% of my portfolio.
I’m up 6.66% so far.
This is a stock I have been adding to significantly in the second half of 2022.
I’m planning on it being one of my core long-term holdings.
In my opinion, Microsoft is poised to be a dividend growth machine over the next decade.
ExxonMobil is my number 2 stock, valued at $17,543.
My total return is a massive 210.73%.
With my 2 years of reinvesting dividends, I’ve earned 18.74 more shares.
This has boosted my dividend yield on initial cost to 10.11%.
ExxonMobil is raking in profits.
That said, I’m not planning to buy more of the stock unless the company is at a massive
discount.
That will likely be in the down market for Oil.
My third largest stock is the Altria Group, ticker symbol MO.
The current value is $13,974, with a total return of 15.13%.
This is my largest dividend payer, with an estimated annual income of $1,120.
With reinvested dividends, my yield on cost is at 9.23%.
Altria is a high yield dividend compounding machine with reliable slow growth.
My fourth largest stock is Disney, currently valued at $12,188.
I’m down 25% overall and the dividend payment remains suspended.
That will likely be true for the next few years as they pay down debt and work to get
their streaming services profitable.
I talked about Disney more in detail in my last portfolio update video.
Most of my thoughts still apply.
Stock number 5 is T Rowe Price, ticker symbol TROW.
This is valued at $8,444, which is a 13.28% total return.
Similar to Microsoft, I’ve been building this position in the second half of 2022.
I will continue to buy more if the price falls back down.
Frankly, I think it may still be a good deal at current prices.
Stock number 6 is Apple.
This is valued at $7,798 which is a 25.96% total return.
Apple remains one of the highest quality businesses in the world and I will continue to dollar
cost average on dips.
Next is Intel, which I just made a video about.
Check that out for detailed thoughts on their latest earnings.
My other stocks include Texas Instruments, Kroger, Visa, Chevron, PepsiCo, and Enterprise
Product Partners.
This portfolio has a dividend yield on cost of 3.37% and from reinvesting dividends I’ve
boosted my yield to 3.6%.
That is a snowball effect of 0.22%.
My 5 largest dividend payers are Altria, ExxonMobil, Intel, T Rowe Price, and Microsoft.
Here is the current diversification of my portfolio.
Technology is my largest segment at around 40%, followed by Energy, Consumer Defensive,
Financial Services, and Communication services.
My account has transitioned massively over the past 2 years as I continued learning more
about investing and refining my strategy.
Since my last portfolio update video, I have only bought 1 stock.
This was a share of Microsoft at $232.76.
Additionally, I reinvested dividends in both PepsiCo and Altria.
The reason I didn’t buy more is because everything rose in price significantly during
January.
The bull market seems to be back, which we’ll discuss later in the video.
My projected annual dividend income is $3,362.40.
This is $840 every quarter, $280 every month, $9.21 every day, and $0.38 every hour.
Here you can see my projected schedule of dividend payments over the next year.
This February will be my lowest month at around $100.
March will be my highest month, which is absolutely loaded with dividends.
Notice that the diversification of my portfolio’s value is vastly different from the diversification
of my dividend income.
This has to do with the dividend yields of each stock.
My upcoming dividends include $58.28 from EPD, $33.70 from Texas Instruments, and $11.61
from Apple.
In total, my portfolio has generated $7,777 in dividend income.
I’ve reinvested all of this to buy more stock, increasing my future income.
This is the dividend snowball effect at work.
In January, I received $264.13.
This was from PepsiCo, Altria, O, and FRT.
O and FRT are stocks I have since sold.
With Altria I earned $186.95, which I reinvested to buy over 4 shares.
My next payment will be even larger at around $280.
Since my last update, only 1 of my stocks has announced a dividend raise.
Chevron increased its dividend 6.3%.
That is not yet reflected in my portfolio data, but is in my breaking real-time dividend
news.
So that is an update on the current state of my portfolio, but now let’s get to the
topic of the day: The 2023 stock market.
With a strong start to the year, investors are wondering whether we will see a new bull
market or quickly fall back into the 2022 bear market.
First, let’s understand why the market soared in January.
There are many compounding factors in place here, causing bullish sentiment.
Top of mind, we now have had a 6 month consecutive decline in year over year inflation.
In fact, we’ve even had consecutive months of outright month over month declines in inflation
following the latest report.
This seems like inflation may be finally getting under control.
In response, Fed chair Jerome Powell mentioned ‘disinflation’ 15 times during his recent
Fed Q&A.
On top of this, he announced a slowing of the rate of interest rate increases from the
prior 50bp hikes, to 25bp.
Also, Powell mentioned that they are only planning 2 more 25 bp hikes in the following
2 meetings.
From there it seems like they will pause, as long as inflation continues trending down.
This is massive news and investors finally feel like they have some certainty on this
crucial factor in the valuation process.
As we’ve discussed in prior videos, a rise in the risk-free rate of return makes riskier
assets like stocks less attractive by the principle of opportunity cost.
This increases the discount rate, compressing the valuation of stocks.
In addition to this news, the market was starting from an extremely beaten down place.
Sentiment was low and many many stocks were down massively.
This led to large amounts of tax loss harvesting at year end, so many investors did have capital
ready to redeploy.
In January, we also got through a large portion of the earnings season.
The results were mostly strong, with no widespread disaster signaling an earnings recession.
Of course, there were individual companies and sectors doing worse than others.
There seems to be a trends of companies buckling down, cutting costs, and focusing on profitability.
I like that to be top of management's mind in times like these.
I would say earnings have been mostly in line with expectations thus far.
The interesting thing is that it seems like the stocks who were punished most in 2022,
have been seeing the highest growth in 2023.
For example, Tesla is up 75% to start the year, Meta is up 49%, Warner Bros Discovery
is up 61%, and countless stocks are up 10-30%.
But is the Bull market here to stay?
There are certainly many investors who think not.
As recent as last week, 'Big Short' investor Michael Burry put out a tweet with a one word
warning: 'sell'.
He even deleted his twitter profile aftwards.
Keep in mind, this is all very much in line with Burry’s behavior so take away what
you will.
Negative catalysts include the possibility of a 2023 earnings recession.
There is certainly evidence in some individual companies and sectors, but it’s not widespread
as of now.
Another risk is the inflation data rising again, causing the federal reserve to be more
hawkish on interest rates.
This could dramatically cause the markets to tumble back down from their recent gains.
Some economists argue inflation could rise due to strong job performance.
We just had a massive beat in the latest jobs report, with the lowest unemployment rate
in a year.
A few high profile macroeconomists have argued that we will not see lower inflation until
unemployment rises and consumer demand declines.
Once again, who knows though.
All it takes is a sentiment shift for stocks to go back into the bear market.
My current approach to the 2023 market is cautious optimism.
I’m hesitant to buy more stocks given the recent surge in prices.
Prices were much much lower on many stocks less than 1 month ago.
They could easily return to those levels quickly.
That said, over the long-term I’m not going to play the game of predicting macro-economic
conditions.
I’m going to have my primary focus on the individual companies I’m buying.
When a business I understand, with good fundamentals, is trading at a fair price, I’ll be buying.
It’s important that we remember all the lessons learned from the 2022 bear market
and carry them with us into 2023.
However, all of this is just my opinion and be sure to do your own research before making
any investing decisions.
Thank you for watching Dividend Data.
You can sign up for DividendData.com to track your portfolio just like me and join a discord
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