One of the objectives of Project $3 Million is to keep the positions as equally weighted as possible. Varied market performance will have some positions get ahead of themselves, but I don't wish to sell part of a winner to add to a laggard. I prefer to allow my winners to run and take the monthly contributions to add to the other positions.
Sometimes valuations prevent me from adding to existing positions and they get left behind.
Currently, a full position in this portfolio represents $4,000.00. As I look at the positions in the Taxable Account, the positions with the smallest market value and represent about a three quarters of a position are as follows:
ADP - $2,893.14
CL - $2,999.61
KMP - $2,966.46
PEP - $2,707.02
PM - $2,935.28
SO - $2,895.95
Of this group, KMP - PEP - PM and SO present the best values at this time. As I look at projected earnings growth and the 5yr estimated total return, here is how these companies wash out.
Estimated Earnings ... 5yr Est. Total Return
KMP ... 12.2% ..... 6.4%
PEP ..... 8.6% ....... 7.1%
PM ...... 9.9% ....... 11.7%
SO ....... 4.7% ...... 9.1%
Based on these numbers, it looks like PM has the best 5 year projected total return.
The next step was to look at the Chowder Rule number. The Chowder Rule takes the current yield and combines that with the 5 year compounded annual growth rate of the dividend and I look for a total dividend return of 12% or better. PM hasn't had a full 5 year history yet, so I'm going to use the 3 year CAGR on each position.
Company ... Yield ... 3yr CAGR ... Chowder Rule #
KMP ....... 6.50% .... 6.68% ..... 13.18
PEP ......... 2.80% .... 5.92% ..... 8.72
PM .......... 3.90% .... 13.68% .. 17.58
SO ........... 4.90% .... 3.78% ..... 8.68
It appears that PM has the best dividend growth at this time and since the "Mission Statement" for this portfolio is to earn an income stream that is reliable, predictable and increasing ... PM supports this objective better than the others at this time.
Therefore, I will add to PM on Monday (tomorrow) and bring that up to a full position.