As the market zigzagged over the past couple of weeks, the real-money Inflation-Protected Income Growth portfolio just kept humming along, collecting dividends and buying shares. Since the last general update near the end of March, the portfolio is up a couple hundred dollars, which isn’t bad given the near-daily whipsaw it feels like we’ve been riding recently.
The secret to the portfolio’s success isn’t much of a secret at all. Instead, it’s a time-tested approach to investing inspired by Benjamin Graham, the father of value investing and the man who taught investing to Warren Buffett. By combining the benefits of dividends, valuation, and diversification into one single vehicle, the iPIG portfolio is designed to let the companies behind the stocks, not the market’s daily fluctuations, drive the investment returns.
So what did happen?
While the overall message was one of relative calm, the market’s machinations did provide the iPIG portfolio the opportunity to pick up shares of Emerson Electric Co. (NYSE:EMR) . As a company with over 55 years of consistently rising dividend payments, it’s a natural fit for a portfolio that seeks to invest in an increasing income stream. Yet until the market was so kind as to knock down Emerson’s price to a more reasonable level, it was simply too pricy to justify buying.
Additionally, Becton, Dickinson and Co. (NYSE:BDX), made good on its dividend pledge, handing the iPIG portfolio $8.91 for the 18 shares it holds ($0.495 per share). That was the second consecutive dividend by Becton, Dickinson at that level. Should the medical device titan follow recent trends, I anticipate that it could increase its dividend near the end of the year for its December payment.
Not to be outdone, Genuine Parts Company (NYSE:GPC) also continued its long streak of paying and increasing dividends. The iPIG portfolio picked up $12.36 for its 23 shares ($0.5375 per share). That was Genuine Parts’ first dividend payment at its new higher rate, and like Emerson Electric Co. (NYSE:EMR), Genuine Parts can celebrate more than 55 consecutive years of increasing dividends.
Finally, Union Pacific Corporation (NYSE:UNP) kept moving money into the iPIG portfolio’s pocket, handing the portfolio $4.14 for the six shares it holds ($0.69 per share). As with Becton, Dickinson and Co. (NYSE:BDX), that was Union Pacific’s second dividend at its current level. Should that railroad giant keep with its pattern, it’d be on track to raise its dividend near the end of the year, as well.
And what comes next?
None of the companies in the iPIG portfolio are expected to pay dividends in the next week or so, but the portfolio still has a touch more than $3,000 in cash that it can deploy. About half of that is in a limit order waiting to see if the market will offer another opportunity to buy the stock that might get away. The other half? It’s available if the market offers up another compelling opportunity like it did last week with Emerson Electric Co. (NYSE:EMR).
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Dividends matter
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iPIG Portfolio Snapshot as of April 5, 2013
| Company | Purchase Date | No. of Shares | Total Investment (including commissions) | Value as of April 5, 2013 |
|---|---|---|---|---|
| United Technologies | 12/10/2012 | 18 | $1,464.82 | $1,667.52 |
| Teva Pharmaceutical | 12/12/2012 | 38 | $1,519.40 | $1,490.36 |
| J.M. Smucker | 12/13/2012 | 17 | $1,483.45 | $1,668.04 |
| Genuine Parts | 12/21/2012 | 23 | $1,476.47 | $1,772.38 |
| Mine Safety Appliances | 12/21/2012 | 36 | $1,504.96 | $1,762.56 |
| Microsoft | 12/26/2012 | 55 | $1,499.15 | $1,578.50 |
| Hasbro | 12/28/2012 | 43 | $1,520.60 | $1,863.19 |
| NV Energy | 12/31/2012 | 84 | $1,504.72 | $1,758.96 |
| United Parcel Service | 1/2/2013 | 20 | $1,524.00 | $1,670.80 |
| Walgreen | 1/4/2013 | 40 | $1,501.80 | $1,880.40 |
| Texas Instruments | 1/7/2013 | 47 | $1,515.70 | $1,607.40 |
| Union Pacific | 1/22/2013 | 6 | $805.42 | $831.24 |
| CSX | 1/22/2013 | 34 | $712.50 | $810.56 |
| McDonald’s | 1/24/2013 | 16 | $1,499.64 | $1,622.72 |
| Becton, Dickinson | 1/31/2013 | 18 | $1,518.64 | $1,729.98 |
| AFLAC | 2/5/2013 | 27 | $1,466.35 | $1,336.23 |
| Air Products & Chemicals | 2/11/2013 | 17 | $1,510.99 | $1,447.21 |
| Raytheon Company | 2/22/2013 | 27 | $1,473.91 | $1,570.86 |
| Emerson Electric | 4/3/2013 | 28 | $1,548.12 | $1,560.44 |
| Cash | $3,102.28 | |||
Data from the iPIG Portfolio’s brokerage account, as of April 5, 2013.
The article An Island of Sanity in a Volatile Market originally appeared on Fool.com is written by Chuck Saletta.
Fool contributor Chuck Saletta owns shares of every public company named in this article. The Motley Fool recommends Aflac, Becton Dickinson, Emerson Electric., Hasbro, McDonald’s, Mine Safety Appliances, and United Parcel Service. The Motley Fool owns shares of Hasbro, McDonald’s, Microsoft, and Raytheon.
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