This is an update on my portfolio for the month of July. This was a quiet month. I made no investment changes in the month. Two dividends were reinvested and one was received as cash in accordance with my standing instructions.
I have prepared this month end based on the position at 29 July, just ahead of going on holiday on 30 July. The FTSE All Share Total Return index, my chosen benchmark, is up by 1.13% in the month, and is up by 12.34% for the year to date. My investment return for the month was a gain of 0.21%, and a gain of 9.63% for the year to date. This underperformance arises mostly from lower returns on my global and Asia Pacific holdings. Share prices for my holdings in those sectors increased by an unweighted average of 3.40%, whereas my other holdings averaged gains of 13.07%. Overall, my individual holdings recorded share price movements for the year so far ranging from a loss of -4.90% to a gain of 30.24% with an unweighted average result of a gain of 9.44%.
Starting from an index value of 100.00 at 31 December 2013, my capital is now 136.83. This is a slight reduction from a peak at the May month end. It is up by 7.70% since the end of the 2020 year. Investment returns, growth and income, were 9.54%, and draw down expenditure deducted -1.84% for the seven months of the year to date.
Annual dividend income as a percentage of the opening portfolio value on 31 December 2013 has increased from 3.37% to reach 6.66% at this month end. This measure is reduced slightly since the end of May because of the investment changes made in early June.
Portfolio income has increased by 2.98% in the year to date. I am now aiming to hold my income at this level.
This year the investment trusts I hold are mostly maintaining their dividends at the level of the previous year. There have been some small increases to meet previously stated objectives or to maintain dividend hero status. They are mostly having to use their revenue reserves to support these dividend payments. They will need the companies they hold to increase or restore their dividends within the next couple of years or else their dividends and my income will fall.
My portfolio can still increase it’s income by the reinvestment of dividends given that my expenditure is lower than my portfolio income. When that happens, I can sell some shares to raise my cash position, or I can sell some higher income holdings and buy some more growth holdings. This will leave portfolio income back where it was but should enable more portfolio growth in future.
The table below shows the composition of my portfolio at the end of the month. This has been analysed by the sector of each holding. I am mostly content with this distribution with over 80% in equities and about half of that in the UK. The bonds and property provide some diversification and enhance the overall dividend yield of the portfolio.
|Yield %||Capital %||Income %|
My annual drawdown spending is now around 3.28% of my portfolio value, based on the last two years spending and the opening and closing values for that period. My cash holdings are sufficient to cover about six months of spending. In addition to this, dividends being paid out each year are sufficient to cover about four months of spending. My other dividends received are being immediately re-invested in more shares in order to grow my income. This cash position means I will need to sell some investments every few months in order to cover spending and to keep a small cash reserve.
Draw down expenditure was only 63.31% of my portfolio income for the last twelve months. This compares to draw down spending being 67.41% of my portfolio income in the previous twelve months. Portfolio income has risen by 9.99% whilst expenditure has increased by 3.31%. The increase in income includes inheriting extra capital in April last year, and the continued effect of dividend reinvestment, dividend increases, and portfolio changes. The impact of lockdown restrictions on expenditure is no longer evident now that both years include several months of lockdown restrictions.
This was a quiet month after some repositioning in earlier months. I feel able to be less active partly because I am relying on the portfolio managers of the investment trusts I hold to manage my stake in the markets and to manage the income flowing from that stake. I also feel that being more active can impair results if the changes made are mistimed.