The Portfolio Spotlight – CINF …..
Welcome to the Portfolio Spotlight series. Here I will detail one of my portfolio holdings and the performance results since its purchase. The goal is to show how dividends and patience will reward you over time if you stick the the DGI strategy. I plan on doing this once or twice a month. This month we look at Cincinnati Financial (CINF), one of my longest current holdings! Check out my last entry for BIP here .
Portfolio Spotlight – CINF
CINF is one of those stocks that won’t dazzle you but is a slow and steady performer. It is not GOOG or AMZN getting daily gains/Losses of 2-4% and it seems to fly under the radar of most investors. It is a boring stock by all accounts. They have been making money since 1950. The dividend growth has continued unabated for 56 years and counting. By all accounts, a solid boring company in a boring industry; insurance. Despite this, you can do a lot worse by putting your money somewhere else. I have been a proud shareholder of this company for almost 6 years (5 years 11 months) and I have not been disappointed in my results. I maintain my holdings because the dividend is consistent and reliable, and because it is a safe place to put my hard earned money. I wouldn’t suggest all your holdings in this type of stock because I believe you need to take some risks with a portion of your portfolio but it is a nice addition that offers some measure of safety.
Lets look at how I have fared so far in my almost 6 years of ownership:
On the surface, you may think this is a rather pedestrian return on an investment but consider the income it produces as well as the measure of safety this stock provides. We can break it down even further and see a back of napkin calculation that shows the annual return we received over the last 6 years. Using the Rule of 72 ( read how this works here ), because my money doubled in 6 years, shows we got 12% annualized return on this investment. It is also important to remember I used dollar-cost-averaging to build my position and didn’t have the full amount for the entire 6 years.
Conclusion – Spotlight CINF
When looking at the numbers, I achieved 12% annual return, maintained relative safety, while continuing to receive cash every year (2017 expected to receive ~ $155 in dividends). 12% annual return is great as far as I am concerned and I have no plans as of right now to exit this position. I will continue to reinvest and increase my yearly payout. No stock is safe but when you compare investments, some are safer than others and I put this in the A+ rating for comparative safety. CINF has 56 years of uninterrupted dividend growth and that suits me just fine. I hope this gives you a little idea of how patience and perseverance is key to achieving wealth and dividend income. Thanks for stopping by and I hope to release another spotlight stock in the next month or two. Happy investing !