Stocks Go Down, but Companies Keep Going

Last week, the real-money Inflation-Protected Income Growth portfolio dropped a bit more than $400, giving up much of the gains it had picked up during the prior week. Still, ending the week with a value of $34,505.64 puts it up around 15% since it was launched in December, which is not a bad return for a bit less than six months of investing.

In light of that drop, it's important to remember that the portfolio's main focus isn't the weekly fluctuations of its holdings. Instead, what matters most to the iPIG portfolio is the payment and growth of the dividends produced by the companies it partially owns. And on that front, the news was decidedly better.

What's working well with dividends?
The highlight of last week was Texas Instruments (TXN 0.25%) paying out its $0.28-per-share dividend, which was an $0.08 increase over its previous dividend -- and a raise after only two quarters. The semiconductor giant has been under siege lately as it shuts down its mobile business because of increased competition. That increase was a welcome reminder that the company's business lines extend far beyond just the hot technology gadgets of the day and that its core operations still remain solid.

On a similar note, this week, the iPIG portfolio expects to receive its ordinary quarterly dividend from package delivery powerhouse United Parcel Service (UPS 0.53%). UPS took a large charge for its pension fund back in December that knocked its earnings into the red and tripped up its otherwise solid balance sheet. The continued dividend -- which looks like it should be fully covered by operating cash flows -- showcases just how much stronger the underlying business is than its trailing net income would indicate.

Likewise, CSX  (CSX 1.07%) and Union Pacific (UNP 4.99%), the two railroads in the iPIG portfolio, are both expected to go ex-dividend this week as their businesses keep rolling along. CSX's $0.15-per-share dividend is a 7% increase from what it paid last quarter, while Union Pacific's dividend is its third quarterly payment at that level.

Additionally, McDonald's (MCD -0.42%) kept on cooking up cash last week, with its board of directors declaring a $0.77-per-share dividend on Wednesday. That dividend, the company's third consecutive payment at that level, is a solid reminder that the company is still making good money. That tangible reminder is especially important given the weak same-store sales the company has been reporting recently.

McDonald's dividend strength in spite of that near-term weakness showcases one of the benefits of the iPIG portfolio's methodology. At some point, either McDonald's will turn around its slumping same-store sales or its dividend or balance sheet metrics will show up as problematic. If it pulls up from the slump, as a shareholder, the iPIG portfolio should benefit. If the weakness continues indefinitely, declining dividend or balance sheet metrics may very well indicate a reason to sell, before it becomes a crisis.

All told, in spite of the loss in market value, it was a reasonable week for this real-money portfolio.

iPIG portfolio snapshot as of May 24, 2013

Data from the iPIG portfolio's brokerage account, as of May 24, 2013.