The real-money Inflation-Protected Income Growth portfolio launched 16 months ago as of last Friday's market close. The portfolio's primary objective is to generate an income stream that rises at least as quickly as inflation. As detailed in last week's update, the portfolio has thus far delivered on that objective, with all but one selection increasing its dividend since being selected.

The portfolio, meanwhile, has completely surpassed expectations in its overall performance versus the S&P 500 index and the SPDR S&P 500 (NYSEMKT:SPY) ETF, an investable tracker for that index. The table below shows the iPIG portfolio's performance relative to those benchmarks:


Performance Since iPIG Portfolio Inception

Year-to-Date Performance

iPIG Portfolio



SPDR S&P 500, dividends reinvested



SPDR S&P 500, dividends as cash



S&P 500



Data from the iPIG portfolio brokerage account and Yahoo! Finance, as of April 4, 2014. 

Will that continue?
There are no guarantees in investing, and the iPIG portfolio's objective remains the quest for income growth, rather than relative total returns. The iPIG portfolio is not designed to beat the S&P 500 or the SPDR ETF that tracks the index. Still, it could continue to perform well overall, even as it aims for that rising income stream.

The iPIG portfolio has a shot to continue doing well because it traces its investing principles to Benjamin Graham's timeless book on value investing, The Intelligent Investor. Graham, and the generations of value investors inspired by his teachings, outperformed the market by focusing on what the company behind a given stock was really worth, rather than price fluctuations.

The iPIG portfolio adds Graham's often overlooked discussion on the importance of dividends to his well-known value focus as the basis for how it invests. That framework gives it a chance, but not a guarantee, of staying ahead of the market even as its focus remains the search for income growth.

Speaking of growing dividends
This past week, two iPIG selections paid their dividends. Both companies' dividends were higher than the payment they provided their owners last quarter.

Union Pacific (NYSE:UNP) handed the iPIG portfolio $0.91 per share on April 1, a nice raise from the $0.79 it paid in January. In addition, Union Pacific's increased dividend actually represents the railroad's second dividend boost within the past year. With a payout ratio of roughly 31% of its earnings, Union Pacific has room to continue increasing its dividend as its business grows over time.

Genuine Parts (NYSE:GPC) handed the iPIG portfolio $0.575 per share, also on April 1. That increase represents about a 7% improvement from the $0.5375 it paid in the previous quarter. Genuine Parts is perhaps best known for its NAPA auto parts stores, but it does have other business lines. Indeed, recent acquisitions in its industrial and distribution-related business lines may provide enough overall growth to fuel future dividend increases.

While the iPIG portfolio isn't expecting additional dividends in April, May will start out strong with continued payout growth. Defense contractor Raytheon (NYSE:RTN) has declared a $0.605-per-share dividend (payable on May 1), a 10% increase from the $0.55 per share it paid last quarter. Raytheon earned its spot in the iPIG portfolio when worries from the defense sequester knocked its shares down. The company managed its operations well despite that lowered revenue forecast, enabling its stock to recover nicely.

Own businesses -- and let the stocks take care of themselves
With its focus on the businesses behind the stocks, rather than the daily fluctuations of their stock prices, the iPIG portfolio plans to stick to its objective of seeking out increasing dividends. If, as a result of that search, it continues to outperform the S&P 500 and the SPDR ETF that tracks that index, so be it.

The table below shows the overall state of the iPIG portfolio as of market close on April 4, 2014, after 16 months of investing:

Company Name

Purchase Date

Total Investment (Including Commissions)

Current Value
April 4, 2014

Current Yield
April 4, 2014

United Technologies (NYSE:UTX)

Dec. 10, 2012




Teva Pharmaceutical (NYSE:TEVA)

Dec. 12, 2012




J.M. Smucker (NYSE:SJM)

Dec. 13, 2012




Genuine Parts 

Dec. 21, 2012




Mine Safety Appliances (NYSE:MSA)

Dec. 21, 2012




Microsoft (NASDAQ:MSFT)

Dec. 26, 2012





Dec. 28, 2012




United Parcel Service (NYSE:UPS)

Jan. 2, 2013




Walgreen (NASDAQ:WBA)

Jan. 4, 2013




Texas Instruments (NASDAQ:TXN)

Jan. 7, 2013




Union Pacific 

Jan. 22, 2013





Jan. 22, 2013




McDonald's (NYSE:MCD)

Jan. 24, 2013




Becton, Dickinson (NYSE:BDX)

Jan. 31, 2013




Aflac (NYSE:AFL)

Feb. 5, 2013




Air Products & Chemicals (NYSE:APD)

Feb. 11, 2013




Raytheon (NYSE:RTN)

Feb. 22, 2013




Emerson Electric (NYSE:EMR)

April 3, 2013




Wells Fargo (NYSE:WFC)

May 30, 2013




Kinder Morgan (NYSE:KMI)

June 21, 2013




Scotts Miracle-Gro (NYSE:SMG)

Jan. 3, 2014








Total Portfolio




Data from the iPIG portfolio brokerage account, as of April 4, 2014.

To follow the IPIG portfolio as buy and sell decisions are made, watch Chuck's article feed by clicking here. To join The Motley Fool's free discussion board dedicated to the IPIG portfolio, simply click here.

Chuck Saletta owns shares of Aflac, Air Products & Chemicals, Becton Dickinson, CSX, Emerson Electric Co., Genuine Parts Company, Hasbro, J.M. Smucker, Kinder Morgan, McDonald's, Microsoft, Mine Safety Appliances, Scotts Miracle-Gro, Raytheon Company, Teva Pharmaceutical Industries, Texas Instruments, Union Pacific, United Parcel Service, United Technologies, Walgreen Company, and Wells Fargo.

The Motley Fool recommends Aflac, Becton Dickinson, Emerson Electric Co., Hasbro, Kinder Morgan, McDonald's, Mine Safety Appliances, Teva Pharmaceutical Industries, United Parcel Service, and Wells Fargo. The Motley Fool owns shares of CSX, Hasbro, Kinder Morgan, McDonald's, Microsoft, Raytheon Company, and Wells Fargo.

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