As a Remember: The dividend growth portfolio’s goal is not to beat markets. It is a small portfolio compared to the Emerging value portfolio.

This portfolio’s goal is to provide

• Some upside

• Some income

• While limiting downside relative to the initial investment

This is a replacement for some cash. Cash earns zero and loses value. If these stocks do 5% a year with 3% dividends, I am happy.

I want to be flexible and earn some money on my cash. This is a strategy that I am not aware of being done before.

The traditional allocation is Stocks then bonds then cash.

I have Stocks, some bonds and now dividend growth stocks, then cash.

After many years, I found that dividend growth stocks in defensive industries bought at very low valuations exhibit all these characteristics.

These stocks have been selling off for about two years. Quality is underrated at the moment.

An Ice cream company.

The new addition for this portfolio is a very tasty company.

A spin off, sold off by impatient funds and investors.

A company that grows slowly, but has strong pricing power.

A company whose products are immensely popular with kids and adults.

The Magnum Ice cream company is a spin off from Unilever.

At 6.84 Billion Euros market capitalisation, it is a small caps by global standards.

It trades in Amsterdam, London and New York.

The ICE Cream market is a slow growth steady market, with projections of 3 to 4% growth in the long term.

Here is the revenue by Brand. My favorite being Magnum.

The business is globally diversified with a heavy weight towards Europe.

Disappointing 2025 results:

The company had operating Profit for the full year of € 599 million (FY 2024: € 764 million), reflecting planned net increase of € 118 million in separation and restructuring costs in 2025 compared to 2024 and forex translation effect.

After that year, we should see the one of costs decrease, and a slight increase in interest costs.

All in all, we trade at a forward EV/EBITDA of 7.6 and forward P/E of 12 (estimates).

The defensive nature of the business combined with the low valuation fits this target.

The Q1 trading update confirms good results in volume (2.9%) and pricing (1.6%). It is affected by the collapse of the USD to the Euro, but this not relevant in calculating business performance.

Capital allocation

In March and April, it concluded an acquisition in India from Unilever, with a mandatory take over planned.

The Magnum Ice Cream company trades at 12 times forward earnings. The 2025 and 2026 year are transition years with one off costs related to the spin off and the new life as an independent company.

There is a cost cutting plan in place as well as increased Capex for the next two years.

The dividend will be around half of adjusted net income in the mid term.

This kind of value slow grower defensive companies are what we can find in the Dividend growth portfolio below: So far, only one stock is down 10%, the one most exposed to EMs, one 2% and the 6 others are up or flat.

Just a quick article before the week end! These defensive companies don’t need long presentations and my main focus is on the Emerging Value portfolio.

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The portfolio has been on a negative trend since the start of the war, nothing new here. For the year, the performance is minus 4.5%. It is disappointing but the world is burning.

I don’t invest based on an apocalyptic scenario of economic crisis. I invest to survive economic crises and thrive in normal time. The reason is simple: over time, human wealth grows.

At the moment, the world is heading for an economic crisis due to a really bad decision to bomb Iran in my opinion, in addition to the human toll in deaths, plus the indirect pain caused by inflation in poor countries.

So the portfolio is down, but it’s nothing compared to what people directly affected feel.

I stopped making large changes in the portfolio like in the beginning of the year.

In March, as previously noted I sold the new position Exor to buy Samsung Electronics and be exposed to the memory trade, which I felt was necessary for a balanced portfolio, with AI reshaping the world. It was ill timed. Later, Google published a news release about a new algorithm using 8 times less memory by compressing the prompts history. Ironically the research paper was already public for a year and the market treated it as a news. I have doubts that it will affect memory demand for various reasons. Nevertheless, this is not my core portfolio and you should not read me for AI takes, despite having some coding experience with AI and a solid background in automation using VBA/Google app script and macro express. My feeling is that the current LLM technology has the potential to be used 100x more in the economy just by capturing more data (such as screenshots from your computer), and by being monitored by ruled based code to provide a structure to a LLM agent. LLMs can hallucinate, but LLMs surrounded by rule based code can use the structure of rules with the creativity of AI to provide autonomous workflow. This would cause much more memory being used. It’s not really better LLMs that are going to be the largest revolution, but smarter uses of it, instead of just prompts, that are not efficient.

On other news I have made little additions to Sea limited and SDI PLC.

Sea limited is a leading South East Asian Ecommerce company. At 20 times forward earnings, it is cheap, but at 1.3 times EV/sales it is very cheap. What happens is that this company is a growing company and is not optimising for profits right now (The Amazon playbook).

SDI PLC is a UK serial acquirer in life science and now defence items at less than 10 times earnings. What more can I say: I buy.

Compounders are extremely cheap at the moment. Sure, if oil enters a shortage, it will hurt a lot for every or nearly every company in 2026, but the value of an investment is more based on 2035, 2040 earnings than 2026 earnings. It is the same as during covid: one or two years of abnormal earnings was not an indicator of long term value.

I will keep adding to compounders and emerging market companies going forward. I do not plan sales or changes. More of a good thing is what I want to add.

This portfolio review is voluntarily short as I focus the main body of the article on something new:

I have launched a new Dividend growth investing portfolio.

A real portfolio with my real money, not a model portfolio or a newsletter idea.

The reason why I launched a new portfolio is because it serves a different purpose than the emerging value portfolio. The emerging value portfolio is for funds that I definitely do not plan to need.

For the rest of my savings, I needed some other strategy to reduce my bank account cash levels and produce some value creation with parts of my emergency cash.

I needed this portfolio to be available to be liquidated without loosing much in a bad scenario, but hopefully I never need to liquidate it.

I found that the current prices are attractive for this type of company at the moment, after a decade of P/E ratios in the 20-25 range.

Where do we find these investments?

My long time in the markets taught me that Dividend growth companies and consumer good companies offer this protection and the upside, especially when bought at low multiples.

I want:

Resilient + High margins + Growth + Safety

I have started to slowly move funds from my bank account to a set of these companies, and will keep my real cash amount close to a minimum.

Many dividend growth investing companies have extremely attractive valuations relative to history, for example Pepsi Co and Unilever are at approx 16-18 times forward earnings. I have been saying on X and here that after being in a bubble for many years, quality investing is now attractive.

A sentiment also shared by “Fintwit king of Austria” Andy, who organised the Vienna value investors meeting.

I found cheaper companies than Pepsi and Univeler, using my years of building watchlists in the stock markets of Europe.

So far, I have done investments of a thousand euros each, and have 7 investments. 6 in Europe and one in the USA. No emerging markets focus here. This is a small amount, sure, because I am careful with my minimum cash levels.

The average PE is around 12 and yield around 3%

And I must say that is new project has also been fun!

Here are the 7 companies, and the 7 currently on the Waiting list, which are potential turnarounds in quality dividend names that I am watching in 2026, but not buying yet. I have also future potential buys prepared which I would reveal as I enter them. I have been looking at beverages, food, healthcare, luxury and even some software.

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