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If you had bought the stocks in my Dividend Portfolio on December 31, 2015–or when I added them to this portfolio during 2016 in the cases of Coach (COH), Qualcomm (QCOM), VanEck Vectors Preferred Securities (excluding Financials) ETF (PFXF), and Kinder Morgan (KMI)–you would have seen at December 30, 2016 prices a gain of 22.1%. Dividends on the portfolio came to 4.73%. That brought the total return for the year for this group of 15 stocks to 26.79%

Pretty good, I think, in a year when the Standard & Poor’s 500 Stock Index returned 9.54% or 11.152% with dividends reinvested.

So I’m a genius. At least a dividend portfolio genius, right?

Nah. I did put the portfolio in the right place at the right time to take advantage of two huge trends that worked out pretty well in 2016. But that’s really the extent of my genius.

The first trend was the market’s love for any stock with a dividend yielding anything above the paltry yield on a U.S. Treasury. I had stacked the portfolio with stocks paying yields of 5%, 6%, and even more in a year when the 10-year Treasury was (mostly) paying less than 2%. The yield on the 10-year Treasury, for instance, was 1.5% in June 2016. Income stocks got a further boost when fears that the Federal Reserve would raise interest rates multiple times in 2016 proved overblown. In the event the markets got one interest rate increase in 2016.

The second trend was the recovery in the energy sector on higher oil prices and then the OPEC agreement at the end of the year to cut production. Look what that did to shares of ExxonMobil (XOM). Shares went from $77.95 on December 30, 2015 to $90.26 on December 31, 2016. That’s a gain of 15.8%. Shares of MLPs (master limited partnerships) in the business of moving oil and natural gas through their pipeline system did even better. Western Gas Partners (WES) tacked on 23.6%. ONEOK Partners (OKS) added 42.7%. I also caught the rebound in some energy-related stocks such as Cummins (CMI), a maker of diesel engines. Those shares were up 55.3% in 2016.

But one reason for my relatively humility about the genius in back of these returns is that I went into 2016 over-weighted in the energy sector (because that’s where the yields were) as a result of being overweighted in the energy sector in 2015. And in 2015 the energy overweighting killed the returns on the portfolio. So a good part of the gains in 2016 were a payback for the losses in 2015. In 2015 ONEOK, for example, lost 15%. (And then there’s always Seadrill, which came close to zeroing out in 2015 and gained 0.6% in 2016.)

The gains of 2016, though, do (and should) lead to the question of “What’s next?” for this portfolio in 2017.

The higher share prices for these stocks and MLPs means that some of them are sporting current yields below 4%. Some are even yielding less than 3%. That’s not good in a year when the Federal Reserve is almost certain to raise interest rates at least twice and when inflation is moving up toward 2%.

The big recovery in the prices of energy shares is behind us too, in my opinion. Oh, I do expect continued price gains in the sector with extended occasional periods of weakness in oil prices. But we’re not looking at anything like the double from the lows we saw in 2016 or even a move into the $80s from current prices in the $50s. At least I don’t see that kind of drawdown in global supplies in 2017.

And the recovery in oil prices even into the $55 to $60 range is about to result in oil companies spending more on exploration and development again. Those capital budgets have to come out of somewhere and every extra dollar that goes into capital spending is one less dollar available for dividends. That’s not a problem across the board in the energy sector but for some companies it does limit their ability to raise dividends to keep ahead of climbing interest rates.

That ability–to produce higher dividends in 2017 when interest rates are on the rise–is a crucial reason to prefer dividend paying stocks to bonds–with their fixed payouts–in 2017. So you certainly want to make sure that the dividend paying stocks that you’ve got in any income portfolio are good candidates for dividend hikes in 2017.

Fortunately, even the modest price recovery engineered by OPEC through its agreement to cut production has created one source of higher dividend payouts. Higher oil prices are leading to an increase in drilling in the U.S. shale geologies and that will lead to more production in 2017. Estimates point to an increase in U.S. oil production of 250,000 barrels a day in 2017. That means more oil and natural gas to ship through pipelines, which means more revenue for pipeline MLPs and more earnings to distribute to investors.

For example, company officers at ONEOK believe that they will see enough of an increase in production in geologies that it serves, such as the Bakken, to resume increases in distributions to investors in the second half of 2017. Standard & Poor’s forecasts that distributions will rise to $3.19 a unit in 2017 from $3.16 in 2016. That’s not a huge increase but the resumption of growth in distributions should move the price of ONEOK units higher as well. I think similar trends toward improved production and shipment volumes suggest higher distributions or dividends for Western Gas Partners and Targa Resources in 2017. Kinder Morgan looks more like a 2018 story for any significant increase in dividends.

So where does that leave us on this portfolio as we head into 2017?

First, today, I’m going to prune away some picks where gains in 2016 have reduced dividends below my target of 4% or better (or 3% if there’s a good prospect for an increase in the dividend in the relatively near term.) That means I’ll be posting sells on ConocoPhillips (current yield 1.97%), Intel 2.84% and Cummins (current yields 2.96%.) Both General Electric (current yield 3.04%) and ExxonMobil (current yield 3.39%) will get a hard look in posts next week.

That will leave me looking for replacement picks. I’ll start my search in the energy MLP space and I should have a suggestion for you in the next week or two. I’d also like to diversify the portfolio a bit more outside of energy–the buys of Coach and Qualcomm achieved some of that but there’s still more work to be done in that direction. Finding those picks will take a bit more of a search and a bit more time. In the meantime, I’ll update some of the older picks in this portfolio in coming days starting with an update on ONEOK Partners posted today.