Saturday, July 5, 2014

July Portfolio Update and Watchlist

Check this page for all portfolios:

A couple of updates since the last June updates. I have finally opened my Roth IRA with an online broker. The cash has been invested in the following companies:

Kinder Morgan Management (KMR) - $1528
Verizon (VZ) - $1480

Both are high yield. KMR provides a current yield of 7.2%. They distribute stock dividends. Verizon has a current yield of 4.3%. I originally had VZ in my taxable account but I transferred it over to the Roth for the tax benefits. I plan to house a lot of high dividend stocks in the Roth IRA first since the dividends can be protected from dividend tax. Stocks that come to mind that fit in this category are REIT and utility stocks. I do not plan on adding anything to the Roth IRA this month.

I continue to contribute the required minimum to receive all my employee 401k benefits. The company currently contributes 7% of my salary for free as long as I keep meeting their personal contribution requirement. These stocks are currently in Vanguard index funds since that is all my 401k offers that is reasonable (I tend to avoid mutual funds with ripoff expense ratios). I am paying around 0.05% for the Vanguard institutional fund expense ratios. My current allocation is a 92/8 equity/bond split. I do not mind the volatility of such a low bond allocation and a 50% correction in the market can easily be offset by my monthly contributions (the 401k balance is not high enough for me to worry yet). I also do not feel bonds will have desirable returns in the coming years since interest rates are so low right now. My 92% in equities is similar to the large/mid/small cap allocation of the VTSMX fund. My emphasis is mainly on large cap which have a dividend yield of ~2%.

I continue to contribute monthly to my taxable account. This month I am still looking at companies to buy. There are already funds being transferred that should be available by next Friday morning for purchase. June was a good month and my portfolio rose but these short term gains or losses do not concern me. At the end of the day as long as the companies continue paying increasing dividends, then their share price do not concern me as I am a buy and hold investor. Currently my taxable portfolio is providing 846$ in annual income and I have 16% of my portfolio in cash that still needs to be put to work. My portfolio currently has a yield of 3.4% and a low beta of 0.68. 

Some recent changes in my taxable since the month of June:
I moved VZ to my Roth IRA and added $400 to the stock.
I sold PETM (I was not comfortable with having so much in retail and the yield is low)
I sold GPC to add more to PG and MCD and PEP
I trimmed down CHD to get more PEP

I cannot find obvious deals in this market at the moment. S&P500 is approaching 2000 and DOW has recently passed 17000. I was eyeing BAX but it has recently shot up. PM has taken a dive but I am overallocated. GIS has recently taken a dive as well and I hope it remains low when my cash funds are ready. Currently stocks that I am looking at possibly adding to the taxable account:
ED - conservative utility stock with high yield, rising interest rate worries me though
SO - conservative utility stock with high yield, rising interest rate worries me though
RTN - defense company that has taken a drop, yield below 3% though
LMT - defense company that has taken a drop, good yield above 3%, higher PE than RTN
GIS - solid consumer staples company with yield > 3%, PE a bit higher than historical PE
CVX - big oil, yield >3%, PE attractive but recently has jumped up in price
BAX - solid healthcare company with stable increasing revenue but recently jumped in price.
GE - am a bit hesistant on this company due to past div cuts, but it looks fair valued.
DE - the price is very attractive right now but its yield is only 2.6% and the stock is quite volatile

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