Tuesday, December 30, 2014

New buy: last week 12/2014

These are my automatic investments for the last week of December. Not much excitement here as most of the stocks I wish to own are setting record highs so I just added to my high yielders. Out of these five I consider T, VZ, and PM to be attractively valued.

CVX isn't meeting my <$100 mark so I didn't add. I wish to add XOM if it hits $85. Seems like oil has risen sharply recently. Hopefully the oil prices will fall further so I can scoop up more.

MO ... $100
PEP ... $100
PM ... $100
T    ... $100
VZ ... $100

These will be bought some time on Tuesday afternoon. The annual dividend added is estimated to be around $21-22.

Friday, December 26, 2014

December 2015: Treemap Visual

I found a new chart option in Google docs that allows one to display Treemaps. Below is a picture of the treemap for my current holdings. I think it's a a cool nifty way of quickly seeing what your sector and stock allocation is.

I am clearly heavy in consumer staples. My largest stocks are O, KMI, and CVX.


Tuesday, December 16, 2014

Watchlist: Mid December

My watchlist for next week include several stocks in addition to the usual energy names CVX / XOM / KMI. EPD is also looking attractive. Although BP and RDS.A offer higher yields I prefer to stick to quality American. BBL is also cheap, but I decided that BBL is not that type of industry I am comfortable in partnering in.

KO

PEP

EMR

T


Monday, December 15, 2014

New buy: CVX, T, KMI

My weekly Tuesday investments are as follows. Bought cheap, quality, and high yield. Plain and simple. Core position additions.

Investment Amount:
CVX: $300 (core position)
KMI: $300 (core position)
T:      $300 (core position)

Share prices bought will be dependent on the market tomorrow afternoon. Estimates are as follows based off today's closing price:
Annual incomes:
CVX: $12.7
KMI: $13.8
T:      $17.1

Tuesday, December 9, 2014

Watchlist: Early December

INDUSTRIALS:
Dover corp is a dividend champion with 59 years of increasing dividends! They have a chowder rulie above 12.0 and a yield of 2.2%. In the 15 year and 10 year FASTGRAPHS, Dover falls below the average PE ratio (blue line). Dov has a solid credit rating of A and has a debt/cap of 38% which is reasonable. The TTM payout ratio is only 27% which is quite safe. The beta of the stock is higher at 1.48 as expected from an industrial sector stock.

S&P gives Dov a $90 12 month price target which means a discount of 15.9%. S&P rates this stock as a Buy.

Jefferson Research rates Dov as a Buy. The following are its ratings for Q3 2014:
Earnings - Strongest
Cash flow - Strong
Operating Efficiency - Strongest
Balance Sheet - Strongest
Valuation - Low Risk


In addition to Dov, I find NSC and SWK interesting as well. Railroads took a slight beating from the fall of oil prices (I don't think this is justified since oil demand will go up with lower prices). NSC has only 13 years in div history, which isn't bad. SWK is a wee bit expensive compared to its historical PE. S&P recommends to Hold both of these stocks and Jefferson Research recommends a Buy for both. Other railroad stocks include UNP, CSX, and CNI. These other names however are quite expensive as they have recently lifted off into the stratosphere. I wouldn't mind adding to my position in UNP though due to its growth prospects.

ENERGY / MATERIALS:
I am also still closely watching the following energy stocks: BP, COP, CVX, XOM, RDS.A. I am willing to wait on BBL as well. It is still in the "falling knife" mode. I am not a big fan of BBL as it's behavior as a stock is quite volatile for me.


Sorting Fish's dividend champion spreadsheet by the Chowder rule and then picking stocks with reasonable yields I have the following stocks. This is only a preliminary screen and isn't a recommendation of picks since some are PE expensive or have other issues.
Champions: SWK, PG, DOV, CLX, XOM, CVX, MO, WMT, MCD, TGT
Contenders: WEC, LMT, MSFT, COP, IBM, NSRGY, BBL, AVA, NU, GIS, NSC

New buy: DIS, PEP, T, VZ

My automatic investments for this week include:

$1200 DIS
$300 PEP
$150 T
$150 VZ

Disney is a growth position I want to add to my portfolio. The yield is terrible but the growth prospects are very attractive. One might ask where is the oil purchases this week? I am willing to wait it out further. I have a feeling the selling will continue towards the end of this year as people and institutions sell for tax harvesting benefits. WTI doesn't seem to have a positive trend yet either so the downward spiral seems to continue.

Some interesting graphs below of the WTI:

Oil can easily tumble down for 6 months at a time. On June 2008 during the financial crisis, oil tumbled from its max in June and rallied back at the start of the new year. Will this same behavior continue in January 2015? Studying charts might be a fools game... I am happy to own high quality companies such as CVX and XOM during the hard times when they are cheap. 

Saturday, December 6, 2014

November 2014 Summary

November was a great time for stocks. The S&P500 rose moderately. Stocks appear expensive and there appears to be PE expansion. The oil sector continues to get pulverized as OPEC continues oversupply.

Below is the standings of my Taxable & Roth IRA portfolio:
Ticker Sector Value PE Yield Annual Divs Beta Weight Credit
AAPL Technology $2,550.46 18.03 1.62% $41.32 0.90 4.64% AA-
BAX Healthcare $1,695.79 23.04 2.82% $47.82 0.72 3.09% A-
CHD Staples $1,891.75 26.27 1.64% $31.02 0.47 3.44% A-
COP Energy $1,628.40 12.12 4.12% $67.09 1.07 2.96% A
CVX Energy $2,615.33 10.47 3.76% $98.34 1.15 4.76% AA
GIS Staples $2,015.52 19.79 3.09% $62.28 0.16 3.67% A
HCP REIT $772.82 22.39 4.80% $37.10 0.60 1.41% BBB+
JNJ Healthcare $2,908.44 17.83 2.60% $75.62 0.56 5.29% AAA
K Staples $1,114.69 13.80 2.95% $32.88 0.52 2.03% BBB+
KMB Staples $1,147.00 20.30 2.93% $33.61 0.20 2.09% A
KMI Energy $3,004.18 34.86 4.21% $126.48 0.68 5.47% BBB-
KO Staples $1,971.00 24.33 2.79% $54.99 0.47 3.59% AA-
KRFT Staples $1,238.75 15.24 3.66% $45.34   No Data 2.25% BBB
MCD Discretionary $1,432.50 18.76 3.56% $51.00 0.33 2.61% AA-
MO Staples $2,354.74 23.48 4.06% $95.60 0.51 4.28% BBB+
O REIT $3,646.52 52.00 4.75% $173.21 0.53 6.63% BBB+
PEP Staples $1,179.84 21.75 2.66% $31.38 0.42 2.15% AA-
PG Staples $1,710.00 25.42 2.86% $48.91 0.37 3.11% AA
PM Staples $2,278.90 17.60 4.56% $103.92 0.92 4.15% A-
ROST Discretionary $1,817.00 21.38 0.88% $15.99 0.67 3.31% A-
SBUX Discretionary $1,448.46 29.58 1.59% $23.03 0.84 2.64% A-
SO Utilities $1,197.50 20.47 4.38% $52.45 0.19 2.18% A-
T Telecom $1,156.00 10.43 5.41% $62.54 0.40 2.10% A-
TJX Discretionary $1,185.48 21.74 1.06% $12.57 0.62 2.16% A
UNP Industrial $1,330.45 22.32 1.65% $21.95 0.99 2.42% A
UTX Industrial $1,220.89 16.39 2.13% $26.00 1.14 2.22% A
V Financial $1,569.60 30.24 0.73% $11.46 0.82 2.86% A+
VZ Telecom $975.80 10.12 4.51% $44.01 0.39 1.78% BBB+
WMT Staples $934.34 17.84 2.26% $21.12 0.47 1.70% AA
XOM Energy $2,753.55 11.94 2.91% $80.13 0.89 5.01% AAA
….. …..2 …..3 …..4 …..5 …..6 …..7 …..8 Credit
Cash Cash $2,221.31 4.04%
. .. Total Yield Annual Divs Beta Avg ….. …2
$54,967.01 3.09% $1,629.14 0.65

The sector weights for my Taxable and Roth IRA are shown below:
Sector Market Value
Staples $17,836.54
Discretionary $5,883.44
Financial $1,569.60
REIT $4,419.34
Industrial $2,551.34
Energy $10,001.46
Utilities $1,197.50
Telecom $2,131.80
Healthcare $4,604.23
Technology $2,550.46
Cash $2,221.31
Materials $0.00


Employer 401K portfolio:
Ticker Sector Market Value Weight Yield Annual Divs
VBTIX Bond Index $1,230.66 8.59% 2.59% $31.87
VIIIX Large Index $9,956.55 69.53% 1.85% $184.20
VMCPX Mid Index $2,154.55 15.05% 1.09% $23.48
VSCIX Small Index $977.20 6.82% 1.24% $12.12
. .. Total: Avg Yield Annual Divs
$14,318.96 1.76% $251.67

In November I received $121 of dividends. 

At the end of the November month, my portfolio sum had exceeded the $66,700 goal I had placed myself this year. The sum of the 401k and dividend portfolio is around $69000 and yields $1880 in dividends a year. I will not be able to hit $2300 in annual dividends (3.5% yield) by the end of this year because my portfolio includes Vanguard indexes (my 401K doesn't offer any higher dividend yield options!!). I will have to readjust the dividend yield goals next year to include the Vanguard index funds.

Below is a illustration of the stock breakdown in the Taxable and Roth IRA portfolio:

I am heavily weighted in O, KMI, JNJ and XOM. I have several low yield growth plays such as ROST, SBUX, TJX, UNP, and V. My high yielders with lower growth include T, HCP, O, PM, VZ, and SO. The aim of my portfolio was to try to have both high yielders with little growth and low yielders high growers.

New broker :)
I have also moved my brokerage to Sharebuilder. I will be taking advantage of their monthly automatic investment program which offers 12 purchases for 12$ a month. This will help greatly compared to my old brokerage. I am also available to access Fidelity research reports now, which allows me to read reviews from S&P, Jefferson Research, and others. Sharebuilder also offers me reviews from Morningstar. I believe that these research articles will help in addition to my current stock resources.

Future plans?
My plan for the coming month is to continue staying invested. There have been a lot of talks about market highs and possibility of a market correction. However, I am still in the very early accumulation phase and I think any drop in the market can be easily remedied by my continuous income contribution. The portfolio will eventually achieve equilibrium pricing after a market drop since the majority of my holdings are high quality; and the continuous contributions at lower market prices will aid in reducing the cost basis even further.

I am intrigued by the cheap oil sector prices but am still patient in pulling the trigger. I have already bought CVX at $111 and XOM at $93 back in October. I want to wait even further before pulling the trigger on CVX. My target is $100 but can consider $103. I am not considering XOM at the moment.

COP, RDS.A, BP are hesitant buys for me since I would rather much own CVX. Out of the 3 I would want COP most. BP and RDS.A do not have impressive dividend histories to me. Shell and BP have much higher payout ratios than XOM and CVX. COP's payout ratio is in the middle. However, I may just consider dripping small amounts into BP and RDS.A in my automatic investment purchases since they are just oh so cheap and their yields so high. My buy target for COP is $60 (it probably won't reach there unless crude hits $50 a barrel). I am highly considering selling COP to buy other depressed oil stocks for tax harvesting this year (i.e. sell COP to buy CVX or BP and avoid paying capital taxes this year for my handful of profitable sells).

I am ignoring the drillers from my watchlist since I think they are too sensitive to oil prices. HP and SDRL and ESV have taken great hits recently. I am relieved that I was able to sell SDRL at good prices before the massive crash in prices. After my experiences with SDRL and ARCP, I am traumatized at high yielders and no longer trust them. My "SWAN" category now prefers stocks in the 2-4% yield range with occassional stocks in the 5-6% (such as AT&T).

BBL or BHP also has shown increased distress in prices and appears extremely cheap with a 5% yield (for BBL). The stock is attractively valued and I am highly considering dripping small amounts weekly. The stock is more volatile than I like but at this valuation and yield I think the risk is worth it.

I believe T, GE, MCD, are fairly valued at the moment. AT&T appears cheap after the competitive pricing wars initiated by Sprint. I will consider adding to AT&T to provide more steady income. I do not feel like adding more to MCD and tend to avoid GE.

In the technology side of things, I am considering IBM. The stock looks VERY cheap right now and they are very strong financially. I believe IBM can eventually overcome its slump like it has done in the past. Technology plays are risky since they have to reinvent themselves, as seen by IBM moving away from hardware into a software cloud service provider. My investment in APPLE has paid off handsomely this year, but it is an investment that I feel less comfortable than something like PG or KO. 

More possible buy may come in the weeks ahead.

Monday, December 1, 2014

Updated Watchlist: Materials & Oil

The materials and oil sector are looking really cheap at the moment. One can choose to invest in what's going up or what is going down. I prefer buying what looks cheapest and oftentimes things are cheap when there are blood on the streets.

Here are some companies that have proven dividend histories and excellent credit ratings that I am highly considering currently.

***********************************************
During a falling oil price environment, one could invest in depressed oil stocks or choose to invest in companies benefiting from reduced oil prices (airlines, transportation, discretionary). Since these companies that benefit from low oil have passed my buy marks, I am no longer interested and will pursue oil stocks.

Energy Forward PE PE Yield PEG Beta
BP 9.90 13.37 6.03% 1.61 1.94
COP 12.88 11.60 4.31% 1.56 1.07
CVX 11.83 10.29 3.83% 1.79 1.15
XOM 13.72 11.62 2.99% 2.89 0.89

From the list, BP and CVX are the cheapest. BP sports an impressive yield but in my opinion a riskier play than CVX or XOM. I am choosing to ignore drillers since I feel they are too volatile and sensitive to oil prices compared to very large oil majors. CVX, XOM, COP, and BP all have very high credit ratings.

I don't like BP as much as CVX or XOM but its yield and PE are getting very attractive
BP

***********************************************
In the materials sector, stocks are plunging similarly.  Below is a FASTGRAPH of BHP. BHP can also be bought using the ticker name BBL. For tax differences one should do their research as the reasoning behind purchasing BHP vs BBL won't be explained here.


BHP has low debt, high yield, low PE (compared to historical average), A+ credit rating by S&P, and steady dividend increases.