Saturday, June 6, 2015

May 2015 Portfolio Summary

My ultimate goal is income replacement using dividends. My dividends must increase every year above the rate of inflation. My core holdings must all have investment grade credit rating and predictable earnings. The yield of my portfolio must always be at least 50% above the S&P500. The target y/y dividend increase of all the companies (averaged) should be around 8 to 10%. Purchases selected for my portfolio must prove to be of decent value at the time of purchase. Slight premiums can be paid for core holdings that will be held for many decades. In addition to P/E screening, I prefer buying a company that has a yield that is above the average past dividend yield.

As of the closing on 6/6/2015, my portfolio is still sitting healthily above $100k. With cash I am at $113,007.53 which is over my target goal by 11%. The portfolio took a hit recently as most of my holdings have yields over 3% and interest rates are looking like they will be raised some time in September with the recent jobs report. This drop in value should be celebrated as a buying opportunity. A lot of companies that I have always wanted to own more of have started diving below the SMA 200. An earlier article published on this blog lists some of these companies I am eyeing.
Ticker Sector Value Weight Annual Div Yield Credit
MO Staples $8,060.24 7.14% $347.40 4.31% BBB+
JNJ Health $6,268.42 5.56% $190.56 3.04% AAA
V Financial $5,172.09 4.58% $36.20 0.70% A+
PM Staples $4,699.57 4.17% $235.92 5.02% A
CHD Staples $4,662.89 4.13% $75.54 1.62% BBB+
O REIT $4,615.50 4.09% $231.70 5.02% BBB+
PEP Staples $4,524.24 4.01% $136.63 3.02% A
ABBV Health $4,166.79 3.69% $126.25 3.03% A
T Telecom $4,113.37 3.65% $223.77 5.44% BBB+
KMI Energy $3,754.21 3.33% $178.32 4.75% BBB-
GIS Staples $3,526.78 3.13% $113.91 3.23% BBB+
XOM Energy $3,475.29 3.08% $120.24 3.46% AAA
PX Materials $3,308.04 2.93% $78.07 2.36% A
MKC Staples $3,084.82 2.73% $64.47 2.09% A-
KO Staples $2,909.30 2.58% $95.72 3.29% AA
AAPL Tech $2,852.67 2.53% $46.21 1.62% AA+
UNP Industrial $2,720.48 2.41% $58.49 2.15% A
KRFT Staples $2,369.66 2.10% $62.56 2.64% BBB
ROST Discret $2,314.68 2.05% $22.22 0.96% A-
CVX Energy $2,144.86 1.90% $90.30 4.21% AA
PG Staples $2,083.54 1.85% $71.26 3.42% AA-
SBUX Discret $1,994.44 1.77% $24.53 1.23% A-
SO Utilities $1,956.37 1.73% $99.58 5.09% A
KMB Staples $1,897.46 1.68% $63.19 3.33% A
TJX Discret $1,810.93 1.61% $23.18 1.28% A+
UTX Industrial $1,795.52 1.59% $39.32 2.19% A
VZ Telecom $1,607.66 1.43% $74.92 4.66% BBB+
BDX Health $1,582.27 1.40% $27.06 1.71% BBB+
MCD Discret $1,459.31 1.29% $51.95 3.56% A-
DIS Discret $1,454.85 1.29% $15.13 1.04% A
TROW Financial $1,196.52 1.06% $31.47 2.63% N/A
WMT Staples $1,189.11 1.05% $31.87 2.68% AA
PH Industrial $1,116.63 0.99% $23.45 2.10% A
LMT Industrial $901.32 0.80% $28.57 3.17% A-
CAT Industrial $853.81 0.76% $27.75 3.25% A
EMR Industrial $736.21 0.65% $23.41 3.18% A
HCP REIT $635.12 0.56% $38.42 6.05% BBB+
AMGN Health $578.76 0.51% $11.63 2.01% A
MMM Industrial $497.19 0.44% $12.98 2.61% AA-
CL Staples $195.86 0.17% $4.54 2.32% AA-
….. …..2 Eq. Total …..4 Annual Div Eq Yield …..8
$104,286.77 $3,258.70 3.12%
Cash Cash $8,720.76 7.73%
. .. Total w/ cash …..22 …..2 …..

My income from dividends has increased by $243 since last month. My largest position is still MO and JNJ which I am quite happy keeping that way. I see large growth prospect with Visa which is why it's my 3rd largest holding. If it weren't for Visa's 30 P/E, I would be adding more every week in my automatic investment plan. 

The worst performing sectors recently are my utility and REIT sectors which are sensitive to rising interest rates. Short term positive performance should not be of the focus here as those still in accumulation should cherish stagnant or decreasing share prices of quality companies. Some of the higher yielding consumer staple stocks such as tobacco have taken a hit too. I see this as the start for potential buys (which I have waited a long time for).
My heaviest sector is still Consumer Staples and my goal is to keep it that way. In the following weeks I expect many of my consumer staples to grow which include MO, KO, CL, PM, and PG since they are beginning to look more attractively valued for buy consideration.

My holdings in utilities are light to my taste but that is because I am waiting for the buying signal for companies such as: D, SO, PNY, XEL, WEC. Out of those listed, SO has the best value today and most margin of safety. My favorite companies are D, SO, and PNY for their earnings & dividend consistency and low volatility.

REITs have taken a beating and my high interest targets are Realty Income (O). I do not have too much of an interest for others as core holdings, but stocks that come to my mind as speculative or supporting positions include HCN, VTR, WPC, and OHI. REITs to me are higher in risk for me and I prefer not to hold too many high yielding REITs.

Like what happened to the Energy sector last year with the crash in oil prices, I feel that interest rate hike worries will force many high quality dividend companies into buy territory. Those with cash on the side ready will be rewarded for being patient.


  1. Thanks for the update , I love your use of charts and graphs. I can really be an eye opener. The first thing I noticed right off the bat even before you mentioned it was that you only hold 1 utility. Personally I'm kinda heavy (compared to my peers) on utilities but I'm still hungry for more and like you I've been eying SO. Combined with rising rate fears, a general market downturn and delays at the new plant the stock is starting to look attractive here.

    By the way Morningstar rates SO's fair value at $47 and PNY at only $29 which kinda shocks me.

    1. I'm actually super excited about SO and really like utilities. My favorite are SO, D, and PNY. Utilities have long outperformed the S&P with dividends reinvested. They are also less volatile than the S&P.

      I feel that the utility stocks will stay stagnant for a while due to incoming interest rate hikes so I'm willing to take my time while I accumulate other stocks that I worry will leave my buy range.

      If I had to buy a utility stock now it would definitely be SO. I think it's undervalued. PNY has a few percent to drop before coming to my buy range and D is still overvalued.