Monday, April 23, 2018

Recent buy: PM, PG, KMB, MMM, etc

The consumer staples companies are getting extremely cheap. The yields are getting very attractive and many of these companies are very high quality. I have taken a sizable hit to my portfolio due to the drop in PM and MO and other consumer staples. However my income from these companies continues to grow. I think the selling is overdone as consumer staples today are now the "unpopular" group shunned in favor of technology and industrials. Today I added the following.

PM: $501
PG: $219
PEP: $204
JNJ: $381
MMM: $433
ITW: $157
CLX: $114
KMB: $196

Trades were executed for free.
I added small amounts. I want to add more to Altria (MO) but will wait until they announce earnings. I still have a lot of cash left (~$20,000) so I was planning to steadily add in over the next days / weeks. I have found it's best to do large additions slowly instead of all at once to avoid risk.

Tuesday, April 10, 2018

Recent buy: JNJ, MMM, APD, etc

I bought the following yesterday:

JNJ:  $1174
MMM: $2851
APD: $816
ABT: $533
CLX: $256
WEC: $313

I paid $8 total for trades for 3M, the others were free.
Right now my cash position is around $20,000. To see what my portfolio looks like now I updated my Portfolio page:

I plan to steadily move the cash in all at once as nowadays the market moves up and down quite heavily. It's good to catch some of the down days if possible.

Saturday, April 7, 2018

March 2018 Dividends Received

It's that time of the month again. Time to count the dividend payments I received in the last month, March 2018.

I currently have two accounts. One is my brokerage account which I call taxable as the income is taxed. The 401k is my retirement brokerage account with my employer. The 401k dividends are not taxed which is great. I tend to hold not so tax friendly securities like REITs in my 401k.

Ticker      Total    Taxable         401k
JNJ $163.32 $157.92 $5.40
HD $130.67 $101.44 $29.23
NEE $125.47 $95.31 $30.16
PEP $109.72 $82.86 $26.86
D $98.48 $54.01 $44.47
MMM $78.46 $78.46
BDX $58.38 $58.38
O $56.45 $56.45
WEC $49.25 $37.09 $12.16
V $41.60 $29.96 $11.64
ROST $41.01 $41.01
KHC $40.53 $40.53
MCD $32.90 $32.90
CHD $32.71 $18.91 $13.80
TJX $26.22 $26.22
SO $0.58 $0.58
INTEREST $0.54 $0.01 $0.53
$1,086.29 $855.59 $230.70

Saturday, March 31, 2018

February 2018 Portfolio Summary

I have been procrastinating on my monthly portfolio updates.
Here is the supposed update for the end of February, but since it's the end of March now I will just summarize what is happening with my portfolio up until now, March 31 2018.

The S&P500 has been rough lately. It is no longer as sanguine as it used to be. Trade war terrors, Trump tweet targeting specific industries or companies, information security crisis at extremely large companies, and instability with the current administration has caused unease with the markets. However, I still feel very positive about the market because of the tax reductions to corporations and the general growth the economy is experiencing right now. I am a big believer in American business and have always felt the place to invest is always in the USA.

The dollar is also weakening considerably. This is a major tailwind for a large chunk of my portfolio as I hold many companies who operate internationally. A weak dollar will boost handsomely the money held overseas when converted into US Dollars.

Crude oil has been rising. I do not hold many companies directly affected by the price of oil. Rising oil costs will increase material costs for the companies I hold but I don't see it affecting them significantly. If anything, the low oil prices in the past has caused the overall market to tank because it was thought to be seen as a sign of low demand or low economic activity. Higher oil prices, although bad for most businesses, may be seen now as a boom because economic activity is high causing higher demand for oil. Anyways, rising oil prices will definitely help those downtrodden oil businesses. I find oil to be a "dying" business with a bad reputation. Oil is not the way of the future (many decades from now) and I want to invest in businesses that will continue being pretty much the same many decades from now (i.e. toilet paper will still be toilet paper and toothpaste will still be toothpaste 100 years from now).

Friday, March 9, 2018

February 2018 Dividends Received

Dividends in February 2018 are shown below.

The quarterly moving average of dividends per month is $876. Next month is March and I'm predicting around $1050 in dividends. And for April I am looking at $1200.

Ticker      Total    Taxable         401k
T $149.46 $149.46
PG $70.71 $60.21 $10.50
O $56.20 $56.20
CLX $40.77 $40.77
SBUX $37.87 $27.83 $10.04
APD $33.47 $33.47
GIS $31.91 $31.91
CL $25.07 $25.07
MA $19.87 $8.01 $11.86
ABT $16.89 $16.89
GD $13.44 $13.44
INTEREST $0.46 $0.01 $0.45
$496.12 $375.16 $120.96

The monthly moving average is in the graph below. The growth has flattened lately as contributions have slowed down.

Sunday, February 25, 2018

January 2018 Portfolio Summary

This is a very late "January 2018" portfolio summary post. I was traveling in first half of February so it was hard for me to find a time to reflect on what happened in my portfolio. I decided to do the summary now, after the market close on February 23, 2018. It will reflect all events up to this time.

I wanted to start off and comment about the general direction of the market in the last 2 months. The plot below shows the S&P500 index in the last 12 months. The S&P500, for new investors, represents the US's largest 500 companies and the performance of those 500 companies together can be tracked in this index. The index can be purchased with index funds such as SPX with usually very low expense ratios (ER = fees per year). For investors that don't want to spend time researching and picking individual stocks I recommend purchasing a low cost index over time and holding it.
The S&P500 has experienced its first correction in many months. There was a 10% drop from the end of January until the bottom in early February. I felt the market was getting too extended in January and this pull back is a nice welcome to bring valuations back down to more reasonable levels. When stock prices start to become parabolic, there is usually a correction. One can witness the parabolic movement from November until the peak in January.

I experienced around a $40,000 paper value decline in portfolio during this time. From January to February I continued to add small amounts to my portfolio to collect additional shares in high quality companies that have withdrew 10-20% in value. I did not make any large allocation changes in my portfolio. Nearly all the positions (note SO was exchanged in my portfolio for AT&T) continue to sit in my portfolio and dividends are collected. The purpose of this portfolio is income accumulation, not timing of the market or observation of how the dollar value of the portfolio compares with the index. The dollar value of my portfolio is only secondary, as those assets are only there to produce dividend income. The growth of the income is of high priority. Usually growth of dividends is followed by growth of share prices. Any increase in my portfolio's dollar value is icing on the cake; the priority is dividend growth which I track very closely on separate graphs. The safety of the dividend is of utmost importance and I see no fundamental differences among the companies I hold between the January peak and the bottom in February. I still remain positive in the long term prospect of America.

Friday, February 23, 2018

January 2018 Dividends Received

In January 2018,  last month, I received $1175 in dividends. Not a bad amount. I used some of this amount to help fund my trip to Tokyo in February.

Although markets were very volatile in February as they usually are, the dividends were highly predictable. They just continue to come in and I do not see any payout ratio problems with these companies so far. Dividends continue to be a smooth climb upward. The plot below shows what I received so far in previous months.

Ticker      Total    Taxable         401k
MO $350.49 $301.26 $49.23
PM $340.58 $292.59 $47.99
PEP $108.97 $82.30 $26.67
MKC $61.56 $39.72 $21.84
KMB $58.54 $36.55 $21.99
XEL $58.49 $58.49
O $54.32 $54.32
ADP $44.58 $44.58
MDT $44.06 $30.82 $13.24
ITW $39.08 $39.08
SYK $13.68 $9.43 $4.25
INTEREST $0.34 $0.04 $0.30
$1,174.69 $934.86 $239.83

Thursday, February 22, 2018

Recent buy: MMM

Market is cheaper. There are some good deals around, wish I had more cash. Each dollar invested now pushes my annual dividend up much higher than before's purchases.

Bought $1200 of 3M

Monday, February 12, 2018

Recent buy: MMM, ITW, GD

The last two weeks have been a godsend for me. I am seeing 10% discounts across the board for some high quality companies that have absolutely no change in fundamentals. I have no idea why the market is reacting the way it is. Some say it's because of rising interest rates. Others say it's due to margin calls due to over leverage on the volatility derivatives. To me, the companies I own have still the same fundamentals a month ago as they do now, and I do not see any danger in any of the companies I own in regards to their dividend payout ratios. All that has changed for me is the lower purchase price which makes buying a lot easier as yield % have gone up on every single company. This makes every single dollar that I put to work now much more effective than the dollars I deployed a month ago. Everyone is panicking but I do not understand the mindset. I am finding the opportunities given in this period to be positive especially given the tail winds many of these companies are experiencing (i.e. lower tax rates and repatriation and expanding markets and weaker dollar).

My strategy this time is to load up on the highest quality dividend paying companies in sectors that I am too underweight in. Since I have around 1/3 my portfolio in consumer staples, I want to pay less attention to that sector. I will focus on industrials (6% weight) and healthcare (14% weight) first. Since these more cyclical sectors tend to have a higher beta, they should have larger pull back percentages than pullbacks seen in the consumer staples space. Materials (1% weight) and Tech (2% weight) are sectors I will also be looking at but those are sectors I do not have such a high priority in. I only have so much money to go around when buying. For financials (9%) I will be only looking at Visa and Mastercard which to me are very expensive and I already have quite a lot of both (their yields % are quite low for me), so those two are lower priority.

For REITs, I do not plan to add more in the short term. I will only reinvest the high % dividends. REITs do not do so well in rising interest rates and I have enough position in "O" to make me happy. I do want more utilities, it's one of my favorites sectors. However I think there is more room to fall given the headwinds and negative narrative of rising interest rates. The companies in that sector are just way too overvalued given the rising rate environment. There's better names elsewhere to get with a higher growth rate for the same P/E ratios than sticking to the overvalued companies in the utilities sector. The only exception I would say is NEE which I always am looking forward to add. I prefer to prioritize purchasing companies that I feel have a higher propensity to "spring" back up due to a positive growth environment (industrials and defense companies for example) instead of companies that will have a negative narrative (rising interest rates) looking forward for a long time.

Today I bought:
$457 - MMM
$422 - GD
$322 - ITW

All three are industrials that pulled back recently.

Friday, January 26, 2018

Recent buy: APD

APD yields 2.60% when I bought it. I bought 6 shares so around $1014.

APD just raised its dividend a massive 16%. They also just announced earnings. The guidance going forward was boosted as expected due to tax changes. Revenue was up 18% Y/Y. And they beat by 14cents out of 1.79$ which is impressive. The shares were down 2.75% when I bought them so I took the opportunity to add more to a dividend aristocrat after a beat and raise, I never can understand the logic or moves of the market.

Wednesday, January 24, 2018

Recent buy: JNJ

I bought JNJ after the 4% dip when announcing earnings. I felt the report was good and JNJ continues to excel, as usual.  One of the highest quality companies on Earth. AAA balance sheet.

I added 9 shares at around $142 or $1278 total.

Monday, January 22, 2018

Recent buy: Utilities and AT&T and others

These shares were purchased last week on 1/19/2018.

SO was sold in taxable account: $2579.
T was bought in its place: $2698
SO yields a bit lower than T when I bought T.
Commission for above was $0

WEC: $1400 bought in 401k
Commision for this transaction was $7.95

Rest of purchases are in taxable account. The trades are free with due to the balance of my account with my broker.

TJX: $157
T: $111
HD: $200
MKC: $100
WEC: $126
XEL: $135
MA: $167
MMM: $248
ITW: $172
ADP: $121
NEE: $150
D: $75

Friday, January 19, 2018

December 2017 Portfolio Summary (Year End)

I'm a little late with my 2017 year end portfolio summary post. So I will post using data as of today. My portfolio is growing and 2017 was a very healthy year for the market. New policies from the new Trump administration have benefited businesses. From lower regulation, repatriation, and lower corporate taxes, the stock market is surging to all time highs. The cyclical business names are on fire and rising every day, it is nearly impossible to buy these types of companies at fair prices anymore. The more defensive sectors have not run as quickly but have benefited no doubt. Due to the growth in 2017 of all sectors, my portfolio has reached all time highs. Buying companies at previous old price target numbers is now impossible. Almost everything is expensive and I have to now re-calibrate my price targets with future outlook in mind, since most American companies are now having huge tailwinds from the tax cut. The economy of the world has also grown very nicely in 2017 and the outlook for 2018 is positive, which fuels the growth.

For 2018 I am expecting higher dividend raises due to the lower tax rates and repatriation and more buybacks to fuel earnings per share growth. Also for 2018, I am expecting rates to go up as the Fed is going to have to start hiking due to all the growth in the economy. As rates go up, I expect high yielders and debt heavy industries like Utilities and REITs will see their prices fall (although utilities I have to say will benefit a lot from the reduced tax rate from high 30%s to low 20%s), presenting good buying opportunities. In 2018, I am expecting my portfolio's average yield to go down. It has already moved from an average of 3.0% yield when I started to 2.5% right now. As prices rise above the rate of dividend payout increases, the yields start to fall which makes me sad because each of my stock purchases in 2018 won't be able to contribute so much dollar in income as they used to.

I will start off with a chart of the S&P500 this year. The chart is quite incredible. Although I am more after the income stream my investments can generate for me, I cannot lie and say I am not enjoying the large rise of my assets on paper. From the chart above (Jan 20 2017 to  Jan 19 2018), the S&P500 has gained a massive 24% and this does not even include the dividends.

Thursday, January 11, 2018

Trump's new tax rates and my portfolio

One may have their own personal opinions about Trump. But one thing is certain. He is making me a lot of money at the moment. He is a businessman and his approach to running the White House definitely is benefiting big business. When businesses succeed, the owners of those businesses (the shareholders) succeed. I expect large dividend increases, M&A, earnings expansion, and large buy backs in the coming months or years.

Under the new president, tax rates are now 22% (or something much lower) compared to the high 30%s that used to burden USA businesses. I ran through my portfolio checking what the average taxes paid for each my companies are. The numbers are averages, and I tried to ignore one time expenses or charges (one offs).

I found a lot of companies that are centered in the USA (not so much international) will benefit severely from this tax change. I expect they will profit handsomely and my price targets have changed quite drastically for these names. A lot of these are brick and mortar, utilities, restaurants, or companies that operate solely in the US and are based in the US (no shady tax dodging overseas setup).

Name Ticker Sector       Value   Weight        Divies      Yield Tax Rate
TJX Companies Inc TJX Discret $6,297.55 1.45% $102.39 1.6259% 38%
WEC Energy Group, Inc. WEC Utilities $3,886.67 0.90% $135.10 3.4759% 38%
Ross Stores Inc ROST Discret $15,017.97 3.47% $116.42 0.7752% 37%
Home Depot Inc HD Discret $24,501.88 5.66% $448.05 1.8286% 36%
Visa Inc V Financial $23,736.68 5.48% $154.49 0.6509% 36%
Altria Group Inc MO Staples $37,889.92 8.75% $1,423.10 3.7559% 35%
Southern Co SO Utilities $2,669.53 0.62% $136.87 5.1271% 35%
Church & Dwight CHD Staples $7,423.49 1.71% $114.28 1.5394% 34%
Xcel Energy Inc XEL Utilities $7,395.83 1.71% $233.96 3.1634% 34%
AT&T Inc T Telecom $10,904.35 2.52% $597.83 5.4825% 33%
Starbucks Corporation SBUX Discret $7,574.30 1.75% $151.49 2.0000% 33%
McDonald's Corporation MCD Discret $5,647.95 1.30% $131.60 2.3300% 33%
Dominion Resources, Inc D Utilities $8,302.07 1.92% $335.53 4.0415% 32%
Automatic Data Proc, Inc ADP Tech $8,290.95 1.92% $178.30 2.1505% 32%
Clorox Co CLX Staples $6,891.90 1.59% $163.09 2.3664% 32%
Colgate-Palmolive Co CL Staples $4,672.54 1.08% $100.28 2.1462% 32%
General Mills, Inc. GIS Staples $3,782.93 0.87% $127.64 3.3741% 32%
NextEra Energy Inc NEE Utilities $16,860.53 3.89% $440.28 2.6113% 31%
Kimberly-Clark KMB Staples $8,717.29 2.01% $300.12 3.4428% 31%
Mastercard Inc MA Financial $12,788.33 2.95% $79.47 0.6214% 30%
Illinois Tool Works Inc. ITW Industrial $8,468.05 1.96% $156.33 1.8462% 30%
General Dynamics Corporation GD Industrial $3,288.16 0.76% $53.76 1.6350% 30%
Philip Morris International Inc PM Staples $34,320.42 7.93% $1,400.83 4.0816% 28%
3M Co MMM Industrial $13,252.73 3.06% $257.06 1.9397% 28%
Kraft Heinz Co KHC Staples $5,001.72 1.16% $162.12 3.2413% 28%
McCormick & Company MKC Staples $11,956.95 2.76% $246.24 2.0594% 27%
Becton Dickinson and Co BDX Health $17,517.72 4.05% $232.72 1.3285% 26%
PepsiCo PEP Staples $15,822.45 3.65% $435.90 2.7550% 25%
Abbott Laboratories ABT Health $3,556.11 0.82% $67.56 1.8999% 25%
Procter & Gamble Co PG Staples $9,243.78 2.14% $283.00 3.0616% 23%
The Coca-Cola Co KO Staples $8,417.12 1.94% $270.58 3.2146% 23%
Air Products & Chemicals, Inc APD Materials $5,987.53 1.38% $133.86 2.2357% 23%
Johnson & Johnson JNJ Health $26,849.50 6.20% $623.07 2.3206% 19%
Medtronic plc MDT Health $8,211.31 1.90% $176.24 2.1463% 18%
Stryker Corporation SYK Health $4,616.59 1.07% $54.72 1.1854% 17%
Realty Income Corp O REIT $13,619.44 3.15% $651.83 4.7860% 1%

I think this corporate tax policy will benefit greatly all corporations that are over 30% tax rate which is the majority of the portfolio. From 36% to 22% tax rate is a huge boost to margins. That extra money is such a huge windfall for these large companies that opens the doors for numerous possibilities for growth. I expect a huge spike in earnings and this will likely result in more expansion, M&A, higher dividends, and large buy backs. All excellent for shareholders! Companies that are based overseas with low taxes (like MDT) or not tax impacted (like REITs) will not benefit.

There seems to be a large sector rotation away from defensive names (like staples and utilities) and more towards super cyclicals, think industrials and energy and materials and discretionary and technology. This has led to a lot of companies I consider Core to fall back to levels I am particularly interested in, especially considering the major tax cut. I am specifically eyeing the Staples and Utilities sectors, but will consider minor additions to other sectors.

Happy investing