Monday, August 10, 2020

August 2020 Portfolio Update

I recently updated the Portfolio and Progress pages to reflect the current portfolio value. Currently my net worth of all assets totals around $968,000 US Dollars. The portfolio is making good progress towards the $1M goal.

I actually updated all the data including data in the past to include in the graphs and tables my miscellaneous assets that are not stocks. These include my Toyota vehicle which is fully owned and has around 38K miles, resale value is at $15.3K USD which is around 1.58% of my current portfolio value. Additionally I have assets that are not stocks, these have a fair market value around $17K USD or 1.76% of my total portfolio, this is the value after liquidation fees. I try to keep non-stock assets in the one percent range so these are okay overall, considering my Portfolio is growing to almost 7 figures. My smallest stock positions are already over $10,000 USD and normal positions are in the $25,000 USD size, so miscellaneous assets like these are a small portion of a diversified set of positions.

I own no properties so those do not show up here. And additionally, I have no debts, no student loans and no car loans and no mortgage and no credit card debt, so the assets below are all positive adders to my net worth.


NameTickerSector      Value  Weight       Divies     YieldSP FinVL FinVL Safety
Visa IncVFinancial$53,196.575.50%$325.100.6111%AA-A++1
NextEra Energy IncNEEUtilities$43,589.124.50%$848.211.9459%A-A+1
Clorox CoCLXStaples$43,264.224.47%$772.411.7853%A-A2
Johnson & JohnsonJNJHealth$40,515.984.19%$1,101.512.7187%AAAA++1
Home Depot IncHDDiscret$40,054.874.14%$884.732.2088%AA++1
Altria Group IncMOStaples$35,788.333.70%$2,851.527.9677%BBBB++3
PepsiCoPEPStaples$33,268.613.44%$995.092.9911%A+A++1
Philip Morris International IncPMStaples$33,180.253.43%$2,003.666.0387%AB++3
Realty Income CorpOREIT$33,176.593.43%$1,478.984.4579%A-A2
Mastercard IncMAFinancial$31,161.283.22%$152.000.4878%A+A++1
Air Products & Chemicals, IncAPDMaterials$29,249.283.02%$556.561.9028%AA+1
Microsoft CorporationMSFTTech$28,104.882.90%$269.830.9601%AAAA++1
Xcel Energy IncXELUtilities$27,799.692.87%$660.982.3777%A-A+1
Becton Dickinson and CoBDXHealth$26,230.232.71%$323.261.2324%BBBA++1
McCormick & CompanyMKCStaples$26,185.362.71%$322.201.2305%BBBA+1
Kimberly-ClarkKMBStaples$26,046.722.69%$708.892.7216%AA++1
Automatic Data Proc, IncADPTech$23,759.892.46%$626.762.6379%AAA++1
Procter & Gamble CoPGStaples$23,398.282.42%$554.132.3683%AA-A++1
Illinois Tool Works Inc.ITWIndustrial$22,772.922.35%$511.512.2461%A+A++1
WEC Energy Group, Inc.WECUtilities$22,765.432.35%$610.332.6809%A-A+1
Abbott LaboratoriesABTHealth$21,709.812.24%$308.821.4225%A-A++1
Church & DwightCHDStaples$20,901.132.16%$211.301.0110%BBB+A+1
The Coca-Cola CoKOStaples$20,684.832.14%$709.693.4310%A+A++1
3M CoMMMIndustrial$20,540.522.12%$762.833.7138%A+A++1
Ross Stores IncROSTDiscret$19,318.182.00%$0.000.0000%A-A+2
AT&T IncTTelecom$19,281.631.99%$1,335.976.9287%BBBA++1
Stryker CorporationSYKHealth$18,523.371.91%$222.431.2008%A-A++1
General Mills, Inc.GISStaples$18,217.861.88%$554.893.0458%BBBA1
General Dynamics CorporationGDIndustrial$16,487.411.70%$474.242.8764%AA++1
Colgate-Palmolive CoCLStaples$15,575.181.61%$359.552.3085%AA-A+1
Starbucks CorporationSBUXDiscret$14,581.061.51%$315.522.1639%BBB+A++1
Dominion Energy, Inc.DUtilities$14,044.991.45%$655.044.6639%BBB+B++2
TJX Companies IncTJXDiscret$12,018.781.24%$0.000.0000%A+A++1
Costco Wholesale CorporationCOSTStaples$10,909.121.13%$89.600.8213%A+A++1
McDonald's CorporationMCDDiscret$10,893.071.13%$266.202.4438%BBB+A++1
Medtronic plcMDTHealth$10,547.211.09%$244.572.3188%AA++1
Honeywell International Inc.HONIndustrial$10,538.391.09%$244.592.3209%AA++1
MiscType………..Partial TotalsWeightYr Dividends Avg Yield…..832…..9…..82
EquityStocks $918,281.0394.89%$23,312.902.5388%   
InvestableUS Dollars $17,149.411.77%     
Toyota VehicleDepreciate $15,300.001.58%     
MiscellaneousAssets $17,040.001.76%$85.00    
...Equity + MiscWeight…..2…..…..222…22…..223
Total  $967,770.44100.00%$23,397.90    

Below is my current net worth graphed. One can see the sharp drop down in net worth value after COVID19 struck the world. However, the dividend payment graph still holds steady. A lot of the companies I invested in still pay their regular dividends and several have actually increased it. The importance in the portfolio is to invest in companies that can weather through uncertain periods like COVID19 and this will ensure they can still support their dividend.


The portfolio has underwent a lot of shifts recently after COVID19. Visa still holds very strongly as the number one position in the portfolio. Next Era Energy and Clorox have climbed up by themselves to the #2 and #3 positions. Both are very huge now with total value over $40K USD. The portfolio has climbed very fast after the lows. This is mainly due to the portfolio recovering by itself, and me adding a lot of cash at the midpoints and lowest points of the crash. My monthly contributions from employment adds a bit to buffer out the volatility, but the portfolio is so large now that monthly contributions from my job are not the main driver of the portfolio like in 2014-2017.

All positions as of today in the portfolio are sitting at a minimum of 5-figure sizes (over $10,000 USD). Currently I have 37 different equity positions, so this is a decent diverse number of positions that each have an appreciable size. To put this in perspective to when I started, when I started my first job when I owned zero assets, I made $13 USD an hour pre-tax as a computer technician. Assuming a 15% tax rate when I was low income, I would need to work around 900 hours to just have enough money to buy one $10,000 "starter sized" position in today's portfolio size. This is 113 days of working, and for 5 work days a week, this is around 23 weeks of working or 5.5 months of working just to get one $10,000 starting position in my portfolio. That is a lot of hours repairing computers as a technician when I began. And today I have 37 of these positions, a $967,770 USD total portfolio will require 10,948 working days at my first job's $13/hour rate and 15% tax rate, this equates to 42 working years as a computer technician. Of course, I did not get to this stage just repairing computers for decades at $13/hour as a technician, it really was not scaling, I had to advance my skill set by getting an engineering Bachelors degree and then a Masters degree and then attempting to get a PhD degree to learn more which I later quit midway through, and then later on working for several years in the high tech industry and moving up the skill tree from actual real industry applications instead of just academic text book topics.

It has been a long journey over the years, when $2,000 was considered a full position in the beginning. Now since my portfolio is almost $1M, $25,000 USD is considered a full position and anything $10,000 or under is considered too small to care. Going forward, in a few years I am sure, 6-figure positions will become the normal sized position. It is great to see the portfolio coming so far since its starting days.

There is a general rule of thumb that one should spend the majority of their money on assets and not on liabilities. In the chart above, the only liability in my table is on the right side, the Toyota Vehicle in brown. This represents around 1% of my assets. All the other boxes are assets that hold their value and (usually) appreciate or generate income. For those that want to improve their financial position, investing in assets and not liabilities is important.

In terms of investing for the future, COVID19 poses a lot of uncertainty. Asset prices are also incredibly inflated so it's hard to really buy anything. The market has very low dividend yields due to the large amount of printing the Fed and other countries have done to their economies. This excess money supply caused asset prices, all of them, irrespective if it's gold or Bitcoin or stocks or properties or bonds to go higher. Higher asset prices means lesser yield as the income produced by these assets will not change. It is also not advantageous to continuously hold cash in these times as the depreciation of the Dollar accelerates with the ever increasing money supply.

I do not think the easing the government and Fed are doing in the USA will stop anytime soon. The Coronavirus is here to stay for a long time and it has changed the way we live and do business. People will work from home and the cloud and online business and connectivity and mobility will accelerate as a result. Traditional business models will come under challenge from the new technology. I am also worried about the growing reliance Americans have on the government hand outs, or helicopter checks. This handout society will cause people to have less incentive to work and this will reduce American production output of goods and services. And my most fear is the "implosion" of this all when inflation runs rampant or when reality kicks in about whether all this money is real (i.e. if everyone can have thousands of dollars without working, is it really worth anything).

I believe in the long run, holding stocks will help one move upwards with the rate of money printing. Like gold prices, stocks will move up as well when money supply increases. However, eventually the businesses themselves will start to suffer as input costs to run the business become higher due to all this extra money printing which causes inflation. High inflation will lead to high interest rates and tightening which will crash asset prices as a deleveraging occurs. And if the economy is not really healthy to stand on its own 2 feet because of its reliance on money printing, then nobody really can buy these goods and services these businesses are trying to offer. This ultimately will cause a reduction in real earnings from companies which will hurt these companies' ability to pay the dividends to shareholders.

For me, I will continue to dollar cost average into more shares of stock that pay dividends. I am adding into companies that are strong in the new COVID19 environment, companies that have metrics for what I consider good solid businesses, as I believe these will be able to stay here for many years to come. Even though some of these companies are now more expensive and the yields are lower, I still add to them as I try to limit my total cash position to be under $20,000 USD. In 30 years from now, I think nobody will remember COVID19 and these companies will do well to survive and grow for decades to come and take advantage of the COVID19 environment to strengthen their positions. My goal now is just to make sure the dividend stays in tact, any increase is nice but not mandatory. And my goal is to ensure I invest in businesses that can weather strongly the storm in COVID19, as those that survive can take advantage of the opportunities left open by businesses that implode.

6 comments:

  1. Hi Young Dividend,

    Very good approach and you are a motivation. However, you should consider real estate as part of your strategy. I lived through high inflation more and having real estate in your portfolio is great, having large outstanding debts for little bit also works.

    KR

    ReplyDelete
  2. Looking good, YD. It's exciting to see you approach a 7-digit portfolio value. You are rather close to $2K/mo. in income as well. Keep building!
    Your position weights are nicely contained. I also have only one position over 5% (QCOM in my case). I do, however, have several under 1% that I either need to build or eliminate. Perhaps the only ones I keep under 1% are the REITs. I try not to let the REITs dominate my dividend weighting and keeping their value weighting in check helps in that regard.
    I enjoyed the update. Take care.

    ReplyDelete
  3. I must say that you have a great strategy. I’m just getting started with investing in dividends, so I have a long way to go. It is very valuable that you share your experience.

    ReplyDelete
  4. Congratulations on the ownership stakes of all those wonderful businesses. That red line in your chart is what I covet most. The unending rise in Annual Dividend income is a great reminder of what is really important. Keep up the great work stacking that annual dividend income. FD

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