Saturday, October 3, 2020

September 2020 Dividends Received

Here are the results for September. Unfortunately ROST and TJX cancelled their dividends, so they paid zero this month. I have exited those positions for around a 30% gain from my original average cost basis. The fact that their prices held up quite well despite the cut means that this cut is likely temporary and things will go back to normal for TJX and ROST after the COVID situation clears. 

I had done substantial homework to prevent dividend cuts in my portfolio, but some events just happen that impact the whole economy. Some of my learnings from past failures include 2014, when oil prices tanked and SDRL (Seadrill), a deep water drilling company, cut its huge dividend and same with KMI (Kinder Morgan), an oil pipeline company. Seadrill taught me now to chase yield, and this oil incident taught me not to focus my investments in cyclical businesses or companies highly influenced by commodity prices.

Similarly, KHC (Kraft Heinz) cut its dividend in 2019 after disappointing results of combining Kraft and Heinz together, and the large debt that followed. The KHC situation made me become wary of huge debt funded acquisitions, it made me become wary of debt which is why I am looking over companies like Altria and AT&T very carefully now.  The KHC results made me focus on the balance sheet strength on my existing positions or new positions.

And in 2020 due to COVID, businesses that require visitors going outside their homes suffered which impacted my TJX and ROST. My positions in McDonald's and Starbucks were also spooked initially but they demonstrated the ability to weather through due to their more defensive nature.

Despite the cuts in TJX and ROST, the monthly dividend trend is still moving upward nicely, albeit at a slower pace due to COVID. Nobody could have known last year that a pandemic would happen in 2020, it's one of the most random incidents I have seen so far that changed the world forever. The diversified portfolio I show below is demonstrating its resilience in protecting the portfolio's dividend generating capabilities. Although I have sacrificed alpha by using diversification, I am happy to avoid large losses by having a resilient portfolio, and it is during turbulent times like these when a diversified and defensive portfolio shows its abilities.

Note Dominion (D) is cutting its dividend by around 28% starting in 2021 after it announced selling some of its assets to Berkshire. Selling large assets reduces revenue generating capabilities for D, which means dividends have to go down to balance things out. The dividend from D below is unchanged as of now, but I am considering if I should exit it for other dividend payers as there will be a sharp tick downward in that position. From the perspective of the overall portfolio, it's a small decrease, but I have a tendency to review positions when they cut their dividend. D has held up well, and my position is still sitting on small gains (not as large as TJX and ROST). Given that D has paid me large dividends in the past, I am not terribly disappointed in the position, as it is has served its job as a utility. However, it has lagged severely behind my NEE and XEL and WEC utility positions (those 3 really don't look like utility stocks anymore to be honest, after their large gains).

Ticker Total Taxable 401k
JNJ $275.37 $269.06 $6.31
PEP $248.77 $212.44 $36.33
HD $221.18 $192.48 $28.70
NEE $212.05 $161.24 $50.81
MMM $190.71 $162.83 $27.88
D $163.76 $108.28 $55.48
WEC $152.58 $134.78 $17.80
O $123.98 $123.98
V $81.27 $64.62 $16.65
BDX $80.82 $80.82
MSFT $67.45 $39.35 $28.10
MCD $66.55 $66.55
HON $61.15 $61.15
CHD $52.83 $37.17 $15.66
INTEREST $0.09 $0.08 $0.01
ROST $0.00 $0.00
TJX $0.00 $0.00
$1,998.56 $1,590.85 $407.71


1 comment:

  1. Young Dividend -

    I hear you on the dividend cut front! Curious if D will cut down it's debt with the proceeds of the sale. Further, am also curious when TJX will reinstitute their dividend again.

    $2k in dividends is insane, by the way!

    -Lanny

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