I wrote a series of articles last year on investing in international stocks. I was personally interested in finding value in European markets which were in a tailspin following the Eurozone crisis and the imminent default of Greek, Spanish and Portuguese economies. I ended up buying a handful of foreign dividend yield stocks last summer. However, I was unable to invest as much as I wanted, since some of the stocks that I had identified as value rose quickly and became "fairly" valued. Separately, I have continued to sell my U.S. stocks in order to book some profits, as I feel that the markets have gone up too fast without underlying recovery in employment, job creation and a long lasting solution to the government debt and mortgage issues.
Over the last few months, some fellow readers of Seeking Alpha have asked me about my holdings and trades. I present my entire current portfolio and discuss my recent actions and future plans below.
The consolidated portfolio is held across two regular brokerage accounts and two Roth IRA accounts (wife and self). It includes every single equity and mutual fund that we hold. I used to have a few mutual funds that I bought when I first started investing in 2007 but I am slowly selling them and buying individual stocks. The table is sorted by percent of my portfolio in decreasing order. Percent gain is my absolute gain (not compounded) based on the actual cost basis for the position.
Average Buy Price
Current Market Price
Vanguard Dividend Growth Inv
Northstar Realty Finance Corp.
STMicroelectronics N.V. (ADR)
Amana Income Fund
BHP Billiton plc (ADR)
Canon Inc. (ADR)
Emerson Electric Co.
iShares S&P Global Telecom
Siemens AG (ADR)
Banco Santander, S.A. (ADR)
France Telecom SA (ADR)
iShares S&P US Pref Stock Idx Fnd
SPDR S&P International Dividend
General Electric Company
Johnson & Johnson
TOTAL S.A. (ADR)
E.ON AG (ADR)
Telefonica S.A. (ADR)
CPFL Energia S.A. (ADR)
Flowers Foods, Inc.
Realty Income Corp
GDF SUEZ SP ADR (ADR)
Vodafone Group Plc (ADR)
BASF SE (ADR)
ABB Ltd (ADR)
Strayer Education Inc
Universal Insurance Holdings, Inc.
Sun Hydraulics Corporation
National Retail Properties, Inc.
TESSCO Technologies, Inc.
National Presto Industries Inc.
Meridian Bioscience, Inc.
AstraZeneca plc (ADR)
CARREFOUR S.A. (ADR)
Sunstone Hotel Investors Inc
Diamond Offshore Drilling, Inc.
Norfolk Southern Corp.
ENEL SOCIETA PER AZI (ADR)
Waste Management, Inc.
National-Oilwell Varco, Inc.
General Cable Corporation
Allegheny Technologies Incorporated
Lincoln Electric Holdings, Inc.
Strategic Global Income Fund Inc.
E I Du Pont De Nemours And Co
It would appear that I have way too many positions that would reduce the potential for market-beating returns. However, I am not looking to beat the market or other parameters. Rather, I am looking to grow the value of my portfolio over decades with managed risk. Some of the stocks were bought at the bottom of the market in 2008-09 and hence the huge paper profits. Some stocks are weighed less than 0.5% of my portfolio which does not appear very smart. This is either because I was trying to build a full position in the stock as it was falling but then recovered, so I did not feel comfortable buying more. In other cases, I have started selling the stock as it continues to hit new 52-week highs. I would want my portfolio to have 5-10% cash but have 28% right now.
The current dividend yield of the entire portfolio is approximately 2.9% if I include the cash in the brokerage account and 4.1% excluding the unusually high amount of cash. I would like the yield on stock positions to be closer to 5% in the next 2 years. I hope to achieve this by a combination of acquiring stocks at uncharacteristically low valuations and growth in dividend paid by my current holdings.
In the last six months, I have done the following trades:
- Sold Pepsico (PEP) at $72 since I felt that the company does not offer much dividend growth or revenue growth.
- Sold Olin (OLN) at $23.50 since the stock has no dividend growth. I had originally bought it for dividend yield at a time when I did not understand the power of dividend growth investing.
- Sold Foster Wheeler (FWLT) at $26 since the stock has no dividend and did not appear to be reaping the benefits of infrastructure projects around the world.
- Sold General Cable (BGC) at $33.50 since the stock has no dividend and the stock had gone up quite a bit from my purchase price.
- Sold Fairholme Fund (FAIRX) at $32.60 and $33.60 since I became impatient and dissatisfied with the fund manager's strategy of investing heaving in AIG, Sears and St. Joe's. I started investing with FAIRX, but going forward, I feel that I don't need mutual funds any more. I enjoy investing in individual stocks, and feel that over the long term, I will generate returns similar to a mutual fund.
- Sold 3M (MMM) at $103 since the stock went up quite a bit. I plan to re-enter the stock if it falls below $90.
- Sold Nacco Industries (NC) at $61. I had bought it before they spun-off Hyster-Yale (HY) and the dividend yield was quite low and the stock went up quite a bit.
- Sold Hyster-Yale (HY) at $51. The company was newly spun-off from Nacco Industries and I felt that it is richly valued and would be a better value around $38-40 levels. Obviously, the market disagrees.
- Sold Leggett & Platt (LEG) at $26 since I thought that the growth would be hard to come by and the dividend growth would stop. I probably read the stock signals incorrectly.
- Sold Nutrisystem (NTRI) at $9 after they reported lackluster results last year (yet again) and eliminated their dividends. In many cases, I am tempted to hold on to a stock even after they cut their dividends, but with Nutrisystem, I felt that the company is not in a strong position and I cut my losses.
- Bought Canon (CAJ) at $32 and $30.75 in October. They have some of the best electronics products that sell well around the world and have decent dividend yield. Increases my exposure to Japanese stock market as well.
- Bought Flower Foods (FLO) at $18.75, since they have been investor friendly, and the bakery industry is highly fragmented, with opportunities in consolidation and increased revenue and EPS.
- Bought Norfolk Southern Corp (NSC) at $58 in November and was looking forward to buying more around $54-55, but it did not fall that far. A revered dividend growth stock that got battered with falling coal volumes, but I feel that in the long run, railroads have a significant moat and are environment-friendly.
- Bought McDonald's (MCD) at $83 and had another limit order at $80 but that never executed.
- Bought Intel (INTC) at $23.5, $22.25 and $21, since I think that the tablets will co-exist with ultrabooks, desktops and servers. The company does not look like a growth candidate, but I am willing to bet that they will survive just fine and continue to increase dividends in the low single digits.
- Bought E.On (OTCQX:EONGY) at $17.50 thinking that it may be too early to write the obituary on nuclear power. Even after the recent dividend cut, I think that the yield is quite attractive.
- Bought GDF Suez (OTCPK:GDFZY) at $19.60 since I like the utility business and GDF is one of the biggest utilities in Europe with a nice play on gas. The dividend may not grow or may even get cut slightly but is pretty attractive right now.
I plan to buy the following stocks if they come close to my target price:
- Lincoln Electric (LECO): I like industrials and feel that there is substantial growth possible in the welding industry which is highly fragmented. I sold most of my Lincoln way too early, hoping to re-enter at a lower price. This was a big mistake, but hopefully there will be a few weak days that will allow me to buy the stock around $45. The company has shown an ability to grow revenues and EPS which is the most important factor.
- Seadrill (SDRL): Risky dividend yield stock. I am uneasy with John Fredriksen and his complicated holding structures and movement of assets. Perhaps, I am looking for my gambling fix with this dividend stock.
- National-Oilwell Varco (NOV): I expect the dividend yield to remain low, but this stock falls in the category of revenue, earnings and dividend growth that should award me with total returns.
- Northstar Realty Finance (NRF): I have been amply rewarded by NRF and the dividend yield and growth has been super fantastic over the last few years. If it comes closer to $7 again then I will buy more.
- Total SA (TOT): I will increase my position in Total at $45.
- National Grid (NGG): I want to get the stability of dividends from utilities and this company should help provide some of that especially because they get business from both sides of the Atlantic.
- Darden Restaurants (DRI): I may initiate a position in the stock if it comes closer to $40 without significant change in the company operations.
I plan to sell the following positions from my portfolio if the market continues to keep going up:
- Fairholme Fund (FAIRX): This used to be my biggest position for years, but I have already sold most of it and will sell the remaining units next week.
- General Cable: I bought years back looking for small-cap/mid-cap growth and did quite well for me. However, this stock doesn't fit my current requirements of dividends along with growth.
- Many other stocks if they continue to go up like they have done in the recent past.
One common theme that you might see is that I am slowly trying to be more about total returns and not just a dividend growth investor. After a few years of only buying and holding, I am ready to sell and am prepared to buy if the stock retracts from multi-year highs. I am less hesitant in buying a company which has cut dividend if I still see a story or feel that the dividend growth might return in the next 2-3 years.
I am also not scared of holding more than 60-75 stocks and watch another 30-40 more, of course not on a regular basis, due to a busy job in the semiconductor industry. This allows me to sell stocks and sectors that are "flavors of the season" and reinvest the funds in stocks that are unduly punished or disliked. My biggest goal for 2013 is to invest most of the cash and perhaps if markets fall, then move new money from CDs into my brokerage account.
I look forward to your comments on my portfolio, my recent transactions and strategies.
Additional disclosure: I tend to have 2-3 buy/sell transactions every month so may buy new stocks and sell existing positions in the coming weeks as I find opportunities.