February has been a rather unusual month for the markets, as well as the Team Alpha Retirement Portfolio. We made some significant changes, while also increasing our cash position for what I feel will be turbulence ahead. Even by making some strategic moves in the middle of the month, our stock performance continued to grow.
At the same time, a number of our dividend winning stocks have increased their dividends once again for 2013. This has reflected in a slight tick upward in our overall dividend yield for income. Thus far, all aspects of the portfolio have continued to work very well.
Our Team Alpha portfolio now consists of Apple (NASDAQ:AAPL), McDonald's (NYSE:MCD), Exxon Mobil (NYSE:XOM), Johnson & Johnson (NYSE:JNJ), AT&T (NYSE:T), General Electric (NYSE:GE), BlackRock Kelso Capital (NASDAQ:BKCC), KKR Financial (KFN), Procter & Gamble (NYSE:PG), CSX Corp. (NASDAQ:CSX), Realty Income (NYSE:O), Coca-Cola (NYSE:KO), Annaly Capital (NYSE:NLY), Cisco (NASDAQ:CSCO), Bristol-Myers Squibb (NYSE:BMY), Healthcare Select Sector SPDR (NYSEARCA:XLV), General Dynamics (NYSE:GD), and iShares S&P U.S. Preferred Stock Index Fund (NYSEARCA:PFF).
The Results Speak For Themselves
The S&P 500 has dipped a bit in February. It has gone from 1503 to 1497 through today. A fractional decline of about .40% does not mean very much in the larger scheme of things, but Team Alpha actually added a few dollars to the value of the portfolio.
Last month the portfolio had a total value of $133,816 vs $135,186 this month. While I do not consider this anymore than a flat month, the portfolio value did increase by $1,370 or about 1.2% overall.
The portfolio now has increased by 35.19% since we began, and delivers a total yield of 4.72%. The yield has been recalculated to reflect the increases in dividends from T, KO, BMY and XLV last month.
When we began our journey, the S&P stood at 1162 (11/23/2011), and has increased by roughly 28.8%. I would consider that a stellar performance over the course of the last 15 months. Team Alpha has beaten the S&P by about 25% in the same time frame including the dividends paid by the S&P. (This time, my math is pretty good!)
Key Actions And Events For The Month
In an effort to raise cash and further diversify the portfolio, we sold 25 shares of JNJ, 100 shares of Wal-Mart (NYSE:WMT) to close our position, and 200 shares of LNCO (unfortunately), to close our position.
While selling LNCO seems to have been a mistake, it still has given us plenty of additional cash to work with as we move forward. At the same time, we added Annaly Capital back into the portfolio with 200 shares, and added to our already solid positions in both KFN and BKCC.
In addition, dividends of $399 has been added to our cash reserves as XOM, JNJ, GE, AAPL, PFF, O, MCD, and CSX all went ex-dividend this month.
Our cash position now stands at $9,221, or roughly 7% of our total portfolio. I would have liked to have that amount at around 10% ($14,000) to take further advantage of opportunities to buy on the dips, but we do have a decent amount to work with.
Where Do We Go From Here?
I believe we will see some weakness in the coming weeks and months as the Government faces the on going saga of our budget issues. I do not think that the roof will cave in, but I will be on the look-out for bargains in the energy and defense sectors.
The portfolio needs to have more exposure in a pure energy stock, perhaps a stock like Chevron (NYSE:CVX) to replace LNCO, and if the budget cuts hit the military spending area, a stock like General Dynamics, that we already own, could be added to.
For now, I am leaning towards CVX to have the best two pure energy stocks (XOM and CVX) in the portfolio.
I will go into greater detail in a separate article, but CVX has been another stellar performer over the long term, and with a current dividend yield of 3.15%, this dividend winning, mega-cap, blue chip stock will fit nicely alongside XOM.
Waiting for a 1-2% dip in the share price will make me feel good, but I will not be waiting too long.
As most of you know, I think we are in the early stages of a secular bull market. The increases we have seen in the market has gotten us back to pre-great recession levels, and while we could see some short term selling pressure, I think this market wants to go higher, much higher, over the long haul.
Please remember these opinions are my own and you should never base any buying or selling decisions without doing your own research and due diligence.
Disclosure: I am long XOM, JNJ, T, GE, BKCC, AAPL, KO, XLV, PFF, O, KFN, NLY, CSCO, GD, BMY, MCD, CSX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.