Retirement Strategy: Buy On Dips, Add To Core Holdings (Part 7)

by: Regarded Solutions

With the January "effect" coming to a close, and my promise to review our Retirement Stategy Core Portfolio (our advanced series), it is time to see how we are doing and what steps we can take from here.

Our portfolio consists of ExxonMobil (NYSE:XOM), Johnson and Johnson (NYSE:JNJ), AT&T (NYSE:T), General Electric (NYSE:GE), Annaly Capital (NYSE:NLY), Exelon (NYSE:EXC), Procter and Gamble (NYSE:PG), McDonald's (NYSE:MCD), Philip Morris (NYSE:PM), Intel (NASDAQ:INTC), Realty Income (NYSE:O), ConocoPhillips (NYSE:COP), Pfizer (NYSE:PFE) Chevron (NYSE:CVX), E.I. du Pont (NYSE:DD), Duke Energy (NYSE:DUK), PPL Corp. (NYSE:PPL).

How Are We Doing?

stock Buy 11-23 1-30-PPS Cost Basis Cur.Value
XOM 75/SHR 85/SHR 7500 8500
JNJ 62/SHR 66/SHR 6200 6600
T 27/SHR 29/SHR 2700 2900
GE 15/SHR 19/SHR 1500 1900
NLY 16/SHR 17/SHR 1760 1810
EXC 41/SHR 40/SHR 16400 16000
PG 61/SHR 63/SHR 12200 12600
MCD 92/SHR 98/SHR 9200 9800
PM 71/SHR 75/SHR 9940 10500
INTC 23/SHR 27/SHR 2300 2700
O 32/SHR 36/SHR 3200 3600
COP 67/SHR 69/SHR 6700 6900
PFE 18/SHR 22/SHR 1800 2200
CVX 94/SHR 102/SHR 9400 10200
DD 44/SHR 50/SHR 4400 5000
DUK 20/SHR 21/SHR 2000 2100
PPL 28/SHR 28/SHR 2800 2800
Tot.Value x x 100000 106110

Our capital appreciation dropped from our previous review (see part 6 here), but still stands at a healthy +6.11% and as we all know, nothing goes up forever, down forever, or does nothing far we are in good shape.

Portfolio Highlights

  • Expired covered call premiums: about $1,490 in cash reserves
  • Paid dividends income received: about $4,200 in cash reserves
  • Our current dividend yield stands at 4.20%
  • A total return with dividends and capital appreciation: 11.7%
  • Cash reserve balance: $5,690

Actions To Take Now

  • Sell out of the money covered calls on many of the stocks we own, with a March expiration, no later
  • Review our holdings and decide if we should add, hold, sell
  • Pick stocks we do not own now and research them to see if we should deploy our cash reserves into adding new stocks or keeping our cash reserves for further pullbacks to add to existing positions.

My Opinion

The "January Effect" had little effect on our core portfoilo, but we collected the dividends, collected the premiums on the covered calls, and have a steady cash reserve fund. I believe that since we began this portfolio, we were due for a pullback. We have been seeing that now and it gives us a moment to pause, review our holdings, and take steps to make changes if we need to, and to sell another round of covered calls.

As far as the holdings, I have several issues that need to be looked at a bit more. Most notably with Exelon and falling natural gas prices. The other stocks we own I am satisfied with thus far and would consider adding more shares of the following; NLY, T, and GE.

Keeping an eye on the Euro Zone folly is prudent as well. Although I do not believe in the apocalyptic views of some folks, it does need to be monitored. Using the cash reserves we now have and with the ensuing premiums we receive from the new calls we sell, I will review our updated positions in Part 8, in the next few days.

Disclosure: I am long NLY, XOM, O, INTC, JNJ, EXC, T.