My End Of Month Portfolio Update And Current Watch List

|
Includes: CAH, CBRL, CLDT, COR, GM, MO, RHP, TRGP
by: Tom Wilson

Summary

I discuss 8 new purchases since my last article.

I update my portfolio income status as of the end of September.

I include the list of stocks on my "want" list along with my desired buy targets and potential upcoming purchases.

A few weeks ago, I published an introduction to my portfolio and some insights into my dividend investing and retirement strategy. If you missed it, you can find it by clicking here.

In this update, I want to walk you through some changes and additions I have made to the portfolio, and update the final end-of-month status of the portfolio income stream. I also include a graphical representation of the income stream since the portfolio was started about 2-1/2 years ago. Finally, I include for the first time, a list of all the stocks on my "want to buy" list, along with my personal buy targets.

Portfolio Changes and Additions

As surprising as it may seem, there have been a lot of additions and changes to the portfolio in the last 2 weeks. Some might question the timing of the purchases, but I feel that each one was a reasonable value and I also wanted to put this particular money to work for me. I continue to have other funds waiting on the sidelines for future market dips.

My purchases and some of my thinking processes are outlined below:

  • Ryman Hospitality Properties (NYSE:RHP) - I added an additional 90 shares to top off my existing position. Ryman runs a small group of upscale resort/conference style hotels in Nashville Tennessee, Kissimmee Florida, Grapevine Texas, and the Washington DC area. In Nashville, they also run the Grand Ole Opry, the Ryman Auditorium, the General Jackson showboat, and several other smaller venues. All of these properties appear to be top notch operations with a dedicated following. Since July, the stock price is down $7.00 and looked like a good long term value. Ryman operates as a REIT and currently has a P/E of 17.3 and a dividend yield of 6.23%.
  • CoreSite Realty (NYSE:COR) - I started a new position in CoreSite with the purchase of 118 shares. CoreSite is one of a handful of similar data center type companies whose prices increased dramatically over the last 18 months. The P/E is somewhat high at 55.4, but the year over year earnings have been increasing significantly and I don't see the internet getting any smaller in the future. I like the data centers and already had positions in Digital Realty (NYSE:DLR), Dupont Fabros (NYSE:DFT), and CyrusOne (NASDAQ:CONE). Since CoreSite is down $17 since its high of $91 in July, it seems to me that the pullback presents a good price point to get in. CoreSite operates as a REIT and currently has a dividend yield of 2.86%.
  • Cardinal Health (NYSE:CAH) - I started a new position in Cardinal Health with the purchase of 115 shares. Cardinal is a healthcare products company with a diverse range of products from pharmaceuticals to general medical supplies and they distribute these to retailers, hospitals, and other healthcare providers. The P/E is currently at 17.99 and the year over year earnings have been increasing significantly each of the last 3 years. Since a high of $84 in August, Cardinal has pulled back $7 or 8.3%. I had been watching Cardinal for awhile and decided that this level appeared to be a decent point to add. Cardinal currently has a dividend yield of 2.31%.
  • Chatham Lodging Trust (NYSE:CLDT) - I started a new position in Chatham with the purchase of 400 shares. Chatham Lodging trust is a REIT with a large portfolio of relatively upscale hotels. This is a company that seems to be on almost everyone's DGI list in some way or another. I had been watching it for awhile and decided that now looked like a good time to initiate a position since it has already pulled back $5 or 25% since its high in July. Chatham has a P/E of 21.6 and their year over year earnings have been increasing pretty significantly. Chatham Lodging currently has a dividend yield of 6.86%.
  • Targa Resources (NYSE:TRGP) - I added an additional 100 shares to top off my existing position. Targa is a midstream natural gas and liquid natural gas company involved in all phases of the business. I originally started my position back in May 2016, and I have found Targa to be highly volatile in response to energy prices (as you would expect). It has been very good to me and I think there is a lot of upside as energy comes off a several year downtrend. Targa currently has a dividend yield of 7.41%.
  • Altria (NYSE:MO) - I added an additional 63 shares of Altria to top off my existing position. Altria is one of the bluest of the blue chips. It is primarily a tobacco company, but it also owns a large stake in SAB Miller (which is being bought by AB Inbev), and some very popular wineries. Since originally purchasing Altria in May of 2014, it has been one of my all time best investments. Most people who own Altria say the same thing. I think the AB Inbev buyout of SAB Miller will result in some good gains for Altria in the form of a stake ownership of Budweiser and a cash payout. Altria has pulled back $6 or about 8.7% since July, but now appears poised to gain as the big merger is finalized. Altria currently has a dividend yield of 3.86%.
  • General Motors (NYSE:GM) - I added an additional 157 shares of GM to top off my existing position. As I've said before, I was not overly enthusiastic about GM after the bailouts occurred back in the recession, but they have been executing very well and currently had a dividend yield of 5%, which is where I started my initial position. As I continued to feel comfortable with GM, I just couldn't resist buying a bit more. Their earnings have been pretty decent this year and their P/E is only 4.07. GM currently has a dividend yield of 4.78%.
  • Cracker Barrel Old Country Stores (NASDAQ:CBRL) - I restarted a smallish position in Cracker Barrel with the purchase of 30 shares. I had owned Cracker Barrel back in 2014 and I eventually sold after having made 34% on my investment. I regretted selling and the stock continued to go higher and higher. Cracker Barrel owns restaurants with gift shops, serving down home style food that appeals to many people, and with that appeal comes dedicated customers who keep coming back. Interestingly, I sold my initial position in Cracker Barrel in 2015 at just over $133. It continued up to $172 and has now pulled back to the $132 range. So, all in all, I got back in while saving a dollar per share. Cracker Barrel currently has a dividend yield of 3.48%.

Current Portfolio Cash Flow Status

As a result of the 8 transactions listed above, my monthly cash flow increased significantly. Here is an updated table showing my portfolio growth and resulting monthly dividend cash flow for the first 3 calendar quarters of 2016:

Quarter Positions Avg Yield Avg Monthly Cash Flow Income
Q1 27 5.80 $1535
Q2 31 5.67 $1680
Q3 39 5.89 $2026

In graphical form, here is how my monthly actual and average cash flow have increased since I started my portfolio in January 2014 (values are in $ per month):

Portfolio Monthly Cash Flow

The blue line is the actual monthly cash inflow and the red line is the "smoothed" monthly average. There were some hickups in late 2014 and 2015 as adjustments were made due to the carnage in the oil related stocks in owned at the time.

My "Want to Buy" list

Since I just listed my portfolio 2 weeks ago, I won't do it again here. Instead, I will present my full list of "want to buy" stocks along with my current buy targets.

I still have a large amount of dry powder that I am sitting on waiting for pullbacks. For this reason, I keep a big list of stocks that I want to buy. I set targets that I think are realistic and then I sit back and wait. I don't actually intend on buying all of these stocks, but which ever ones hit first will get my attention.

My buy targets are listed as "Yield Targets". I target by yield instead of price, since the yield incorporates two attributes (price and dividend) instead of just one (price). The CCC levels are courtesy of David Fish and his monthly CCC Dividend Champions stock list, available here.

Here is my buy list (ordered alphabetically):

Company (Ticker) CCC Price Yield Yield Target
Alliant Energy (NYSE:LNT) Contender 38.31 3.07 3.18
CenterPoint Energy (NYSE:CNP) Contender 23.23 4.43 4.51
Chevron (NYSE:CVX) Champion 102.92 4.16 4.28
Cincinnati Financial (NASDAQ:CINF) Champion 75.42 2.55 2.70
Cisco (NASDAQ:CSCO) Challenger 31.71 3.28 3.53
Clorox (NYSE:CLX) Champion 125.18 2.56 2.56
Coca Cola (NYSE:KO) Champion 42.32 3.31 3.33
Cracker Barrel Contender 132.22 3.48 3.56
Cummins (NYSE:CMI) Contender 128.15 3.20 3.36
Eastgroup Properties (NYSE:EGP) Challenger 73.56 3.37 3.44
Everest RE Group (NYSE:RE) 189.97 2.42 2.55
Extra Space Storage (NYSE:EXR) Challenger 79.41 3.93 3.95
Exxon Mobil (NYSE:XOM) Champion 87.28 3.44 3.57
Flowers Foods (NYSE:FLO) Contender 15.12 4.23 4.13
General Electric (NYSE:GE) 29.62 3.11 3.17
General Mills (NYSE:GIS) Contender 63.88 3.01 3.10
Helmerich & Payne (NYSE:HP) Champion 67.30 4.16 4.67
Johnson & Johnson (NYSE:JNJ) Champion 118.13 2.71 2.78
Kimberly-Clark (NYSE:KMB) Champion 126.14 2.92 2.97
Lockheed Martin (NYSE:LMT) Contender 239.72 2.75 2.84
Macquarie Infrastructure (NYSE:MIC) Challenger 83.24 6.01 6.13
McDonald's (NYSE:MCD) Champion 115.36 3.09 3.10
Microsoft (NASDAQ:MSFT) Contender 57.59 2.50 2.62
NextEra Energy (NYSE:NEE) Contender 122.32 2.84 2.87
Phillips 66 (NYSE:PSX) Challenger 80.55 3.13 3.23
Procter & Gamble (NYSE:PG) Champion 89.75 2.98 3.17
Public Storage (NYSE:PSA) Challenger 223.14 3.23 3.27
QTS Realty (NYSE:QTS) 52.85 2.72 2.77
Reynolds American (NYSE:RAI) Contender 47.15 3.90 3.91
Target (NYSE:TGT) Champion 68.68 3.26 3.25
The Kraft Heinz Co (NASDAQ:KHC) 89.50 2.68 2.76
Vectren (NYSE:VVC) Champion 50.20 3.19 3.26
Verizon (NYSE:VZ) Contender 51.98 4.35 4.34
W.W. Grainger (NYSE:GWW) Champion 224.84 2.17 2.23
Watsco (NYSE:WSO) 140.90 2.41 2.49
Wells Fargo (NYSE:WFC) Challenger 44.28 3.43 3.62
Yum! Brands (NYSE:YUM) Contender 90.81 2.25 2.36

Four of the target companies are currently in my buy range. They are CLX, FLO, TGT, and VZ. I will likely be making purchases of those stocks during the first week of October, depending on market action. Several others are getting very close to the target yields, such as KO, MCD, and RAI. If those hit, I may also start positions in those stocks.

My buying strategy going forward is generally to purchase "half positions", or 1/2 of the size that I actually want to own. Then, if prices pull back any more I have room to add and lower my overall cost.

I look forward to hearing your comments about my recent buys, my cash flow status, or my buy list. I learn a lot by reading comments, so please join in.

Disclosure: I am/we are long CAH, CLDT, COR, CBRL, GM, MO, RHP, TRGP.

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.

Additional disclosure: I plan on initiating positions in CLX, FLO, TGT, and VZ in the following week. I may also initiate positions in any of my listed buy list stocks if the listed yield targets are reached.