Portfolio Of A Millennial: June Update

Summary

• My dividend-focused portfolio performed strongly in June, increasing by around 3%.
• Dividends received were almost 3 times the amount earned in June 2016.
• I did not buy or sell any holdings.

Credit: High Plains Investor

Portfolio Goals

For those who didn't read my introductory piece, the first group of stocks were purchased in the winter of 2015.

I used inherited funds upon my father's passing to buy an equal allocation of shares in 10 US companies, one in each sector.

The goals were to find large companies with growing earnings, stable cash flows, consistent dividends and low debt at a reasonable valuation. I have, for the main, kept to that strategy with some exceptions.

These were the initial positions:

• Archer Daniels Midland (NYSE:ADM)
• Corning (NYSE:GLW)
• Dow Chemical (NYSE:DOW)
• Johnson & Johnson (NYSE:JNJ)
• Magna International (NYSE:MGA)
• Norfolk Southern (NYSE:NSC)
• Public Service Enterprise Group (NYSE:PEG)
• Telus (NYSE:TU)
• Wells Fargo (NYSE:WFC)
• Woodward (NASDAQ:WWD)

As of July 2017, my holdings have expanded to a current total of 19: 12 companies and seven REITs.

Monthly Performance

Credit: High Plains Investor

In terms of performance, June 2017 was the third strongest month for my portfolio in the past year.

Biotech giant Amgen (AMGN) had a spectacular 30 days, leaping by almost 10%. I outlined my views about this excellent company in a recent article. I think I'll always hold on to the Enbrel manufacturer.

Other strong performers included Packaging Corporation of America (PKG), Wells Fargo (WFC), Easterly Government Properties (DEA) and Omega Healthcare Investors (OHI). I'm pleased to see that the rotation of money into financial stocks helped buoy my holding.

New Jersey utility Public Service Enterprise Group (PEG) was my chief loser, suffering a drop of 5% over the month. PEG went the way of the broader utilities ETF (XLU) which finished the month 1.41% lower.

PEG offered 2017 guidance of $2.80-$3.00 in its Q1 earnings call, giving the company a forward P/E of just over 15. That's tempting to me and I may look into adding to my position in the near future.

Overall Performance

Credit: High Plains Investor

To this point, my portfolio has performed strongly which is a double-edged sword.

On the one hand I could think that I'm fantastic, a young hybrid of Warren Buffett and Peter Lynch, succeeding at one of the toughest games going. I'm not. This has been a surprisingly strong and sustained rally from which I have profited. I have also been lucky with the market's view of PKG, Western Digital (WDC) and Corning (GLW) - I really didn't predict those increases.

On the other side of the blade lies a common emotion in investing - fear. The returns have been too good so there must be a large correction coming to straighten me out! Again, this isn't necessarily true. As Warren said, "a stock doesn't know that you own it." I have no idea if or when there will be a correction, so there's no point worrying about it. In fact, as someone who loves to buy shares at a fair valuation, a significant correction would offer a great buying opportunity.

However, since I know no more than you about what's going to happen, I'll stick to what I have been doing: assessing stocks carefully for interesting opportunities.

Dividends

Credit: High Plains Investor

I'm happy with how my dividend payments are developing. Of the 19 companies that I have shares of, only three failed to increase their payout for 2017.

I anticipate significant increases in the coming years from AMGN, DEA, GLW, HASI, OHI, PKG, RHI, SPG, STAG, TRV. Independence Realty Trust (IRT) is the most speculative of my holdings - as I have written about before - and the only dividend that I monitor closely given its 100% payout ratio.

At the end of 2017, I'd like to reach $1,000 a year in dividends after some purchases.

Acquisitions & Dispositions

Credit: Jez Arnold

It's been another one of those months with neither a purchase nor a sale.

The valuations for most of my holdings are beyond a level that I'm comfortable adding to. PEG and SPG are reasonably priced but I haven't made a clear decision on either of them. I intend to build up cash in the coming months in preparation for bargains down the line.

What I'm Looking At

I have been researching Lowe's (NYSE:LOW) lately and it looks very interesting. Last month, I analysed Starbucks (NASDAQ:SBUX) and could certainly make a move on the coffee giant in the coming months.

Otherwise, Digital Realty (NYSE:DLR), CyrusOne (NASDAQ:CONE), Realty Income (NYSE:O), Crown Castle (NYSE:CCI) Vereit (NYSE:VER) and Foot Locker (FL) are on my watchlist.

Analyst’s Disclosure: I am/we are long ADM, AMGN, CLDT, DEA, GLW, HASI, IRT, NSC, OHI, PKG, PEG, RHI, SPG, STAG, T, TRV, WDC. 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.