My Journey To Financial Independence: 86-Stock November Portfolio Update - Buying Apple, AbbVie And BMW

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Includes: AAPL, ABBV, AINV, ALB, AMD, ARI, ATVI, AZSEY, BAC, BASFY, BAYZF, BGS, BMWYY, BNS, BTC-USD, BZUN, CBAUF, CF, CL, CLDT, CM, COIN, COR, COST, CSCO, CTL, CVS, CZNC, D, DAL, DATA, DDAIF, DHT, DIS, DRHKF, EPD, ETE, FB, FDX, FMS, FRO, FSNUF, FSNUY, GILD, GIS, GM, GOOG, HON, HPT, JNJ, JPM, KO, LNXSF, MAIN, MCD, MDGEF, MMM, MO, MOMO, MS, MSFT, NKE, NVDA, O, OHI, PEB, PEP, PG, PM, RDS.B, RY, SBUX, SEP, SNH, SO, STAG, STWD, T, TD, TEAM, TGT, TNK, TOT, TWX, TXN, UN, USA, V, VZ, WFC, WMT, XOM
by: Stefan Redlich

Summary

Dividend income in November totaled $182.80 in dividends, up +10% QoQ and +119% YoY.

I outline portfolio composition by sector and portfolio weight for each holding.

I opened positions in 2 new stocks and sold out Kroger.

The euro stabilized in November and my two biggest positions Altria and AT&T started to rally.

It's November and the year is coming to an end, fast and furious. Global stock markets rallied in November and despite still being hampered by the strong euro my portfolio also appreciated quite significantly driven mostly by Altria (MO) and AT&T (T).

The expected corporate tax reform is fueling the recent stock rally with several stocks appreciating significantly and the overall broad S&P 500 market now trading at an even loftier 26 times earnings, yet another record during this long bull market.

However, the real action is taking place on the cryptocurrency markets with Bitcoin (COIN) more than doubling in no time and other digital currencies like Litecoin, Ethereum, Ripple, Neo etc. skyrocketing, particularly in December.

I am absolutely not into that crypto party as I am expecting a huge hangover once the music stops but each to their own and the "Fear of Missing Out" on this party is clearly catapulting the market into the stratosphere right now.

I am counting my dividends and constantly screening the market for new opportunities. One of the two best stocks to pick in November was AT&T and Altria before they started to rally. Strong capital appreciation here is nice on the one hand but also limits my options for further investments as the key to great long-term performance is getting great stocks at attractive prices which is easier said than done.

I continued my monthly savings plans in November and added to existing positions in the German DAX which I am rating to be undervalued.

Portfolio Changes | 2 new stocks, 1 sale and 20 repurchases

I am repeating myself compared to previous updates but November was another really busy month. I deployed around $4,300 in fresh capital which went into the following positions.

1) Continue ongoing monthly stock savings plans: These are routine investments between $50-115 each into Wells Fargo (WFC), Visa (V), McDonald's (MCD), Johnson & Johnson (JNJ), Apple (AAPL) and the lesser known Commonwealth Bank of Australia (OTCPK:CBAUF).

2) Invest in existing growth stocks: I added to Honeywell (HON), a software industrial giant which has enjoyed a stellar run in 2017, is firing on all cylinders and is also priced at the high end of the valuation spectrum. Despite that high valuation I added to my position as double-digit dividend and earnings growth will prove decisive over the long-term. Honeywell's outlook for 2018, given this week, is very solid and the success story should continue.

I added heavily to BMW (OTCPK:BMWYY) as I am bullish on the stock itself but also on its dividend prospects and BMW's initiative into electric vehicles. The most recent quarter wasn't necessarily good but overall 2017 is poised to be another record year and 2018 should follow suit. Given its ultra-low valuation with a P/E ratio of around 7 and dedications to its business I decided to pull the trigger.

Another stock beaten down in November was DAX member Fresenius SE (OTCQX:FSNUY) driven by a "Sell" rating from UBS which in turn was driven by ongoing concerns about the company's Kabi subsidiary. As a German investor I know Fresenius' presence in Germany and while there may be short-term issues with Kabi, the long-term prospects for the stock and the company remain intact. This is not a dividend play at this stage but purely for growth and capital appreciation.

3) Invest in new growth stocks: I started a tiny position in Atlassian Corporation (TEAM) which has been trending downward since my purchase. Great timing but the company's products are playing such an important part already in our own company and the growth will be big over the next years. I could also imagine TEAM to get acquired by Microsoft (MSFT), Google (GOOG), Cisco (CSCO) or others.

4) Speculative buys: I bought a few shares in Energy Transfer Equity (ETE) motivated by fellow SA authors, the stock's dividend and rock solid payouts and dividend growth.

All purchases in November can be found below:

Dividend Income: What happened on the dividend side?

My income from 22 corporations amounted to $182.8 in dividends, up 10% sequentially and 119% Y/Y.

In November more than 50% of total dividend income originated from two companies, Omega Healthcare Investors (OHI) and AT&T. While I remain very confident and happy with AT&T the dividend income from OHI will significantly decline in future months given that I have sold around 2/3 of my position after Omega shocked the markets with its tenant issues. If the company's next earnings release will provide more clarity and hopefully ease concerns I am very tempted to buy back in.

This dashboard shows how the monthly dividend income breaks down into the individual stocks. It also shows the change in income vs. the previous quarter and year.

Here is a look at my favorite chart, the net dividend income development by month over time between 2015 and 2017, where you can easily see the development of my dividend income as well as the average annual dividend in a given year:

Next, I have scattered all the individual dividend payments I have ever received and colored them by year:

For November we can clearly detect the two big payments from Omega and AT&T. It also clearly shows how unevenly dividend income was distributed in November compared to other months and how that progressed since I started my journey. For better readability I split and color-coded the horizontal axis by year while still using the same scaling for the three years. I just cherish this development and could not be happier about it.

It will be fascinating to watch how all these metrics develop over time. Right now, as I am still in the early stages, these metrics are not that impressive but the growth is truly striking and all these instruments help me measure it and provide meaning to it.

Speaking in terms of meaning, another way to express the monthly dividend income is in terms of Gifted Working Time (GWT). I am assuming an average hourly rate of $20 here.

What this shows is the following

1) All-time (blue area): Around 129 hours or more than 16 days of active work have been replaced with passive income since the start of my dividend journey. Assuming a 5-day work week that equals three weeks of vacation funded via dividends.

2) YTD (green bars): Around 89 hours or 11 full days of active work have been replaced with passive income. I have now surpassed my yearly target by 9 hours and with December dividend income still to come the only question is whether I can still hit the magical 100 hours mark or have to wait for next year.

3) Monthly (delta between final two green bars): Around 9 hours of active work have been replaced with passive income in November.

12-Month Forward Dividend Income

My projected forward income over the next 12 months crossed the $2,500 barrier again coming in at almost $2,600. Thus, new investments have already compensated for the loss in income from trimming my OHI position earlier.

Upcoming November Dividends

The snapshot below is taken from my Dividend Calendar and Dashboard Tool and shows expected gross dividend payments for December. December will be a great month as it is end of quarter with most of my stocks paying dividends.

I use that tool basically every day and I would be happy if you give it a try as well, for free of course. I am also very interested in your ongoing feedback regarding this as it continues to be popular across the community. In case of any problems I am more than happy to assist you in setting up everything. I am also working on simplifying and automating it further as well as adding new features. This however, takes a lot of time actually so please be patient.

The future

Currently, I am also working very hard to enrich my updates with real portfolio return tracking. This will allow me to do the following:

  • For every single year calculate the return of existing investments held prior to start of the year
  • For every single year calculate the return of new investments during the year
  • Calculate total portfolio performance and compare to benchmark
  • Automatically single out best-and-worse performers over any time period
  • Calculate all these metrics both in USD and in EUR

This is still very much WIP as I need to get the calculations right but once finished it could look something like this...

or this...

Please let me know in the comments section if you have any ideas on what else I could integrate in order to enhance these portfolio updates.

My portfolio composition

As of end of November, based on cost basis and previously mentioned clustering, my portfolio is composed as follows:

AT&T Inc. (T) 6.72%
Altria Group Inc (MO) 5.97%
Gilead Sciences, Inc. (GILD) 5.23%
Royal Dutch Shell Plc (RDS.B) 4.36%
Cisco Systems, Inc. (CSCO) 3.55%
McDonald's Corporation (MCD) 3.29%
Apple Inc. (AAPL) 3.13%
Southern Co (SO) 2.73%
Unilever NV (ADR) (UN) 2.31%
Bayerische Motoren Werke AG (OTCPK:OTCPK:BMWYY) 2.28%
Visa Inc (V) 2.07%
Wells Fargo & Co (WFC) 1.98%
B&G Foods, Inc. (BGS) 1.98%
Main Street Capital Corporation (MAIN) 1.83%
Commonwealth Bank of Australia (OTCPK:OTCPK:CBAUF) 1.82%
Johnson & Johnson (JNJ) 1.80%
PepsiCo, Inc. (PEP) 1.78%
AbbVie Inc (ABBV) 1.72%
Toronto-Dominion Bank (TD) 1.60%
Verizon Communications Inc. (VZ) 1.58%
Bank of Nova Scotia (BNS) 1.49%
Philip Morris International Inc. (PM) 1.47%
Daimler (OTCPK:OTCPK:DDAIF) 1.46%
Procter & Gamble Co (PG) 1.38%
The Coca-Cola Co (KO) 1.33%
Omega Healthcare Investors Inc (OHI) 1.32%
BASF (OTCQX:OTCQX:BASFY) 1.29%
Microsoft Corporation (MSFT) 1.25%
Exxon Mobil Corporation (XOM) 1.21%
Fresenius SE (OTCQX:OTCQX:FSNUF) 1.13%
Spectra Energy Partners, LP (SEP) 1.09%
Walt Disney Co (DIS) 1.09%
Nike Inc (NKE) 1.07%
General Motors Company (GM) 1.05%
Honeywell International Inc. (HON) 0.97%
3M Co (MMM) 0.90%
Momo Inc (ADR) (MOMO) 0.88%
General Mills, Inc. (GIS) 0.88%
Target Corporation (TGT) 0.82%
Allianz SE (OTCQX:OTCPK:AZSEY) 0.81%
Senior Housing Properties Trust (SNH) 0.80%
Drillisch (OTC:OTC:DRHKF) 0.80%
Total SA (ADR) (TOT) 0.79%
Canadian Imperial Bank of Commerce (USA) (CM) 0.76%
Realty Income Corp (O) 0.76%
Advanced Micro Devices, Inc. (AMD) 0.76%
Morgan Stanley (MS) 0.72%
Royal Bank of Canada (RY) 0.68%
BP (BP.L) 0.68%
Pebblebrook Hotel Trust (PEB) 0.61%
Bayer AG (OTCPK:OTCPK:BAYZF) 0.58%
Texas Instruments Incorporated (TXN) 0.51%
Starwood Property Trust, Inc. (STWD) 0.50%
Citizens & Northern Corporation (CZNC) 0.48%
Bank of America Corp (BAC) 0.48%
Teekay Tankers Ltd. (TNK) 0.48%
Baozun Inc (ADR) (BZUN) 0.48%
FedEx Corporation (FDX) 0.47%
Colgate-Palmolive Company (CL) 0.47%
CoreSite Realty Corp (COR) 0.47%
Dominion Energy Inc (D) 0.45%
JPMorgan Chase & Co. (JPM) 0.43%
Lanxess AG (OTCPK:LNXSF) 0.41%
Stag Industrial Inc (STAG) 0.40%
Enterprise Products Partners L.P. (EPD) 0.39%
Tableau Software Inc (DATA) 0.33%
Starbucks Corporation (SBUX) 0.32%
Chatham Lodging Trust (CLDT) 0.30%
MediGene AG (OTCPK:MDGEF) 0.26%
Fresenius Medical Care (FMS) 0.25%
Time Warner Inc (TWX) 0.24%
Frontline Ltd. (FRO) 0.24%
Hospitality Properties Trust (HPT) 0.23%
Costco Wholesale Corporation (COST) 0.23%
Facebook Inc (FB) 0.23%
Wal-Mart Stores Inc (WMT) 0.22%
NVIDIA Corporation (NVDA) 0.22%
CF Industries Holdings, Inc. (CF) 0.20%
CVS Health Corp (CVS) 0.20%
Delta Air Lines, Inc. (DAL) 0.19%
Apollo Commercial Real Est. Finance Inc (ARI) 0.19%
Energy Transfer Equity LP (ETE) 0.18%
Activision Blizzard, Inc. (ATVI) 0.18%
Apollo Investment Corp. (AINV) 0.18%
DHT Holdings Inc (DHT) 0.17%
Albemarle Corporation (ALB) 0.17%
Centurylink Inc (CTL) 0.16%
Atlassian Corporation PLC (TEAM) 0.15%

Author's note: If you enjoyed this article, the only favor I ask for is to click the "follow" button next my name at the top of this article. This allows me to develop my readership so I can offer my opinion and experiences to interested readers who may not have received them otherwise. Happy investing :)

As always, I hope that you find this update interesting and relevant. The biggest inspiration for me are reading these updates from other authors and following their progress over the years. Compared to them, I am still really at the beginning of my journey, and I would appreciate if you want to follow/continue to follow my journey as well. I hope to inspire many more readers to also start and share their journey.

Disclosure: I am/we are long AAPL, BP, CSCO, KO, CL, XOM, GILD, JNJ, MCD, PM, PG, RDS.B, UN, DIS, PEP, VZ, V, WFC, GIS, BGS, SEP, MSFT, MAIN, CTL, TNK, HCP, ABBV, FIG, CLDT, RY, EPD, QTS, DFT, GM, CZNC, OHI, CM, T, JPM, STAG, HPT, FDX, AINV, SNH, DHT, FRO, HON, STWD, PEB, MS, CF, SO, RAI, FLO, CCP, BNS, MO, PFE, CVS, TWX, O, COR, HCN, TOT, TD, ARI, D, FB, ALB, TGT, WMT, AMD, 3M, BZUN, MOMO, DATA, ATVI, TTWO, LNXSF, TXN, ETE, TEAM, SBUX.

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.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.