Seeking Alpha

Sand In My Shoes - March Update

Includes: APD, HRL, MMM, MMP, SO
by: Brian Soule

Another tough month for large cap equities with the Dow, NASDAQ, and S&P all down around 3% and so the portfolio suffered another down month.

I have included details of dividends received and an updated view of projected dividends for Q2, which should be a record quarter by all expectations.

There was one new addition to the portfolio and I added to one of the existing positions and I will detail those.

The Sand In Shoes IRA portfolio lost close to $2,000 this month, nearly all of that explained by the drop in the large cap equities. All of the other asset classes were nearly a wash comparably, and as such we won't even spend much time talking about them.

The big news for the month was my addition of a stock in the materials sector. I have been looking for a stock for months, and finally a stock I like hit a price I was willing to pay. The stock I finally purchased is Air Products and Chemicals Inc. (APD). More details to follow, so please read on.

March Dividends

I actually expected a few more dividends to hit in March, but they have been pushed out to the first week of April. That will just make April's numbers look better, but March still turned out to be pretty good.

Not surprisingly, Q1 set a record for dividends collected and each of the three months were well above the same months from last year.

March Performance

Once again, nearly all of my stocks suffered losses which makes sense given how tough a month the broader equity markets had. The only stocks that were in the black were my two REITs plus Hormel Foods Corp. (HRL) and Southern Co. (SO).

Offsetting the change in market value was the nearly $900 I received in distributions from my mutual funds and ETFs plus the dividends I already mentioned.

Individual Stocks

Below are the stocks in the portfolio as of close of business March 29, 2018:

There are a few stocks that I want to own more shares of that are coming close to where I bought them initially. One in particular that I will be watching throughout April is 3M Co. (MMM). I made my initial purchase right around $208-209 and it is getting close to that now. When MMM was breaking through $230 and then $240 and then $250 I was lamenting that I only entered a half position, and it looks like if we have another few down days I will be able to purchase the other half either at or below where I made my initial purchase. I will definitely keep an eye on that one.

Projected Dividends

It turns out a few of the dividends that were scheduled to be paid on March 30th ended up being paid on April 2nd since the markets were not open on Good Friday. So April will look just a little bit better than initially expected and March looked just a little bit worse. Here are the projected dividends for Q2.

And there it is, my first $500+ quarter (projected). Barely $500, but I'll take it. It is also possible that I will see another dividend increase or two by the next payout for some of these, specifically I'm thinking of MMP which had not announced at the time of this writing.

Sector Diversification

As mentioned above, I finally have a stock in the materials sector. This gives me representation in all eleven sectors. Now I can use this table as a guide to tell me which sectors I should probably avoid adding to and which sectors I still need to beef up. Fortunately, my desire to purchase more MMM and these sector weightings might coincide, but we'll have to see what happens in the next couple of weeks. Here were my sector weighting as of March 29th:

Consumer Discretionary 10.7%
Consumer Staples 8.3%
Energy 7.3%
Financials 20.9%
Health Care 11.6%
Industrials 3.3%
Materials 4.8%
REIT 10.1%
Technology 9.3%
Telecom 6.8%
Utilities 6.8%

Asset Allocation of the Portfolio

The decline in equity prices led to the large cap portion of my portfolio dropping from 42.0% at the end of February to 41.6% at the end of March. My domestic fixed income investments, which I was considering adding to in order to bring the asset allocation back closer to my targets rose from 28.0% to 28.1%, which means I will still be keeping my eye on the balance, but no action was taken in that regard in March.

Sales and Purchases in March

One new position was added to the portfolio, I finally filled the hole in the materials sector with APD. You can read all the details here if you are curious as to why I finally settled on one. A little over a week ago I also added to one of my existing positions because frankly, the share price had just dropped too far and the yield now exceeds 6%. Also I had about $1,000 just sitting in cash, so the decision was easy. That position was Magellan Midstream Partners LP (MMP) and I purchased 16 more shares of that LP for about $950 total. You can read about why I initially selected MMP here.

The only sale was $2,350 of my S&P index fund, the proceeds of which I used to fund my purchase of APD.

Final Thoughts

Second down month in a row, which isn't fun. However, I am now looking forward to crossing the $500/quarter line and building on that on my way to my ultimate goal of $10,000 per year in dividend income.

Things are getting exciting. I hope you are enjoying following this as much as I'm enjoying writing this. As always, thank you for reading this and best of luck!

Disclosure: I am/we are long AAPL, AIG, AMGN, APD, BAC, BLK, C, CSCO, CVS, GPC, HD, HRL, MMM, MMP, O, OHI, PEP, SO, T. 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.