Green Dot Portfolio: June 2018 Update

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Includes: AAPL, AMD, AWF, BGX, BKH, BRX, BXMT, CELG, CLNY, CSX, D, DFP, DOC, DSL, DSLV, EMD, EPR, EVV, FAX, FEO, FLC, FRA, GE, GOV, HASI, HPS, HPT, JPS, JQC, KBWY, KHC, KIO, LDP, LTC, MIC, MPW, MRCC, MSD, MSFT, NHI, NVG, O, PFXF, PG, PGX, RA, ROIC, RQI, SBUX, SCO, SDS, SKT, SO, SPFF, SPY, UGLD, UTF, UTG, VLO, VTR, WELL, XLK, XLP, XLY
by: Green Dot Investor
Summary

Realized total return on portfolio investment for June from dividends and swing trades was +1.57% (same as May) and now totals +8.37% for 8 months.

I closed 2 stock swing trades (SO and BKH) for small gains in June (now 38 consecutive winning swings for +7.32% or +47.14% annualized).

In June I closed 6 option premium swing trades (AAPL, MSFT, VLO, XLK, XLP, XLY) for +43.5% gain on investment (now 12 consecutive winning option swing trades).

Dividend income decreased slightly in June to $542 due to quarterly distribution schedules. Monthly dividend income for 2018 still averages $545.

I continued portfolio adjustments for preferreds, REITs, and CEFs. In June, I added 1 new CEF, sold 7 small positions, and added to 7 existing CEFs and 2 REITs.

Welcome to the 8th monthly update for my Green Dot Portfolio. This is my self-managed retirement portfolio created in a Roth IRA trading account. My goal is to yield a total return of at least 8% annually in income using high-yield dividend investments and swing trading. I have made continuing changes - more than others might want to manage - but I am well on the way to reaching my annual goal, with total returns for the past 8 months now at +8.37%.

Recap of Market Action for June 2018

Overall, the markets in June continued the intermediate level pullback that started in January of this year. Using a daily chart for 6 months for the broad market index, the SPDR S&P 500 ETF (SPY), it's now been 97 trading days since the market's 10 day drop (from the high at 286.63 on 1/26 to the low at 252.92 on 2/9) that marked the beginning of the market pullback. As I described in May and my recent weekly blogs, the SPY twice attempted the resumption of an uptrend in late February and mid-March, failing both times at about the 75% Fibonacci retracement from the 2/9 low. A third attempt failed again in April (4/18), turned back at a lower level (the 50% retracement).

For the first half of June, it appeared that the SPY might finally be putting the downtrend to rest, as the index climbed fairly steadily to the SPY 280 level at about the .786 retrace. That level was also resistance from a more recent up-sloping trendline (gold line). But the SPY for the last half of June headed back down, making this 3 failed attempts to break resistance at the .786 retrace. The month closed with the SPY sitting on the 50 period moving average (green line) just above the 50% retrace level.

(Source: Chart created by author from TD Ameritrade 'thinkorswim' platform).

As I concluded the past few months, in order to resume an uptrend toward a new all-time high, the SPY especially needs to break resistance and confirm above the inside bar of 2/2 at about SPY 280. Should the SPY continue to lose its current footing, closing below the 200 period SMA (near SPY 267) and confirming below the 2/9 low, it is possible for a continuing decline to the SPY 250 level or lower. At SPY 240, the market is about equal to a pivot top in late February 2017 and near a basing level in August 2017.

Portfolio Strategy and Asset Allocation Changes for June

In June, I continued to use swing trading of option premiums to generate some profits for further investing. I wrote about that in an article here, and it is paying off nicely so far, with 6 additional consecutive winning option swing trades in June. Overall, I've continued to trade, consolidate, and add to positions, all intended to serve my overall annual portfolio growth goal of at least 8%.

My active management style means that I make a lot of trades, but the action is adding to my total returns far faster than from collecting dividends alone.

Highlights of changes to my portfolio in June are as follows:

  • The overall portfolio investment increased in June to a new high ($109,460) as a result of reinvesting dividends and swing trade profits.
  • The total number of current shares increased to a new high (6,725), and the number of holdings was reduced further to 52 including my options.
  • The overall unweighted average dividend/distribution yield of my current investments increased slightly, to 7.07%.
  • My total investment in CEFs increased to 60% including CEFs with portfolios of preferred stocks.
  • The average investment per holding in the portfolio (excluding options) increased from $1,903 in May to $2,290 in June.

The table below shows the portfolio allocation by asset class. I include data for June for the number of holdings and shares, total cost, % of the portfolio, and dividend/distribution yield. These are compared to the portfolio in May, and to January to show how significant the changes have been over time. Data for other months is available in previous articles.

Asset Type Date # Holdings # Shares $ Cost % of Portfolio Div. Yield
Preferreds 18-Jan 9 245 6,860 7.3% 6.2%
18May 4 95 3,074 2.9% 6.7%
18-Jun 4 95 3,174 2.8% 6.6%
Pref. ETFs 18-Jan 3 284 4,476 4.7% 6.4%
18May 3 284 4,476 4.3% 6.6%
18-Jun 2 184 3,197 2.9% 6.1%
REITs 18-Jan 18 1109 27,620 29.2% 7.2%
18May 17 1014 24,290 23.2% 6.8%
18-Jun 12 939 22,553 20.6% 6.6%
CEFs 18-Jan 25 3575 43,158 45.6% 7.8%
18May 20 4437 57,820 55.3% 7.8%
18-Jun 20 4922 66,124 60.4% 7.9%
Stocks 18-Jan 9 365 12,446 13.2% 5.3%
18May 15 510 14,978 14.3% 5.7%
18-Jun 14 585 14,512 13.3% 6.0%
Total 18-Jan 65 5638 94,560 100.0% 6.8%
18May 54 6310 104,638 100.0% 7.0%
18-Jun 52 6725 109,460 100.0% 7.1%

(Source: Table created by author from portfolio data as of June 30.)

Swing Trades in June

In June, I continued to use swing trades to add profits for my portfolio, including for stocks and option premiums. Details about these trades including charts can be found in my weekly blogs.

1. Closed Stock Swing Trades

In June, I closed 2 stock swing trades, for Southern Company (SO) and for Black Hills Corp. (BKH). These were small trades, held far too long, and I was happy to finally exit without losses. Details including charts for these trades can be found in my weekly blogs. The table below summarizes the position sizes, dates bought and sold, prices, dividends collected, net gain/loss, and percentage G/L.

Symb Qty Buy Date Sell Date $ Buy Price $ Sell Price $ Div Net $ G/L % G/L Days in Trade Annualized % G/L
SO 25 1/16 6/4 44.33 44.15 29.50 20.49 1.84 97 4.76
BKH 15 11/30 6/25 58.58 61.50 14.18 48.97 5.54 143 9.73

(Source: Created by author from portfolio data as of June 30.)

2. New Stock Swing Trades Opened

  • On Wednesday (6/27) I bought 100 shares of ProShares UltraShort Bloomberg Crude Oil Fund (SCO) at $15.635. This is a leveraged (-2x) trade and the 3rd time I am trading this ETF in my Green Dot portfolio.

3. Option Premium Swing Trades Closed

In June, I closed 2 option premium swing trades that I opened in May, for the SPDR Select Sector ETF for Consumer Staples (XLP) and Valero Energy Corp. (VLO). I also closed an option trade for Apple Corp. (AAPL) that I opened in May and added to in May and June. Finally, I opened and closed 3 additional option premium swing trades for the SPDR Select Sector ETF for Consumer Discretionary (XLY), the SPDR Select Sector ETF for Technology (XLK), and Microsoft Corp. (MSFT).

Details for these trades are provided in my weekly blogs, but the table below summarizes the entry and sell dates, contract prices, and percentage gains. These 6 option premium trades provided a net gain of $1,042 after commissions/fees.

Symb Option Qty Buy Date Sell Date $ Buy Price $ Sell Price % G/L Days in Trade
XLP Sep 21 2018 35 Call 8 5/17 6/15 0.40 0.60 43.43 21
VLO Sep 21 2018 95 Put 6 5/16 5/22 6/21 0.92 avg. 1.30 36.92 26
AAPL Aug 17 2018 150 Put 16 5/7, 5/22, 6/7 6/25 0.35 avg. 0.50 35.31 35
XLY Sep 21 2018 105 Put 2 6/20 6/25 1.15 1.90 58.99 4
XLK Sep 21 2018 66 Put 4 6/4 6/25 0.91 1.45 54.74 16
MSFT Sep 21 2018 90 Put 3 6/4 6/25 1.03 1.55 45.67 16

(Source: Created by author from portfolio data as of June 30).

4. New Option Premium Swing Trades Opened

In June I opened and am still holding 4 new option premium swings for Advanced Micro Devices Inc. (AMD), CSX Corp. (CSX), Celgene Corp. (CELG), and Starbucks Corp. (SBUX).

Symb Option Qty Buy Date $ Buy Price
AMD Aug 17 2018 12.0 Put 16 6/1, 6/4 0.29 avg.
CSX Aug 17 2018 55.0 Put 6 6/4 0.36
CELG Sep 21 2018 100.0 Call 5 6/21 0.46
SBUX Sep 21 2018 55.0 Call 10 6/28 0.32

(Source: Created by author from portfolio data as of June 30.)

Cumulative Swing Trade Results

Since August 2017 when I started buying for the portfolio, I have been most fortunate to close 50 consecutive winning swing trades, including 38 equity swings and 12 option premium swings for a total net profit of nearly $4,600 after commissions/fees. The table below presents the cumulative % gains, average days in trade, average trade cost, and % gains annualized.

Trade Type # Trades % Gains Avg. Days Avg. Cost % Gains Annualized
Equities 38 +7.32% 39 $960 +47%
Options 12 +42.85% 13 $371 +827%

(Source: Portfolio data as of June 30).

One reader has commented that, given this record, I should increase the position size/risk for my trades. I will consider this advice. The chart below shows the percentage gains for my 38 closed equity swing trades since August 2017.

(Source: Charts created by author using portfolio data as of June 30.)

The chart below is the percentage gains for the 12 closed option premium swings to date.

I still encourage readers to consider using swing trades including option premiums to add income to traditional G&I portfolios. I provided some details about my approach to swing trading option premiums in a recent article.

June Portfolio Adjustments

Over the past few months I have made adjustments and trimmed some positions in my portfolio, moving mostly out of weaker performing individual preferred stocks, REITs, and CEFs. I have not counted these changes as swing trades. These actions are also part of my plan to reduce the overall number of holdings and to increase the size of higher-yielding positions in my portfolio.

I moved out of 7 positions in June, for a net gain of $20.78.

  • Hospitality Properties Trust (HPT)
  • Eaton Vance Limited Duration Fund (EVV)
  • Realty Income Corp. (O)
  • Global X SuperIncome Preferred ETF (SPFF)
  • Nuveen Credit Strategies Income Fund (JQC)
  • Invesco KBW Premium Yield Fund (KBWY)
  • Retail Opportunity Investments Corp. (ROIC)

The chart below summarizes the sell date and price, dividends collected, and net gain/loss.

Date Sold Symb. Type Qty. Price $ Divs. Net $ G/L
6/4 HPT REIT 25 29.05 26.25 26.74
6/11 EVV CEF 50 12.68 34.91 -36.09
6/11 O REIT 15 53.30 26.00 42.06
6/11 SPFF Pref. ETF 100 11.88 72.65 -18.43
6/12 JQC CEF 100 8.10 8.20 17.68
6/12 KBWY REIT 25 34.81 32.00 -6.64
6/18 ROIC REIT 35 18.80 20.22 -4.54

(Source: Created by author from portfolio data as of June 30.)

I used the proceeds from these adjustments as well as swing trade profits to buy new holdings and add to existing positions.

Portfolio Additions in May

I added 1 new Closed End Fund position to my portfolio in June.

  • On 6/18 I bought 40 shares of Cohen & Steers Limited Duration Preferred and Income Fund (LDP) at $25.36.

The preferred stock CEF provides a $0.156/share/month income-only distribution (+7.32%) and is currently trading at a -0.08% discount to NAV.

I also added to 7 existing Closed End Fund positions and 2 existing REITs in June. These are generally higher-yield, well-performing holdings in my portfolio. I have been adding shares as the share prices become attractive. Data below on distribution rate and discount to NAV are from CEFConnect as of 6/30.

  • AllianceBernstein Global Income Fund (AWF)
  • Hannon Armstrong Sustainable Infrastructure Fund (HASI)
  • KKR Income Opportunities Fund (KIO)
  • John Hancock Income Fund III (HPS)
  • MS (Morgan Stanley) Emerging Markets Debt Fund (MSD)
  • Flaherty & Crumrine Dynamic Preferred and Income Fund (DFP)
  • Blackstone Mortgage Trust Fund (BXMT)
  • DoubleLine Income Solutions Fund (DSL)
  • Brookfield Real Assets Income Fund (RA)
DATE SYMB QTY Type PRICE New Qty Distr. % % Discount
6/1 AWF 75 CEF 11.68 490 7.27 -12.84
6/1 HASI 45 REIT 18.41 78 6.68 n/a
6/4 HASI 50 REIT 18.31 128 6.68 n/a
6/11 AWF 80 CEF 11.61 570 7.27 -12.84
6/11 KIO 50 CEF 16.28 150 9.06 -5.26
6/11 HPS 60 CEF 18.18 100 7.87 -1.22
6/11 MSD 100 CEF 8.92 400 6.40 -12.32
6/12 DFP 50 CEF 23.42 200 7.57 -4.63
6/12 BXMT 30 REIT 31.67 55 7.89 n/a
6/28 DSL 40 CEF 19.95 305 9.00 -1.96
6/29 RA 40 CEF 22.75 270 10.52 -6.35

(Source: Created by author from portfolio data as of June 30.)

I continue to consider that most of my CEFs provide great returns, and most are still trading at good discounts to their Net Asset Values, or the value of their portfolio holdings. I try to focus on adding CEFs that pay stable dividends and for which most of their distributions are consistently from income (i.e. no destructive return of capital).

Dividend Income for June

Total income from dividends decreased for June to $542. A number of REITs only pay quarterly and didn't pay dividends in June. I have collected >$4,200 in dividends since I started purchasing portfolio positions in August 2017. Average monthly dividend income (blue line below) continues to increase (but only $6 higher this month) and is now $497 (since November), and monthly dividend income for 2018 averages $545. As I commented last month, my dividend income will allow me to continue adding to existing positions and/or to add new holdings to my portfolio.

(Source: Chart created by author from portfolio data as of June 30.)

I've been increasing the concentration of my portfolio in CEFs and REITs, as they are the leading asset classes for generating dividends. On a cumulative basis since November, CEFs now comprise the greatest proportion of total dividend income (54%), with REITs second (26%). As I noted last month, the "Preferreds" group includes individual preferred stocks and preferred ETFs, but not preferred CEFs. In the future I may re-configure the analysis to combine all preferreds.

(Source: Chart created by author from portfolio data as of June 30.)

The table below summarizes the cumulative value of dividends received since August 2017 by asset class and the percentage of total dividend income by asset class. CEFs have provided just over half of all dividends to date.

Preferreds REITs CEFs Stocks Total
$ 481 $ 1,159 $ 2,166 $ 417 $ 4,223
11.4% 27.5% 51.3% 9.9% 100.0%

Dividend Reinvestment

As I explained previously, since February all dividends have been added to my cash account. In lieu of automatic dividend reinvestment, I use dividends to add purchases for holdings that are trading at lower share prices.

Realized Gains/Losses

As a growth and income portfolio, Green Dot generates income each month through dividends and profits from swing trades. These are realized gains, or money that is available for additional investment. I am tracking this in order to gauge progress toward my portfolio goal of an 8%+ annualized gain. I continue to use November as the tracking origin, so the data below do not include 5 swing trades ($393.72 in profits plus $10.80 in dividends on those) in September-October when the portfolio was actively under accumulation).

The table below shows the total investment and investment return in my portfolio each month, including total profits from swing trades, ex-dividends, dividends on swings, and other dividends collected. I separated dividends from swing trades in order to avoid double counting. Dividends are reported for the month received in my account.

Month $ Cost $ Swing Profits $ Divs on Swings $ Other Dividends $ Total Income % on Investment
Nov17 79,154 509 71 235 814 1.03%
Dec17 79,587 445 48 353 846 1.06%
Jan18 94,560 548 37 509 1,094 1.16%
Feb18 98,637 160 - 473 632 0.64%
Mar18 95,878 154 5 497 656 0.68%
Apr18 100,656 64 - 598 662 0.66%
May18 104,638 1,026 - 612 1,638 1.57%
Jun18 105,394 1,068 44 542 1,654 1.57%
Total 3,973 204 3,819 7,996 8.37%

As presented in the table, total portfolio return in June held at the same level as in May. Using my new option premium swing trading tactic, I have increased income by nearly the same amount as my income from dividends only. The 8 month total return is +8.37%, which already puts me at the minimum annual portfolio gain that I set for my Green Dot portfolio. I continue to expect that dividend income will remain high as I have added significantly to existing positions. I also expect to continue to make at least a modest income from swing trades, especially if I continue to successfully make option premium swings.

The chart below depicts the monthly source of realized portfolio profits. The increase in swing trade activity in May and June, including from option premium swings, is emphasized.

(Source: Chart created by author using portfolio data as of June 30.)

Unrealized Gains/Losses

In June, the total unrealized market value (minus dividends) of my portfolio was -7.51%, an improvement from May. Three holdings - Colony Capital (CLNY) - formerly Colony Northstar Inc. (CLNS), Macquarie Infrastructure (MIC), and General Electric (GE) - continue to account for an out-sized percentage of unrealized loss, at 47% of total losses, all due to dividend cuts in recent months.

On the bright side, the rest of the portfolio is doing better; 13 positions are profitable and another 13 are down <4%, with the net total loss for those 26 positions at only $101. I'm working to manage the portfolio to reduce losses, and I am aware that these are paper losses at this time.

Of the asset classes, CEFs and preferreds continue to weather the storm the best, and stocks and REITs the worst. For June, preferreds/preferred ETFs were down -4.6%, CEFs were down -3.7%, REITs were down -11.2%, and stocks/options were down -20.4%. While I would prefer that all of these classes were profitable, the current market downtrend is continuing to take a toll, as well as my propensity to take profits and re-invest them.

Current Portfolio

Below is a summary table of the 52 holdings in my Green Dot Portfolio as of June 30. Full names of holdings as of mid-November were included in my Part 2 article introducing the portfolio, and new additions were described in my weekly position update blogs.

As I have commented before, the portfolio remains fairly diversified and comprised of multiple asset classes. These classes and a moderate number of holdings were chosen to help reduce risk. With increased market volatility, I think that this is still a good strategy. That said, I will likely continue to consolidate holdings and increase position size, with about 7% as a maximum for any individual holding.

Symbol Qty. Unit Cost Close 6/30 Div. Yield % of Portfolio
Preferreds
C-J 30 29.00 27.73 6.41% 0.79%
MHLA 30 25.94 20.99 7.89% 0.71%
MS-E 25 29.18 28.22 6.30% 0.67%
SPG-J 10 69.66 71.11 5.89% 0.64%
PFXF 84 20.15 19.59 5.97% 1.55%
PGX 100 15.04 14.56 6.18% 1.37%
CEFs
AWF 570 12.12 11.54 7.27% 6.31%
BGX 110 15.87 16.46 7.53% 1.59%
DFP 200 23.91 23.46 7.58% 4.37%
DSL 305 20.43 19.99 9.00% 5.69%
EMD 50 15.77 13.27 9.04% 0.72%
FAX 1,000 4.96 4.32 9.72% 4.53%
FEO 50 17.08 13.62 10.27% 0.78%
FRA 125 14.30 13.90 5.25% 1.63%
FLC 80 21.14 19.51 7.32% 1.55%
HPS 100 18.34 18.64 7.88% 1.68%
JPS 623 9.83 8.81 7.60% 5.59%
KIO 150 16.28 16.56 9.05% 2.23%
LDP 40 25.36 25.57 7.31% 0.93%
MPW 100 13.12 14.04 7.12% 1.20%
MSD 400 9.52 8.75 6.40% 3.48%
NVG 249 15.24 14.59 5.41% 3.47%
RA 270 22.99 22.70 10.52% 5.67%
RQI 175 11.83 12.02 7.98% 1.89%
UTF 240 21.93 22.70 8.19% 4.81%
UTG 85 29.48 28.91 7.05% 2.29%
REITs
BRX 60 18.21 17.43 6.31% 1.00%
BXMT 55 31.49 31.43 7.89% 1.58%
CLNY 345 11.78 6.24 7.05% 3.71%
DOC 35 18.13 15.94 5.77% 0.58%
EPR 36 67.42 64.79 6.66% 2.22%
GOV 40 18.36 15.85 10.85% 0.67%
HASI 128 19.51 19.75 6.68% 2.28%
LTC 60 41.59 42.74 5.33% 2.28%
NHI 20 75.90 73.68 5.42% 1.39%
SKT 125 26.05 23.49 5.95% 2.98%
VTR 20 58.44 56.95 5.54% 1.07%
WELL 15 62.00 62.69 5.55% 0.85%
Stocks
D 15 80.19 68.18 4.89% 1.10%
DSLV 30 25.83 26.03 -- 0.71%
GE 103 23.92 13.61 3.52% 2.25%
KHC 9 80.99 62.82 3.97% 0.67%
MIC 33 69.74 42.20 9.47% 2.10%
MRCC 80 14.13 13.48 10.38% 1.03%
PG 10 83.70 78.06 3.67% 0.76%
SCO 100 15.64 14.91 -- 1.43%
UGLD 160 10.55 9.37 -- 1.54%
AMD Aug 17 2018 12 Put 16 0.29 0.24 -- 0.42%
CSX Aug 17 2018 55 Put 12 0.43 0.30 -- 0.47%
CELG Sep 21 2018 100 Call 5 0.46 0.49 -- 0.21%
SDS Sep 21 2018 43 Call 2 1.45 1.19 -- 0.26%
SBUX Sep 21 2018 55 Call 10 0.32 -- 0.29%

(Source: Created by author from portfolio data as of June 30.)

Going Forward

Despite the continuing pullback and volatility of the markets for 2018, and regardless of what unfolds over the coming months, I remain comfortable with my overall strategy to collect growing income through swing trades (including for option premiums) and high dividend CEFs and REITs, as well as to capture the potential for price appreciation for longer-term holdings.

Author's note: If you found this article of interest and want to read more about my Green Dot Portfolio and my incremental, multi-asset approach to investing, please click the "follow" button at the opt of this page. Please share this with others who you think would be interested.

I have appreciated the comments from readers in the Seeking Alpha community, and I look forward to continuing to share my investing experience and to learn from others.

Best to your investing/trading!

=Green Dot Investor=

Disclosure: I am/we are long AWF, BGX, BRX, BXMT, C-J, CLNY, D, DFP, DOC, DSL, DSLV, EMD, EPR, FAX, FEO, FLC, FRA, GE, GOV, HASI, HPS, JPS, KHC, KIO, LDP, LTC, MHLA, MIC, MPW, MRCC, MSD, MS-E, NHI, NVG, PFXF, PG, PGX, RA, RQI, SCO, SKT, UGLD, UTF, UTG, VTR, WELL. 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 also currently have option premium trades open for AMD, CELG, CSX, SDS, and SBUX.