The Rose Portfolio
93 investments in the Rose portfolio and all golden to me, while chosen with utmost care and consideration for quality and dividend reliability. In a previous article here, I discuss S&P credit ratings and consistency of dividend raises. These traits are important for my core dividend growth investments. I also have Regulated Investment Company (“RIC”) investments and they form a nice portion of the portfolio and generous part of its income as well. I advise everyone to know your investments well and what to expect from each and every sector and investment type. RICs are generally considered income wealth growers and do need a bit more of a watchful eye on them.
The updated alphabetical list that follows shows price from June 30th, 2018 or the end of Half One (“H1”).
Div Yield = % dividend yield using the yearly dividend shown.
18-Div F = Yearly estimated 2018 forward dividend as I get from Fast Graphs or Nasdaq.
% PV = % of total portfolio value at the end of H1.
% P Inc = % of total portfolio income as I calculate using the dividend shown in the chart.
19 Est % = The income I project with any changes made to generate income in 2019. There might be dividend raises, I hope, not included in this calculation estimate for the future to come as yet.
C/sh = My cost per share for H1.
Celgene, which is listed last to provide completeness, provides no dividend.
|stock||6/30/18 pr||Div Yield||%PV||18-Div F||%P Inc||19 Est%||C/sh|
|Automatic Data Proc||(NASDAQ:ADP)||134.14||2.06%||0.53%||2.76||0.23%||0.23%||20|
|ALPS Alerian MLP ETF||(NYSEARCA:AMLP)||10.1||8.32%||0.16%||0.84||0.28%||0.28%||12.35|
|InfraCap MLP ETF||(NYSEARCA:AMZA)||7.31||18.06%||0.85%||1.32||4.22%||3.23%||9.2|
|CBL Preferred D||(NYSE:CBL.PD)||19.25||9.56%||0.34%||1.84||0.35%||0.69%||18.4|
|Chimera preferred B||(CIM.pb)||25.83||7.74%||0.30%||2||0.50%||0.50%||25.58|
|DNP Select Income||(NYSE:DNP)||10.78||7.24%||0.97%||0.78||1.51%||1.49%|
|Johnson & Johnson||(NYSE:JNJ)||121.34||2.97%||3.22%||3.6||2.01%||2.01%||89.05|
|NGL Preferred B||(NYSE:NGL.PB)||24.62||9.14%||0.63%||2.25||1.09%||1.21%||24.23|
|NuStar Preferred B||(NYSE:NS.PB)||20.59||9.28%||0.19%||1.91||0.19%||0.38%||20.99|
|Procter & Gamble||(NYSE:PG)||78.06||3.68%||1.07%||2.87||0.84%||0.83%||65.43|
|PennyMac Preferred B||(NYSE:PMT.PB)||25.17||7.95%||0.30%||2||0.50%||0.50%||24.81|
|Brookfield Real Assets||(NYSE:RA)||22.7||10.53%||0.71%||2.39||1.61%||1.58%||23.42|
|Royal Dutch Shell||(NYSE:RDS.B)||72.65||5.18%||1.57%||3.76||1.82%||1.71%||54.17|
|Teekay Preferred B||(NYSE:TGP.PB)||24||8.83%||0.71%||2.12||1.18%||1.32%||23.98|
|Washington Prime Preferred H||(WPG.ph)||23.69||7.89%||0.28%||1.87||0.47%||0.46%||21.28|
Sold shares and income already received comprise 0.97% of the income not shown in the chart above.
I forgot to mention the portfolio has a current dividend yield on value of ~4.58%.
The cost prices do show upward movement in many cases, like CMI, as I add on to it. Averaging up is acceptable if the yield and value give reward for income. This also works for trims, but it generally means a stock has gotten overvalued and the yield has gotten just too low to be pleasing for the portfolio. I don’t always sell out as I might still want a core position and keep some shares. A June activity chart is shown just a bit later in the article.
The market is volatile, especially this year; many of us were lulled last year with an upward moving market and not much downward or bumpy price movements. That was a quiet nice year for low volatility. However, just like this year, sectors rotate and prices change. Last year, REITs got hit hard.
It is important to know portfolio value will change, but I always want my dividend income to remain stable and even grow. I want to report my portfolio did just that for dividend income growth.
Income - $$
Wealth or income building can be done in many ways, the most common that I am aware of other than having a job or robbing a bank are through investing in:
- Growth stocks with little or no income provided that have capital or price appreciation as the goal.
- Dividend growth of all yield types with a low yield generally growing faster than high yield.
- Income producers or RICs = Regulated Investment Companies and these are generally high yield.
1 and 2 generally take time and hopefully you have started to pay yourself and invest during all your working years. Start early and watch it grow is indeed a method that works, as it was done with my portfolio. The defensive nature of the portfolio for me is to be strongly continued and stay invested in those type of sectors:
- Consumer staples
- Healthcare dividend growth stocks.
I maintain about 50% PV in these 4 sectors alone.
I have gotten a bit more adventurous with adding hopefully safe wealth generating investments with some RICs or #3 above. RICs, and I will reiterate, they are certainly not common stock and need a more watchful eye.
They largely include:
- Real Estate Investment Trusts or REITs, mortgage and equity types
- Master Limited Partnerships or MLPs, LPs
- Closed-End Funds, or CEFs
- Business Development Companies or BDCs
...and other high yield investments that are currently found in 2 sectors of finance and real estate. They do not pay what is called dividends but pay distributions. They also cannot be measured using P/E, but generally FFO or Funds From Operations. Again, it is important to understand your investments.
To better understand the RICs, I have tried on my own through reading numerous authors on SA and I still do so. They can change easily from quarter to quarter and that may or may not change the dividend. A “watchful eye” is a must for owning RICs.
I did decide to join the subscriber service of The Wheel of Fortune, with The Fortune Teller as its owner and leader. He alone is a fantastic “watchful eye” guru of finance and options, and he has added Trapping Value, a Canadian, to the total buffet of knowledge provided there. To help me understand and learn about all investment types and understand the meaning of the quarterly reports from the RICs, I find a service makes me confident in owing them, doing options, and for considering ownership in a new common stock. I have gotten numerous quality ideas from the service, along with quick action alerts on all their ideas which are provided in real time.
Now that I have explained my income sources, let's check into the portfolio performance.
Portfolio Performance Appraisal 2018
January 2019 was the market top for most all indices and for my portfolio value or “PV”.
That was a dream come true month for most everyone, but then it was suspiciously quick and momentous, and I commented so to my husband. It was not to last as we all know.
February brought downward motion and it was bad, but March continued the pain for PV, and it was down 4.86% from December 2017 and 16.14% from that January high. Not a dream come true any longer. The chart below shows the changes. Many called it a correction and opportunity knocked for purchases, and dividends made that possible for me. Thankfully, dividends were up 6.8% from the same period of 2017 and allowed for some value purchases.
Portfolio value was up 3.96% in this quarter. The chart below shows how each month performed. May was the slowest, but June had a bit more pop in value, but sill not very much and the portfolio value was still down 1.09% from December 2017, and down 12.82% from that January high. The statistics also include acquired dividends and other income from options as shown in the chart below:
Dividend performance was up:
Dividends were up nicely by 24.2% over 2017 Q2 and 12% more than 2018 Q1. Most companies pay quarterly and 50% or more pay during the months of March, June, September and December, so I was expecting June to be a good month, and it was.
2018 Half 1
As shown in the chart above, dividends were up totally by 15.3% over 2017 H1.
I repeat that I had a 12% increase in dividends for Q2 over Q1, very nice and I am smiling again.
Bad news is with dividends subtracted, the portfolio value was down 3.29% from December 2017.
I attribute the portfolio value declines to the poor performance of AT&T and many of utilities in the portfolio, especially D and SO. I expect all of these to perform better in H2 of this year or perhaps into 2019. The industrial holdings that I own, such as BA, CMI and LMT are also showing poor performance, but they were overvalued all last year. I fret not, as I believe this is just opportunity to keep adding to some of these as shown below in my June activity chart. Good news was the equity REITs doing better and I hope that continues.
Portfolio June Activity
I made 15 add-on purchases and 5 trims and one outright sale as follows:
All prices are shown in US dollars.
I would like to explain some of the activity.
Medical Properties Trust (NYSE:MPW) was a quick purchase and a quick sale.
I liked it and still like it, but thought it had risen too fast and quick in price. The reward on value has lessened and thus I took profits from a purchase price of $12.90, and received the dividend. I also sold to consolidate a bit within the healthcare REIT sector. I have also sold some call options on OHI to reduce that position size. I hope to write about the options at a later date.
Occidental has been a real price thorn in the portfolio for many years. However, it has an “A” S&P credit rating and pays a steady dividend. The energy sector and many within have finally arisen in price. OXY is at least near my cost basis, thus I saw opportunity to finally trim some in the taxable account and did. I still have a nice position and wish to continue to own this energy company which is also a component of the Energy Select Sector SPDR ETF (NYSEARCA:XLE).
Becton Dickinson and Co. [BDX]
It was tough to do this trim, but the credit rating was just downgraded a bit and the yield has become very low at 1.3%. I wanted to capture some of the gains with the upward wonderful price movement. I used this to balance somewhat the sale of OXY in the taxable account. I still have profits left over if I wish to sell more OXY or some other non-performing or low yield growth investment.
Another tough decision to trim. It is quality and has excellent dividend growth for now, which I do not see continuing in the near future. I captured some capital gains and lowered position size. I see more growth for ABBV and went with it as a preferred choice with its 4%+ dividend yield and excellent dividend growth.
I will want this back again some day, but not at this price. The upside from where I purchased it around $55 has been fantastic. Profits were in order as the upside in price now seems limited. I did keep some shares. I sold through an option price strike of $112 and received $1.30 premium/share. This also gave me the cash to buy the preferred share debt of the energy companies. NS.PB and TGP.PB are both still under par $25 and have F-T-F debt. I think it's a good place to park the cash and has the nice yield of ~9%.
Re-Buy of Oxford Lane [OXLC]
I did sell out of this last month for ~$11.50.
It fell back down by $1 and I added some back. I will get more if and when it falls further, but for now I like this CEF with monthly income and a yield of ~15%.
IRA Activity not included with the Rose Portfolio is shown below for completeness.
This IRA is my husband's and I rarely write about it, here is the last article update from February.
I also had some activity this month as follows:
Prices shown are in US dollars.
The new buy here is Ares Dynamic (NYSE:ARDC), a CEF investment with monthly payments and 8% yield. 40% of the OHI position was sold outright along with some call options for some of the shares. I am hoping OHI will again rise up just a bit higher and I will continue to lessen its position size with time.
A quality dividend stock is meant to be held and hopefully it was bought with those characteristics in mind and at a good value. I know many sectors are cyclical and stocks do fall out of favor. I will continue to have faith in management and hold on, collecting the dividends for income for the long run. I do stay fully invested and will try to utilize cash even with covered put options that provide decent projected returns. I also try not to buy high and will trim when valuation is overdone or sell call options to garner extra income for over pricing. I find with a great company, good earnings continue to rise and good dividends always follow right behind. I will continue to invest and buy shares and fear not averaging up in share price if the value is there and quality remains. Investing is all about profit and growing income which allows current preservation of wealth and accumulation of more wealth. Mistakes do and will always happen and I find I must just move on. I do know it is the many excellent investments made that will outweigh the fewer poor ones and keep the portfolio growing and providing the desired income. Please use your own due diligence, have a plan, follow it in all you do, never stop learning and be happy investing.
Disclosure: I am/we are long ABBV. 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: and 93 stocks in the list