My 94 Stock Portfolio August Value, Income Review, Activity Update, And Sector Additions

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Includes: AVGO, BIP, CBL.PD, CSCO, FSIC, INTC, NRZ, OHI
by: RoseNose

Summary

Global Industry Classification System, GICS, is adjusting sectors in September, for which, I will reveal some of those changes as well as 2 of my own.

RICs (Regulated Investment Companies) and non-common stock continue to boost portfolio income, for which, I have now rewarded them and fixed income new sector designations in the portfolio.

Activity was low with only 7 add-ons, 2 trims, and 1 buyback to bring the portfolio to 94 holdings in 10 sectors.

I would like to present my 94 investment portfolio by sectors, but believe first a review of some changes coming to the sectors should be shown and discussed. The GICS is revamping the S&P 500 Index sectors which gave me the courage to reorganize my own portfolio sector structure, adding RIC (Regulated Investment Company) and fixed income.

Sector Changes by GICS: Global Industry Classification System for the S&P 500

Below is a representation of the generally accepted 11 sectors and weightings from Bespoke Financial.

This is a general representation with insight into the largest represented sectors, with tech leading the way. GICS, information here, has announced that some changes will be made to these sector designations on Sept. 21st of this year, which is coming soon.

Communications replace Telecom

Telecom, the smallest at 2.41% as seen above, will become known as communications with some other names added such as:

-Disney (DIS),

-Comcast (CMCSA),

-Alphabet (NASDAQ:GOOG) (GOOGL),

-Facebook (FB) and

-Twitter (TWTR)

These will join the current names such as Verizon (VZ) and AT&T (T).

Also added will be some gaming stocks such as Activision Blizzard (ATVI).

Amazon (NASDAQ:AMZN) remains in consumer discretionary and will really dominate it even more. Tech will lose much of its predominance from 21% in that chart, not a lot, but it will shrink down. Some ETFs could be impacted with the changes, but I believe QQQ will remain unchanged. MSCI or Morgan Stanley has announced it will adjust its sector designations later this year. My reference is from SA here.

My New Sector Presentation

2 years ago, GICS removed equity REITs (Real Estate Investment Trust) from the financial sector, shrinking it a bit and creating a new sector called real estate. The change has bothered me for some time as I feel the whole market needs a RIC sector designation of which real estate would belong. RICs are not like common stock, are evaluated differently, and in general, offer distributions rather than dividends. They also have numerous performance attributes that differ as well. As I, Rose, began to venture into RIC investing, these differences became even more apparent, and now I have the need to reorganize and adjust these holdings on my own. I did just that with my sector presentation as follows:

RIC Sector

The newly created sector will contain:

e-REIT = equity REIT or real estate

m-REIT = mortgage Real Estate Investment Trust

ETF = Exchange-Traded Fund

CEF = Closed-End Fund

BDC = Business Development Company

Fixed Income Sector

This sector hereby now will be for any income that does not change or remains fixed such as preferred debt shares. This does right now for me also include a bond type and CEF. The table below is a consolidated view and shows the new sector designations by values on August 31st, with % rounded for ease of viewing.

PV = Portfolio Value

PInc = Portfolio Income

I did not eliminate the material sector. I just don't own anything in it.

Sectors I consider to be defensive are in bold in the top part of this chart.

Sector PV PInc
Cons Staples 19.6% 15.7%
Cons Discretionary 5.1% 2.5%
Energy 5.4% 5.9%
Finance 4.0% 0.5%
Health-care 10.9% 7.2%
Industrial 7.8% 4.3%
Tech 3.4% 1.8%
T-Com 6.7% 7.3%
Utility 12.0% 10.0%
TOTAL 74.8% 55.2%
RIC 25.2% 42.7%
RE Real Estate 12.3% 16.1%
Health-Care 4.7% 6.9%
Other 7.6% 9.2%
Other RIC 8.4% 19.8%
ETF-energy 1.0% 4.5%
m-Reit 3.8% 8.3%
CEF 1.0% 2.0%
BDC 2.7% 5.0%
FIXED 4.5% 6.8%
Pref-Energy 1.5% 2.4%
Pref-RE 1.1% 1.4%
bond/cef 1.3% 1.9%
Pref-financial 0.6% 1.0%
SOLD x 2.2%
100.00%

Key Takeaway

75% PV is from 9 core sectors.

25% remaining is from RICs including ~4.5% from fixed income.

Amazingly and yet not surprising is that 43% of portfolio income comes from the RICs with ~7% from fixed. This just proves, as I and many say, with RICs a little does go a long way to building more income.

Income received from sold equities amounts to ~2.2% at this time.

Defensive Position Sectors

The chart below sums up the bold defensive sectors from the above chart and shows ~49% in defensive sectors by portfolio value. Sometimes, I like to include healthcare REITs in the mix but have decided that was cheating. I do have some fixed income, a bond, and CEF utility that got moved and would bring the total up to the 50% level that I try to maintain. This is, however, close enough for my approval, especially with many of these sectors having currently depressed valuations.

DEFENSIVE
Cons Staples 19.6% 15.7%
Health-care 10.9% 7.2%
T-Com 6.7% 7.3%
Utility 12.0% 10.0%
Total 49.2% 40.2%

94 Rose Portfolio Holdings by Sectors

The chart that follows shows sector totals along with individual stocks and the yearly dividend. The yearly dividend or Div-F might be somewhat forward looking, as I incorporated raises for many in them. The dividend yield or Div Y is based on that figure and the price as shown for September 1, 2018.

FYIO (For Your Information Only) dividend yield is calculated from the 1-year dividend and divided by the stock price. Both those figures are included, but I did the work of dividing it out for you.

The dividend yield will change with the stock price on a daily basis and should not be considered a static number. It is only there for reference.

S&P Credit ratings are taken from Fast Graphs, a paid service. They are generally unavailable for most non-RIC stocks, another reason to create such a sector.

Company Name S&P cr %PV %PI Div-F Div Y Pr 9/1
16 CONS-S 19.65% 15.71%
Anheuser-Busch InBev (BUD) A- 0.52% 0.41% 3.86 4.14% 93.23
Colgate-Palmolive (CL) AA- 0.37% 0.21% 1.68 2.53% 66.41
CVS Health (CVS) BBB 0.56% 0.33% 2 2.66% 75.24
Diageo plc (ADR) (DEO) A- 1.57% 0.96% 3.5 2.51% 139.41
General Mills (GIS) BBB 1.81% 1.73% 1.98 4.30% 46.01
Hershey (HSY) A 1.04% 0.54% 2.76 2.75% 100.52
Kraft Heinz Co. (KHC) BBB 0.26% 0.25% 2.6 4.46% 58.27
Kimberly-Clark (KMB) A 3.03% 2.11% 4 3.46% 115.54
Coca-Cola Co. (KO) A+ 2.09% 1.73% 1.66 3.72% 44.57
Mondelez (MDLZ) BBB 0.63% 0.30% 0.92 2.15% 42.72
Altria (MO) A- 1.68% 1.79% 3.2 5.47% 58.52
PepsiCo Inc. (PEP) A + 0.99% 0.65% 3.71 3.31% 112.01
Procter & Gamble (PG) AA- 1.09% 0.84% 2.87 3.46% 82.95
Philip Morris International (PM) A 2.00% 2.54% 4.56 5.85% 77.89
J.M. Smucker (SJM) BBB 1.03% 0.68% 3.4 3.29% 103.38
Target (TGT) A 0.98% 0.64% 2.56 2.93% 87.5
4 CONS-D 5.14% 2.46%
Genuine Parts (GPC) A+ 1.31% 0.81% 2.88 2.88% 99.85
Home Depot (HD) A 1.69% 0.77% 4.12 2.05% 200.77
McDonald's (MCD) BBB+ 1.22% 0.68% 4.1 2.53% 162.23
Nike (NKE) AA- 0.92% 0.20% 0.8 0.97% 82.2
5 ENERGY 5.35% 5.93%
Chevron (CVX) AA- 0.67% 0.56% 4.48 3.78% 118.46
Occidental Petroleum (OXY) A 0.90% 1.41% 3.08 3.86% 79.87
Royal Dutch Shell-B (NYSE:RDS.B) A + 1.39% 1.79% 3.76 5.58% 67.38
Valero Energy (VLO) BBB 0.44% 0.40% 3.2 2.71% 117.88
Exxon Mobil (XOM) AA+ 1.95% 1.77% 3.28 4.09% 80.17
3 FINANCE 3.95% 0.53%
Mastercard (MA)

A-

2.42% 0.25% 1 0.46% 215.56
MetLife (MET) A 0.13% 0.10% 1.68 3.66% 45.89
Visa (V) A+ 1.40% 0.18% 0.84 0.57% 146.89
7 H-CARE 10.88% 7.21%
AbbVie (ABBV) A- 2.70% 2.27% 3.84 4.00% 95.98
Amgen (AMGN) A 0.94% 0.60% 5.28 2.64% 199.81
Becton, Dickinson (BDX) BBB 0.74% 0.23% 3.15 1.20% 261.87
Cardinal Health (CAH) BBB+ 1.17% 0.89% 1.85 3.54% 52.19
Celgene (CELG) BBB+ 0.18% 0.00% 0 0.00% 94.45
Johnson & Johnson (JNJ) AAA 3.41% 1.98% 3.6 2.67% 134.69
Pfizer (PFE) AA 1.74% 1.24% 1.36 3.28% 41.52
7 INDUST 7.81% 4.27%
Boeing (BA) A 2.25% 1.00% 6.84 2.00% 342.79
Cummins (CMI) A+ 1.57% 0.88% 4.44 3.13% 141.8
Covanta (CVA) BB- 0.36% 0.46% 1 5.67% 17.65
Fortress (FTAI) B 0.41% 0.33% 1.32 7.29% 18.1
Lockheed Martin (LMT) BBB+ 1.40% 0.79% 8.2 2.56% 320.41
3M Co. (MMM) AA- 1.26% 0.57% 5.44 2.58% 210.92
Union Pacific (UNP) A 0.56% 0.24% 2.92 1.94% 150.62
4 TECH 3.41% 1.78%
Automatic Data (ADP) AA 0.55% 0.23% 2.76 1.88% 146.75
Broadcom (AVGO) BBB- 0.66% 0.23% 7 3.20% 219.03
Cisco Systems (CSCO) AA- 1.52% 0.93% 1.32 2.76% 47.77
Intel (INTC) A+ 0.68% 0.39% 1.2 2.48% 48.43
3 T-COM 6.68% 7.29%
BCE (BCE) BBB+ 0.50% 0.31% 2.36 5.79% 40.77
AT&T (T) BBB+ 2.51% 3.45% 2 6.26% 31.94
Verizon Communications (VZ) BBB+ 3.67% 3.53% 2.36 4.34% 54.37
8 UTILITY 11.99% 9.96%
Brookfield Infrastructure Partners (BIP) BBB+ 0.51% 0.25% 1.88 4.82% 39
Dominion (D) BBB+ 2.65% 2.78% 3.34 4.72% 70.77
Alliant Energy (LNT) A- 0.64% 0.45% 1.34 3.13% 42.84
MGE Energy (MGEE) A- 1.98% 0.87% 1.3 1.99% 65.45
SCANA (SCG) BBB 0.14% 0.13% 0.62 1.62% 38.34
Southern Co. (SO) A- 2.30% 2.79% 2.4 5.48% 43.78
WEC Energy (WEC) A- 1.52% 1.10% 2.21 3.27% 67.58
Xcel Energy (XEL) A- 2.25% 1.59% 1.52 3.16% 48.05
Reg Inv Co RIC
14 Real Estate
3 H-CARE 4.68% 6.89%
Omega (OHI) 2.23% 3.95% 2.64 7.99% 33.05
Sabra (SBRA) 0.66% 1.10% 1.8 7.63% 23.58
Ventas (VTR) BBB+ 1.79% 1.84% 3.16 5.28% 59.87
11 Misc 7.57% 9.18%
CorEnergy (CORR) 0.42% 0.75% 3 8.01% 37.43
Digital Realty (DLR) BBB 0.81% 0.59% 4.04 3.25% 124.28
EPR (EPR) BBB- 0.39% 0.46% 4.32 6.16% 70.18
Iron Mountain (IRM) BBB- 0.47% 0.49% 2.35 6.51% 36.1
Kimco (KIM) BBB+ 0.71% 0.99% 1.12 6.55% 17.11
Kite (KRG) BBB- 0.20% 0.16% 1.27 7.27% 17.48
Tanger (SKT) BBB+ 0.63% 0.83% 1.42 5.90% 24.06
Simon Property (SPG) A 0.86% 0.82% 8 4.37% 183.03
STAG Industrial (STAG) BBB 0.76% 0.83% 1.42 4.92% 28.87
Uniti (UNIT) B- 0.08% 0.20% 2.4 11.53% 20.82
W.P. Carey (WPC) BBB 2.24% 3.06% 4.09 6.14% 66.58
2 ETF-Energy 1.02% 4.45%
Alerian MLP (AMLP) 0.16% 0.28% 0.84 7.74% 10.85
InfraCap MLP (AMZA) 0.86% 4.17% 1.32 16.97% 7.78
6 Fin mREIT 3.79% 8.30%
Arbor (ABR) 0.09% 0.44% 1 8.16% 12.26
Ajax (AJX) 0.77% 1.50% 1.2 8.80% 13.64
Blackstone (BXMT) 0.45% 0.70% 2.48 7.28% 34.06
Cherry Hill (CHMI) 1.05% 2.44% 1.96 10.54% 18.6
New Residential Investment (NRZ) B+ 1.11% 2.58% 2 10.77% 18.57
Sutherland (SLD) 0.32% 0.64% 1.6 9.33% 17.15
2 CEF-Fin 0.98% 2.04%
Brookfield Real Assets (RA) 0.70% 1.59% 2.39 10.23% 23.36
Oxford Lane (OXLC) 0.28% 0.45% 1.62 15.00% 10.8
4 BDC-Fin 2.66% 5.03%
Ares Capital (ARCC) BBB- 0.38% 0.70% 1.52 8.71% 17.46
FS Investment (FSIC) BBB- 0.29% 0.16% 0.76 9.93% 7.65
Monroe Capital (MRCC) 1.07% 2.09% 1.4 10.31% 13.58
TriplePoint Venture (TPVG) 0.92% 2.08% 1.44 10.98% 13.12
9 FIXED 4.45% 6.80%
NGL Energy (NGL.PB) Pref 0.60% 1.07% 2.25 9.06% 24.84
NuStar Energy

(NYSE:NS.PB)

Pref 0.21% 0.19% 1.91 8.20% 23.28
Teekay LNG (TGP.PB) Pref 0.69% 1.17% 2.125 8.63% 24.63
CBL- Real Est (CBL.PD) Pref 0.82% 0.96% 1.84 10.05% 18.3
Wash Prime Re (NYSE:WPG.PH) Pref 0.26% 0.47% 1.88 8.06% 23.32
Dominion Bond (DCUD) Ute 0.35% 0.45% 3.37 7.16% 47.04
DNP Select Income Fund (DNP) Ute 0.95% 1.49% 0.78 7.07% 11.04
Chimera (CIM.PB) Pref 0.29% 0.50% 2 7.68% 26.04
PennyMac (PMT.PB) Pref 0.28% 0.50% 2 7.99% 25.03
94
SOLD Income 2.17%

Portfolio Value

PV is up 3.7% from last year December including dividends, I confess dividends, glorious dividends, and some options income are a part of the total return. From the January S&P all-time high, it is up 2%. As best as I do, my accounting and with dividends excluded, the PV is up ~1%. Please remember I don't sit still and reinvest dividends averaging up in many cases. I also may sell, trim, or change stocks, so I am unpredictable in that regard. The August activity list follows after I show you the stocks I received dividends from and those results.

Dividends

The portfolio does have a dividend yield of 4.52% as of the end of August, with them being up 29.4% compared to 2017. They are up 21.7% YoY 2017, a higher level than I predicted it to be last year, smiling I am.

In the chart below are the companies and dividend per share received along with what total part of the income as a % it was for August.

The first 5 with an * are monthly payers.

08/31/18 Div/sh % total
Monthly* (AMZA) 0.11 * 4.13%
(EPR) 0.36 * 0.69%
(OXLC) 0.135 * 1.20%
(RA) 0.199 * 2.03%
(STAG) 0.118 * 1.05%
(ABBV) 0.96 9.17%
(AMLP) 0.21 1.05%
(CL) 0.42 0.80%
(CORR) 0.75 2.86%
(CVS) 0.5 1.27%
(DCUD) 0.84 2.15%
(FTAI) 0.335 2.52%
(GIS) 0.49 6.55%
(LNT) 0.335 1.71%
(MA) 0.25 0.95%
(OHI) 0.66 15.13%
(PG) 0.7172 3.20%
(SBRA) 0.45 4.30%
(SKT) 0.35 3.12%
(SPG) 2 3.18%
(T) 0.5 13.05%
(VZ) 0.59 13.52%
(ABR) 0.25 0.64%
(AJX) 0.3 5.73%
100.00%

Biggest contributor was OHI, followed by telecoms T and VZ. ABBV was in 4th place. Note that AMZA is a monthly payer and really comes in 4th place with ABBV in 5th.

August Activity

I generally only use dividend and option income for activity. The portfolio is contained in that regard.

BUY/Add Stock Ticker Price/sh
Hershey HSY 96.08
CBL-preferred CBL-D 18.88 18.58
CBL.PD 18.28 18.16
Triple Pt Venture TPVG 13.31
Oxford Lane OXLC 11.31 10.92
Broadcom AVGO 206.9
FS Investing Co FSIC 7.57
Monroe Cap MRCC 13.58
Brookfield LP BIP 39.38
TRIM
Cisco CSCO 43.6
Intel INTC 49.56

I did trim some tech to add to the new holding AVGO from last month, so that is what happened there.

Not much else to say, other than the preferred debt of CBL-D is a gift that keeps on giving. I do think I have enough now with a nice 10% yield on average. I am also building a larger position in BIP.

INTC continues to fall in price and I will consider adding again if it goes a lot lower. I am now pleased with what I own in CSCO.

FS Investment Company was repurchased for about what it was sold. That took the portfolio back up to 94 investments. I am pleased and more confident with it after learning about the new management team. It is a BDC or a RIC.

RIC Investing

RICs and income HY producing stocks or high yield, are nothing to be afraid of, and definitely not like

jumping from a high cliff to nowhere. I suggest learning a bit about RICs and their characteristics. I started with equity REITs and reading Brad Thomas back in 2016. I found even more education coming from following The Fortune Teller, also known as TFT. The fantastic A-team of mREITs and BDCs, 10 of them, got me introduced to owning and managing them and of course with following everything he said to do: well maybe not everything. RICs in many cases are not forever, and that team is no longer covered. I still own New Residential or NRZ as the last player from that group. It is still going strong and I remain long. I know I would not own the preferred or CEF issues without the educational instruction received from being in the subscription service of TFT called The Wheel of Fortune, WoF. Trapping Value, another fine author has also joined the teaching venue at The Wheel. They both continue to write free articles on SA as well.

I have learned so much and continue to do so. Getting ideas and great articles from a broad number of authors on SA. This includes Scott Kennedy, Dane Bowler and BDC Buzz to name a few. SA is a wealth of knowledge and much of it is free.

Be free to learn and ask questions from any of the authors mentioned, as I have done so to aid in my learning along the way. My experience with them all was finding that they are terrific kind smart people that really do want to help with investing. Thank you to all that have helped me and many others along the way to:

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 94 stocks listed in the charts