The Rose 96 Stock Portfolio Due Diligence Criteria Exposed Along With Some Value Buys

Summary

• Purchase candidate results are exposed using the Rose portfolio of 96 stocks and the criteria of quality, 5 year dividend growth rate and yield, and newly added earnings per share.
• The criteria only offer success measurements for past performance and I offer a view into the future through earnings growth forecast.
• Best Value due diligence is also shown using P/E, price valuation and analyst purchase finalists with Fast Graphs.
• Presented are 3 new buys including Fast Graphs and all my costs per share for all holdings.

First and foremost, my investing focus has been to build a portfolio of quality blue chip mostly defensive common stock for increased value creation and rising income for the future. The current investments in this portfolio also include RIC (regulated investment companies), high yield, ETFs and fixed income preferred debt. Younger investors may still wish to own high growth stocks without dividends and or low yield ones for capital gains, of which I have been slowly reducing and moving into income providers as just mentioned. It is good to have a plan and stick with it and utilize quality criteria for stock selection.

QUALITY Investment Criteria

A good quality investment to me and many could be evaluated using the following metrics:

-Investment grade credit rating “IG” as noted by a credit rating agency, such as Standard & Poor's, which I obtain from Fast Graphs “FG”.

-Good dividend yield better than the average as found in the S&P 500 currently at 1.7%.

-Good dividend growth unless purposefully bought as pure or fixed income or high yield “HY”.

-Good earnings growth and especially if low yield or a no yield growth stock.

I will delve more into each of these in turn as the article progresses.

S&P credit ratings

The credit rating is a measure or grade of a companies ability to pay back its own debt and its investment worthiness. I use S&P because it is available in FG, a subscriber service I use, so I need go no further. My last article reveals the ratings for individual stocks as shown by sector, so please use that as a reference. It is also important to note 75% of the Rose portfolio value is in common stock and most all are quality IG rated. The remainder or ~ 25% is RIC, ETFs and some fixed income, which generally are not credit rated or even followed by some analysts. Morningstar “M*”, Value line “VL”, Moody’s and Fitch also generate their own credit ratings. I am able to use the premium service of VL and M* from a library source for no fee. Please check with your library for it, as those services also give future fair value estimates for most all common stock, which I will be showing later along with my own cost per share.

First I would like to present:

The Rose Portfolio

Surprise !

96 investments, now, up 2 in count from my last article.

3 new ones, which I will reveal later in deeper bonus review, but they are in the chart, perhaps if you follow me, you will be able to find them. Hint is 2 are common stock and 1 is a RIC, added to my basket of BDCs.

The common stock portion still remains at ~ 49.6% in defensive sectors by value, as in the short summation as shown below. The income from them also still remains around 40%, which still meet my own goals. Communication is the new sector designation that rules over telecom, which is all I own that qualifies there anyway.

Common	Defensive
	Consumer S/D	19.85%	15.90%
	Health-care	10.88%	7.18%
	Communication	6.96%	7.40%
	Utility	11.87%	9.96%
Total		49.56%	40.43%

Click to enlarge

The portfolio holdings are listed alphabetically, and divided into 3 sections as follows:

#1 Common stock of 47 companies

#2 Utilities (8) and communication ( 3 telecom).

#3 HY or high yield (38) = 29 RIC, ETFs and 9 fixed income holdings.

The metrics used for each is just a bit different and will be explained separately as well as we move along with each section of the portfolio.

Stocks seen in bold letters, 5 of them, still have the dividends dripped. 4 with an asterisk * have the dividends removed from the portfolio and right into the checking account.

Abbreviations used in the section charts are as follows:

Div Yield = dividend yield, obtained on or around Sept 26^th, 2018. from FG.

5 Yr DGR = 5 year dividend growth rate from FG acquired on the same date.

Total Return desired values

The dividend yield added to the 5 yr DGR gives a look at past total return. It is only an estimate which does not assure any type of future returns. I have chosen the numbers for my particular portfolio and plan. Each investor should decide on their own rate of return. The why for mine will be explained shortly after I reveal them and the dividend yield chosen for them.

Y= Yield, dividend yield in the following chart abbreviations:

Y>=2.5 has a desired total return value of 10.

Y<2.5 would require a value of 14.

foreign means there were exchange rate issues in determination of the evaluation and with a deeper look into it could change the result.

Yes in the Result column means the stock met the value

18=+ means any 5 yr DGR of >=18 gets a Yes+ rating in the “D” Result column.

EPS Y = Earnings per share Yield as taken from FG

a 6 meets expectations and gets a Yes in the E Result column.

>8 gets a Yes+ rating in the result column labeled E.

The highest result rating is Yes + and the worst is a blank space which essentially means No or does not meet value standards. There are 5 with the really worst No-No rating. I felt they needed to be singled out. Also note all Yes+ ratings are in bold, along with any total return value that also passes.

Earnings Growth Forecast: The final column is earnings growth from FG it is added as a guide into the future and can only be used as a “guess-ti mate”.

#1 Common Stock 47

				Y+DGR	Y+DGR	EPS Y			EPS
Common			18=+	10	14	6	Result	Result	Growth
stock		Div Yield	5 Yr DGR	Y>=2.5	Y<2.5	8=+	D	E	Forecast
AbbVie	(ABBV)	4.20%	13.2(4)	17.4		7.8	Yes	Yes	14.6
A Data Proc	(ADP)	1.80%	8		9.8	3	No	No	16.6
Amgen	(AMGN)	2.60%	26.6	29.2		6.6	Yes+	Yes	5.7
Broadcom	(AVGO)	2.80%	52.4	55.2		8.2	Yes+	Yes+	13.8
Boeing	(BA)	1.80%	27.2		29.1	3.7	Yes+		19.7
B-Dickinson	(BDX)	1.20%	10.2		11.4	4.2	No	No	14.5
Anheuser	(BUD)	4.20%	14.6	18.8 *		4.6	Yes+	foreign	10.9
Cardinal H	(CAH)	3.40%	15.6	19		9.1	Yes	Yes+	5.6
Colgate	(CL)	2.40%	5.6 last 3		8	4.3	No	No	7.5
Cummins	(CMI)	3.10%	18.8	21.9		8.3	Yes+	Yes+	11.2
Cisco	(CSCO)	2.70%	36.4	39.1		5.6	Yes+		9.7
Covanta	(CVA)	5.90%	11.2	17.1			Yes		20
CVS	(CVS)	2.50%	25.2	27.7		8.5	Yes+	Yes+	10.8
Chevron	(CVX)	3.70%	4.4 last 1	8.1		5.6			10.5
Diageo	(DEO)	2.60%	4.2	6.8 *		4.5	foreign		8
Fortress	(FTAI)	7.10%	31.5(2)	38.6		1.3	Yes+		30
General Elec	(GE)	3.90%	Cut	3.9		8.6		Yes+	3.6
Gen Mills	(GIS)	4.50%	9.6	14.1		7	Yes	Yes	3.9
Gen Parts	(GPC)	2.80%	6.6	9.4		5.3			9
Home Depot	(HD)	1.90%	22.4		24.3	4.2	Yes+		12.9
Hershey	(HSY)	2.70%	10.4	13.1		5	Yes		7.7
Intel	(INTC)	2.60%	4.4	7		8.4		Yes	9.4
J & J	(JNJ)	2.50%	6.8	9.3		5.6			7.7

Click to enlarge

Kraft-Heinz*	(KHC)	4.60%	4 (last)	8.6		6.4		Yes	4.7
Kimberly-Clk	(KMB)	3.40%	5.6	9		5.6			6.9
Coca-Cola	(KO)	3.60%	7.8	11.4		4.4	Yes		8.75
Lockheed M	(LMT)	2.40%	12.4		14.8	4.8	Yes		17.2
Matercard	(MA)	0.50%	56.2		56.7	2.7	Yes+		21.2
McDonalds	(MCD)	2.50%	6 last 15	8.5		4.6	No	No	9.7
Mondelez	(MDLZ)	2.10%	-0.6 last 14	16.1		5.3	Yes		9.8
Met Life*	(MET)	3.40%	17.4	20.8		10.1	Yes+	Yes+	14.7
3M	(MMM)	2.50%	15.4	17.9		4.6	Yes+		8.65
Altria	(MO)	4.50%	8.2	12.7		6.2	Yes	Yes	11.6
Occidental	(OXY)	3.90%	7.4	11.3		4.9	Yes		13
Pepsico	(PEP)	3.20%	8.2	11.4		4.8	Yes		7.2
Pfizer	(PFE)	3.10%	7.8	10.9		6.6	Yes	Yes	7.3
Procter-G	(PG)	3.30%	4.8 last 1	8.1		5	No	No	7
Philip Morris	(PM)	5.20%	5.2	10.4		6	Yes	Yes	8.2
RD Shell-B	(RDS-B)	5.40%	1.8 Froze	7.2		7.4		Yes	14.5
JM Smucker	(SJM)	3.00%	9.4	12.4		7.4	Yes	Yes	3.9
Tencent	(OTCPK:TCEHY)	0.30%	34.8		35.1	2.6	Yes+		0
Target	(TGT)	2.90%	16.2	19.1		5.9	Yes+		7.3
Union Pac	(UNP)	1.80%	15		16.8	4.4	Yes		17.4
Visa	(V)	0.60%	23		23.6	3.1	Yes+		20.7
Valero	(VLO)	2.90%	35	37.9		5.5	Yes+		30
Exxon	(XOM)	3.90%	7.2	11.1		5.1	Yes		10.2
Celgene	(CELG)	0.00%	0	0		10		Yes+	20.2

Click to enlarge

Winners

From the results column (D and E) are as follows:

Yes+, Yes+ (4):

Broadcom , Cummins , CVS, and Met Life

Yes, Yes (8) in some fashion:

ABBV, AMGN, CAH, GIS, MO, PFE, PM, and SJM

Losers .. and some surprises to me are:

5 that get No, No:

ADP, BDX, CL, MCD, and PG

In some cases the grades will change as does valuation and the current dividend yield which is what I discuss next. Note: MCD, just raised its dividend by 15% which helps it here, but still does not bring it up to a pass.

Total Return Values come from using the S&P 500 (SPY) dividend yield as my guide.

DIVIDEND YIELD

The S&P 500 or SPY is currently yielding 1.7% and it is usually agreed one should want to obtain that yield for any current individual dividend paying investment. The 1 year US Treasury bond yields ~ 2.5% and it should be agreed anyone would want to achieve that for a minimum investment yield for a non capital growth stock. Some even consider that rate high yield, at least right now. Times and yields are always changing.

Below is a chart from Yahoo and shows the current SPY yield at 1.7%, but also note as that yield goes down the price of the investment goes up and the SPY is at a 1 year high, actually a 5 year high. One could easily say the SPY is a bit overpriced but I won’t, but I can think it, as it continues on the upward momentous trend.

For a stock with dividend yield >=2.5% I would want total return to= 10, and if < 2.5% my desire is 14. Any stock with a dividend growth rate >18 gets an automatic pass for total return.

The earnings per share "EPS" has a minimum value of 6 which equates to a 6% EPS yield (or a P/E of 16.6). The statistics were obtained from Fast Graphs portfolio review.

Earnings Per Share "EPS" Yield.

Chuck Carnevale, aka Mr. Valuation, in a recent article mentioned earnings growth should be a part of due diligence for any investment. I have always felt great earnings give great dividends and never really looked at them specifically. Truth be told, that also still holds true, but now I have performed that specific task for the Rose portfolio with the results shown above.

Interestingly enough EPS means Earnings per share price and is the reverse of Price/Earnings or P/E. Thus, you only need 2 statistics to solve for both, the share price and earnings per share and can be obtained from numerous investing sites. A universally accepted general P/E for most common stock is 15 and Chuck in numerous articles continues to support that value as well as FG. Some sectors and some stocks do not ever achieve such and others over achieve that level. It is important to realize that fact when measuring any stock and finding a normal 5 or 10 year P/E for the stock is advisable. I will use P/E in a future chart along with some fair value estimates from analysts.

A normal P/E of 15 converts to a EPS by dividing 15 into the number 1 or = 6.6% for EPS. The S&P 500 (SPY) is currently trading around 16 or 17 and thus equates to earnings of ~ 5.9% - 6.2%.

Any stock with a higher P/E generally has lower EPS, which would certainly be logical. One must decide if it is the price or the earnings that are affecting the calculation.

This chart below shows the (SPX) which has a forward P/E of 17.3 for Q4.

Again, more than the general average of 15 and it continues to be priced highly, but lower than the trailing Q4. If earnings are going up then it makes sense the P/E would fall.

Therefore, I have added a column for earnings growth (note it is growth and not yield). The statistics were again taken from FG and many do show even more earnings growth. Something to consider always. Those don’t don’t show much growth and currently do not pass EPS yield should be watched carefully, but most are showing growth which gives me a smile, and that includes MCD.

#2 Utilities 8 and Communication 3

These stocks are generally defensive holdings for reliable income. Dividend growth is very varied, as is share price with each having its own characteristics. The telecoms most often offer the lowest DGR and I list them separately at the end of this list.

I use an 8 for total return, which might currently be too high as many utilities are trading at rather high valuations and have lower than normal dividend yield and also gives some a lower EPS yield and P/E.

Chart is below and there is only one outright winner which is discussed below.

		Div		Y+ DGR	EPS	Result	Result	EPS
Utility/Com		Yield	5yr DGR	8	6	D		Grow
Brookf Infr P	(BIP)	4.80%	11.8	16.6	2.7	Yes+		20.8
Dominion	(D)	4.70%	7.6	12.3	4.7	Yes+		6.5
Alliant	(LNT)	3.10%	7	10.1	4.8	Yes+		7.12
Madison Gas*	(MGEE)	2.00%	4	6	3.4	No	No	na
Scana	(SCG)	1.40%	Cut/Froze		10.5		Yes+	-4
Southern Co	(SO)	5.50%	3.2	8.7	6.9	Yes	Yes	1.8
Wec Energy	(WEC)	3.30%	12	15.3	4.9	Yes+		6
Xcel Energy	(XEL)	3.20%	6.2	9.4	5.1	Yes+		6.2
BCE is CDN	(BCE)	5.80%	0.8	6.6 *	6.7	foreign	Yes	2.4
ATT	(T)	5.90%	2	7.9	10.2		Yes+	5.5
Verizon	(VZ)	4.30%	2.6	6.9	8.1		Yes+	8.3

Click to enlarge

Many utilities are no longer just electricity providers, and offer natural gas, and alternative energy. We are in changing times for energy and these also operate in numerous different states and countries. There is much to research. I am only offering investing metrics and the results here.

Winner: SO

It is extremely undervalued and having problems with its nuclear reactor project having cost overruns. Good thing it has great management.

Loser: MGEE

This company has an excellent dividend track record but is extremely overpriced and only 2% yield.

Other:

D, WEC and BIP have amazing EPS Yield with BIP having a projected EPS 20.8% growth.

These are all actually great candidates for further review and I have been buying BIP.

Telecom stocks are now in the communications sector and are doing just fine. I actually had a rotary dial phone such as the one above and, yes, in black.

All these companies are not just land lines any more.

BCE has the foreign exchange issue, Canadian, keeping me from making it a pass for DGR. I have been adding to it on dips.

ATT is very close to a perfect investment with its price rising and moving on to incorporating Time Warner, hopefully. I bought some more earlier in the year even though I didn't need it, just was too hard to ignore.

VZ is getting pricey again, glad I added to it last year, as it remains a quality holding.

The RICs or Regulated Investment Corporations, ETFs and Fixed Income come close to, if not the same, to the total return values for utilities and telecoms.

#3 High Yield or “HY” 38

There are 29 high yield and 9 fixed income holdings.

They generally qualify on the high yield aspect alone and the fact they were purchased for it. These all have different metrics for evaluation as an investment. In the future I will be evaluating these separately from my other holdings in the portfolio. They will be included in all total portfolio reports, but do deserve more attention and looked at in a different investing light.

RIC/ HY				8
RE/eREIT		Div Yield	5y DGR
Corr Energy	(CORR)	7.90%	6.6	14.5
Digital Realty	(DLR)	3.30%	5	8.3
EPR	(EPR)	6.30%	6.2	12.5
Iron Mt	(IRM)	6.50%	17	23.5
Kimco	(KIM)	6.70%	7	13.7
Kite Realty	(KRG)	7.60%	5	12.6
Omega H	(OHI)	8.10%	8.4	16.5
Sabra H	(SBRA)	7.70%	5.6	13.3
Tanger	(SKT)	6.20%	10.4	16.6
Simon Prop	(SPG)	4.40%	11.6	16
Uniti	(UNIT)	11.50%	-1(2)	10.5
Ventas	(VTR)	5.60%	4.8	10.4
WP Carey	(WPC)	6.20%	11.4	17.6

Click to enlarge

ETF
AMLP ETF	(AMLP)	7.80%		7.8
AMZA ETF	(AMZA)	17.40%		17.4
BDC
Ares	(ARCC)	8.90%	0.2	9.1
FS Investmt	(FSIC)	10.60%	1.4	12
Monroe Cap	(MRCC)	10.20%	60.6	70.8
Blackstone	(TCPC)	10.00%	7.6	17.6
Triple Pt Venture	(TPVG)	11.00%	4(3)	15
mREIT
Arbor Realty	(ABR)	8.30%	13.8	22.1
Great Ajax	(AJX)	8.80%	313(3)	321
Blkstone	(BXMT)	7.20%	49.8 (4)	57
Cherry Hill	(CHMI)	10.60%	87(4)	97.6
New Res	(NRZ)	11.00%	26.2(4)	36.4
Sutherland	(SLD)	8.80%		8.8
CEF: Financial
Oxford Lane	(OXLC)	15.20%	3.2	18.4
Brookfield Real Assets	(RA)	10.30%		10.3

Click to enlarge

FIXED Income	Ticker	7-8 desired yield
CBL Realty	(CBL.pb)	11.00%
Chimera-pref B	(CIM.pb)	7.80%
NGL-pref b	(NGL.pb)	9.10%
Nu Star LP- pref b	(NS.PB)	8.80%
PennyMac-pref b	(PMT.pb)	8.00%
Teekay pref b	(TGP.pb)	8.70%
Wash Prime G-Pref h	(WPG.ph)	8.10%
Dominion bond	(DCUD)	7.10%
Duff N Phelp*	(DNP)	7.10%

Click to enlarge

Winner: All

I like them all. Sorry no evaluation, no disappointments, just great income provided.

The only difficult to own holding here is AMZA, an energy ETF. It might get sold, but I await the next dividend announcement. My total return is on the positive side now and my hopes it will get better as its go along, but I need the energy sector to perform well into 2019.

The fixed income are mostly all preferred debt from numerous sectors including energy, retail REITs, and financial. DNP is a closed end fund that has a frozen dividend and is primarily a holding of utilities. I have owned it for over 20 years and it stays.

I, again, want to thank the Fortune Teller and his paid subscription service, The Wheel of Fortune, for insightful guidance and education for buying, holding and price target buy and sell points for most all of the HY investments I do own for primarily the last 2 years. He can not take credit for some, I have made my own purchases and some mistakes in buying too high, but for the most part everything he suggests is successful and smart price buys. I continue of offer high praise to him and his partner Trapping Value.

Prices, prices and P/E evaluation

It just would not be me if I did not look at prices and offer some sort of evaluation and winners/finalists for purchase.

The following abbreviations are used:

C/sh= my current cost per share

M* FV = Fair value suggested by Morningstar

M* Buy= Buy price suggested from analyst Morningstar

Future 3-5y VL = Future price by VL suggested in 3- 5 years

P/E = Current Price/Earnings as shown on FG

5y P/E= Past 5yr P/E average from FG

		Price	Price	Price		5yr
		M*	M*	Future 3-5y	P/E	P/E
C/Sh		FV	Buy	VL
64.51	ABBV	97	68	125-185	13	15.2
low	ADP	96	67	145-180	33.1	27.2
137.85	AMGN	198	130	275-335	15.2	14.4
209.24	AVGO	300	210	210-320	12.3	15.2
low	BA	323	194	390-475	27.5	18.7
156.8	BDX	225	157	270-330	23.7	18.7
102.28	BUD	124	99	105-130	20.7	23.5
70.48	CAH	82	57	100-150	10.8	14.2
28.57	CL	72	58	75-90	22.4	23.4
117.84	CMI	159	96	200-270	11.5	15.1
28.47	CSCO	43	30	50-65	18.3	12.9
13.4	CVA			16-25
99.58	CVS	96	67	100-120	11.7	15.7
79.1	CVX	136	95	130-160	17.9	20.1
101.65	DEO	139	111	85-115	22.4	21.3
18.67	FTAI
12.86	GE	15.7	9.5	25-40	11.7	17.6
53.44	GIS	58	46	55-70	13.9	17.8
65.11	GPC	103	72	125-155	18.4	19.8
141	HD	168	118	230-280	23.4	22.3
103.23	HSY	116	81	105-145	19.6	23.9
38.55	INTC	65	46	80-95	11.9	13.8
89.05	JNJ	130	104	170-210	17.4	16.9

Click to enlarge

unk	KHC	62	43	90-120	15	27.1
97.12	KMB	112	78	165-200	17.3	19.3
31.87	KO	49	39	50-60	22.7	20.9
269.68	LMT	327	229	370-455	21.5	17.9
82.98	MA	165	116	185-235	37.4	28.9
78.71	MCD	190	133	180-220	22.7	20.2
unk	MDLZ	52	36	55-75	18.3	21.7
Unk 49	MET	52	31	55-80	9.5	10.2
163.19	MMM	193	154	255-315	21.1	21.1
unk	MO	64	51	80-110	15.7	19.3
84.03	OXY	73	44	95-140	20.7	36.8
unk	PEP	123	90	135-165	20	20.7
32.33	PFE	46	37	50-60	15.1	13.7
65.43	PG	97	78	105-130	19.5	19.8
unk	PM	102	82	115-155	16.5	18.2
54.17	RDS.B	83	58	85-115	13.9	13.4
111.8	SJM	129	90	140-175	12.6	17.3
40.05	TCEHY	76	46		36.6	39.3
60.73	TGT	65	46	90-125	17.1	15.4
88.36	UNP	140	98	180-220	22.4	18.6
62.06	V	129	90	155-185	32.7	26.1
57.51	VLO	106	64	95-145	18.7	11.2
88.78	XOM	90	72	100-125	19.6	17.5
95.06	CELG	104	73	125-190	10.6	21.8

Click to enlarge

The winning P/Es are in bold print and the tickers that I know have a winning price are also in bold.

When looking at the prices and the P/E gives the following possible buy results:

Winners:

The following are at or lower than the buy price listed by M*:

BUD, CAH, GIS, INTC, PM, TCEHY, and CELG.

In comparing these values with the EPS and other metrics, there appears a few stand outs of CAH. GIS, PM and CELG.

These last 4 are the winners and I will show the FG for them. It shows the past 5 years and 3 years of estimated future statistics.

CAH:

Undervalued and has plenty of cash to cover the dividend (the white line). It has a 3.5% yield and shows 8% growth of earnings. I add to it as I can.

GIS:

Undervalued, plenty of cash to cover the dividend and 4.6% yield, however earnings growth down for 2019, but up for 2020. DGR is slowing but safe.

It is indeed not a capital gain type stock, but could be attractive for income. I added a bit this month.

PM:

If you believe in the company it is trading at a nice yield of 5.6%, great for income and it looks to growing in all regards. I am still drip dripping away with it.

CELG:

Celgene looks fantastic and has great earnings. It is unloved for some reason and certainly shows growth. It is not a dividend payer and thus one must rely on the growth with certainly looks to be there or coming soon. I should get some more, and might do so next month.

Bonus:

Here are my New Buys for the month and there are 3, surprise!

TCEHY:

It appears to have been overpriced and now is heading back to fair value and near its normal P/E again. Earnings forecast show an excellent increase for 2019. I hope it to be true.

The WoF or

suggested and issued a hot tip to buy it at $40. I missed it at first and it climbed up a bit, but returned to the buy price where I was able to get some in early September with an average cost of $40.05. It hasn’t moved much as yet, but it will be a hold for capital gains in a Roth. It also has a 0.3% yield. It has a P/E almost equal to its future growth, so a PEG ratio of ~1, which is attractive as well.

GE:

This is pure speculation, but it certainly is worth something and offers opportunity. It has fallen in price to an attractive level for the dividend and earnings level. It seems to have the cash to pay the current recently cut dividend. It has positive projected earnings and I will enjoy the 4.3% dividend yield while I wait. I have a small position, possibly not even worth mentioning, but know I am watching it closely and might sell a put to get more shares lower, or just buy some more outright if it does go below $10. I paid $12.86, perhaps too much, but certainly not a bad deal. I see it is up today with the announcement of a new CEO who has time to do better for it in the future.

TCPC:

BlackRock is a BDC and I am showing it using diluted earnings in the FG. I bought for $14.37 and I will add on if it goes much lower, perhaps $14. If not, I am fine with my new position in it. Thanks again, Fortune Teller for the suggestion on your service, but I was slow to do it, but now I have.

It has a frozen dividend/distribution and 10.1% yield, which has not been cut. I believe this chart shows it is headed up in earnings and very able to cover the dividend. It has a BBB- credit rating which is also rare to find a rating for a BDC. ARCC, which I also own has such a rating. I can not complain about the return, but perhaps might see a raise coming in the future.

My only complete sale was Nike.

I believe I did mention this sale in the last monthly report. It is done and gone and I don’t miss it, as it was a low dividend paying growth stock. I have been transitioning out of those, so Nike was on the list to go no matter what.

That’s all for me and I hope you found some value and ideas for your own investing.

I will do a separate quarterly/ Q3 report article, that will provide a more comprehensive list of all my purchases and trims, hopefully coming soon.

I certainly continue to learn from writing about my portfolio and enjoy sharing my learning experiences, success, and adventures in investing. I hope you continue to follow and guide me along the path to Happy Investing!!!

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.

Analyst’s Disclosure: I am/we are long CAH. 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.

and all 96 stocks in the charts

Comments

[Long+Golf]

Great read Rose. I own 30 stocks and we share 20 of them. Wonder if you might comment on the following....PPL,MSFT,O,LYB,OKE,PM. Thanks

[RoseNose]

Hi @Long+Golf -
Thank you for the comment.
I can comment on those, but I really only own PM, which is doing what it normally does...it split from MO and we drip both of those as yet.
I think MSFT and O are very quality companies.
I own neither right now because of overvaluation.
I will get interested in O if it gets to >5% yield. I already own WPC that has a 6% yield and offers international holdings as well. They both are NNN leasers.
I like utilities, but own lots of D and SO, so I don't follow many others.
I just did a quick look at LYB - interesting company, I might have to look longer. Low PO, Low debt and nice dividend yield operating in a sector that I do not have a lot of exposure in...so thanks for the suggestion.
Rose :))

[ZAAN]

Hello @RoseNose and @Long+Golf,

I own/am long LYB and am happy with it. Morning* gives it a Fair Value of $89.19.

Also MSFT. Which M* gives a fair value of $130. I like this one particularly for it's AAA+ credit rating shared only with JNJ (last time I looked)

I added to PM in the summer sometime at $79. M* gives it a Fair Value of $102.

Take care,
Zaan

[RoseNose]

Great to know and thank you for sharing your investing @ZAAN !
Just so you know there is no AAA+ credit rating, but MSFT and JNJ probably do deserve it. They sit at AAA. I give The Fortune Teller AAA+ rating, him and him alone....lol.

[rado403]

Please- if anybody in this crazy and increasingly crazy- you are definite Presidential material-- Look how you handle with the folks who can not do more than 10 companies' stocks--nicely done

[The Fortune Teller]

...and this is how a campaign starts! @rado403 ...
Count me in (though I have no vote...)
I'm ok with being in charge of the Ministry of Fortune Telling or, alternatively, the Office of Corn and Roses.

[RoseNose]

Thank you @rado403 !
To be considered less crazy than others is perhaps a realyl good thing...
My first duty would be to create the
Dept / Ministry of Good Fortune with a czar that has already volunteered to serve...
Wow, that could be a fun administration.
Appreciate you both for starting the campaign with your 2 votes of confidence which mean a lot to me.

[The Fortune Teller]

Hi there lady @RoseNose

Apologies for being $SO (a winner!) late to the 96 party! I was (and still am) on a writing spree; setting few personal bests... :-)

First and foremost, thanks for the mention and reference as always. So very much appreciated!

Secondly, I like your additions this month ($GE, $TCEHY, $TCPC); they look familiar.... :-)

Thirdly, you are anything but simple. It has been a while (over 85.5 years!) since America had a president from Iowa. It's about time the corn State put someone in the oval office.
Vote @RoseNose for becoming the 46th president of the US!

Finally, you love all the high yielders - and rightly so - but everybody should be very minded of the risks that are associated with HY, aseptically these days. The floaters are doing a fine job on the space.

Good luck and it's about time you reach 100 positions!...

[RoseNose]

I am ready to sell those HY at a moments notice @The Fortune Teller !
You teach to be prepared and I like to think I have a week or two left to keep many of them....I read, I learn and follow. Just know I and others will keep you company always and have trust in your thoughtful wisdom. I am Not Presidential material, nor have the desire, but thanks for the vote of confidence.
I have been watching your amazing output with some concern for your well being, but do know how much you enjoy your vocation and especially offering warnings when they are due. Carry on and give me no mind, other than the wonderful helpful knowledge you impart to me and others.
God Bless and Happy Investing :)) Rose.

[Paul Leibowitz]

Rose (others) ...

Curious to know your take on VOD.

I just bought (more) VOD.

Value Line ranks it with a financial strength rating of B++, and Safety Score of 3. VL projects 3-5 year total *annual* returns of 20-32%.

S&P gives it a credit rating of BBB+

M* assigns a FV of $32 (well above today's price).

VOD's yield is over 8% because the stock price has tanked a lot.

Why the tank? In large part due to the strong USD, not the business.

VOD can easily pay the dividend out of Operating Cash Flow, but not FCF or EPS .... mainly because of the very large investments it's making.

In VOD's chosen currency (Euro), the annual increases have a spectacular record ....

23 years as found here:
dividendlife.com/...

More data, here:
www.dividenddata.co.uk/...

Not everyone's cup of tea. But, this seems to me to be a company that is doing well in the currencies of other nations (Euros).

My bet is that the USD will not strengthen greatly from this time out several years and that Ray Dalio is correct ... that the USD will begin to weaken by 2 years from today.

Meanwhile, a starting yield of 8%+ isn't hard to take even if it grows around 2%/year, while waiting for M*'s fair value of $32 to materialize (if ever).

Anyway, I'm curious to learn what others think.

Paul

[RoseNose]

Hi Paul and thank you for stopping in and asking a great ?
VOD is an interesting t-com. I have considered it myself, but I just got into BCE (CDN). I agree mostly with what you say and think it is a good candidate for purchase now near $21. Good Luck..Rose

[ZAAN]

@Paul Leibowitz

This just published and remembered you asking about it: seekingalpha.com/...

Only telecom I have is TU (Telus Canada)

Wishing you all the best.
Zaan

[Paul Leibowitz]

@ZAAN

Thank you for the link to Nick Mackintosh's Oct. 10th article.

It makes sense. He wrote:

"FCF no longer covers the dividend unless cash flow from operations increases or cash savings and reductions in capital expenditures can generate the additional €1.4 billion Vodafone has spent."

I studied FCF before buying VOD and came to the conclusion that FCF is highly likely to improve because VOD is reducing investments following completion of its Project Spring program to improve its networks in Europe and other markets, as mentioned in this article.
www.reuters.com/...

Nick Mackintosh then goes on to say "After doing some digging, there are signs that show Vodafone can generate the additional €1.4 billion." He shows where half the money could easily come from ... and then writes: "Vodafone still has €13.46 billion in cash and short-term investments on its balance sheet, it could easily afford to keep the dividend without cutting it, provided they don't miscalculate their expenditures for 2020."

As mentioned in my post above, VOD is close to being a dividend champion in its native currency. I believe they will try hard to maintain their record and that they have the ability to increase FCF.

VOD does have problems with India. I am amazed that India passed a retroactive ruling demanding payment of past taxes. I hven't been able to figure out what would happen if VOD settled and paid the cash.

M* writes: "the Indian government continues to seek $2.5 billion in taxes for Vodafone's acquisition of Hutchison Essar in 2007, despite the Indian Supreme Court ruling that the money is not owed."

Value Line's Sept 14, 2018 report is at odds with a Jefferies report saying that the dividend is at risk of a cut.
finance.yahoo.com/...

VL writes: "Financial Strength rating remains solid, at B++. At the conclusion of fiscal 2017 (ended last March 31st), cash and equivalents were in the neighborhood of $5.7 billion. Furthermore, long-term debt resided at a manageable 33% of total capital, and short-term commitments did not present a major stumbling block. Finally, there were two revolving credit facilities aggregating $8.8 billion (both of which mature in several years). As a result, the company seems quite capable of bolstering its market positions through acquisitions.

VOD isn't for everyone.

I see it as a value play with the odds greatly in favor if continued dividend payments. Of course, there's always the risk of the USD continue to strengthen against the EURO.

Last, in order to reduce financial risk, my portfolio position size is small (around 1%).

Thank you again for the link to Nick Mackintosh's Oct. 10th article.

Paul

[ZAAN]

Dear Rose,

Fabulous article! Thank you so much for writing it and sharing. I hope you've had a wonderful summer.

With appreciation
Zaan

[RoseNose]

@ZAAN -
Hi Zaan !
I have been wondering if you are still in Canada...and how you are doing.
Hope all has been lovely for you and have a great fall wherever you roam.
Thanks for the comment and I am glad you enjoyed the article.
Rose :))

[ZAAN]

Dear Rose,

I've recently returned to Cape Town after almost 5 months away. My time in Canada was wonderful! I've been a bit out of the loop and trying to catch up on reading here on SA. Lucky for me I had quite a few painting commissions to do in the last few months and I also managed to travel to Nova Scotia in July and to Iceland, Germany and Austria in August. Very nice! But now I'm quite happy to stay put for a while till the North does their big Freeze and Thaw. Unfortunately I'm missing the Fall in Canada this year, but Spring here is just glorious. Cape Town has had a lot of rain this winter and it's sooooo beautiful and green right now with one perfect day after the next.

Congratulations on your TCEHY purchase! I'm thrilled by that.

Wishing you a fabulous Sunday!
Zaan

[RoseNose]

So wonderful for the update on your travels. Many places in the "cool" north that I have not traveled too. The fall here in Iowa is one of the worst I can remember, as it is very cool, rainy and dreary..the trees are dropping leaves in spurts and not changing colors together.
Your spring does sound lovely and lush. Welcome home and may it be peaceful.

[Denver Harbor]

Hi Rose. Thanks for your notes. We have many overlapping names as recent additions to my DGI portfolio—glad to have affirmation by other like minded investors. Instead of buying a single Chinese stock,what do you think about a fund like Matthews China Dividend to give you broad exposure to the pullback in China? Thank you for your thoughts.

[RoseNose]

@Denver Harbor-
I am new to the China stocks, but would want those and only those listed on the NYSE. A fund that has stocks in it that are listed would be candidate for due diligence. I am just getting interested, but also with no hurry and perhaps no real enthusiasm either, as I am pretty pleased with my current portfolio. :)) Rose

[SleepyInSeattle]

Rose, I appreciate the article, but I sold approx. 30% of my portfolio, accumulating cash. What do you think?

[RoseNose]

@TheRoseLady
What works for me might not work for you...and the market is looking to offer some bargains if the current trend continues.
If you sold some of your income producers, then you will have to wait it out. If they were growth stocks you sold, then you perhaps won't be missing as much...I really can't say, but wish you good luck :)) Rose

[Cashflow Curator]

This was not addressed to me, but if you are going to go 30% to cash as you have, then it seems like you should set some very strict criteria for when and under what conditions that cash gets reinvested back into the market. I think that needs to include a set of conditions (perhaps valuation based assuming that is your concern) as well as a maximum duration you are willing to wait for those conditions in case they don't happen in the near future.

[SleepyInSeattle]

I already reinvested a small amount into preferreds, some cumulative, some not, call date over 2 years. PEI-D @ 21.47 (yield 8.24%)
USB-P @ 24.23 (yield 5.66%)
AHL-C @ 24.82 (yield 5.96%)
PSA-E @ 21.45 (yield 5.73%) The adjusted yield is probably higher as I bought below PAR

[RoseNose]

Hi @MtBudmoreView -
I appreciate your following and with your sister as well. Keep healthy yourself and God Bless :)) Rose.

[MtBudmoreView]

Goodness Rose you get a lot of attention and deservedly so you should. My sister and I keep up with your now 96. Glad to see some Chinese exposure which will eventually look better and I have time for bargains like T was recently again. We look forward to the next update. Keep healthy!!

[rado403]

Chinese exposure? I am a little bit exposed right now QI-Ali- JD- been hit very hard with Chinese lack of value and honesty--When will that change? Very old society complete with centuries old intrigues--I am concerned that the Chinese have such a radical difference in values versus the West-- Of course maybe our sense of values upon deeper inspection may not bees lily "white"

"

[Bigslix]

Rose- Enjoy your articles. Your numbers on SO may make it #1 on your list of great future performers, but I think you have to look past the numbers. I'm not sure I can agree that SO is so well managed. look at the construction cost problems they are having. What are they, something like 6 billion over on cost? thats a lot of money, even for you! look at the pollution problems they are having. Thats costing a lot of extra money. These are not the things that happen to this degree in a well managed company. They are borrowing money like crazy in part to keep paying the dividend.
I'm long SO, but it may have to go.

Big Slix

PS Bought some D yesterday.

[cemanuel]

I've looked at SO a few times and keep not buying due to the reasons you mention. I would like to add another utility - have D and NEE - but due to debt/dividend safety concerns SO hasn't made the grade for me.

[RoseNose]

Thankyou Bigslix for your thoughts on SO.
Sadly it is having the continuing troubles with the nuclear project.
It can win and is persisting with the project, perhaps unjustly so.
It continues to survive and has a solid credit rating.
I stick with it, not arguing for it either, show putting out the facts.
I also have D and welcome you to that one, just know it is having trouble with SCG and South Carolina regulators for that purchase ....
always something for most power companies.
Best and Happy Investing :)) Rose

[RoseNose]

Thanks for sharing @cemanuel -
I would not know which one to pick if I had to buy another right now. Good Luck.

[richjoy403]

Approaching the Dividend Space -- Part 3 Conclusion

It is important to note High Dividend Yield, Dividend Growth, and Quality Dividend strategies are distinct approaches and demonstrate significant differences in desired outcomes, fundamentals, and sector exposures. Given these differences, investors should carefully consider which strategy best aligns with their objectives.

Investors may also consider combining multiple dividend strategies to manage fundamentals or sector exposures. Some dividend ETFs do this; for example, it is not uncommon to see hybrid strategies that combine high dividend yielders meeting quality screens. While a hybrid approach can result in more balanced sector exposures and fundamentals, it often comes at the expense of maximizing the dividend yield, quality or growth characteristics of the portfolio.

The source document: Global X, July 12, 2017, by Jay Jacobs, CFA
www.globalxfunds.com/...

_______________________

As always, such documents are measured in the eye of the beholder. I’m not suggesting anyone should make any changes based upon this thesis--some may find it useful, and others find it useless. Although the data are from 2017, their relationships should hold up over time.

[RoseNose]

Thank You @richjoy403 for posting the information.
Diversity and understanding the type of investing one is doing is important.
Plans are important and are not set in stone, thus allowing us to change as our needs change.

[RoseNose]

To all that read and follow Richjoy403:
He has a list of holdings for 1 of his portfolios on his profile page, as well as his past and future investing methods. Also information about his retiring early and family life....I came to SA back when he was still writing articles and excellent ones too. He has moved on to enjoy his family and not place SA and investing above the JOY in his life (his wife) and family with her.
But he can easily afford to do so with his investing abilities which are truly excellent. He has a plan and changes it as needed, but always started with investing in himself first and not spending every dollar that came his way. I think this to be the truth for him, but it also is what I have done as well. Start investing EARLY and count the dividends as time rolls along.
Anyway, a big thanks to Rich for providing his thoughts here and being a friend to many, and to me. Rose :))
God Bless to all.

[richjoy403]

Approaching the Dividend Space -- Part 2

These 3 dividend strategies tend to exhibit sector biases (illustrated below). Thus differences in sector weights can produce distinct return drivers and risks for each strategy.

The HIGH DIVIDEND YIELD strategy favors sectors with low valuations (like Energy and Financials) and sectors that distribute a high percentage of their cash flows (like Utilities).
The DIVIDEND GROWTH strategy favors historically low-dividend paying sectors like Health Care and Information Technology, which should have a greater capacity to increase dividends because of their lower starting point.
The QUALITY DIVIDEND strategy leans most heavily on Consumer Staples, which tend to be more resistant to economic downturns.

SECTOR COMPOSITION OF THE 3 DIVIDEND STRATEGIES -- Approximate distributions
(source: Bloomberg, as of 6/30/2017)

HIGH DIVIDEND YIELD
Consum Disc: 15%
Consum Staples: 13%
Real Estate: 12%
Financials: 25%
Health Care: 3%
Industrials: 5%
Materials: <1%
Energy: <1%
Info Tech: <1%
Telecoms: 4%
Utilities: 22%

DIVIDEND GROWTH
Consum Disc: 11%
Consum Staples: 16%
Real Estate: 3%
Financials: 15%
Health Care: 18%
Industrials: 13%
Materials: 3%
Energy: <1%
Info Tech: 17%
Telecoms: <1%
Utilities: 3%

QUALITY DIVIDEND
Consum Disc: 10%
Consum Staples: 20%
Real Estate: 4%
Financials: 3%
Health Care: 16%
Industrials: 12%
Materials: 1%
Energy: 5%
Info Tech: 18%
Telecoms: 5%
Utilities: 4%

[richjoy403]

Rose -- Are there USEFUL distinctions to be made among dividend-payers? As mentioned yesterday, I’ll summarize a professional-source document I found to contain interesting (and perhaps helpful) observations about dividends. A link to that document is at the end of Part 3.
_______________

Approaching the Dividend Space -- Part 1

Because many fixed income investments deliver historically low yields, many SDIs consider alternatives--especially equities offering both income and the opportunity for capital appreciation. Such as stocks and dividend-focused ETFs.

The majority of dividend strategies fall into the following three categories:
HIGH DIVIDEND YIELD,
DIVIDEND GROWTH, and
QUALITY DIVIDEND.

Below are the major differences between these categories:

HIGH DIVIDEND YIELD
a) Primary Orientation: Yield
b) Explanation: Stocks with high yields potentially increase a portfolio’s yield, while maintaining the opportunity for capital appreciation
c) Key Measure: High Dividend Yield

DIVIDEND GROWTH
a) Primary Orientation: Total Return
b) Explanation: Stocks that are likely to increase their dividends can appreciate in value while increasing a portfolio’s cash flow over time
c) Key Measures: High expected earnings growth and history of dividend increases

QUALITY DIVIDEND
Primary Orientation: Defensive
Explanation: Stocks that are likely to maintain their dividend payments across a variety of economic climates may provide more a portfolio more defensive characteristics
Key Measures: High return on equity (ROE) and High dividend coverage ratio

Below is a comparison of the 3 strategies based upon their Key Measures--Dividend Yield, Earnings Growth, and Profitability (ROE is a proxy for profitability), as of June 30, 2017.

HIGH DIVIDEND YIELD
.. Dividend Yield = 6.3% (highest)
.. Earnings Growth = 5.5%
.. Return on Equity = 12.8%

DIVIDEND GROWTH
.. Dividend Yield = 2.5%
.. Earnings Growth = 9.1% (highest)
.. Return on Equity = 19.9%

QUALITY DIVIDEND
.. Dividend Yield = 3.0%
.. Earnings Growth = 8.5%
.. Return on Equity = 23.4% (highest)

[User 40187946]

I think that you have too many holdings.

[RoseNose]

@WMX0102 - Many agree with you and say so.
Many agree I don't, and even have more...it depends on how much time and how much money you care to utilize.
Good luck with your <96. thanks for reading.
Rose :))

[Dividend Sleuth]

Rose,

Thank you for the update. You are the Queen of Consumer Stocks. Your portfolio gives us lots of study ideas. The GIS FAST Graph is intriguing. I hope you get a good bounce from GE.

Happy Investing!
Ted

[RoseNose]

@Dividend Sleuth - friend Ted,
Always great to have you stop by and comment. I so enjoy your investing articles and ideas, and don't always comment, but know I read them all.
GIS is just a basic core type safe holding. Not exciting, nor should it be. I don't know if I will get a bounce from the price or not, but want stability for the dividend and hope it continues with an excellent track record for it and the yield.
Happy Investing to you Ted and your wife!
and happy retirement too :)) Rose

[investor30s]

Thanks for another wonderful article. Always look forward to reading yours. TECHY is in my watch list. Hesitant to pull the trigger.

[RoseNose]

Thank you @investor30s and Tencent will most likely be a good one to own.
But when everyone thinks that, it is best to watch a bit first. I don't have a large holding. Good Luck ! Rose

[User 43034176]

@RoseNose
It is a always a great day over here to be able read your portfolio reports!

Share many of the same securities over here in the Portfolio of Power, and have the utmost respect for your market thoughts. :-)

I look forward to your work immensely and appreciate everything you do for all of us here on Seeking Alpha fortunate enough to call you a friend.

Thank you so much Rose!

[RoseNose]

@Blury8 -
Very sweet and kind comment. Thanks and much appreciated, it gives me encouragement to continue with my own commenting. So much to read and learn on SA, good luck to you and enjoy adding friends.
Best and Happy Investing :)) Rose

[Sleepless in the Alps]

Hey, Rose!

Another in a long series of seriously great articles that give everything and ask for nothing! Super!

Don't see how you can lose with your 96 stocks in really great companies, especially over the long term. Our portfolios are a bit more concentrated (Helga has only a half dozen in hers, and one single stock comprises 60% of it!) We believe however that for the average investor your method is a lot better.

Always appreciate your huge efforts, your BFFs,

Heidi, Helga, Clarissa and Desiree

PS: Notice you are long one of our all-time favorites, DEO. Of course you already know our life style, so it fits...

[RoseNose]

Hi @Sleepless in the Alps Girl friends of mine...and to Schnitzel too and his little darling (if you got him one)...hope all is well with you all.
Thanks for stopping by and such a nice comment, to continue to make me and many others smile. Is it 420 yet? lol, I hear that is the time to start smoking...at least for Tesla ...anyway, God Bless you all :)) Rose

[BluechipDividendHunter]

@RoseNose what is your take on SO?, seems to have lots of problems,tons of issues with Vogtle plant and its construction, but excellent yield at bottom price!!!, I see that you own it and may not be that happy right now, but seems to be at right price for a long term play?, thx again for all your wisdom and shares.

[RoseNose]

@BluechipDividendHunt... -
Yes + for SO. It is a buy right now. I do have plenty and agree it has seen happier days. I think the nuclear regulatory commission or EPA of something is causing great delays, but hopefully it will get the project finished in 2020 or so. Kind of a nightmare for sure.
I am long and intend on staying long. Best and thank you for the comment.

[JJeljefe]

This is impressive beyond belief. I'm always making a list to compare my holdings (and lack of) against yours -- really helps to see affirmation in DGI. Departing from dividends (and not being critical) you should start a small section called "Market Darlings" and comprise it with stocks like: AAPL, NVDA, AMZN, GOOGL, UNH, BRK.B, SQ, PYPL & so on. You could even equal weight each position & just average the total return -- It would be interesting.

[RoseNose]

@JJeljefe -
Interesting idea, but I don't even own any of those darlings...lol.
I might start one called #10 for all and easy investing...I appreciate the kind comment and thanks for reading my work.