Dividends And Side Hustles Portfolio - May 2019 Highlights

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Includes: ABBV, ACB, BEP, CAG, CIO, CNP, CWEN, EPD, GLW, MO, NWL, O, PLUG, ROST, SKT, SQ, T, TGT, UPS, VST, WBA
by: Chandra Miller
Summary

This is the first of many articles on Seeking Alpha highlighting my investment journey and covering my personal portfolio, "Dividends and Side Hustles."

Retirement is not my sole purpose for building this portfolio. While it is definitely a real money actual portfolio, I have a buy-and-hold indefinite time projection for three main reasons.

While much of the decision making for my selection criteria is technical (no emotional investing), there are other factors that directly relate to my knowledge as a consumer.

By categorizing my stocks into their respective sectors I can clearly see what areas I need to focus on to reach my goal of full diversification across all sectors.

Editor's note: Seeking Alpha is proud to welcome Chandra Miller as a new contributor. It's easy to become a Seeking Alpha contributor and earn money for your best investment ideas. Active contributors also get free access to SA Essential. Click here to find out more »

Dividend Word Cloud

Source: Wordclouds.com

This is the first of many articles on Seeking Alpha highlighting my investment journey and covering my personal portfolio, "Dividends and Side Hustles." The name is derived from the idea that reinvesting dividends from my stocks will assist in organically growing my portfolio. Any extra income earned from side hustles will also be used for portfolio growth along with predetermined regular monthly amounts allocated from my budget.

Investment Strategy, or "Building My Portfolio"

My strategy is as follows: To build a well-balanced and stable stock portfolio of monthly dividend income producing stocks purchased while under-valued, (on sale/discount), on a twice monthly interval that produces a minimum of 10% annualized growth per year.

I decided early on when developing my investment strategy that I would carry no more than 50 stocks across all sectors. They would be a combination of both value income producing dividend stocks of large-cap companies as well as growth stocks which may or may not be dividend producing at the initial time of purchase. No one sector allocation will dominate more than 15% of the overall portfolio. Now I realize for many individuals this may seem to be a large amount of companies to research and keep tabs on, but I enjoy the process of researching, reading financial statements and learning the nuts and bolts of what makes a company profitable. Also, many of the individual stocks I purchase are from companies that I'm familiar with, use their products and/or services and believe in their brands. In my head I'm convinced I'm recycling my dollars back to myself. While this is said in a joking manner, I honestly do believe this to be at least 50% true and it keeps me focused so as to continue.

My initial goal was to contribute at least $50 worth of capital per pay cycle in order to purchase stocks via one of my two broker accounts, Robinhood or Fidelity. Since I started back in October 2017 I've been amazed at my own personal ability to find extra money. I've become much more conscious with my shopping and started freelancing side gigs. This amount has now grown to $150 -$200 per pay cycle and will hopefully continue to grow as I am able to pay down more of my individual debt.

Piggy Bank and Planted Dollars

Source: ThinkStock

Someone is sitting in the shade today because someone else planted a tree a long time ago. - Warren Buffet

My Personal Whys

Retirement is not my sole purpose for building this portfolio. While it is definitely a real money actual portfolio, I have a buy-and-hold indefinite time projection for three main reasons:

  • Replacement of my payroll income from my full-time employer. While I do believe that Social Security benefits will remain an option for the future, my current estimated amount of monthly benefits would be $1375.00 USD monthly, ($2413.00 USD monthly if adjusted for inflation), if I choose to receive benefits at 62 years old. This would definitely not be enough for me to maintain my current standard of living. I would like the option to continue working past 62 years of age as a choice and not have that be deemed mandatory for myself because I can't afford to retire.
  • My second goal is to be able to provide a source of residual income for myself and ultimately my son through dividend payments as an inheritance. In setting up a trust fund and moving ownership of the assets of "Dividends and Side Hustles" Portfolio to the trust fund, he will be able to receive life-long dividend payments and preserve the value of the principal shares for 75% of the portfolio. It will also be bequeathed to any of his children and/or grandchildren, thereby creating intergenerational wealth and a legacy that will extend well beyond my years.
  • My third reason is to establish a non-profit/legacy family foundation with the remaining 25% of the assets from my "Dividends and Side Hustles" Portfolio. The goal is to utilize any dividend payments for art classes, music lessons, STEM labs, teen entrepreneurial classes, financial literacy and organic community gardens. These gardens will serve residents of food deserts as well as healing gardens that will assist patients in various forms of therapy in my home city and across the U.S.

Before I get started, please understand I am in no way suggesting the purchase of any stocks on my list. I am merely a single woman with a son in college who loves investing and researching stocks when I'm not reading, shopping, or trying out new recipes.

Selection Criteria

While much of the decision making for my selection criteria is technical (no emotional investing here), there are factors that are directly related to my knowledge and comfort level of the business as an everyday consumer. Obviously, there are certain sectors which this may not be possible, but I always look around at the everyday items I use at home or work. Also, when I'm researching a stock on my wish list I enlist my friends and family and annoy them with tons of questions to better my understanding of the brand.

  1. Am I familiar with the brand/company on a personal level?
  2. Do I currently use the brand or products from the company?
  3. Growth: > +10% annually for growth stocks and >+5% for value dividend stocks
  4. Dividend / Yield Rate: >+3% for quarterly dividends and >+5% for monthly dividends
  5. Forward P/E Ratio: < 25 (exception for REITS, MLP's and cannabis stocks)
  6. What is their economic moat of competitive advantage over their industry peers?
  7. Are they trading below their current intrinsic value, 50-day moving average, and/or 200-day moving average? (one of these needs to be a definite yes or it's not on sale and goes back to the wish list)

Personally, I'm not into following trends or the latest and greatest. I believe in tried and true. If ain't broke, don't fix it. I'm not about chasing the hottest stock or looking for the next get rich penny stock. If Warren Buffet or Peter Lynch methods of value investing works for them, then it should definitely work for me as well.

There are numerous stocks that pay dividends, but do they pay dividends on a consistent basis? Do they raise their dividends on a consistent basis? The Dividend Aristocrats and Nasdaq Dividend Achievers were the best starting grounds for myself. These lists carry blue-chip stocks with consistent dividend payers. Some may say they are boring stocks. But boring is OK when I'm growing my money tree. I don't need a lot of pomp and circumstance and I definitely don't want to give away unnecessary money in management fee's, which is why I tend to stay away from mutual funds. The Dividend Aristocrats and NASDAQ Dividend Achievers keep it simple. I like the "KISS" methodology.

While I do have a buy-and-hold investment strategy, if the dividend of any particular stock in my portfolio is cut or reduced I would definitely sell it. My goal is to grow my portfolio through income and growth. Capital appreciation is secondary behind passive income on my list of priorities.

Also, if there was some drastic change in brand portfolio, or management philosophy that went against my social values or ethics I would consider a sell of my position. Normally this isn't a big issue, but there are a few stocks that I disagree with morally and socially so I would never purchase them no matter how undervalued they are priced.

Monthly Stock Purchases and Sells

Purchase Date

Name

Stock Symbol

Shares

Purchase Price / Per Share

5/13/2019

Walgreen's

(NASDAQ:WBA)

1

$52.97

5/13/2019

Enterprise Products

(NYSE:EPD)

1

$28.75

5/12/2019

Aurora Cannabis

(NYSE:ACB)

1

$8.17

5/13/2019

Altria

(NYSE:MO)

1

$51.74

5/13/2019

AT&T

(NYSE:T)

1

$30.35

5/14/2019

Plug Power

(NASDAQ:PLUG)

2

$4.50

5/28/2019

Tanger Factory Outlet Center

(NYSE:SKT)

1

$18.15

5/28/2019

Conagra Brands

(NYSE:CAG)

1

$28.80

9

And the following stocks were sold:

Sell Date

Name

Stock Symbol

Shares

Sell Price / Per Share

5/2/2019

Newell Brands

(NASDAQ:NWL)

5

14.63

5/2/2019

Square

(NYSE:SQ)

1

67.78

I sold Newell Brands not because I don't believe in the stock, but because I want to spend more time researching their strategy for a turnaround. The company has taken several hits lately and has plummeted to new 52-week lows. They are also selling off non-core businesses to reduce their overall debt and closing 60+ Yankee Candle stores. I need to spend more time taking a deeper look into their financials. It was an emotional buy which goes against my investment philosophy so I have no technical background and reasoning for the purchase.

I only owned one share of Square stock and they don't pay dividends, so I sold it until I balance my entire portfolio across all sectors with dividend paying stocks. I need to have a technical reason for allocating any additional funds away from stocks that do carry dividend yields.

Sector Diversification

Sector Diversification

Sector

Shares

%

Consumer Defensive

15

22.39%

Consumer Staples

0.00%

Energy

7

10.45%

Financials

0.00%

Health Care

15

22.39%

Industrials

0.00%

Materials

0.00%

REIT

6

8.96%

Technology

18

26.87%

Telecom

6

8.96%

Utilities

0.00%

Total

67

100.00%

By breaking down my stocks into their respective sectors, I can clearly see there is much more work to be done to ensure that I reach my goals of being 100% diversified. This has created a new short-term goal for myself to create wish lists based on each sector where I have zero exposure. Those stocks and their respective sectors will be highlighted in future articles.

Current Portfolio Activity

Overall month up/down:

Which stocks were up: The top 3 performing stocks for the month of May 2019 were Target (TGT) (+3.41), Plug Power (+1.60), and City Office REIT (CIO) (+1.90%).

Which stocks were down: The 3 lowest under-performing stocks were Aurora Cannabis (-16.79%), Conagra (-13.31%), and Altria (-9.41%).

Dividend Payouts

Do you know the only thing that gives me pleasure? It's to see my dividends coming in. - John D. Rockefeller

May 2019 Dividend Payouts

Symbol

# of Shares

Industry

Amount

AbbVie (ABBV)

2

Healthcare

$2.14

ConAgra Brands

5

Consumer Defensive

$1.06

Enterprise Products Partners

6

Energy

$2.63

Tanger Factory Outlet Center

3

REIT

$1.07

AT&T

5

Telecom

$2.55

21

$9.45

Stock Watch List

My current short watch list is as follows:

  1. Clearway Energy, Inc. (CWEN)
  2. Vistra Energy Corp. (VST)
  3. Brookfield Renewable Partners L.P. (BEP)
  4. CenterPoint Energy (CNP)
  5. Realty Income (O)
  6. United Parcel Service (UPS)
  7. Corning (GLW)
  8. Ross Stores (ROST)

I plan to post further research on each stock in two separate articles later during the month of June. The first will be focused on renewable energy stocks and the second on stocks that will further enhance my sector diversification.

Other General, Yet Noteworthy, News

  1. AT&T is now accepting bitcoin payments via BitPay when paying cellular bills online. They are the first major telecom company to do so in the cryptocurrency arena. I'm definitely in it for the long haul with this high yield dividend player and will continue to purchase more shares.
  2. In keeping with their goals to launch even more in-house branded labels, Target just announced the launch of their own vegan beauty line, Versed. Since 2016 they've launched over 20 new private label brands to reinvent their brand portfolio. They are currently undervalued, which makes this dividend stock a continued buy in my portfolio.
  3. The FDA held their first hearing on regulating CBD. This is good news for Walgreen's as they announced their plan to sell CBD products in 1500 stores. CBD sales have been projected to surpass over $20 billion in the next five years. Legal cannabis is still in its infancy stages in the United States. While the stock is undervalued I'll continue to snatch up more shares.

Final Thoughts

I hope you have enjoyed reading my article and hopefully I may have inspired someone or sparked a flame of interest in investing and passive incomes. I do hope to receive feedback from the Seeking Alpha community. Any additional insight would be an added lesson during my journey.

Every month I will provide an update on The "Dividends and Side Hustles" Portfolio to track my progress. Please click the "follow" button at the top of the article so that you may continue to share in following my journey.

Be Blessed, Bountiful, and, Most Importantly, Fabulous!

Disclosure: I am/we are long KO, WBA, CIO, SKT, MO, IIPR, PLUG, ACB, EPD, T TGT, CAG, 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.