The Brown Bag Portfolio June Review

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Includes: APLE, BP, D, EPD, EPR, IRM, MAIN, OXLC, T
by: Michael Hesse
Summary

A brief history of the Brown Bag Portfolio.

A frothy June produces good results.

Patience pays off: AT&T finally gains some traction.

A Brief History

Those of you already familiar with my monthly updates can jump down a couple of paragraphs. For those new readers, welcome! I started the Brown Bag Portfolio on July 5, 2016, with a $150 initial investment. At that time, I was in my early fifties and due to some severe medical issues and a costly divorce had practically nothing saved for my retirement. My 401(K) was non-existent and the $150.00 I used to open my brokerage account was approximately three-quarters of what was sitting in my checking account. Although I owned a house and had a new wife who (unlike the first) was financially thrifty, I had nothing saved for my rapidly approaching retirement.

July 5, 2016, was the day I started on a path towards, if not financial independence, at least a vastly more comfortable retirement. I began scrimping and saving. Instead of eating my lunches out (I'm a computer service technician with a very large district), I began packing my lunches each day. I started depositing my expense reimbursement checks into the brokerage account, instead of into my checking account, and I looked for savings everywhere I could.

I made mistakes at first. I chased stocks up and panicked when they came down. I began to doubt if I was doing the right thing. While I tried to gain a better understanding of the market and how things work, I discovered Seeking Alpha and started reading every article I could on the stocks that interested me. It was during this period that I discovered dividend investing and how to use the various dividend reinvestment programs (DRIP).

I needed something that would limit the emotional upheaval I felt every time a stock went up or down. Dividend investing provided that for me. With automatic reinvesting (DRIP), I pick up additional shares every time the dividend is paid and if the price is temporarily down, then I pick up a little larger slice. Additionally, my brokerage allows fractional shares when using their DRIP, so I get to take advantage of compounding interest.

After a year of investing and having fairly good results, at least I felt so, I decided to start writing articles for other new investors, documenting my journey. I strive to honestly report on everything I do, the mistakes and the successes so that others can learn from what I've done. Over the past two years of writing articles, I've gotten better about saving. After all my bills are paid, I take 90% of my discretionary income from all sources: paychecks, article sales, book sales, and occasional consulting work on the side, and pour it into my brokerage account. I also now contribute 8% to my 401(K) from my day job.

A Frothy June

June was frothy but produced better results for me than the month before. Every position I hold, except for EPR Properties (EPR), performed better than the month before. These results continue to reinforce my belief in dividend investing as the correct vehicle for me.

Brown Bag Portfolio

June 2019

Company Name

Ticker

Shares

Value

%Return

Div/Shr

Annual Div

Dominion Energy

D

41.91

$3,240.75

17.09%

$3.67

$153.80

Iron Mountain

IRM

86.43

$2,705.26

-7.04%

$2.44

$210.89

Apple Hospitality

APLE

228.91

$3,630.58

-9.94%

$1.20

$274.70

Enterprise Partners

EPD

243.10

$7,018.21

7.64%

$1.75

$425.43

AT&T

T

108.87

$3,647.80

-2.30%

$2.04

$222.09

EPR Properties

EPR

63.48

$4,734.97

14.26%

$4.50

$285.66

Main Street Capital

MAIN

76.09

$3,128.99

7.64%

$2.46

$187.19

Oxford Lane Capital

OXLC

100.01

$1,008.13

-0.59%

$1.62

$162.02

British Petroleum

BP

40.60

1692.85

-1.04%

$2.46

$99.87

Total

$30,807.54

1.10%

$2,021.64

Div Goal

% Goal

BBP Yield %

$16,800.00

12.03%

6.80%

Div Goal 2019

% Goal

$2,520.00

80.22%

As I do every month, I like to include what my real out of pocket costs are and the overall effects from dividend reinvestment.

Out of Pocket

as of June 30, 2019

Symbol

OOP Shares

$ OOP

Shrs frm Div

Div Rcvd

Current Value

Total Rtrn

D

40

$2,626.60

1.907

$142.73

$3,240.25

23.36%

IRM

85

$2,860.85

1.43

$49.33

$2,705.26

-5.44%

APLE

205

$3,618.28

23.914

$410.69

$3,630.58

0.34%

EPD

215

$5,766.99

28.097

$748.84

$7,018.21

21.70%

T

100

$3,453.42

8.857

$279.95

$3,647.80

5.63%

EPR

59

$3,839.26

4.48

$308.78

$4,734.97

23.33%

MAIN

70

$2,672.20

6.094

$232.62

$3,128.99

17.09%

OXLC

80

$810.40

20.013

$203.96

$1,008.13

24.40%

BP

40

$1,686.00

0.596

$24.60

$1,692.85

0.41%

Total

$27,334.00

$2,401.50

$30,807.04

12.71%

While it may still be a bit too early, June proved to be the month where AT&T (T) finally began to get some traction. Although it is still below my cost-basis, we are rapidly eroding that margin. Hopefully, this is a reflection of management's commitment to paying down debt and its ability to reduce costs.

I've frequently been tempted to sell AT&T over the past year. With a cost basis of 34 and change, it's been difficult to hold. The only reason I didn't double down when it slipped as low as 29 was due to the fact that it was already a substantial holding for me and some trepidation I had on my part as to management's commitment to reduce their massive debt. Right now, I'm feeling pretty good about holding off my worries, but anything can happen. I'll be listening in to their next quarterly report with bated breath. If I don't believe that management is going to continue to reduce debt, then this is the time to sell.

Next month will be my two-year anniversary writing for Seeking Alpha. I'll be giving a more in-depth examination of the Brown Bag Portfolio and include a few charts that clearly show how the portfolio has done.

Thanks for reading.

Disclosure: I am/we are long D, IRM, APLE, EPD, T, EPR, MAIN, OXLC, BP. 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.