Nicholas Ward's Dividend Growth Portfolio: September 2023 Fair Value Update

Summary

• My passive income stream increased by 55.58% in July and 63.07% in August, pushing year-to-date dividend growth to 40.26%.
• I've been building my cash position in preparation for a market crash and taking advantage of high interest rates.
• I continue to buy stocks while also allocating savings to cash equivalents, and selectively reinvest dividends back into dividend growth stocks.
• Looking for a portfolio of ideas like this one? Members of The Dividend Kings get exclusive access to our subscriber-only portfolios. Learn More »

anouchka

It's been a couple of months since I've written a portfolio review.

I've been busy at work. I went on vacation last month (I recommend Ocracoke, North Carolina to anyone looking to take a relaxing break). And there have been a couple of persistent healthcare issues that I've had to deal with in my household (damn you, Lyme disease).

But, through it all, I can confidently say: these last couple of months have represented a couple of big steps towards financial freedom.

During July, my passive income stream increased by 55.58% on a year-over-year basis.

This was the best performance that I'd seen in years (only topped by some of the months in 2017 when my monthly income soared higher because of a significant capital infusion after a property sale).

But that record didn't last long.

In August, my passive income stream increased by 63.07%.

Nicks dividends (Nick's data )

These two months pushed my year-to-date dividend growth up to 40.26% (compared to the first 8 months of 2022).

This year-to-date performance is trending higher than I could have ever expected coming into the year; however, as I've said throughout the year, it's not because of organic growth.

Instead, this massive dividend growth is primarily due to asset allocation decisions.

Throughout the year I've been building my cash position every month, slowly preparing for the next recession/market crash.

Now that the broad market indexes have recovered from their 2022 lows (where I was aggressively allocating cash to the markets), I want to rebuild my bear market baskets so that I can take advantage of the next bout of macro weakness.

In the past, this wasn't a pleasant process. It had to be done, but it wasn't fun.

It felt pretty bad stashing cash away in my checking account that was yielding 0.04%.

These days saving feels great though.

I've moved all of my cash to a Fidelity account where their SPAXX money market fund yields nearly 5%.

Therefore, when I move savings into SPAXX at the end of each month it's akin to buying a safe, high yielding stock.

SPAXX has become my second largest holding and this allocation is growing every month.

This position will continue to grow so long as the markets continue to rally.

I know people love to hate Jerome Powell and the Federal Reserve for its hawkish policies over the last 24 months or so…but as a regular saver, I'm not complaining.

It feels pretty great to be able to build cash while also building my passive income stream. And while I know these high rates won't last forever, I'm content to take advantage of them while they last.

Theoretically, when the Fed pivots dovish it will be due to bearish signs in the economy (and/or stock market), so when rates start to fall on short-term bonds (which dictate the money market fund's yield) it should be a prime time to begin allocating these funds back into the equity space.

I don't know when this pivot will occur, but in the meantime, I'm sleeping well at night collecting 4.98% with a cash equivalent position in SPAXX.

Nick's Dividends (Nick's Data)

Speaking of sleeping well at night…that nice upward curve that's starting to form on the monthly dividend chart above provides me a lot of solace.

It shows that the compounding process associated with accumulating dividend growth stocks is working nicely.

The stock market goes up and down…but my income stream continues to trend higher.

That's what dividend growth investing is all about and I continue to be a believer in this strategy's ability to get my family where we want to go financially.

Despite 2023's Rally, There Are Plenty Of Opportunities In The Stock Market

Although I'm allocating capital to my cash position every month, I'm still buying stocks as well.

I want to get my cash/cash equivalents position up to the ~10% level, but I don't want to totally sacrifice the upside that equities (risk assets) provide over the long-term.

Each month roughly half of my available savings are being allocated towards SPAXX and/or short-term bond funds. The other half is still being allocated to blue chip dividend growth stocks.

What's more, I continue to selectively reinvest 100% of my dividends back into dividend growth stocks each month. With that in mind, I've made many trades since my most recent update. But, at this point in time many of those trades are outdated and no longer relevant and/or actionable for readers, so instead of talking about something that I did 60 days ago, I decided to update all of the fair value estimates across my holdings and provide readers with those.

As always, you're free to take these estimates with a grain of salt, but they're what I'm basing portfolio management decisions off of at the moment.

And I think it's a pretty good time to provide this update because it makes sense to refresh many of the old estimates given that we're close enough to the end of 2023 to start to prioritize 2024 expectations.

Remember, what's in the past is in the past.

Stocks are generally priced upon the expectation of future cash flows (and they should be).

And while I don't want to speculate too much when it comes to pricing in future growth, I think there's adequate visibility (barring a significant black swan event) into 2024 right now to start basing FV estimates off of next year's expectations.

Before you take a look at these estimates, remember that these fair values aren't necessarily price targets for future purchases.

Only the highest quality stocks in my portfolio/on my watch list don't require a margin of safety to be bought.

For the most part, I'm only looking to buy stocks at a discount.

What I deem to be an appropriate discount will vary from company to company based upon my long-term growth outlook.

Also, managing single stock risk is important to sleeping well at night, so generally speaking, once I have built a "full" or even an "overweight" position, the margin of safety requirements to add more shares expand in an effort to reduce overall risk.

Everything is a balancing act…between quality, value, and asset allocation…when it comes to managing my portfolio.

But, I think establishing fair values across one's holdings is the first step to being able to make informed decisions in the market and therefore, performing this exercise periodically, no matter how tedious it might seem, is paramount to making sound, rational, intelligent trades.

So, with all of that being said, here are my holdings, my cost basis numbers, my current position weightings, current share prices, and my updated fair value estimates.

Nicholas Ward's Dividend Growth Portfolio

Core Dividend Growth			53.90%
Company name	Ticker	Cost basis	Portfolio Weighting	Current Share Price	Fair Value Estimate
Apple	AAPL	$22.79	8.76%	$179.29	$145.00
Microsoft	MSFT	$72.84	4.30%	$328.80	$264.00
Broadcom	AVGO	$234.30	3.84%	$850.83	$735.00
BlackRock	BLK	$462.83	2.05%	$696.87	$775.00
Starbucks	SBUX	$48.10	1.64%	$96.29	$102.00
Qualcomm	QCOM	$76.44	1.63%	$113.05	$138.00
Comcast	CMCSA	$38.54	1.58%	$45.68	$63.00
Johnson & Johnson	JNJ	$114.02	1.49%	$161.86	$186.00
Lowe's	LOW	$148.99	1.48%	$218.37	$263.00
Cummins	CMI	$217.77	1.28%	$236.86	$300.00
Merck	MRK	$73.71	1.24%	$107.30	$125.00
PepsiCo	PEP	$97.58	1.15%	$178.93	$170.00
Lockheed Martin	LMT	$354.14	1.07%	$429.43	$480.00
Broadridge Financial Services	BR	$148.90	1.05%	$185.78	$168.00
Deere & Co.	DE	$347.85	1.00%	$413.08	$490.00
Parker-Hannifin	PH	$255.96	0.99%	$397.10	$385.00
Cisco	CSCO	$23.80	0.98%	$56.01	$57.00
Raytheon Technologies	RTX	$80.22	0.95%	$76.11	$96.00
Canadian National Railway	CNI	$114.55	0.95%	$115.70	$122.00
Texas Instruments	TXN	$110.11	0.90%	$163.09	$166.00
Honeywell	HON	$126.18	0.85%	$194.38	$202.00
Amgen	AMGN	$136.07	0.85%	$262.71	$282.00
Brookfield Infrastructure	BIPC	$31.06	0.81%	$37.36	$44.00
Coca-Cola	KO	$40.25	0.80%	$57.77	$62.00
Essex Property Trust	ESS	$223.54	0.76%	$225.01	$255.00
Illinois Tool Works	ITW	$130.90	0.73%	$238.04	$207.00
Air Products and Chemicals	APD	$234.91	0.73%	$300.87	$287.00
Hershey	HSY	$213.40	0.71%	$211.06	$235.00
Brookfield Renewable	BEPC	$33.49	0.69%	$27.84	$39.00
Ecolab Inc.	ECL	$143.58	0.65%	$176.60	$170.00
Bristol Myers Squibb	BMY	$49.47	0.65%	$58.60	$79.00
Brookfield Corporation	BN	$29.89	0.63%	$35.91	$42.00
Camden Property Trust	CPT	$113.04	0.62%	$102.34	$126.00
L3Harris Technologies	LHX	$192.50	0.58%	$175.27	$215.00
AvalonBay Communities	AVB	$163.23	0.58%	$182.69	$203.00
Linde	LIN	$350.18	0.55%	$387.86	$350.00
Diageo	DEO	$133.15	0.52%	$157.66	$175.00
Northrop Grumman	NOC	$385.78	0.45%	$440.06	$423.00
Rexford Industrial Realty	REXR	$52.11	0.42%	$52.00	$63.00
Prologis	PLD	$118.30	0.41%	$123.40	$118.00
Sherwin Williams	SHW	$219.30	0.38%	$259.93	$263.00
Digital Realty	DLR	$49.87	0.34%	$129.11	$122.00
Republic Services	RSG	$123.71	0.30%	$149.58	$142.00
Alexandria Real Estate	ARE	$130.96	0.27%	$112.25	$154.00
Waste Management	WM	$158.83	0.25%	$160.36	$160.00
Hormel	HRL	$42.99	0.25%	$37.90	$38.50
Carlisle Companies	CSL	$228.31	0.23%	$273.12	$302.00
Medtronic	MDT	$76.02	0.22%	$82.95	$91.00
McCormick	MKC	$35.71	0.20%	$79.57	$70.00
Mid-America Apartment	MAA	$163.02	0.14%	$137.03	$163.00
Automatic Data Processing	ADP	$223.34	<0.10%	$247.20	$250.00
McDonald's	MCD	$232.10	<0.10%	$277.44	$273.00
High Yield			9.90%
Realty Income	O	$62.34	1.62%	$54.11	$67.00
British American Tobacco	BTI	$37.50	1.08%	$33.55	$45.00
AbbVie	ABBV	$79.08	1.07%	$153.32	$141.00
W.P. Carey	WPC	$65.23	0.97%	$63.71	$77.00
Enbridge	ENB	$39.33	0.89%	$34.98	$43.00
Agree Realty	ADC	$65.85	0.88%	$59.41	$70.00
Toronto Dominion Bank	TD	$65.06	0.61%	$61.80	$69.00
Altria	MO	$44.30	0.56%	$43.42	$52.00
National Retail Properties	NNN	$38.40	0.56%	$38.16	$53.00
Federal Realty Investment Trust	FRT	$114.86	0.50%	$97.51	$114.00
Pfizer	PFE	$38.25	0.46%	$33.66	$41.00
Crown Castle	CCI	$140.53	0.42%	$98.94	$124.00
Royal Bank of Canada	RY	$100.18	0.28%	$91.32	$103.00
High Dividend Growth			13.17%
Visa	V	$102.40	2.56%	$243.86	$256.00
Nike	NKE	$62.68	1.09%	$96.00	$93.00
UnitedHealth Group	UNH	$484.60	1.07%	$485.75	$504.00
MasterCard	MA	$90.44	1.00%	$416.88	$407.00
Accenture	ACN	$270.99	0.95%	$315.30	$287.00
S&P Global	SPGI	$338.61	0.90%	$390.01	$365.00
Home Depot	HD	$250.58	0.88%	$319.20	$309.00
Danaher	DHR	$240.13	0.86%	$254.26	$225.00
Thermo Fisher	TMO	$541.81	0.81%	$510.67	$540.00
Intercontinental Exchange	ICE	$97.23	0.61%	$115.95	$135.00
Zoetis	ZTS	176.61	0.47%	$181.25	$175.00
ASML Holding	ASML	$643.47	0.44%	$595.93	$690.00
Booz Allen Hamilton	BAH	$75.49	0.39%	$112.22	$102.00
MSCI	MSCI	469.41	0.39%	$533.43	$450.00
Moody's	MCO	$329.85	0.29%	$344.48	$285.00
Carrier	CARR	$32.67	0.25%	$54.88	$51.00
Agilent Technologies	A	$117.41	0.21%	$113.17	$125.00
Non-Dividend			7.04%
Alphabet	GOOGL	$44.34	4.77%	$138.58	$147.00
Amazon	AMZN	$88.17	2.09%	$139.96	$213.00
Salesforce	CRM	$233.58	0.18%	$215.09	$281.00
Palantir	PLTR	$10.79	<0.10%	$15.43	n/a
Special Circumstance			7.74%
NVIDIA	NVDA	$54.97	3.04%	$437.64	$525.00
Walt Disney	DIS	$91.92	1.26%	$85.59	$107.00
Blackstone	BX	$95.86	1.19%	$113.98	$120.00
Owl Rock Capital	OBDC	$13.64	0.84%	$13.86	$15.26
CME Group	CME	$183.73	0.46%	$206.89	$202.00
Main Street Capital	MAIN	$39.25	0.39%	$41.16	$41.00
Ares Capital Corp.	ARCC	$17.26	0.29%	$19.28	$22.00
Brookfield Asset Management	BAM	$23.67	0.16%	$36.10	$39.00
Otis	OTIS	$58.65	0.11%	$81.85	$69.00
Cash Equivalents			8.20%
Fidelity Treasury Money Market Fund	SPAXX	$1.00	6.00%	$1.00	n/a
WisdomTree Floating Rate Treasury Fund ETF	USFR	$50.40	1.47%	$50.45	n/a
SPDR Bloomberg 1-3 Months T-Bill ETF	BIL	$91.63	0.73%	$91.65	n/a
Cash			0.05%
Most	Recent	Update:	09/18

Click to enlarge

Bonus Material

Since this update was a month late, I decided to provide readers who made it to the end with an added bonus.

I don't often discuss my watch list.

These days, I'm actually looking to get a bit more concentrated into my highest conviction ideas, so it's going to take a lot for me to start building up a position into a company that I don't already own.

But, there are still many wonderful, wide moat companies that are great at compounding their fundamentals, as well as their dividend payments that I don't own…and therefore, I think it's fair to say, "never say never" when it comes to establishing new positions.

With that in mind, here are the 3 stocks currently sitting atop my watch list with updated fair value estimates as well.

Bonus Watch List
Company name	Ticker	Cost basis	Portfolio Weighting	Current Share Price	Fair Value Estimate
General Dynamics	GD	no position	no position	$225.49	$225.00
Canadian Pacific Kansas City	CP	no position	no position	$79.40	$79.00
FactSet Research	FDS	no position	no position	$428.55	$416.00

Click to enlarge

Conclusion

Overall, fundamental growth is expected to be solid over the coming year for the vast majority of my holdings. With that in mind, fair value estimates are rising (I base these figures off of the most recent company guidance, consensus analyst estimates, specific, trusted analysts with proven track records, and my own, sort of under-the-hood work on these companies).

As time moves on, these estimates ebb and flow as fundamentals change. But right now, at least, it appears as though there are plenty of good bargains out there for investors to continue to accumulate.

These are bargains that compound their earnings, their dividends, and ultimately, their shareholders' wealth.

It's a great time to be a dividend growth investor!

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/we have a beneficial long position in the shares of A, AAPL, ABBV, ACN, ADC, ADP, AMGN, AMZN, APD, ARCC, ARE, ASML, AVB, AVGO, BAH, BAM, BEPC, BIPC, BIL, BLK, BMY, BN, BR, BTI, BX, CARR, CCI, CMCSA, CME, CMI, CNI, CPT, CRM, CSCO, CSL, DE, DEO, DHR, DIS, DLR, ECL, ENB, ESS, FRT, SPAXX, GOOGL, HD, HON, HRL, HSY, ICE, ITW, JNJ, KO, LHX, LMT, LOW, MA, MAA, MCD, MCO, MDT, MKC, MO, MRK, MSCI, MSFT, NKE, NNN, NOC, NVDA, O, ORCC, OTIS, PEP, PFE, PH, PLD, PLTR, QCOM, REXR, RSG, RTX, RY, SBUX, SHW, SPGI, TMO, TD, TXN, USFR, UNH, V, WM, WPC, ZTS either through stock ownership, options, or other derivatives. 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.

Comments

[User1117913587020187]

@nicholas @nicholas Ward @nicholas Ward www.facebook.com/...

Here you go. Since you're so big on investment income, Phoenix Capital Group promises 8% - 12% annual returns. "Equity-like returns, no equity-like volatility."

[Nicholas Ward]

@User1117913587020187 beware of promises that seem too good to be true.

[Cash Flow Assets]

I was busy buying Hershey now I am busy buying Pepsi. Pepsi has always done well for me. Now Hershey and Pepsi both pretty much 25 percent each in my portfolio with 10 percent in J&J and 5 percent each in P&G, Coke, Berkshire Hathaway, Google, Visa and Stryker. Rest 10 percent In Starbucks, Macdonald, Microsoft, Amazon, Apple, Nike, UNP, Disney, O, MO etc.

[Nicholas Ward]

@Cash Flow Assets Yeah - I think PEP and KO are both attractive after today's sell-off. They're climbing up my watch list. Very boring stocks, but I like having defensive holdings like this for when times get tough.

[Three Wood Capital]

Great update. Looks like we're in sync on somethings (beginning to allocate new capital to our top positions/highest conviction ideas). My portfolio has undergone an overhaul the last few months as I've reduced the amount of names and consolidated into higher conviction ideas (MCO, SPGI, V, MA, MSFT, CP, CNI, etc). In essence, got tired of reading earnings reports/following companies that I was not as bullish on as others. I'm jealous of your full time job providing you the opportunity to follow a wide universe of stocks.

[Nicholas Ward]

@Three Wood Capital yeah - it seems like we've reached similar conclusions at similar times. Great minds. I've def. spent time recently determining what positions are truly core to my long-term strategy and which stocks I'd be happy to sell/trim into strength. Unfortunately, the market has sold off recently, so I'm less likely to sell into weakness. But if we get a strong Santa Claus rally this year, don't be surprised to see me cutting ties with companies and lowering my position count a bit.

[Three Wood Capital]

@Nicholas Ward Are you rethinking your "full" position size as well then? I think you typically have is roughly around 2%, with anything over that being "overweight". Do you see yourself still sticking to that framework or maybe bumping full position to 2.5% and having those top ~10 names being closer to 3-4% weighting each?

[Nicholas Ward]

@Three Wood Capital not really - it's more about taking my highest conviction long-term ideas overweight. So yeah, I will probably end up with more 2.5%+ weighted positions, but it will be a select few. Basically, my plan is to focus the majority of my new capital additions to the portfolio over the next couple of years into a more focused group of stocks. Over time, this should elevate their weightings and make their performance more impactful long-term.

[User1117913587020187]

@Nicholas Ward @Nicholas Ward I thought you're an owner of both Novo Nordisk and Meta? What happened to them?

[jlipps]

@User1117913587020187 I think he sold them last summer.

[Nicholas Ward]

@User1117913587020187 I used to own shares of both companies - I sold them awhile ago though.

[User1117913587020187]

@Nicholas Ward Any reason why you're not longer term bullish on them anymore? Wondering more about META than Novo.

[User1117913587020187]

@Nicholas Ward @Nicholas Ward @Dividend Ambassador @BM Cashflow Detective Why is AXP not in your portfolio? If it's good enough for Uncle Warren, I think it's worth a second look. It's at a pretty reasonable valuation, at the moment.

[Nicholas Ward]

@User1117913587020187 I prefer V/MA's toll booth-like business models in that space. And since I have large positions in both, I don't feel the need to add another player from that industry. AXP is cheaper, but its growth prospects aren't quite as strong, nor as its financial as attractive as a V/MA (IMHO). And being that I think V is undervalued right now, that's where any $$ that I'd want to allocate towards a financial stock would go right now.

[User1117913587020187]

@Nicholas Ward I disagreed with your perceptions on BMY's future growth prospects and I disagree with AXP here, as well. If the financials of AXP passes Uncle Warren's sniff test, it's good enough for me.

The problem is the future is not completely knowable, you could be right or I could be right.

Same with approximating fair value. I believe there's a quote about being "precisely wrong" saying fair value is more of a range. I believe V might be around fair value and it's come down from overvaluation, but I don't find V to be cheap at all.

[BM Cashflow Detective]

@User1117913587020187
$MA is my largest position in many years and it wouldn't be an exaggeration to say that I love the business model and fundamentals.

Mastercard's Cash Return On Invested Capital (CROIC) of 53.1% ranks in the 96.5% percentile for the sector.

Boy oh boy, what could be better in this world and in your own portfolio?!

The only problem is that “everyone” already knows it. A small dip doesn't change anything significantly. Smart calculators notice this very quickly and it significantly reduces the value of the share.

Due to combined valuation methods such as relative value and DCF value, the share is overvalued at 29%.

This means a huge 5y margin of risk of -7.09% CAGR.

You should really think about buying it ten times. If that's enough?!

$V is been my second largest position for many years. The love here is only slightly lower.

Visa's Cash Return On Invested Capital (CROIC) of 31.4% ranks in the 94.2% percentile for the sector.

However, this stock is even more overvalued at 35%.

Keep thinking about Chuck Carnevale's mantra.

"Valuation matters and it matters a lot!"

$AXP is one of my middle portfolio components. Unfortunately, the value of this potentially good investment is often underestimated.

American Express Cash Return On Invested Capital (CROIC) of 20.9% ranks in the 89.2% percentile for the sector.

The financial sector average, on the other hand, is only a measly CROIC of 8.8. Still questions?!

A really efficient and effective cash cow that is not worth overlooking.

Especially the current undervaluation with around 44% for “too” extreme pessimism.

This results in an extremely advantageous 5y valuation reversal potential of 12.30% CAGR.

The point is that many investors always view potential investments as being a little too disadvantageous in absolute terms rather than something more advantageous in relative terms. Understood?!

But the stock market is colorful and I am an enthusiastic accumulator of cheap and very colorful CROICs.

Well-done value investing is so simple. You just have to do it.

[jtag5]

I think I recall you mentioned Target (TGT) was on your watchlist when it had its initial drop down to ~130. No position yet? Been watching patiently and thinking of going long myself soon.

[Nicholas Ward]

@jtag5 I've decided to keep my distance from the retailers, in general. I recently added to AMZN which hits that industry. And I own large stakes in LOW and HD. That's good enough for me - I don't really consider big-box retailers as wide moat companies.

[steve7074]

@Nicholas Ward I agree with most, but am glad to own Costco, though it isn’t buyable very often. Proud owner since $350. I, also have come around to Kroger, but especially recommend Costco.

[Nicholas Ward]

@steve7074 I'd love to own COST...but like you said, it's nearly always overpriced (IMO, at least). Obviously, I should have just bought shares years ago...I've just never been able to justify a 30x+ multiple on a physical retail stock.

[alla_al]

I more active with my cash then you. I buy T bills or CD for max for 6 weeks of duration (mostly 1 month). 6 months ago I consolidated my 2 brokerage accounts, I moved my positions from schwab to etrade bc etrade was more user friendly and conveniently. Then once etrade and morgan stanley merged - etrade got worse with Tbills (i cannot buy if i have less then 10k) and rates are not so great, and they never had great CDs. Once I have matured funds I transferred my cash back to schwab. schwab has better price for tbills and CDs! I recently got 5.5% CD for 1 month. schwab also let me invest right away once I initiate transfer even when it was >50K transfer. I have Fidelity too and their CDs are not as best as schwab. So instead of holding my cash in MM fund I am getting .5% more in best case and .3% in worse case. I use google reminders to know when maturity will happen. To reallocate money again take 5 mins only. I have maturity happens almost every 2 weeks.

[Nicholas Ward]

@alla_al Nice! I've been too lazy (and busy) to add building bond ladders to my weekly schedule. But it seems like I should probably find the time because you're generating ~50 bps more yield than I am with your strategy.

[alla_al]

@Nicholas Ward Believe me you won't regret! I found of the benefits of paying attention on yield more then 10y ago! When I calculated how much I got per year with min effort I was motivated to do even more to see what my money do and where they go. Especially it works and you see the results in such env as we have right now. Even my hubby finally got onboard! It's hard too start and easy to follow. I don't bother to create a ladder (extra effort to think and manage it) bc it's just savings, I go with better deal, that's it. I keep it simple:)

[alla_al]

@Nicholas Ward I am seeing in schwab 2 CDs. I don't see what I bought anymore, it's sold out.
State Bank of India NY 5.5% CD 10/27/2023
Santander Bank N.A. DE 5.5% CD 10/30/2023

[RoseNose]

Hi Nick!
Enjoyed the list, as you have many of the stocks I also own or would have interest in.... MO is a stand out as a bargain and great yield, but then its tobacco and many don't want it for the reason even though its legal. (just like alcohol and McDonalds food)..I am sure you will be updating WPC with the latest announcement.
Gotta Love, love love AVGO... amazing in many ways, Happy one to own and buy when we did.
Have a great fall and hope the family is doing well.
Happy Investing , Rose:))

[steve7074]

@RoseNose McD food, I never get that one. Some will mention KO & PEP, everything in moderation.
In tobacco, I own PM. They seem the best equipped to get tobacco users off nicotine. Yield is great, wish they could get some growth.

[RoseNose]

@steve7074 : I own all of those dangerous stocks... PM, MO and BTI; KO, PEP, MCD ... Hope all is good with you. Have a great week. Rose:))

[Nicholas Ward]

@RoseNose Yeah - I sold out of WPC on the day that the dividend "reset" was announced. That will be reflected in the next update.

[extramoney]

What's your take on the WPC spin off?

[Nicholas Ward]

@extramoney I'm not happy about it - just about anytime that a company announces plans to cut the dividend, I sell. And looking at the report, that's what WPC is planning on doing here...using this spin-off to reduce the dividend by ~20-25%.

[User1117913587020187]

Sharing huge double digit dividend growth every month may seem impressive, but it doesn't mean anything if you don't disclose dollar amounts. I know why it's the case for you and I explained it to someone on your recent AMZN article asking you to post audited statements, but still. Your growth numbers and charts are only useful to you because only you know what it really means, whether it's going to ultimately mean you meet your financial goals and achieve financial freedom or not.

You can have 50%+ dividend growth period after period and fall short of meeting your goals, which no one even knows what those are either.

[Nicholas Ward]

@User1117913587020187 I've stated many times before that my goal is to generate double digit annual dividend growth. Doing that will allow me to reach my financial goals...anything above 10% is a cherry on top and simply accelerates the journey towards financial freedom. If interest rates remain "higher for longer" as many analysts (including myself) think, then I could end up retiring much sooner than expected.

As for sharing the extent of my wealth online with strangers...that's a no-go. I see no benefits to doing so and I prefer to discuss all of my trades in percentage terms to protect my family's privacy.

[JazzPaw]

In my view, interest rates have nearly peaked, but I don’t see the pivot on the horizon, yet. The labor markets are still tight and wage inflation is going to continue to drive inflation at a 3.5+% rate for a while. The Federal Reserve will not lower interest rates until the inflation rate takes another significant drop toward the goal.

My dividend producers are going to be fine, although there won’t be bull market to enjoy for a while. My speculative companies have been hammered to multi-year lows, but luckily I don’t have much money in them. I’m reallocating some of those speculative funds to my long term winners with growing dividends. The no-profit tech sector is out of favor and will stay that way until inflation is tamed.

[Nicholas Ward]

@JazzPaw I think it all depends on your time horizon.

Regarding rates, I think you're probably right. I don't think we'll see many more raises...but I also don't expect to see the Fed cut for awhile either.

[Eli73]

Thanks for sharing your portfolio. You probably have more holdings than I could manage but diversification is a very personal thing.
I especially like your high growth names, and am looking at layering into some of them as they approach buy levels, DHR, TMO, MSCI, SPGI.
I wondered what you would consider the minimum number of stocks to achieve diversification? ( although I understand that not everyone needs to be “diversified per se).
Keep up the good work!

[Nicholas Ward]

@Eli73 Honestly, I think it comes down to personal preference, like you said. For me, once I identify a secular growth trend and an industry that I want exposure so, I feel more comfortable forumating fair value estimates for the blue chips in the industry and trying to build positions in all of them. For instance, I own V and MA...DHR, TMO, and A...SPGI and MCO...I don't think it's really possible to pick which one is going to be the out performer over the long-term so I just buy them all.

[Eli73]

@Nicholas Ward thanks, I think that’s a great strategy. It’s definitely hard to pick the winners. Best wishes.

[steve7074]

@Nicholas Ward I do that sometimes, figuring I can sell the weaker one later on if wish. Still own HD & LOW.

[SCBruce]

Is there a mutual fund or EFT that is anywhere close to this portfolio? It'd be nice to not have to buy each individual stock to get this overall benefit(s).

[steve7074]

@SCBruce Plenty of them. Do the research on some. Might take buying a growth & a value. Their holdings are available. JEPI, JEPQ, SCHD could be a good start.
I agree with your premise even though I own a chunk, probably one half the number, which I would like to reduce.
His current price & fair value could also be a good source for individual buys.

[Nicholas Ward]

@steve7074 SCHD or VIG probably fit the mold best (IMO). But, the problem with buying ETFs (once again, IMO) is that you're forced to buy the good with the bad. The overvalued and the undervalued...higher quality stocks and lower quality stocks. I prefer to pick and choose the best companies at any given point in time. But, I also acknowledge that it's a lot of work and requires time/energy that others may not have/want to dedicate to the market. Overall, VIG is my favorite DGI ETF.

[SCBruce]

@steve7074 great advice. I was thinking the same thing picking out the ones selling below fair value

[labman106]

Thanks for the timely article. Lymes disease. I live in WI which has deer everywhere. Have a herd just half a mile from my house, and they roam the back yards at night. Make sure you see a specialist for treatment. Most MDs do not have the experience with the disease. The best for you.

Wonder it you are considering selling DIS and Black Rock holdings? These are way to political for my blood. Their internal culture is way too political and can continue to rock havoc no matter what the CEOs are saying to assuage stock holders.

[Nicholas Ward]

@labman106 we have seen a specialist (it was for my daughter, not me, which made it worse watching her suffer).

I think BLK is a very solid DGI stock and I have no plans to do anything but buy into weakness (IMO, the moat is very wide).

DIS, on the other hand, has been a pretty big disappointment. Not because of political issues, but simply because of its problems with cash flows...no one is making money streaming and the entertainment has quickly become a low margin business. If DIS were to rally, I'd likely sell the rest of my shares and move along (I already trimmed DIS once when they but the dividend several years ago). Honestly, I thought they would have reinstated it by now, but I definitely underestimated how hard the streaming business is.

[User1117913587020187]

@Nicholas Ward DIS got on my watchlist several years ago and it finally got cheap, but now that it has I don't seem to be buying.

[Nicholas Ward]

@User1117913587020187 if DIS was still paying a growing dividend I'd be much more bullish here. But without the dividend I'm not the stock's biggest fan. I am hoping to return to Orlando with the kiddos again next year so never fear, the Ward family will do our best to support annual sales figures.

[Sharepro]

Thank you Nick for the update. Together with Sebastian Wolf you're my favourite author on SA. I left DK recently. Besides your channel the platform became meaningless to me. Thus it's great to get updated information from you. All the best to you and your family.

[Nicholas Ward]

@Sharepro thanks for stopping by. I know that a lot of readers look forward to the monthly updates so I def. plan to continue to publish them moving forward. They usually get pushed to the back burner when other work pops up, but eventually I'll get to them :)

[Cash Flow Assets]

I bought lots of Hershey and Pepsi this month. They are 25% and 20% of my portfolio. I had no allocation to REITS so I added O and WPC this morning and bought RTX after mini crash. No buy for you last month?

[Nicholas Ward]

@Cash Flow Assets I've made a bunch of trades - I just figured that most of them were too old to be actionable. I August I sold VZ, STZ, and CMG...and bought CNI, HSY, SPGI, MCO, and NVDA. In July I sold DPZ, PYPL, and trimmed BMY...and bought CNI, CPT, and NNN.

[Cash Flow Assets]

@Nicholas Ward I would have kept CMG. I studied in detail when the stock was trading under $300 when there were food quality issues over six years ago or something. My dentist asked me which stock I should buy and I said CMG (but I never bought it for myself for whatever reason). Fast forward our dentist mentioned it a few months ago and he is up over 600 percent on big position.

[Nicholas Ward]

@Cash Flow Assets Yeah, it's a solid company, for sure. But, I was looking for stocks to sell in an IRA (where I can't really add money to anymore due to income levels) so that I could buy more CNI and CMG/STZ were the easiest sales...locked in profits of 46% and 49%, respectively, and I think both stocks are a bit expensive after their recent rallies. What's more, outside of scale, I'm not sure that fast food brands have a competitive moat. They're dependent on brand awareness and consumer tastes (which are very fickle). I'm doing my best to focus on attention (and $$) on the widest moat companies/compounders these days.

[amegalo]

Nicholas, a nice article as usual.. I too am enjoying a 5% plus in a money market fund as well. I use SWVXX.. I also am allocating some cash to high yield stocks, MO, VZ and XSHD (an etf.)
Cash seems to be the easy way to go but in the long term buying undervalued stocks will prove to be fruitful. I noticed GD on your watch list.. I bought a tiny bit in 2020 for about $144/ share.. I wish I bought more back then but it was a tough investing environment.
That proves when you have faith in an undervalued stock , time will be your friend..
Take care and I’ll watch for future updates.

[Nicholas Ward]

@amegalo agreed - this is the first time that I've had access to high yielding cash equivalents and it's really nice. I'm also saving up for major home renovations right now and it's really cool to make ~5% on those funds while we wait for the contractor to get their ducks in a row.

[amegalo]

@Nicholas Ward yeah it’s nice to have income from investments.. I just had my deck renovated, paid for by dividends from my after tax account , with still some money left to earn more income.

[jlipps]

I notice some of your positions are currently priced under your acquisition cost (HSY, O, CRM, ADC, A, ASML, TMO, RY, CCI, PFE, FRT, MO, TD, ENB, WPC, BTI, MAA, HRL, ARE, LHX, CPT, BEPC, RTX). How are you prioritizing your dividend reinvestment to lower your cost basis for these positions?

I am actually in a similar boat with ADC, O, ASML, CCI, MO, & ENB.

[Nicholas Ward]

@jlipps some of them are high priorities (such as HSY). Others are disapointments (due to poor fundamental growth). I'm not interested in adding to stocks that have lower quality scores. Those are names that I'd consider selling/trimming if/when they rally. At this point in time, I'm most interested in accumulating shares of the highest quality companies on Earth (I'm not interested in sacrificing quality for value).

[jlipps]

@Nicholas Ward which position is #1 on your chopping block due to low quality?

[Nicholas Ward]

@jlipps this morning I sold WPC because of the dividend "reset" news (in other words, a cut). So I guess that's the answer.

[bill h illify]

Good read and much appreciated. Very impressive results. Been slowly building a position in CP recently. Keep on staying on.

[Nicholas Ward]

@bill h illify thanks! CP is definitely on my shopping list night now. I'm in the process of finishing my basement (which is going to cost a pretty penny). But, once I figure out how much $$ I have to allocate towards the portfolios, CP is def. a high priority target.

[bill h illify]

@Nicholas Ward
Good luck on that basement. I did that about 15 years ago with my dad and father in law, was fun but definitely time consuming. It was well worth it and I’m sure you will find it to be as well.

[Nicholas Ward]

@bill h illify I wish I had the know-how to do it myself. It would save me a lot of $$. I'll be contracting the work out...I'm not handy enough for a big job like that.

[steve7074]

SPAXX is Fidelity’s lowest yielding MM. you can open SPRXX, which yields 5.05%, there is even a premium which takes $10,000 to open, yields 5.17%. On stock buys & sells, Fidelity automatically moves these to the sweep for settlement, Not all brokerages run their MM so smoothly.
Love Fidelity.

[EPata]

@steve7074 I wonder if Merrill has an equivalent MM fund otherwise I would move some of my cash to Fidelity.

[steve7074]

@EPata I did that a year ago August. Merrill has a premium MM, yielding a little less, but takes $100,000 to open
I was with Merrill for about 4 years. Your broker or you have to move your MM to your sweep account after your purchases.
Fidelity is so much better than Merrill. Also allows buying. & selling partial shares. You can also meet at their office, Merrill only seems to do that for Wealth Mgt Accounts

[Nicholas Ward]

@steve7074 interesting - I'll need to check. I used to have more core position if FZFXX because its yield was slightly higher than SPAXX...but then they evened up. Good looking out though - ~0.05% makes a difference over time.