January 2019 Portfolio Update
Contributor Since 2017
NOTE: For those looking for the DGI Chit Chat Blog here's the link: https://seekingalpha.com/instablog/48196727-cemanuel/5208606-dgi-chit-chat-successor
I recently sold a bunch of real estate (first purchase was in 1986 when I was 23) and am investing in stocks - have gone with mutual funds for a couple of decades and formerly traded grain commodities but opened my accounts to trade individual stocks on March 8, 2017. The longer I have been in the market the more convinced I have become that Dividend Growth Investing (DGI) is the best method for building income.
I am retired, effective 12/31/21.
I have three accounts; a Taxable Account, a Roth IRA, and a Traditional IRA. I also have a small HSA I can invest with but have index ETFs in it and don't discuss it on SA.
I am managing my separate accounts differently as follows:
Taxable: Main purpose - to live off in retirement. Most of this will come from dividend income which will be about 70% of what I need. But I have large amounts of AAPL and GOOGL which I will sell as needed to supplement this. As much as possible, other than those two companies, I intend to have a buy-and-hold strategy for this account.
IRAs: Total return. I like dividends but as I don't expect to need to withdraw from these until RMD time I will look for more rapid dividend growth and non-dividend payers are not automatically excluded. The Roth is quite small so dividends received will be automatically reinvested in the issuing stock. I take them as cash in the T-IRA to buy more stocks with. I will likely be more active in these accounts though I never expect to be a frequent trader.
Buying for the IRA began on 2/22/22 and was completed on 3/7/22. I am doing Roth conversions, trying to be close to the 24% tax bracket limit each year. The first was on 6/17/22.
I ended my accumulation phase of investing on 7/1/21 to build cash for retirement.
Here are my current holdings, last updated 8/4/22:
- Taxable Account: AAPL, ABBV, BBY, BLK, CVS, GD, GOOGL, ITW, LMT, LYB, MO, MSFT, NEE, OGE, PM, T, TROW, UNH, VZ, WHR, WSM
- Roth: ABBV, AMD, AMZN, BBY, BMO, CHWY, GOOGL, KLAC, LRCX, MSFT, MU, NVDA, PYPL, QSR, SBUX, WSM
- TIRA: AAPL, ABBV, AMAT, AMZN, ANTM, AOS, BBY, BMO, CHWY, CM, CMI, CRM, DG, DT, F, FAF, GM, GOOGL, KLAC, LCID, LOW, LRCX, META, MSFT, MU, PYPL, QSR, RY, SHW, TD, TGT, TROW, TSCO, TSLA, TXRH, UNH, WMS, WSM
2017 Total Return: 16.2%.
2018 Total Return: 1.58%.
2019 Total Return: 31.63%
2020 Total Return: 13.57%
2021 Total Return: 32.63%
2 year/24 month return on 3/8/19 - 18.87%
3 year/36 month return on 3/8/20 - 39.61%
4 year/48 month return on 3/8/21 - 78.02%
5 year/60 month return on 3/8/22 - 113.39%*
I calculate the returns after subtracting new money added into the account however I do count reinvested dividends. For example, if I have an account worth $100,000 at the start of the year, I add $10,000 in new money and the 12/31 balance is $112,000 my return would be 2%, not 12%.
*Does not include the IRA
Summary
- Trades made and dividends received.
- Plans going forward.
Trades and Dividends Received
January was a light month. I spent all my cash on December 24 except for the $7,000 I added to my Roth on January 1. Then I waited. I finally made a couple of buys, both in the Roth, and both NOT according to plan which I'll cover later.
Trading Activity:
Dividends Received:
- 1/2 - WalMart (WMT)
- 1/10 - Disney (DIS)
- 1/10 - Hannon Armstrong Infrastructure (HASI)
- 1/10 - Illinois ToolWorks (ITW)
- 1/10 - Medical Properties Trust (MPW)
- 1/15 - Uniti Group (UNIT)
- 1/25 - New Residential (NRZ)
- 1/28 - Two Harbors (TWO)
NOTE: I DRIP dividends in my Roth. In my taxable account I take them as cash. The cash is in a Fidelity money market which pays a little over 2%.
The Trades:
This was interesting. I have been using my Roth for what I consider high yield stocks. My definition of high yield means pretty much Real Estate Investment Trusts or REITs and Business Development Companies or BDCs. And if I ever buy them this will also include Closed End Funds or CEFs. I had some REITs and BDCs I was looking at but was waiting to see if the market would retest the December lows. Then MO and T dropped to where their respective yields were over 7% and I picked them up instead.
Buys made in my taxable account are with the idea that I'll never sell. This is not the case for the Roth. It is a total return account. The goal is to make the most money I can in it by hook or by crook. I have no tax liability for anything that happens in it and if I ever trade again it will be in this account. So if MO or T has a price pop I could sell it - same for any other Roth stock. And if they don't I'm happy to collect and DRIP the 7%.
But it was not the original plan.
I made no sells in January.
Dividends:
This was a good dividend month for me, well above my average 2018 month. I am hoping it is part of the new normal, not an outlier. Based on my projections February should be a better dividend month but we shall see. It doesn't mean all that much but my January 2019 dividends were an increase of 106.90% over January, 2018. This is more due to a change in my portfolio and an increase in the amount invested than due to dividend increases though some of this was in play.
Plans Going Forward
I still plan on selling WMT if it reaches $100 though if this happens close to February 20 I may hold off for the next dividend announcement. If they continue raising it by a penny a quarter as they have done since 2014 it'll confirm it as one to sell. If they raise it by $.05 it will completely change my plans - and be a big surprise. My retirement is not far off. Owning a company paying just a little over 2% and only increasing the dividend 2% annually does not fit my plans for growing income.
Before buying MO and T I had planned to sell either NRZ or UNIT from my Roth to maintain a fairly consistent overall BDC and REIT level in my accounts. They were in a race - NRZ at $18 or UNIT at $20. Whichever reached its respective level first would be sold. That plan is on hold. I own each in my Roth so it's not that I dislike them, I just dislike paying taxes on the ordinary dividends. Either could still be sold if it is trading high and something else I like goes on sale.
It doesn't matter much but for the month my portfolio value increased by 6.78%. This does not include the money I added to the Roth but does include dividends.
January was a slow month after the hustle and bustle of December. That's OK - other than the Roth I was pretty much out of cash anyway. But dividends are coming in and at some point will be put to use.
Disclosure: I am/we are long All companies in the trade and dividend lists.
Additional disclosure: I am not a professional investor and do not offer investing advice. I have a college degree in Animal Science and used to train horses for a living. Would you really want to tell a loved one you invested based on something an ex-horse trainer/animal scientist wrote?
I didn't think so. Please perform your own due diligence when making investing decisions.