2020 Taxable Portfolio Review

Summary

• Background, start date and portfolio objective.
• Review of realize gains/losses.
• Review of unrealized gains/losses.
• Goals for 2021.

Background 

This blog is intended to not provide investment advice but a way for me to look back in a few months and compared how a I feel about my positions now vs. in the future. The goal for this portfolio ultimately is it'll compound and grow resulting in dividend income that won't replace my W2 wage but supplement it heavily.

I am 27 years old and have worked at the same regional/national P&C insurance company since I graduated college four years ago with a finance degree. The company I work for is great and easily one of the most employee friendly in the area but it only took four years for me to realize working all year for a 5.5% raise and hopefully a bonus isn't what I dream about. The raise and bonuses are great and I appreciate them but what really concerned me was if I didn't start working on making multiple income streams I would be trading my time for money for the rest of my life and at some point when I have a family the employer would hold the leverage. 

The first stocks I bought was a S&P ETF and Roku and 2017. Roku was ~$38/share and SPY was ~273/share. I ended up closing both of these in 2018 to buy a pretty run down duplex I fixed up and ended up moving into. I only used half of the proceeds from that to fix the duplex but was worried about them in the short term, which ended up being a good lesson in opportunity cost. 

After owning a duplex for a while I realized I really liked getting paid to have investments and started getting really interested into dividend investing. In the spring I started investing again and bought some shares $O, Realty Income. That was in the spring I didn't really get serious until September. 

Review of realized Gains (Losses)

Through 2020 I had multiple realized gains and losses. First I want to address the two options. I have a decent understanding of options but both of these were nothing more than not having any sports to bet on for a couple months and being bored. They both worked out but I couldn't give any rational reason for why they were puts vs calls etc. $DGRO I started but also hold it in my Roth so I figured before it got to big to move on to something else in this account. Also as a dividend ETF I like $SCHD. 

By far the worst investment I made was $GEO. At the time I thought private prisons going away was just political talk but then in November marijuana was legalized in multiple states and they had cut their dividend plus 20%. Also the conviction I bought $GEO with was the dividend and without that conviction it's tough holding a stock that only has more bad news each day. 

$PEY was a monthly paying EFT that has a lot of small and mid cap companies. The dividend history is solid but again I didn't know much about the companies it holds. Also I didn't know much about it but was just interested in the monthly payment. 

$STAG in the facebook groups I'm in and on Seeking Alpha gets lots of love. The dividend yield was not great and the dividend growth was very small. I know $O and $STAG are different REITs but $O has a history of producing results, top of the line management and a long history of increases. Taxes for REIT's are not quiet as efficient in a taxable account from what I've read also so I decided to diversify. 

$VTRS was the spin off from $PFE. I do not enjoy researching pharmaceutical companies at all and it was only a few shares so I took the cash and used it for something else. It has done very well since it was spun off though. 

Review of Unrealized Gains (Losses)

Of the ten or so positions still have open I don't plan on closing any in the next couple months. There are a few ($AAPL, $V, $DG, $O, $MO, $KO and $SCHD) I have no intention of selling in the next seven to ten years. I am going to avoid to much detail about them because unless the revenue drops, margins are continually squeezed, dividends are cut or start taking out massive amounts of debt I think they will be larger and more profitable in the future than they are today. 

There is one ETF I own that doesn't fit with the rest of the companies in the portfolio and that is $ARKK. The main reason I own it is the companies they invest in are a high growth and generally not making money constantly ect. I have a hard time being comfortable with what a reasonable price for these kinds of companies is but Cathie Wood appears to be pretty passionate about it and good at it. It is another one that unless she loses her mind I'm probably in it for ten plus years.

$PFE and $T are two positions that I'm keeping an eye on a little more closely. As I mentioned earlier I don't like researching pharmaceutical companies, I don't understand them generally. They take more time to keep up with ongoing trials and patents expiring. The top holdings for $SCHD include $PFE and $KO. I really like $KO so don't mind being a little "overweight". For now with $PFE I am just riding the Covid vaccine wave but I'm on the look out for a different company to buy with that money. 

$T has a strong yield but the dividend growth is basically 1%. They haven't raised it this year but I'm sure they will this year to keep status. I am hoping to see them get serious about paying some debt off in the coming year and the HBO Max subscribers to impress. Streaming has become so competitive I'm not sure if it can save them though. If I was looking for more income and a shorter time horizon I would over look some of this but long term I'm not convinced it's a good fit.  

Goals for 2021

The main goal for 2021 is to max out my Roth IRA and hopefully make about $6,000 in contributions to this account. I am looking to start a position in a consumer company such as $CLX or $PG to add some stability. Also I would like to get some kind of financial company such as a bank but I'm very early in that search. 

Overall I'd like to keep the yield ~4%. So that should add about $240 in income, plus compounding, plus a few good dividend increases should continue my investing momentum from 2020 through this year.