Tracking Spreadsheets

As many of you know, Two Investing has published – and periodically updates – a Google spreadsheet for portfolio tracking.  I started using the original one published by Investment Moats several years ago and later migrated to the Two Investing version.  A new version was recently released due to Google/Yahoo API issues – basically not all data was readily available.  So I spent the last three weeks manually converting my data.  I chose a manual process so I could cleanse data that was no longer relevant primarily due to mergers.

As advertised, I found the new version to be more robust and faster.  But there are a few issues to be aware of.  I did comment on most of these on their site November 30th but figured I’d include my additional findings to provide a heads up to people reading my ramblings.

1. Perhaps you caught it by now but the version I downloaded was missing Telecom as a sector.

This is readily corrected by adding it via the Lists tab.  You also have to update the Summary tab to include it as well.

2. An error is received (Reference Data) when the company name has an apostrophe (Casey’s/CASY). (I did a manual override).

The override I referred to is ‘IF($D146=””,””,”Caseys General Stores Inc”) which is the name (less apostrophe). Google’s name function includes apostrophes.

3. It appears some ADR issues have data and some don’t. I haven’t figured out the why (maybe the sponsor?) ex. AKO.B does, CMSQY doesn’t.

4. OTC pink sheet data (US pricing/dividends on Canadian issues) not available. ex. HRNNF (corresponds to H.TO)

5. OTCQB market data is lacking. I didn’t check the greys as I own none.

I still haven’t figured it out. Cross (dual) listings work and some ADRs as well.  My work around (for my 7 outliers) is to enter ‘=GOOGLEFINANCE(A100,“price”) in column J on the Reference Data tab (where A100 corresponds to the ticker symbol field of yours) and manually enter the annual dividend in column K.  This sets the override function so the DivPayoutCalc tab and Portfolio tab both update properly.

6) ReferenceData generates ‘error getting data’ (ExDate, PayDate) when the company does not pay a dividend.

Not a functional problem only cleanliness of presentation.

7) (New): Optional use column P – DivCalendar – doesn’t lock to the year as do the other columns.


Bottom line I’m pleased with the improvements and improved performance.  It’s been awhile since I’ve had all the fields working and look forward to approaching year end with a minimum of manual adjustments!

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November 2017 Update

The upward trend continued this month fueled by the progress on the tax plan.  If finalized, my guess is that the first half of 2018 will be good for corporations (i.e., dividends) with reality setting in later in the year that the average consumer received a raw deal and has less disposable income than advertised.  That is unless trickle down really works.  The wild card being the government (or lack thereof) as a second felony plea was accepted with individuals tied to the campaign or administration.  The S&P index increased by 2.81% while my portfolio increased by 3.22% largely fueled by Financials.  For the year I’m still ahead of the index by 3.12%.

Headlines impacting my portfolio (bold are owned):

  • 11/1 – OMI buys HYH‘s Surgical and Infection Prevention (S&IP) business
  • 11/2 – SBUX sells Tazo line to UL
  • 11/6 – AVGO bids to acquire QCOM at $60 cash & $10 stock per share
  • 11/6 – BCE acquiring ARFCF
  • 11/9 – AAPL acquires InVisage Technologies
  • 11/13 – GE cuts dividend by 50%
  • 11/13 – AMT buys Idea/VOD Cellular towers in India
  • 11/13 – VER selling Cole Capital to CIM Group
  • 11/14 – Baupost Group initiates 3,565,361 sh position (abt 6.25%) in AMC
  • 11/14 – MSG to sell WNBA team (Liberty)
  • 11/15 – SQ launches ability to buy and sell Bitcoin
  • 11/16 – PYPL sells $5.8B loan package to SYF
  • 11/16 – IRM buys China assets from SFG.CO
  • 11/20 – MSG acquires Obscura Digital
  • 11/27 – PNC acquires The Trout Group, LLC
  • 11/28 – BLK to acquire C‘s Mexican asset management business

Portfolio Updates:

  • increased position in existing DRE holding

Dividends:

  • November delivered an increase of 18.3% Y/Y with the about 60% of the increase being attributable dividend increases and the remainder purchases.
  • November delivered a 1.0% decrease over last quarter (August) due to two payouts being moved to December.
  • Declared dividend increases averaged 11.9% with 71.75% of the portfolio delivering at least one increase (including 2 cuts (XRX and YUM) and and 1 suspension (TIS)).  Note: GE’s announced cut is counted as 2018.
  • YTD dividends received were 109.86% of total 2016 dividends which exceeded last years’ total on October 25th.

Spinoffs:

Spirit Realty Capital (SRC) – Nov 21, Form 10 was filed confidentially with spin completion targeted for 1H 2018.

Mergers:

AGU/POT (Nutrien) remains pending with the US being the only approval pending.

Summary

My 2018 strategy is forming with the focus turning towards Consumer Staples and Utilities (existing holdings).  I expect to incorporate a side strategy on lower yielding but faster growing companies which I’ll publish in the next week or two.   Of course I will continue to also pursue opportunities as they arise.

And how was your month?

Hammurabi and DGI

This week I ran across a post on Farnam Street titled, The Code of Hammurabi: The Best Rule To Manage Risk.  While an interesting piece, there were a couple of areas that I had an issue with, notably bonus payments.  If one navigates successfully through rough waters a reward may be warranted.  Conversely, failure should not be rewarded and be, perhaps, punished.  In my mind, the degree (lavishness) of the reward has the ability to inflict more damage than the remuneration itself.  Risk taken should not be without reward so long as potential downsides are properly mitigated (margin of safety).  Excessive CEO pay is an entirely different matter.

The tangent my mind followed was if there was a correlation between Hammurabi’s Code and Dividend Growth Investing.  Following I’ll perform a deeper dive into the tenets noted by the author:

Three important concepts are implicit in Hammurabi’s Code: reciprocity, accountability, and incentives.

Reciprocity

the practice of exchanging things with others for mutual benefit

As DGI bloggers we freely share our buys, sells, portfolios, reasoning and rationale.  We solicit comments and questions.  All of which is performed with no expectations other than others knowledge and experience will in turn be of benefit to us.

Accountability

willingness to accept responsibility or to account for one’s actions

There have been times that our choices or decisions resulted in a loss or failure to achieve the desired outcome.  Sharing within the community of a loss incurred or a dividend cut is a form of accountability.  Sharing our thoughts and concerns – particularly in a time of failure – is not only cathartic but an exercise in self-improvement.

Incentives

a thing that motivates or encourages one to do something

The encouragement provided to each other is by far the largest incentive.  Considering DGI is a journey that is a lifetime in the making, having our spirits lifted or a nudge along the path is a job undertaken by everyone in the community.


To summarize, you could say we are adherents to the Code of  Hammurabi.  Perhaps not to the degree or brutality as the original, but to the parts that depict a sense of community and a helping hand to our neighbors.

 

Tax Plans – Part 2

Much has transpired over the past week in regards to tax reform.  With the Alabama Senatorial special election now being too close to call, Congress is kicking into high gear to try to get it passed while the Republicans hold a slim majority in the Senate.  This past week saw the House passing their version with no debate although appearances were that many were unaware of the full impact.  Case in point is the CNBC interview with Diane Black (R-TN) where she had the wrong definition of carried interest (she thought it was applicable to car dealers not hedge funds).

If it passes the Senate in something close to its current form, the result will be a reduction in the number of people qualifying for tax deduction itemization from the current 29% to an estimated 6%.  This is the “gotcha” for many filers including myself.  The proposed increase in the standard deduction is large enough to wipe out itemization yet too small to prevent an overall tax increase.  The only viable course of action (for me) is to front load deductions into the current tax year and hope it is not a retroactive change.  I’ve eliminated one alternative from consideration (establishing a corporation) as it would only be a wash in my current bracket and would choose accelerate my 2018 income up to the 25% tax level while reducing subsequent years to fall below the 0% rate.

This plan also has some potential ‘unintended consequences’ which may impact both Trump’s agenda as well as 2018 (and beyond) investment strategies.  Last week I identified home builders as a potential casualty, this week I’ll present a few more that I’m looking at .

Chained CPI

This will impact retirees first and wage earners later.  Essentially this modifies cost of living increases to a lesser increase than regular CPI.  Social Security and Veterans benefits will have lower increases than before reducing disposable income.  Wage earners will see tax brackets expand more slowly potentially (eventually) putting them in a higher bracket faster than the current structure.  End result is (my opinion) a positive for Staples and Utilities with Discretionary taking it on the chin.

Municipal Bonds

The plan would eliminate – or curtail – issuance of private activity bonds (hospitals, nonprofit colleges and universities, and airports) or Municipal Bonds for stadiums.  These types of bonds are often used for rehabilitating cities – think infrastructure.  If one tool is eliminated what is the chance of Trump’s Public/Private partnerships getting off the ground?  I see this as a negative for some Industrials.

General Electric

In the midst of GE’s dividend cut and restructuring I had to hit the pause button.  Their game plan going forward is to focus on three segments; Aviation, Healthcare and Power.  All fine and well – at least it’s a plan.  The remaining business lines will be sold or spun off – which is why I remain interested (although prior spins haven’t been shareholder friendly).  Now the tax plan injects an additional wildcard.  The Power division is the most troubled.  The Renewable Energy segment may be a spin candidate especially as the tax plan targets the Wind Energy production tax creditRetroactively.  Talk about throwing a monkey wrench into the thought process.


With all the unknowns, I believe my 2018 strategy will be to prioritize growth over yield.  The rationale being to delay taxable events as much as possible.  Next year is certainly on tap to be full of uncertainty and  surprises.

Are you considering alterations to your strategy?

 

The Tax Plans Are Here

It’s little wonder that the markets finally had a losing week as both the House and Senate released their respective (Republican) versions of the new tax plan(s).  While there are items to both loathe and like in each plan, as is normal, the devil will be in the details.  I spent the better part of last week parsing through the little we know to figure out the personal impact of the proposals.

Bottom line it depends on how a few things will be applied.  I am assuming a worst case scenario in that the new standard deduction will be high enough to prevent itemization in my situation (this blows away property tax, mortgage interest and sales tax).  I’m also assuming foreign dividends will receive no offset.  In this scenario, my tax rate would more than double from last years 9.32%.  Being retired, if necessary I could probably pursue one of two paths to reduce my liability.  The first is to take a one year hit on taxes by accelerating my RMD to reduce subsequent years tax rates to either 0% or 12%.  The other is to create a corporation for my investments as this could (potentially) protect foreign dividends from dual taxation.  One has to decide if the time, effort and cost is beneficial – and which is ultimately best.

I’m sure this thought process will be playing out in the minds of many.  Probably others will be caught unaware.  The unfortunate reality is the impact will be felt differently by everyone – and the rules of the game are still changing.  401Ks, state and local tax offsets and elder care benefits are among the areas at risk.  I would suggest keeping one ear tuned to the debate that will be taking place in Congress.  At a high level, if you’re a trickle-down theorist, you’ll be happy.

In my opinion, what worked – to a degree – in the Reagan years will not work today.  There are two things allied against success – and one of them is not the Democrats.  First the tax rate was significantly higher and the debt (and servicing load) much smaller.  These two factors will result in this effort ending in failure but not, perhaps, before being passed into law.  The Tax Policy Center has stated that Trump’s 2017 plan would reduce GDP after 2024 (thanks to debt service).

Over the years I’ve found that where turmoil and uncertainty exist, opportunity is also resident.  From a business viewpoint I fail to see a benefit to home builders.  I see some clouds over the nursing home industry dependent on tax breaks through their clients.  If we make it through the clouds, there is also some hope – if only there is not too much damage inflicted in the meantime.  Stay tuned and keep your seat belts fastened and over the next few weeks I’ll consider themes that could have some legs if the taxing scheme changes.

October 2017 Update

This month was pretty solid with the market continuing its upward grind.  Earnings season was in focus with good reports outweighing the bad.  Most of the attribution to the hurricanes was legitimate but a few did raise my eyebrows.  The US dollar turned in a second rising month.  The S&P index increased by 2.22% while my portfolio lagged (again) by only increasing 2.03%.  The two culprits were international currency weakness and a drop in value in my October (speculative) purchase.  For the year I’m still ahead of the index by 2.7%.

Headlines impacting my portfolio (bold are owned):

  • 10/3 – IRM acquires Bonded Services Holdings from Wicks Group, LLC
  • 10/4 – IBM acquires Vivant Digital (pvt)
  • 10/5 – YUMC initiates quarterly dividend scheme
  • 10/5 – IRM buys CS datacenters in London and Singapore
  • 10/6 – K acquires Chicago Bar Company LLC (RXBAR)
  • 10/11 – BHB sells insurance business
  • 10/11 – FHN acquires Professional Mortgage Co.
  • 10/16 – SJI buys NJ/MD assets from SO
  • 10/17 – SYY acquires HFM Foodservice
  • 10/18 – India approval for POT/AGU merger received. awaiting  US and China.
  • 10/18 – DGX to acquire Cleveland Heart Lab
  • 10/19 – JNJ acquires Surgical Process Institute
  • 10/25 – AAPL acquires PowerbyProxi
  • 10/30 – DGX aquires some California Laboratory Associates assets
  • 10/30 – TU to acquire Xavient Information Systems

Portfolio Updates:

  • initiated position in NXNN

Dividends:

  • October delivered an increase of 24.59% Y/Y with the about half of the increase being attributable dividend increases and the other half purchases.
  • October delivered an increase of 8.53% over last quarter (July).
  • Declared dividend increases averaged 10.91% with 70.62% of the portfolio delivering at least one increase (including 2 cuts and 1 suspension).
  • YTD dividends received were 103.83% of total 2016 dividends which exceeded last years’ total on October 25th.

Spinoffs:

Spirit Realty Capital (SRC) has been announced.

Mergers:

AGU/POT (Nutrien) remains pending.

Summary

With the primary goal of exceeding last year’s dividends completed, my focus turns to developing a strategy for 2018.  Meanwhile adding NXNN (speculative) in October and DRE for November’s primary purchase.  DRE as they go ex-div next week and a special dividend is likely in December as a result of the sale of their Medical buildings to HTA this past May.

My Overseas Guidebook

Over the past few months I’ve visited several blogs when one topic in particular has been addressed. For the past year or two I’ve been expanding my international holdings to my current mix which is highlighted below. Time In The Market got me thinking with his comment.  Although he tends to be more an ETF investor, he was experiencing similar trends as I.  Then there was Bert’s CM purchase.  He was agnostic to the CAD/USD correlation probably because the US and Canadian markets are usually tightly correlated with exchange rates.  Then there was Tawcan, illustrating his top five.  In his post he mentioned his use of ETFs for international diversification.  Finally there was The Dividend Pig musing on portfolio hedging.

My endeavors in overseas investing have delivered an education of some obscure items that hopefully will benefit an investor looking out of country.

Create a Strategy

Before starting, perform your due diligence and run an issue through your screening algorithm.  Then ask the question, “Is my home currency overvalued?”.  In the case of US investors, the simpler question is “Do you believe Trump’s policies will result in a stronger or weaker dollar?” and secondarily, “To what degree?”.  I like to use foreign exchange as a tailwind.  But by investing in dividend stocks in the event I’m wrong the sting is mitigated.

Be Aware of Monthly Deviations

Currency fluctuation will result in either positive or negative moves in both portfolio value and dividend amounts.  As an example January to August 2017 saw the US dollar depreciating against most currencies.  One example is the Euro which has appreciated 8.95% since last October – making US exports cheaper and imports more expensive.  One anomaly with the currencies I track – the relative value has been stable when compared to each other whereas the US dollar has been the outlier.  Also many companies pay annual dividends or interim/final (with variable amounts) dividends.  Some are capped at a percentage of profits.

Be Wary of Tweetstorms

In recent months, fluctuations have occurred as the result of Presidential tweets.  Most recently was the posturing on NAFTA.  This was a buying opportunity for Canadian and Mexican issues.  Conversely, dividends received took a hit.

Understand the Tax Implications

The US engages in tax treaties on a country by country basis which establishes the withholding rate and the application of said rate.  Ones that I’ve found with caveats include Canada (15% unless in an IRA and a part of DRS – then no withholding), Australia 15% (unless reduced via franking), Singapore – verify on a company basis whether dividends are qualified (may impact the decision to place in a taxable or tax-deferred account) and Switzerland (15% if registered, 25% if not – check your broker).  The good news is that at tax time foreign withholding can be credited (with some limits) under current law.

Stay Abreast of Local Events

This can be issues not normally aired in the US such as the Australian deflation discussion (generally groceries) or the Customs workers strike in Chile.  These wildcard issues have the ability to impact the profitability of the investment.

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The lessons I’ve learned have been many and these are but a few.  However, foreign investing can be rewarding as long as there is an awareness.