March 2017 Update

March brought us the longest DOW losing streak in five and a half years on the heels of the first legislative defeat of the Trump administration.  The talking heads then moved their focus to the “end of the earnings recession”.  Frankly, I think as long as the US dollar remains strong, earnings will continue to suffer – except for domestically focused companies.  As a leading indicator to this thesis, I would point to the slowing growth in dividend increases as a proxy.  Regardless, the S&P closed the month down .04% while my portfolio rebounded ending the month up 3.3%.  At the end of the first quarter, I lead the S&P by 1.35%.

Headlines impacting my portfolio:

  • 3/1 – SQ buys OrderAhead (pvt)
  • 3/6 – FMBI acquires Premier Asset Mgmt, LLC
  • 3/9 – BR acquires Message Automation, Ltd.
  • 3/13 – BUSE acquiring MDLM
  • 3/16 – MMM acquiring Scott Safety from JCI
  • 3/16 – Fed lowers barriers for <$100B bank mergers
  • 3/20 – UL reviewing sale of spreads line
  • 3/23 – BLK buys 5% stake in NTDOY
  • 3/27 – BLL sells paint can line to BWAY Holding
  • 3/27 – DST buys remaining UK JVs from STT
  • 3/27 – SGBK to merge with HOMB
  • 3/28 – KO and KOF close on AdeS line purchase from UL
  • 3/29 – MA acquires NuData Security
  • 3/30 – CM increases offer for PVTB

Portfolio Updates:

  • Added to BCE
  • Added to SQ
  • Added to KO
  • Added to TD
  • Initiated position in AKO.B

Dividends:

  • March delivered an increase of 9.15% over March 2016.  2.24% of this increase is attributable to purchases with the remaining 97.76% a result of dividend increases.  The Y/Y comparison is a little distorted as four companies shifted pay dates and one special dividend did not reoccur.
  • March had an increase of 6.44% over the prior quarter.  This was primarily due to a pay date shift as a result of a merger.
  • Declared dividend increases averaged 7.75% with 36.42% of my portfolio delivering at least one raise (1 cut – YUM).
  • YTD Dividends received were 27.1% of total 2016 dividends.  If the current run rate is maintained would exceed 2016 around October 15th – particularly with most of my semi-annual or interim/final cycles paying during the next quarter.

Spinoffs:

The MET spin (Brighthouse Financial – BHF) remains pending.

Mergers:

Agrium/POT, JNS/HGG.L and SGBK.HOMB remain pending

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6 thoughts on “March 2017 Update

  1. So true! As with many numbers, this one is a little misleading. Since my portfolio is a little overweight in financials, this time last year the Fed hadn’t released banks from CCAR restrictions (allowing for dividend increases). The real test will be the Y/Y comparisons in the last half of the year. Thanks for visiting!

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  2. As I always say, an increase is an increase no matter how large or small. My Feb. increase was 8.7%.Sometimes you have nice year over year gains and sometimes they are more modest but in the end they are still gains. Curious to know if that BHS spin off will also pay a dividend. Thanks for sharing.

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  3. I agree! On BHF, my guess is ultimately yes. Going through the 10-K, there’s a provision for a dividend to be paid to MET on separation (less than $5B – probably closer to $3B). This line item coupled with MET’s charge to earnings (related in part to BHF’s goodwill impairments) are a positive indicator. Their size is similar to LNC (dividend payer) but I guess any payment will be initially restricted based on the loan covenants associated with the $5B – as this is paid down room for a dividend expands. Even so, they deliver a profit. Another crucial consideration is the spin ratio (TBD). You’ll most likely see me add to my MET holdings but staying below the 1% threshold. Thanks for visiting!

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  4. Thanks Tristan! It pales in comparison to your 85% though! 🙂 My hope is that my new foreign dividends kick in to offset the Y/Y comps later in the year (one new Aussie one in the mix). Hope all is good on the baby front – rewarding on one front but (based on past experience) a nightmare initially on the savings rate. Thanks for the comment.

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