Mar 2018 Update

A few days late since Easter got in the way with the markets being closed March 30th and dividends not being posted in a timely manner.  FX transactions were also delayed impacting my final accounting for the month and quarter.  This month the DOWs first quarterly loss since 2015 grabbed the headlines while the news getting my attention was the rising Libor particularly with its potential impact on adjustable rate mortgages and business loans.  March saw the S&P drop 2.69% and for the first time this year my portfolio outperformed the index by registering a drop of 0.06%!  YTD I still lag the S&P by 0.81%.

Portfolio Updates:

  • Added to PWOD, WU and ABB
  • Initiated a position in VLVLY

DIVIDENDS

This is where my main focus resides.  Market gyrations are to be expected but my goal is to see a rising flow of dividends on an annual basis.  I’m placing less emphasis on the quarterly numbers as the amount of semi-annual, interim/final and annual cycles have been steadily increasing.

  • March delivered an increase of 39.79% Y/Y fueled by dividend increases and purchases.  In particular, my December buys were almost exclusively March payers.
  • March delivered a 11.44% increase over last quarter (December).
  • Dividend increases averaged 11.25% with 40.3% of the portfolio delivering at least one increase (including 1 cut (GE) and 1 suspension (DST see M&A).
  • 2018 Dividends received were 29.3% of 2017 total dividends putting us on pace to exceed last year in early November.

Spinoffs:

Spirit Realty Capital (SRC) – Mar 6, Form 10 was filed publicly with spin completion targeted for 1H 2018.

Mergers:

Jan 13 – DST announced it was merging with SS&C for $84 cash per share.  As part of the merger agreement, the dividend has been suspended – the merger received shareholder approval on March 28th.   I expect the deal to complete in April or May.

Jan 31 – XRX announced a merger with Fujifilm for stock and $9.80 in cash.

A few others are rumored to be in play including Humana and Shire.

Summary

With my March call being spot on (… it appears we’re getting a preview of March Madness in the form of a Trump induced possible trade war.) the Paychex jobs data (small business) released this morning is keeping me in a cautious mood.  Yes it is only a one month view showing fewer jobs – but small businesses are supposed to be the economic driver in Trump World.  Perhaps it’s an aberration – but one to keep an eye on.  Overall a good month in spite of tariff uncertainty.

Hope all of you had a good month as well.

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8 thoughts on “Mar 2018 Update

  1. Trump is toying with Twitter no absolutely no working plan in place. Like paying chess with the Chinese only he’s already told them his future moves. That was why the Chinese slabbed back with taxes on 125 American products. Yikes!

    Now he’s bullying the Mexican with US troops on the border.

    The Chinese was and still is the #1 threat that he can’t tame. Now he’s provoking the Mexicab

    Liked by 1 person

  2. Never a dull moment nowadays! The biggest losers with the negotiating style being used are US consumers and the small investors. Not in a direct manner, but in higher costs for all purchases, higher interest rates and general uncertainty. The tax cut received will be frittered away with higher gas prices due in part to the weaker dollar. In my opinion, a misguided approach at best.

    Thanks for allowing me to vent 🙂

    Like

  3. My question as well which probably won’t be answered until this fall (unless triggered by external events such as a trade war, NAFTA pull out, etc.). Several shoes must fall first – the first was yesterday’s Paychex job number (small business) showing a drop. https://www.paychex.com/employment-watch/

    Next will be earnings where I expect strength as any impacts (pro or con) haven’t really had time to manifest themselves. Then will be any teetering of zombie companies and the the mid-term elections. By fall we should see the first checkpoint in crop loans (many are Libor based), redeterminations (MLPs) and inventory build for the holidays. The picture could start to form at this time.

    That, my friend, is my baseline for the year which could change based on residual implications from a simple Tweet. 🙂

    Like

  4. I agree on the correction but ‘normal’ could be debated (self-inflicted would be more appropriate). But I’m not running for cover just yet. There’s still some strength on tap especially with earnings season upon us. But tariffs could be either a black swan or a negotiating ploy.

    Thanks for the visit!

    Like

  5. Oh, to be a youngster again! Yes, you do have time on your side. At least I’m still a net investor even after the RMDs. But I am more cautious now than I was before. I’ve been told it comes with the territory (age). 🙂

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