The theme for this month – and I hate to go into the political arena, but bear with me a little as it will relate to an investing theme – is hypocrisy in the world of climate change. At least Trump, being an in your face denier, was straight up in his rollback of EPA regulations and pandering to his supporters. By contrast, Biden has more of a stealth approach with his NIMBY (not in my backyard) handling of metals necessary for EV manufacturing. I guess “green” is only if within US borders disregarding the outsourcing to other countries any harmful byproducts making it more difficult for them to achieve thresholds established with the Paris accord. Adding fuel to this fire was the assignment of Cemex to the portfolio as a freebie Webull promotion. Great for an infrastructure play, does nothing for dividend growth and doesn’t rate highly in my mind as environmentally friendly. Just food for thought in the event ESG is an investing guideline within your portfolio.
This month, the portfolio rose again, this time by 3.30% while the S&P gained 0.55%, half of my increase being the remainder of last month’s fresh money deployed. Anyway, for the year, I’m now ahead of the index by 8.14% but my dividend run rate – though improving – remains under the 10% annual increase goal, checking in at 107.98% this month. The good news here is the month Y/Y dividends came in 26.9% over 2020 with part of that being timing related. One area I’ll have to look at a little deeper is the impact of portfolio churn as I attempt to double up on dividends when making adjustments. If I were to guess, I suspect the impact is about 5 points additive. Dividend increases are averaging 9.19% with 43.65% of the portfolio declaring at least one, offset by two decreases. I’m taking the 9.19% with a grain of salt as it is distorted by Nintendo’s 103.67% increase which management has already indicated is a one off. My comfort level will increase if the big banks get Fed clearance for raises later this year.
For the third month, purchases exceeded my 1% threshold but anticipate a pause in significant activity in June with a resumption in July. As I continue the portfolio pruning, I’m encountering capital gains. The buzz in Washington is the possibility of a retroactive tax hike. I think it’s more likely as a going forward tax so I will continue my process for the foreseeable future.
New Positions
Added Lion Electric (LEV) and Cemex (CX). CX was a free one so I’ll hold for at least a year so any gains are treated as long term.
Positions Sold
Nexeon Medsystems (NXNN), IBM, Equifax (EFX) and Coca-Cola Amatil (CCLAY). IBM and EFX will deliver one more dividend and Amatil was sold via a merger. All were ancillary positions.
Positions Increased
The ones of note are Pepsi (PEP – underweight core position), Coca-Cola Eurasian (CCEP) and Canadian National (CNI) as (post) merger plays and Hawthorne Bank (HWBK – to validate Schwab’s treatment of stock dividends).
Pending Mergers
TPG Pace Beneficial Finance Corp (TPGY) – EVBox merger in progress, no shareholder vote yet
Tortoise Acquisition Corp. II Class A (SNPR) – Volta Industries merger in progress
Canadian Pacific (CP) Canadian National (CNI) to acquire Kansas City Southern (KSU). I hold all three companies.
Independent Bank Corp (INDB) and Meridian Bancorp (EBSB) to merge, EBSB shareholders to receive .275 shares INDB for each EBSB share. End result will be a slight dividend increase – I hold both sides of the deal and will continue to hold.
Spinoffs
ABB announced the exploration of monetizing their majority stake in Chargedot, a leading Chinese e-mobility solution provider, on their April 27th earnings call. They separated it into its own division and initiated the process of separating it into its own legal structure to explore the option of a separate listing.
Ardagh had previously announced an agreement to the beverage can business, AMP, with the Gores V Holdings SPAC with the business to be listed on the New York Stock Exchange under the ticker AMPV. Following the merger, a planned offer to Ardagh shareholders to exchange their Ardagh listed shares for AMP listed shares will commence. My rationale for buying ARD was the can business so I may tender my shares for AMPV. More to follow …
Becton, Dickinson (BDX) announced plans to spin off their diabetes insulin group as an independent company in 2022. I will continue to accumulate.
AT&T announced plans to spin its Warner Media unit and combine with Discovery. As I bought T due to the Warner acquisition, I will hold through the spin and reassess whether to retain AT&T afterwards.
In Summary
In all, another good month but still recovering from January. I have two more positions identified to jettison as I continue some consolidation, which will offset with one minor new position. Only the timing is to be decided – and there will probably be more to come.
Here’s hoping your month was good as well!
Seeking Returns 