The month was relatively crazy with geopolitics driving the highs and domestic lunacy driving the lows. In between were relatively strong earnings and interest rates inching higher driving the question of the bull market sustainability. Personally, I’m not overly concerned yet but Marco Rubio‘s “implication that Republicans have found no good answer to the problems Mr Trump described is irrefutable.” may be an omen of things to come. Meanwhile, I took advantage of some dips and stayed the course. April saw the S&P rise 0.27% and my portfolio outperformed the index by registering a rise of 0.65%! YTD I still lag the S&P by 0.43%.
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%.
- Added to PWOD, WU and ABB
- Initiated a position in VLVLY
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.
Spirit Realty Capital (SRC) – Mar 6, Form 10 was filed publicly with spin completion targeted for 1H 2018.
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.
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.
The theme for the month was volatility. A couple of ETNs cratered as a result of the high volatility causing investors to lose significantly when using these levered products. “We sincerely apologize for causing significant difficulties to investors,” Nomura said. Credit Suisse stated “investors who held shares of XIV had bet against at volatility at their own risk. It worked well for a long time until it didn’t, which is generally what happens in markets”. Caveat emptor.
During the month, the S&P index dipped into correction territory before rallying to close the month down 3.89%. My portfolio sympathized with the index closing down 5.53%. I never hit correction so my peak drop was less but I also failed to recover as quickly. Probably an area to perform a root cause analysis on at some point. Following back-to-back monthly losses against the S&P, I’m down 3.44% to start the year. Continue reading
The market came out of the chutes and barely looked back this month, the catalysts being the realization of the tax plan’s impact on corporate earnings and few earnings reports being significant disappointments. The lower tax rates started trickling into paychecks (average about 3.5%) but the average gas price nationwide increased by roughly 5% primarily due to the weakness in the US dollar (caused in part by the prospects of increased deficits from the tax plan that haven’t been offset by jobs, productivity or GDP gains yet). At least we can watch commercials touting unrealized benefits even though it is way too early for any tangible impact to be realized. Kind of makes me wonder a little. For the month, the S&P index increased by 5.62%% while my portfolio value increased by merely 3.81% putting me behind by 1.81% to start the year. Continue reading
The upward trend continued this month with catalysts being the tax plan and holiday sales. My guess remains that the first half of 2018 will be good for corporations (i.e., dividends and buybacks) with a shift in focus later with deficits and mid-term elections playing a leading role. I remain convinced the yearlong weakness in the US Dollar will continue and expect to allocate more cash into foreign equities during the first half 2018. I will review this plan as my personal tax implications become clearer. For the month, the S&P index increased by .98% while my portfolio increased by 3.29% largely fueled by Financials (again). For the year the S&P increased by a stellar 16.26% while I came in at +20.58%! The S&P return with all dividends reinvested adds about 2.41% which my hybrid approach still beat.
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
- increased position in existing DRE holding
- 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.
Spirit Realty Capital (SRC) – Nov 21, Form 10 was filed confidentially with spin completion targeted for 1H 2018.
AGU/POT (Nutrien) remains pending with the US being the only approval pending.
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?
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
- initiated position in NXNN
- 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.
Spirit Realty Capital (SRC) has been announced.
AGU/POT (Nutrien) remains pending.
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.