May 2020 Update

I’m not sure how many times I repeat myself, but suffice it to say this probably won’t be the last – this month was one for the record books.  The debate can now rage as to whether this was the shortest bear market in history and the start of a new bull or classic bear trap.  My thoughts are aligned with the doubters considering the muted – though improving – recovery, throttled reopenings and record unemployment.  Speaking of which, one has to wonder how much of Friday’s gains will be relinquished now that the buried caveat (misreporting) in the jobs data has come to light.

While Trump’s allies are generally ignoring the issue (which lowered the unemployment rate by about 3 points) and the liberals were blaring about ‘Trump’s manipulation’, the reality – as usual – is in the middle.  This issue is just one of many where it is beneficial to perform your own research prior to forming an opinion pretty much about anything.

With this mindset, while the S&P index increased 4.33% in May, my portfolio value increased 5.51%.  This continues to include my cash position as the migration is not quite complete (it’s about 95%).  For the year I’m beating the index by 3.24%.

I expect to restart the Monthly Recap with either June or July.  Basically the number of transactions renders any type of reporting meaningless.  At a high level view, I’ve exited all REITs except PLD, DRE, IIPR and IRM.  These are either Industrial (distribution centers) or Specialty REITs.  I’ve also eliminated companies that cut their dividend – but continue to hold those that suspended (except KIM).  I’m reducing my exposure to Insurance due to Covid-19 and now damage exposure from the protests.  One notable increase was BLK and a minor one with BDX completing the mandatory call of BDXA.

Dividends:

  • May delivered an increase of 39.09% Y/Y with most of the increase attributable to double payments due to the migration from Motif.  I was able to buy prior to ex-div while Motif sold post ex-div.  Also a Swiss dividend was paid in May versus June in 2019.
  • Dividend increases averaged 5.91% with 40.25% of the portfolio delivering at least one increase (including 5 cuts and 9 suspensions). This is off last years’ pace and a direct by-product of the global pandemic.
  • 2020 Dividends received were 47.19% of 2019 total dividends. The YTD run rate was not calculated due to portfolio churn. I suspect it’s near my 110% target.

As an aside, twice this year I was able to front-run positioning moves resulting in some double dividend payments.  This will subside in June but put me in a lousy position when I report year-on-year comps in 2021.  As they say, “A bird in hand …”

Spinoffs:

None

Mergers:

None

Splits and Stock Dividends

None

Summary

With the health of you and your loved ones paramount – stay safe.

I will also reiterate that unless you had fully replicated my portfolio, these results were not attainable – as many are one-off events.  This month, I will continue to monitor the reopening saga and corresponding COVID-19 increase – alongside consumer demand.