October 2020 Update

Whether October’s notoriety of being a bad month for the stock market is deserved remains debatable, however this year’s entry did nothing to quash this narrative. With a number of down days to choose from, I did buy some dips – the only one not previously reported was adding a slightly larger Citigroup (C) position in my shares to my Citigroup (C) holding Webull account.  It dropped below my original purchase price and I had excess cash from last months sale of Cracker Barrel (CBRL).  I’ll wait the thirty days for it not to be classified as a wash sale and sell the Citi holdings in M1, meanwhile collecting November dividends on both tranches.  The report card for the month is: the S&P lost 2.85% while my portfolio beat the index with a 0.5% loss.  For the year, I stretched the lead to 7.3% – still too close to take a victory lap with two months to go.

DIVIDENDS

My primary focus resides on dividends with the goal being a rising flow on an annual basis.

  • October delivered an increase of 16.99% Y/Y which is finally the expected trendline decrease.
  • Dividend increases averaged 5.36% with 49.38% of the portfolio delivering an increase (including 9 cuts and 9 suspensions (3 of which were sold and 2 now lifted)).  This is off last years’ pace and a direct by-product of the global pandemic – and a slight improvement from last month.
  • 2020 Dividends received were 101.9% of 2019 total. The YTD run rate remains above my 110.0% goal but I anticipate this will drop some. 

Notes:

  1. Generally the increase/decrease in value is driven by market fluctuation.  I’m finding that it’s rare that my net purchases/sales to exceed 1%.
  2. 2020 Dividends exceeded 2019 Dividends on October 30th
  3. Dividend suspensions were lifted from Coca-Cola European Partners and Yum China.

Going forward purchases will primarily be to get the portfolio more in alignment with the desired weightings of which RY and FAF fit the bill.  C is more opportunistic.

Spinoffs:

IBM’s (IBM) announcement of a spinoff expected late in 2021.  I haven’t yet formed an opinion but suspect any benefit will arise from less bureaucracy and improved strategic focus at some future point in time.  Meanwhile, this one is a hold while I figure out which sides of the business gets what I consider the crown jewels.

Mergers:

Coca-Cola European Partners (CCEP) to acquire Coca-Cola Amatil (CCLAY) for $12.00 (AUD) cash.  Amatil’s board has given tentative approval pending an independent appraisal on price.  I don’t have a major issue with the pricing as my cost basis is $6.54USD which the $12.00AUD translates to $9.10USD at current exchange rates providing a gross ~ 28% return (excluding dividends). Owning both sides of this transaction, I’ll probably increase my CCEP position on weakness and sell CCLAY prior to the acquisition assuming the price per share gets closer to $8.85USD if prior to year end (assuming a Biden win) or hold until the merger with a Trump win (hedging against possible capital gains tax rate increase).

The one question I have is the logic behind KO’s agreement to sell their stake at a lesser price which is not an obvious shareholder friendly move on their part.

Splits and Stock Dividends

Landmark Bancorp (LARK) 5% Dec 16
Commerce Bancshares (CBSH) 5% Dec 18

Here’s hoping your month good as well. Stay safe!