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.
March brought us the longest DOW losing streak in five and a half years on the heels of the first legislative defeat of the Trump administration. The talking heads then moved their focus to the “end of the earnings recession”. Frankly, I think as long as the US dollar remains strong, earnings will continue to suffer – except for domestically focused companies. As a leading indicator to this thesis, I would point to the slowing growth in dividend increases as a proxy. Regardless, the S&P closed the month down .04% while my portfolio rebounded ending the month up 3.3%. At the end of the first quarter, I lead the S&P by 1.35%.
Headlines impacting my portfolio:
- 3/1 – SQ buys OrderAhead (pvt)
- 3/6 – FMBI acquires Premier Asset Mgmt, LLC
- 3/9 – BR acquires Message Automation, Ltd.
- 3/13 – BUSE acquiring MDLM
- 3/16 – MMM acquiring Scott Safety from JCI
- 3/16 – Fed lowers barriers for <$100B bank mergers
- 3/20 – UL reviewing sale of spreads line
- 3/23 – BLK buys 5% stake in NTDOY
- 3/27 – BLL sells paint can line to BWAY Holding
- 3/27 – DST buys remaining UK JVs from STT
- 3/27 – SGBK to merge with HOMB
- 3/28 – KO and KOF close on AdeS line purchase from UL
- 3/29 – MA acquires NuData Security
- 3/30 – CM increases offer for PVTB
- Added to BCE
- Added to SQ
- Added to KO
- Added to TD
- Initiated position in AKO.B
- March delivered an increase of 9.15% over March 2016. 2.24% of this increase is attributable to purchases with the remaining 97.76% a result of dividend increases. The Y/Y comparison is a little distorted as four companies shifted pay dates and one special dividend did not reoccur.
- March had an increase of 6.44% over the prior quarter. This was primarily due to a pay date shift as a result of a merger.
- Declared dividend increases averaged 7.75% with 36.42% of my portfolio delivering at least one raise (1 cut – YUM).
- YTD Dividends received were 27.1% of total 2016 dividends. If the current run rate is maintained would exceed 2016 around October 15th – particularly with most of my semi-annual or interim/final cycles paying during the next quarter.
The MET spin (Brighthouse Financial – BHF) remains pending.
Agrium/POT, JNS/HGG.L and SGBK.HOMB remain pending
In my inbox I found a message inspired (?) by my last post. In a nutshell, it was a request for further insight into my October purchases. I have to admit that, on the surface, the appearance is that I was throwing stuff against the wall to see what would stick. I would like to think I’m slightly more calculating. To set the scenario, I had an oversized cash position due to a merger, the markets had started their pre-election downward drift and the FBI just breathed new life into Candidate Trump’s aspirations.
October was basically a quiet month with OPEC failing – once again – to shore up their hold on the oil markets. Chevron announced a small increase in their dividend maintaining their status as a Champion. Several small positions were added at month end as the market began a pullback (continuing into November) enabling me to start redeploying funds received from PNY’s merger with DUK. This month The S&P dropped 1.94%. My portfolio was basically flat, ending down 0.1%. Note: I normalized these numbers to consider the impact of cash infusion from the merger. My ‘pure’ equity positions decreased by 4.15%. The need for this normalization should end as my excess cash is used. This increases my lead for the year to 11.5% with two months to go.
Headlines impacting my portfolio:
- 10/3 – JNS to merge w/ Henderson
- 10/11 – SRCE gains FRB approval for Sarasota, FL branch
- 10/19 – C finalist to be designated as clearing firm for Renminbi trades
I’m a little behind again this month but the portfolio data has been compiled and will be posted in the next couple of days with the goals update later in the week. The Unabridged portfolio should be next week as per normal.
- Closed PNY due to merger
- Added to BMO
- Added to CVLY prior to ex-div for the stock dividend
- Added to JNS (weakness on currency exposure)
- New position – ABM
- New position – AMT (Jan)
- New position -BLL
- New position -CASY
- New position -CHCO
- New position -KOF (Mex. peso exposure)
- New position -COKE
- New position -CCE (UK exposure)
- New position -CSAL
- New position -CTBI (Jan)
- New position -CCI
- New position -HUM (Jan)
- New position -LAMR
- New position -NWFL
- New position -OCFC
- New position -ONB
- New position -OUT
- New position -PLD
- New position -QCOM
- New position -DGX (Jan)
- New position -SRC (Jan)
- New position – SGBK (Cuba exosure)
- New position – BATRA
- New position – VALU
- New position – VER (Jan)
- New position – YUMC (YUM spin-off)
- October delivered an increase of 28.9% over October 2015. This was due about evenly between dividend increases (Y/Y) and late 2015 funding.
- October was down 10.68% from the prior quarter due to special and semi-annual payments in July.
- Announced dividend increases currently average 12.59% with 67.11% of my portfolio having at least one raise so far this year.
- Through October, dividends received exceeded total 2015 dividends by 7.2%.
Roughly half of the PNY/DUK proceeds have been redeployed with an additional 3 orders pending for January payers. I’ve filled some of the hole I’ll face in January, so I plan on maintaining a small cash position through the election before making further decisions.
The XRX spin (Conduent) is on track to complete by year end. MetLife has filed for a spin of their Brighthouse Financial unit under the ticker BHF.
Proxies were received and voted for both the LSBG/BHB and AGU/POT mergers.