Reporting Style Update

On my “to-do” list was to refine my monthly results presentation to make it more relevant – particularly in light of the significant movements in my portfolio of late.  In search of ideas, I stumbled across the Simple Dividend Growth methodology. While not exactly what I had in mind, it covered probably 80% of which I could mix, match and modify to my hearts’ content.

His presentation covers Weekly actual and Forward Annual views, illustrated below.

XXX is text, $$$ currency

The largest differences are that I report monthly (as opposed to weekly), I convert actuals to percentages and I don’t use forward anything (except announced cuts) preferring to use trailing actuals.

The more subtle differences are twofold, I embrace stock dividends and M&A activity (one of his sell signals is a merger announcement).  So I’ve enhanced this template to serve my purposes as follows:

Actual as of 16 Nov 2019

The left column contains all ticker symbols – essentially a point of reference for portfolio activity.  The right column is the activity – as a percentage of portfolio value. The exception being the Dividends which are percentages of dividend activity.

I’ve segmented my new buys between the source of funds – the default being dividends accrued from prior months.  I don’t show my available cash as I reserve the right to spend it on my tax bill (like last April), take a trip or – in this case – replicate the granddaughter’s portfolio.  I may add a “new cash” line item in the event I hit the lottery or my living expenses decrease, otherwise I expect to continue funding purchases via excess funds generated by the portfolio.

I’m not sure how relevant the separate itemization of increases will be, but I’ll let it run for now.  In this example, BX increased their dividend but it doesn’t register as it amounts to 0.001962% – thereby rounding to 0.00%.  This becomes even more negligible when ORIT’s dividend cut is added. Likewise, the increase from stock dividends and DRIPs may also be too small to be meaningful.

The key point I wanted to visualize was the delta between market fluctuations and dividend growth.  Since my purchases are (generally) self funded by the portfolio, the fields: Increase from New Buys, Less Dividends, Less M&A cash and Incr/Decr from Market Action should equal 100%. 

The selfish reason?  After the four dividend cuts I experienced to start 2019, my assumption was the market was in for a rough year and I went into a little of a retrenchment mode.  My cash position rose and my purchases decreased. Now my dividend run rate is below normal – I might exceed 2018 dividends by month end which would be a month later than usual.  I’m used to coasting into the fourth quarter starting some positioning moves to get a head start for the new year. 

I’m thinking dividends deployed for purchases should be in the 3-5% range.  If I had used this method earlier in the year I probably would have realized faster how far I was lagging behind.

The term M&A Cash may be a little bit of a misnomer as a merger may be the trigger for multiple portfolio transactions which can be illustrated through this example.  The PB/LTXB merger was a cash and stock transaction and I owned both sides – PB in my IRA and LTXB in a taxable account. The cash was received this month.  I will sell PB in the IRA replacing it with TD and finally selling the TD in the taxable account. Excess cash in the IRA was used to create a TD starter position there. However, this daisy chain of events will occur over roughly two months to maximize the dividend payments.  The sales of the (current) overweight PB position and the soon to be overweight TD position will be classified as Positions Reduced.

Others present their results in a manner I found interesting including Dividend Driven and Wallet Squirrel.  Tom at Dividends Diversify had suggested creating an index. This solution is less complex but equally illustrative (I think).  I will probably track (perhaps on the side) the Buys to Dividends ratio as a correlation to market value (think “be greedy when others are fearful”) as this presentation may reflect increased buys when the market drops (or failure to do so).

So I’ll lay it out here for ideas, thoughts and discussion and intend to use it starting with my November review.

April 2017 Update

April brought more noise to the market with geopolitical issues front and center.  The market appeared to acknowledge the fact that even with Republican control of government, a more centrist approach is necessary to accomplish much of anything.  The President’s first 100 days ended with one legislative win; a Supreme Court Justice.  As earnings season kicked into high gear and the French election completed (runoff pending), the markets rebounded and the S&P ended the month with a .91% gain.  Including new money (mostly IRA maximization), my gain was 3.41% (2.32% excluding new money).

Loyal3 Migration

The forced move from the Loyal3 platform is essentially complete.  Full shares arrived at Schwab April 27th.  Fractionals did not move – basically a he said/she said scenario.  Schwab says they would accept them while Loyal3 said they wouldn’t.  All fractional shares on Loyal3 were sold April 28th, netting $218.59.  Loyal3 was basically my ‘spare change’ broker and illustrates the benefits of investing even small amounts.  The trades will settle Wednesday and Friday I’ll transfer remaining funds – after I see which direction the YUM dividend goes.

I decided to use Schwab’s synthetic DRIP for PEP, DIS, SBUX, KO and HAS to mitigate the sting of having to sell shares – even fractionals.  I’ll take the cash on YUM, AMC, AAPL and K.

Headlines impacting my portfolio (bold are owned):

  • 4/3 – IBTX closes Carlile merger
  • 4/4 – NJR/SJI discuss merger
  • 4/4 – MSGN discusses sale
  • 4/7 – JNS merger date expected 5/30/2017 new ticker expected to be JHG w/ qtrly divs
  • 4/10 – UNIT acquires Southern Light (pvt)
  • 4/17 – CCI to acquire Wilcon Holdings
  • 4/17 – BX acquires Eagle Claw Midstream
  • 4/20 – UMBF sells institutional investment arm to RJF
  • 4/20 – SLF acquires Premier Dental
  • 4/24 – NWBI to close consumer finance subsidiary
  • 4/27 –TOWN to acquire PBNC,
  • 4/27 – IVZ to acquire Source UK

Portfolio Updates:

  • Added to JNS
  • Added to VALU
  • Initiated position in PWCDF
  • Initiated position in ARD
  • Initiated position in HOMB
  • Sold LB
  • Sold UL
  • Reduced (fractional positions) YUMC, SBUX, PEP, K, YUM, DIS, SQ, KO, AMC, AAPL, HAS

Dividends:

  • April delivered an increase of 32.55% over April 2016.  17.25% of this increase is attributable to purchases, 48.41% a result of semi-annual cycles (Ireland, Australia) and the remaining 35.51% a result of dividend increases.
  • April had an increase of 20.28% over the prior quarter due primarily to the same reasons.
  • Declared dividend increases averaged 8.72% with 42.94% of my portfolio delivering at least one raise (including 2 cuts – YUM, XRX).
  • YTD Dividends received were 38.1% of total 2016 dividends.  If the current run rate is maintained would exceed 2016 in early November – particularly with most of my semi-annual or interim/final cycles paying during the next quarter.

Spinoffs:

The MET spin (Brighthouse Financial – BHF) remains pending.

Mergers:

Agrium/POT, JNS/HGG.L (estimated completion 30 May) and SGBK/HOMB remain pending.  I did add to JNS and HOMB as both appeared undervalued versus the merger price.

No more Loyal3

Every now and again you wind up getting what you pay for and there’s no such thing as a free lunch.  I probably came to this realization last summer when I ensured that even my smallest holding on the Loyal3 platform had greater than a fractional share.  So the news this week of their migration to FolioFirst was no big surprise.  The issue I have with FolioFirst is the $5 monthly fee.  So transferring my holdings becomes priority one.  In fact Dividend Growth Investor lays out the options fairly succinctly in his post.

Early on, my strategy with Loyal3 was twofold:

  1. Move three horses to the platform to generate enough dividends to play with.  This was accomplished with PEP, AAPL and SBUX.
  2.  Build a group of speculative holdings (less than 1% portfolio weighting) via dividends generated by the first goal.

The free trades with Loyal3 accelerated this process.  Today I’m faced with a (slight) strategy shift.

Sells

An order was placed this morning to sell Unilever (UL) and L Brands (LB).  Unilever due to taking profits off the table and for a sense of protection from a potential single headquarter  location and the possible corresponding tax implications.  L Brands due to uncertainty with their ability to maintain comps while the malls where their stores are located appear to be imploding.  I’ll use this as a tax loss against UL and the required fractional share sales.

Transfer

My remaining Loyal3 full share holdings (YUM, YUMC, AAPL, K, SBUX, HAS, DIS, SQ, PEP, KO and AMC) will be moved … Loyal3 will not move fractionals which will need to be sold.  My goal is to have the transfer complete prior to May 1st which is the ex-div date for the next payer, Hasbro.  I can then sell any remaining fractionals, wait for YUM’s dividend to post (May 5th, went ex-div April 14th), then move any cash into my bank.

My default approach will be to consolidate the holdings into my existing brokerage account which provides the alternative to reinvest dividends.  I will, however, meet with TD Ameritrade today as they (via phone conversations) have indicated they perform OTC ‘grey market’ trades with no surcharge.  As Schwab charges a $50 surcharge, this may clinch the deal for AMTD.

So any Loyal3 strategy shifts in your future?

Update: 20 Apr 2017 – UL and LB sold, decision finalized on move of remaining to existing Schwab account.  AMTD has no set ‘grey market’ policy but will normally adjust the fee.  Lack of certainty killed this option.

Dec 2016 Update

December was a continuation of the Trump effect with significant  reassessment underway in many portfolios.  The DOW continued its march to 20,000 before failing and pulling back at month end.  While consumer optimism is at multiyear highs, this has not resulted in holiday sales records probably due to the inability of a President-Elect’s posturing to translate  into tangible policy change.  This month The S&P gained 1.82%.  My portfolio recorded a gain of 3.92% largely reflecting my overweight position in the Financial sector which has been a beneficiary of election sentiment.  This increases my lead over the S&P for the year to 19.83% achieving one of my 2016 goals of besting the S&P index.

Headlines impacting my portfolio:

  • 12/7 – CIBC/PVTB merger vote postponed
  • 12/13 – WFC fails ‘Living Will’, BAC passes
  • 12/14 – Fed raises .25%
  • 12/20 – BAC sells UK MBNA assets to Lloyd’s
  • 12/20 – AMC receives last approval for CKEC merger
  • 12/21 – KO buys BUD African, El Salvador and Honduras bottlers
  • 12/21 – MET financing for spin secured (BHF)

Blog Updates:

Basically chose to be a slug through the holidays

Portfolio Updates:

  • Added to HAS
  • Added to HWBK
  • New position – CNDT (XRX spin)
  • Added to CVLY (stock dividend)
  • Added to LARK (stock dividend)
  • Added to CBSH (stock dividend)

Dividends:

  • December delivered an increase of 24.0% over December 2015.  This was due about evenly between dividend increases (Y/Y) and October purchases from merger proceeds.
  • December had a 5.4% increase over the prior quarter.
  • Dividend increases averaged 12.3% with 74.5% of my portfolio delivering at least one raise.
  • Dividends received exceeded total 2015 dividends by 29.3%.

Spinoffs:

The MET spin (Brighthouse Financial – BHF) secured financing.

Mergers:

LSBG/BHB expected to close in January 2017.

Jul 2016 Update

Last month the sky was falling primarily on Brexit concerns.  Just a few short weeks later, the S&P and DOW are setting all time records.  Similarly you can choose a Cleveland view of the US economy (“it’s on the cusp of a recession”) or the Philadelphia view (“Tremendous progress has been achieved”).  Sadly reality probably sits squarely in between.  Meanwhile, I’m keeping an eye on Italian banks.  For good measure, the S&P outperformed my portfolio for the first time this year – 3.56% vs 3.0%.  For the year though, I’m ahead by 11.65%.  Headlines related to my portfolio this month include:

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