August 2020 Update

Another month with the market driving through the roof, setting records and leaving the distaste of the Covid-19 shutdowns a distant memory.  Or so the narrative goes.  My tilt towards defense hurt a little once again but I’m not missing too much sleep as I still have concerns over the headlines that are hurtling towards us.  That bridge we’ll cross as it arrives.  Meanwhile on the board for an upcoming post is the Oracles’ venture into Japan and how it mirrors mine (ignoring scale, of course).  With that teaser, the August report card is: the S&P gained 6.55% for the month while my portfolio lagged with a 5.32% gain.  For the year, I remain ahead by 2.97% though the gap is narrowing. 

DIVIDENDS

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

  • August delivered an increase of 17.14% Y/Y which is the start of the downward trend towards normalization (running off comps that distorted reality a little).  This would have been even lower had two payers not delivered a month earlier than last year.  As I’ve previously acknowledged, 2021 comps will be tough.
  • Dividend increases averaged 4.81% with 44.92% of the portfolio delivering an increase (including 8 cuts and 9 suspensions (2 of which were sold)).  This is off last years’ pace and a direct by-product of the global pandemic. 
  • 2020 Dividends received were 77.69% of 2019 total dividends putting me on target to exceed last year’s total in November. The YTD run rate remains over my 110.0% goal but I anticipate this will drop some.  A clearer picture of this will emerge as we enter the fourth quarter.

I have to opine a little on the increases (or lack thereof).  My report from last August was:

Dividend increases averaged 10.2% with 58.59% of the portfolio delivering at least one increase (including 4 cuts). This is off last years’ pace and I believe a new personal record for dividend cuts in a single year since about 1980.

Understandable is the differential between 10.2% and 4.81% (Covid-19), as well as the doubling of cuts and the reduction in the pace of increases.  A little surprising are the number of companies that have not delivered an increase.  Not that caution appears to be rampant, but that either 1) I missed the news, 2 it hasn’t made the news yet or my conglomeration of a portfolio is an aberration.  This will need to be researched further, particularly in light of the fact last August’s weakness was pre-pandemic.  It’s worth understanding whether this was pilot error (stretching for yield) or cracks forming in the real economy now hidden in the Covid-19 response.

Since I began this version of the recap last year, at times it has generated more questions than answers – generally due to portfolio size and nominal activity.  This month I present these issues/anomalies after the recap so if anyone has a better suggestion, let me know.

Notes:

  1. Increase from Dividend Raises was a decrease (hence the red) of -.0024% which of course rounded up to 0.00.
  2. Generally the increase/decrease in value is driven by market fluctuation.  I’m finding that it’s rare that my purchases/sales to exceed 1%.

Summary

I did add one issue this month (HKXCY) on the foreign side of the portfolio.  As the US dollar continues to weaken, my guess is my going forward buys will be slanted domestic.  Still I’m essentially biding time by filling in some gaps while waiting on a more opportune time – which who knows when that will be. 

No spins or mergers to announce.  A 3% stock dividend from AROW is on the horizon.

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