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.
It’s been about two years since I first invested in Australian issues, choosing to take a slow approach while I obtained some practical experience first hand. Certainly many of the yields are good, but the economy – much like Canada – is resource based. Then there’s the whole franking deal. Plus the foreign exchange conversion – but this has been relatively stable at 75 – 80 cents per USD. Add to that, until recently the selection was limited to ADRs or using a cost prohibitive foreign desk.
May was generally quiet with the market trending generally higher. With few pullback opportunities, I barely deployed new dividends so my cash position increased again. At least the turmoil I experienced moving from Loyal3 subsided and I could resume a more moderate pace. An upcoming election in the UK may present a buying opportunity on weakness in the GBP versus the US dollar. The S&P ended the month up 1.16% while my portfolio recorded a gain of 1.37%. For the year (so far), I’m ahead of the index by 4.07%
Headlines impacting my portfolio (bold are owned):
- 5/1 – DRE sells medical office portfolio to HTA
- 5/1 – TIS suspends dividend
- 5/4 – FHN to acquire CBF
- 5/30 – JNS/HGG.L merger completed (becoming JHG)
- 5/31 – KEY acquires HelloWallet from MORN
- Initiated position in SGAPY
- Added to IVZ
- Added to PWCDF (proceeds from sale of TIS)
- Added to DST
- Added to PLD
- May delivered an increase of 51.44% over May 2016 with the vast majority of this attributable to foreign dividend cycles not held last year.
- May delivered an increase of 38.94% over last quarter (Feb) for the same reason.
- Declared dividend increases averaged 8.89% with 48.02% of my portfolio delivering at least one increase (2 cuts – XRX and YUM; 1 suspension – TIS)
- YTD dividends received were 47.11% of total 2016 dividends which if the current run rate is maintained would exceed last year’s total in early November.
Note: with 14.6% of current dividends paid by foreign sources, the weakening US dollar is providing a tailwind with exchange rates i.e., increasing my return.
The MET spin (Brighthouse Financial – BHF) remains in regulatory review.
Agrium/POT, SGBK/HOMB remain pending