Written by Robert & Sam Kovacs
Introduction
Already the 6th update. Time flies! Since initiating our All Weather Dividends model portfolio in May, we’ve had the chance to showcase our investment style. This has led to many interesting discussions with our readers, about stock picks, but also about strategy, goal setting, and general philosophy.
The portfolio tracks the investment of a fictional $100,000 and $2,000 per month of extra contributions. Not all of the $100k was invested the first month, so for the first 5-10 months, portfolio additions will be larger than $2,000
Source: Open Domain
This months update includes suggested transactions for the portfolio. We own all of the stocks we suggest buying and sell of the stocks we suggest selling. Because of timing difference and because we are picky on prices, this portfolio is not identical to our portfolios. Some stocks which we own simply haven’t been available at a good entry point since we started tracking the portfolio.
We will present the portfolio’s performance for the past month, then introduce our latest transactions (using the closing prices for the 30th of September). We’ll then give a summary of the portfolio’s investments and cash positions, an overview of the diversification and of expected dividends, before finally presenting an overall table summarizing the portfolio’s holdings.
September was the first real challenge for the portfolio, as markets traded down big time. We’re happy to say, despite giving back some of the gains from previous periods, the portfolio held up quite well.
Performance in September
The portfolio was down 3.89% in September (excluding dividends). The S&P 500 (SPY) widened its gap with the portfolio during the month.
Source: mad-dividends.com
The All Weather dividends portfolio is up 10.95% since inception, while the S&P 500 is up 13.52% since the 15th of May, when we started tracking the portfolio.
|
Year |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
Total |
|
2020 |
+9.14% |
-1.11% |
+3.35% |
+3.71% |
-3.89% |
+10.95% |
Source: mad-dividends.com
The portfolio still trails by 2.5% before the impact of dividends.
The portfolio yields 4.59% relative to the S&P 500’s meager 1.77%. With that in mind, we remain quite satisfied with the performance, as the portfolio lags the index by only 1% or so after dividend income is taken into account.
The top performers remain unchanged, with VFC Corp (VFC), Realty Income (O), Union Pacific (UNP), and Comcast (CMCSA) leading the way.
This month, however, a few more positions went into the red. Chevron (CVX), Oneok (OKE), and Valero (VLO) are still suffering of course. But Iron Mountain (IRM), AT&T (T), Cogent (CCOI), Huntington Ingalls (HII), Omnicom (OMC), Exelon (EXC) and Federal Realty (FRT) are all showing a small loss.
We are not yet overly concerned with the performance of our top performers or of our laggards.
Latest transactions
Buys:
This month 4 new All Weather dividend stocks were added to the portfolio:
- Essex Property (ESS): A dividend aristocrat which is extremely undervalued. Recent Seeking Alpha articles provide excellent coverage of the stock. We think our MAD Chart sums up quite well the undervaluation.
Source: mad-dividends.com
- Snap-on (SNA): we highlighted our interest in Snap-on in our recent article on 5 undervalued dividend stocks. Investors can profit from industrials classic cyclicality by pursuing an investment in this great dividend company.
Source: mad-dividends.com - Prudential Financial (PRU) was also brought up in the same article. The firm is hated right now. Being a life insurance company is usually quite a stable business. But throw a global pandemic and low interest rates at it, and you create massive volatility. The dividend will not be cut, as management remains fully committed to it. The MAD Chart shows that it yields an amount which has never been on offer in the past 10 years.
Source: mad-dividends.com - Pepsico (PEP) was also added. We mentioned it in our article on shifting from overvalued stocks to more undervalued ones. While Pepsico isn’t cheap, it is trading at a slight discount to its historical multiples and we are happy to initiate a position at current prices.
Source: mad-dividends.com
Five Fair Weather stocks were introduced to the portfolio:
- Insperity (NSP): This stock came up in one of our screeners, but it is fellow SA author Michael A. Gayed’s recent article which got us to pull the trigger. The stock still pays a super low 34% of free cashflow, and is ramping the dividend up rapidly. A few years from now, this might look like a steal.
Source: mad-dividends.com
- NASB Financial (OTC:NASB): The small bank is up 11% in under a month since we recommended it in our article on unknown dividend stocks. The small bank is a prime takeover candidate and is trending upwards.
Source: mad-dividends.com - Arbor Realty (ABR): The highest yielding stock in our unknown stock list, Arbor has largely recovered from its crazy lows early this year. Yet it still remains deeply undervalued, and makes a great pick at current prices.
Source: mad-dividends.com - Unum Group (UNM): Buying insurance companies can be seen as a risky move in 2020, but if you buy high quality insurers at basement prices, you’ll likely come out on top. Unum Group fits the bill here, with a massive 6.7% yield and a history of growing the dividend at an aggressive rate.
Source: mad-dividends.com - Greenbrier Companies (GBX): this relatively unknown small cap railroad freight car company has a lot going for it. As a cyclical it is once again trading at values which make an entry attractive.
We then increased our positions in 2 other stocks, which we believe deserve to be expanded: Amgen (AMGN), to increase our healthcare exposure, and T Rowe Price (TROW), which is once again trading at a super attractive yield. The table below summarizes all the transactions.
|
Ticker |
Type |
Num Shares |
Price |
$ Amount |
|
SNA |
All Weather |
14 |
$ 147.13 |
$ 2,059.82 |
|
ESS |
All Weather |
10 |
$ 200.79 |
$ 2,007.90 |
|
PRU |
All Weather |
31 |
$ 63.52 |
$ 1,969.12 |
|
PEP |
All Weather |
14 |
$ 138.60 |
$ 1,940.40 |
|
TROW |
All Weather |
8 |
$ 128.22 |
$ 1,025.76 |
|
AMGN |
All Weather |
4 |
$ 254.12 |
$ 1,016.48 |
|
NSP |
Fair Weather |
8 |
$ 65.49 |
$ 523.92 |
|
UNM |
Fair Weather |
30 |
$ 16.83 |
$ 504.90 |
|
GBX |
Fair Weather |
17 |
$ 29.40 |
$ 499.80 |
|
ABR |
Fair Weather |
43 |
$ 11.47 |
$ 493.21 |
|
NASB |
Fair Weather |
8 |
$ 60.00 |
$ 480.00 |
Source: mad-dividends.com
Summary of portfolio value & cash
In this section, we will give summaries of the cash position, as well as the value of the portfolio’s all weather and fair weather components.
On top of the $2,000 monthly contributions, we aim to invest $8,000 to $10,000 per month until the portfolio becomes fully invested.
Cash Summary
- Cash before end of month transactions: $33,782.45
- Total invested this month: $12,521.31
- Dividends received in August: $351.23
- Monthly contribution to portfolio: $2,000
- Cash still available: $23,612.37
- Total invested cash: $87,227.67
All Weather Summary
- Number of All Weather stocks: 26
- Market value of All Weather stocks: $80,271.58
Fair Weather Summary
- Number of Fair Weather stocks: 16
- Market value of Fair Weather stocks: $10,983.60
Total Summary
- Number of stocks: 42
- Market value of the portfolio: $91,255.18
- Yield on Cost: 4.73%
- Dividend Yield: 4.59%
Diversification
With the extra additions, and the portfolio getting closer to being fully invested, the diversification numbers are starting to look better.
Source: mad-dividends.com
The largest positions are PFE, O, DTE, BAC & CVX respectively.
Looking at sector diversification next, the portfolio remains underexposed to certain sectors. This is mostly because of lack of opportunities in certain sectors. For instance there are very few consumer discretionary stocks we are fond of right now.
Source: mad-dividends.com
Our diversification continues to differ from that of the S&P 500, as our focus on dividend stocks draws in more utilities and more real estate stocks.
The chart below shows diversification at cost.
Source: mad-dividends.com
Comparing the two charts, we can see that financials, industrials, utilities, consumer discretionary, and tech have driven returns so far, while energy, consumer staples and healthcare have been a drag.
Next month’s dividends & 12 month projections
Turning towards income, after receiving $351.23 in September, the portfolio can expect to receive $219.30 in October.
Source: mad-dividends.com
During the next 12 months, the current portfolio is expected to generate $4216.68 (up from $3,632.21 projected from early September) in dividends. Of course this amount will be greater because of future investments.
Source: mad-dividends.com
Current portfolio holdings
As always we include our massive data table with data on all of our current holdings.
|
Company |
Sector |
Stk Stgth |
Div Stgth |
Quantity |
Avg Cost |
Total Cost |
Market Value |
Realized Gain |
Unrealized Gain |
Dividends Received |
Total Return |
Yield on Cost |
Dividend Yield |
Ann Dividend |
Weight |
|
Pfizer (PFE) |
Healthcare |
80.78 |
87.64 |
137 |
$ 36.67 |
$ 5,024.21 |
$ 5,027.90 |
$ – |
$ 3.69 |
$ 31.92 |
$ 35.61 |
4.15% |
4.15% |
$ 1.52 |
5.51% |
|
Realty Income (O) |
Real Estate |
49.23 |
70.58 |
76 |
$ 52.51 |
$ 3,990.76 |
$ 4,617.00 |
$ – |
$ 626.24 |
$ 70.95 |
$ 697.19 |
5.35% |
5.35% |
$ 2.81 |
5.06% |
|
DTE Energy (DTE) |
Utilities |
70.56 |
84.13 |
40 |
$ 102.20 |
$ 4,088.18 |
$ 4,601.60 |
$ – |
$ 513.42 |
$ 40.50 |
$ 553.92 |
3.96% |
3.96% |
$ 4.05 |
5.04% |
|
Bank of America (BAC) |
Financials |
57.23 |
85.12 |
176 |
$ 22.77 |
$ 4,008.06 |
$ 4,239.84 |
$ – |
$ 231.78 |
$ 48.60 |
$ 280.38 |
3.16% |
3.16% |
$ 0.72 |
4.65% |
|
Chevron (CVX) |
Energy |
55.07 |
90.4 |
56 |
$ 89.40 |
$ 5,006.48 |
$ 4,032.00 |
$ – |
-$ 974.48 |
$ 85.14 |
-$ 889.34 |
5.77% |
5.77% |
$ 5.16 |
4.42% |
|
International Business Machines (IBM) |
Information Technology |
84.38 |
96.1 |
33 |
$ 119.86 |
$ 3,955.38 |
$ 4,015.11 |
$ – |
$ 59.73 |
$ 40.75 |
$ 100.48 |
5.44% |
5.44% |
$ 6.52 |
4.40% |
|
V.F. Corporation (VFC) |
Consumer Discretionary |
45.28 |
68.68 |
57 |
$ 53.27 |
$ 3,036.24 |
$ 4,004.25 |
$ – |
$ 968.01 |
$ 54.72 |
$ 1,022.73 |
3.60% |
3.60% |
$ 1.92 |
4.39% |
|
AT&T (T) |
Communication Services |
68.55 |
93.58 |
136 |
$ 29.38 |
$ 3,995.12 |
$ 3,877.36 |
$ – |
-$ 117.76 |
$ 70.72 |
-$ 47.04 |
7.08% |
7.08% |
$ 2.08 |
4.25% |
|
Iron Mountain Incorporated (IRM) |
Real Estate |
63.88 |
68.35 |
142 |
$ 27.95 |
$ 3,969.54 |
$ 3,804.18 |
$ – |
-$ 165.36 |
$ – |
-$ 165.36 |
8.84% |
8.84% |
$ 2.47 |
4.17% |
|
Texas Instruments (TXN) |
Information Technology |
90.3 |
90.21 |
24 |
$ 127.16 |
$ 3,051.92 |
$ 3,426.96 |
$ – |
$ 375.04 |
$ 14.40 |
$ 389.44 |
3.21% |
3.21% |
$ 4.08 |
3.76% |
|
3M (MMM) |
Industrials |
77.04 |
88.88 |
21 |
$ 142.62 |
$ 2,994.95 |
$ 3,363.78 |
$ – |
$ 368.83 |
$ 51.45 |
$ 420.28 |
4.12% |
4.12% |
$ 5.88 |
3.69% |
|
T. Rowe Price (TROW) |
Financials |
87.44 |
90.92 |
26 |
$ 115.91 |
$ 3,013.68 |
$ 3,333.72 |
$ – |
$ 320.04 |
$ 32.40 |
$ 352.44 |
3.11% |
3.11% |
$ 3.60 |
3.65% |
|
Philip Morris International (PM) |
Consumer Staples |
66.86 |
62.21 |
44 |
$ 69.56 |
$ 3,060.44 |
$ 3,299.56 |
$ – |
$ 239.12 |
$ 51.48 |
$ 290.60 |
6.90% |
6.90% |
$ 4.80 |
3.62% |
|
Altria Group (MO) |
Consumer Staples |
30.92 |
93.16 |
81 |
$ 37.38 |
$ 3,027.75 |
$ 3,129.84 |
$ – |
$ 102.09 |
$ 68.04 |
$ 170.13 |
9.20% |
9.20% |
$ 3.44 |
3.43% |
|
Amgen (AMGN) |
Healthcare |
89.97 |
73.67 |
12 |
$ 253.45 |
$ 3,041.44 |
$ 3,049.92 |
$ – |
$ 8.48 |
$ – |
$ 8.48 |
2.53% |
2.53% |
$ 6.40 |
3.34% |
|
Comcast Corporation (CMCSA) |
Communication Services |
93.74 |
80.7 |
56 |
$ 35.92 |
$ 2,011.52 |
$ 2,590.56 |
$ – |
$ 579.04 |
$ 12.88 |
$ 591.92 |
2.56% |
2.56% |
$ 0.92 |
2.84% |
|
Union Pacific (UNP) |
Industrials |
84.33 |
94.58 |
13 |
$ 151.24 |
$ 1,966.12 |
$ 2,559.31 |
$ – |
$ 593.19 |
$ 25.22 |
$ 618.41 |
2.57% |
2.57% |
$ 3.88 |
2.80% |
|
WEC Energy (WEC) |
Utilities |
68.75 |
90.26 |
24 |
$ 84.80 |
$ 2,035.20 |
$ 2,325.60 |
$ – |
$ 290.40 |
$ 15.18 |
$ 305.58 |
2.98% |
2.98% |
$ 2.53 |
2.55% |
|
Southern Company (SO) |
Utilities |
65.16 |
78.56 |
38 |
$ 52.54 |
$ 1,996.52 |
$ 2,060.36 |
$ – |
$ 63.84 |
$ 48.64 |
$ 112.48 |
4.87% |
4.87% |
$ 2.56 |
2.26% |
|
Snap-On (SNA) |
Industrials |
93.26 |
86.5 |
14 |
$ 147.13 |
$ 2,059.82 |
$ 2,059.82 |
$ – |
$ – |
$ – |
$ – |
2.94% |
2.94% |
$ 4.32 |
2.26% |
|
Reliance Steel & Aluminum (RS) |
Materials |
98.39 |
97.29 |
20 |
$ 98.26 |
$ 1,965.20 |
$ 2,040.80 |
$ – |
$ 75.60 |
$ 12.50 |
$ 88.10 |
2.54% |
2.54% |
$ 2.50 |
2.24% |
|
Essex Property (ESS) |
Real Estate |
48.15 |
72.15 |
10 |
$ 200.79 |
$ 2,007.90 |
$ 2,007.90 |
$ – |
$ – |
$ – |
$ – |
4.14% |
4.14% |
$ 8.31 |
2.20% |
|
Prudential Financial (PRU) |
Financials |
51.54 |
68.82 |
31 |
$ 63.52 |
$ 1,969.12 |
$ 1,969.12 |
$ – |
$ – |
$ – |
$ – |
6.93% |
6.93% |
$ 4.40 |
2.16% |
|
PepsiCo (PEP) |
Consumer Staples |
78.8 |
87.6 |
14 |
$ 138.60 |
$ 1,940.40 |
$ 1,940.40 |
$ – |
$ – |
$ – |
$ – |
2.95% |
2.95% |
$ 4.09 |
2.13% |
|
Federal Realty (FRT) |
Real Estate |
25.54 |
78.61 |
26 |
$ 76.30 |
$ 1,983.80 |
$ 1,909.44 |
$ – |
-$ 74.36 |
$ – |
-$ 74.36 |
5.56% |
5.56% |
$ 4.24 |
2.09% |
|
HP (HPQ) |
Information Technology |
67.32 |
91.3 |
62 |
$ 15.94 |
$ 988.18 |
$ 1,177.38 |
$ – |
$ 189.20 |
$ 5.99 |
$ 195.19 |
4.39% |
4.39% |
$ 0.70 |
1.29% |
|
Regions Financial (RF) |
Financials |
53.61 |
90.16 |
99 |
$ 10.13 |
$ 1,003.09 |
$ 1,141.47 |
$ – |
$ 138.38 |
$ 30.69 |
$ 169.07 |
6.12% |
6.12% |
$ 0.62 |
1.25% |
|
Principal Financial Group (PFG) |
Financials |
51.17 |
91.21 |
25 |
$ 40.02 |
$ 1,000.54 |
$ 1,006.75 |
$ – |
$ 6.21 |
$ 21.28 |
$ 27.49 |
5.60% |
5.60% |
$ 2.24 |
1.10% |
|
Huntington Ingalls Industries (HII) |
Industrials |
70.14 |
75.52 |
7 |
$ 151.46 |
$ 1,060.22 |
$ 985.25 |
$ – |
-$ 74.97 |
$ – |
-$ 74.97 |
2.72% |
2.72% |
$ 4.12 |
1.08% |
|
Exelon (EXC) |
Utilities |
55.27 |
58.32 |
27 |
$ 37.80 |
$ 1,020.49 |
$ 965.52 |
$ – |
-$ 54.97 |
$ 4.97 |
-$ 50.00 |
4.05% |
4.05% |
$ 1.53 |
1.06% |
|
Omnicom Group (OMC) |
Communication Services |
63.66 |
96.48 |
19 |
$ 52.65 |
$ 1,000.40 |
$ 940.50 |
$ – |
-$ 59.90 |
$ 6.50 |
-$ 53.40 |
4.94% |
4.94% |
$ 2.60 |
1.03% |
|
Valero Energy (VLO) |
Energy |
57.54 |
88.02 |
17 |
$ 62.47 |
$ 1,061.96 |
$ 736.44 |
$ – |
-$ 325.52 |
$ 16.66 |
-$ 308.86 |
6.28% |
6.28% |
$ 3.92 |
0.81% |
|
Evercore (EVR) |
Financials |
96.96 |
78.18 |
10 |
$ 49.25 |
$ 492.50 |
$ 654.60 |
$ – |
$ 162.10 |
$ 11.60 |
$ 173.70 |
4.71% |
4.71% |
$ 2.32 |
0.72% |
|
Flowers Foods (FLO) |
Consumer Staples |
86.67 |
58.65 |
22 |
$ 22.75 |
$ 500.50 |
$ 535.26 |
$ – |
$ 34.76 |
$ 4.40 |
$ 39.16 |
3.52% |
3.52% |
$ 0.80 |
0.59% |
|
Insperity (NSP) |
Industrials |
93.52 |
91.97 |
8 |
$ 65.49 |
$ 523.92 |
$ 523.92 |
$ – |
$ – |
$ – |
$ – |
2.44% |
2.44% |
$ 1.60 |
0.57% |
|
Unum Group (UNM) |
Financials |
72.96 |
100 |
30 |
$ 16.83 |
$ 504.90 |
$ 504.90 |
$ – |
$ – |
$ – |
$ – |
6.77% |
6.77% |
$ 1.14 |
0.55% |
|
Greenbrier Companies (GBX) |
Industrials |
92.07 |
78.28 |
17 |
$ 29.40 |
$ 499.80 |
$ 499.80 |
$ – |
$ – |
$ – |
$ – |
3.67% |
3.67% |
$ 1.08 |
0.55% |
|
Arbor Realty (ABR) |
Real Estate |
76.22 |
78.09 |
43 |
$ 11.47 |
$ 493.21 |
$ 493.21 |
$ – |
$ – |
$ – |
$ – |
10.81% |
10.81% |
$ 1.24 |
0.54% |
|
Cogent Communications (CCOI) |
Communication Services |
32.77 |
57.89 |
8 |
$ 65.91 |
$ 527.28 |
$ 480.40 |
$ – |
-$ 46.88 |
$ – |
-$ 46.88 |
4.13% |
4.13% |
$ 2.72 |
0.53% |
|
NASB Financial (OTC:NASB) |
Financials |
76.29 |
89.12 |
8 |
$ 60.00 |
$ 480.00 |
$ 480.00 |
$ – |
$ – |
$ – |
$ – |
3.67% |
3.67% |
$ 2.20 |
0.53% |
|
Employers Holdings (EIG) |
Financials |
36.23 |
76.43 |
15 |
$ 32.52 |
$ 487.80 |
$ 453.75 |
$ – |
-$ 34.05 |
$ 3.75 |
-$ 30.30 |
3.08% |
3.08% |
$ 1.00 |
0.50% |
|
ONEOK (OKE) |
Energy |
46.78 |
89.97 |
15 |
$ 32.39 |
$ 485.85 |
$ 389.70 |
$ – |
-$ 96.15 |
$ 14.03 |
-$ 82.12 |
11.55% |
11.55% |
$ 3.74 |
0.43% |
Source: mad-dividends.com
Conclusion
We remain satisfied with the way our model portfolio is going. Nothing has happened which was out of the ordinary and beyond expectations. With the pandemic enduring, the election around the corner, and the news that the president has tested positive, we continue to find opportunities in this polarized markets.
One last word…
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Disclosure: I am/we are long ALL PORTFOLIO STOCKS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.