The stock market continues to be volatile.  This past month the primary contributor to the volatility appeared to be a potential trade war with our foreign trading partners, especially China.  While a trade war has been in the collective mind of the market recently, the market nevertheless traded sideways for most of the past month.  However, this past week things turned a little ugly, with the S&P 500 dropping nearly 6% as the prospects for the trade war came closer to reality.  The S&P 500 is now just trading above the recent low reached this past Feb. 8th.  It will be interesting to see if the current levels hold, or if the markets move another leg down.

As expected, my Portfolio has not been immune to the stock market decline, and my Portfolio yield has crept up, just under 2.8%.  This is getting close to the highest it’s been in the past year.  I’d be surprised if it managed to reach 3.0%.

Of course, with the market drop comes potential opportunity…. an opportunity to perhaps pick up some stocks trading at prices not seen for a while.  These could be additions to my existing set of dividend stocks, or entirely new stocks introduced to the Portfolio.  If nothing else, it’s seems wise to evaluate my Portfolio and at least see what candidates there are for investment, and perhaps establish some purchase prices so that I can be prepared to act, if desired.

In any case, let’s check out this month’s Portfolio Thoughts.  We’ll go over my purchases this past month, see what price movement there’s been for my Portfolio holdings, and take a look at the stocks I’ve got on my watchlist.

 

Transactions

Again no stock sales this month, but I did have a couple of purchases, and both came as a result of assignment of put options last week.

I purchased 100 shares of biotech Celgene (CELG), and 100 shares of media company Comcast (CMCSA).

CMCSA was on my radar recently, as it was approaching my $37-$38 price target.  I wrote the option so that if was assigned, I’d end up paying $35.55/share after factoring in the premium.  The stock initially declined in part due to Comcast’s offer to purchase European pay TV provider, Sky.  CMCSA has since continued its decline along with the recent market drop.

Neither of these were existing holdings.  CMCSA will move into my dividend Portfolio, but not CELG, as it doesn’t pay a dividend.

You can read more about these assignments in my latest Monthly Options Income (Mar. 2018) post.

 

Price Movement

For the 2nd month running, the number of Portfolio stocks on the rise over the past month were few and far between thanks to more market declines.

Only BDC Main Street Capital (MAIN) managed to show a small gain, creeping up from the low $36s to the mid-to-high $36s – Sad to say this is my winner for the month!

In addition, Starbucks (SBUX) was able to break even, holding the $56 level after a month.

Finally, very small drops were recorded by my REITs (OHI, O, CCI & WPC).  Although their prices declined ever so slightly, they felt like winners compared to the rest of the Portfolio.

On the negative side, I again had plenty of companies suffer 6%-10% price drops over the past month.  However, the following 3 stocks led my group of dividend payers to the downside.

First, I have biotech Abbvie (ABBV), which slid from $122 to $98.  The majority of ABBV’s plummet came just this past week, when they announced they would not seek accelerated approval from the FDA for a Phase 2 lung cancer treatment after concerns about its effectiveness during a recent study.  Despite the setback, ABBV is still up a healthy amount over the past year.

Second, I have tech company Qualcomm (QCOM), which sank from $67 to $54.  There was plenty of drama surrounding QCOM this past month, which consisted of a good deal of back and forth between QCOM and Broadcom (AVGO) regarding Broadcom’s proposed takeover of QCOM, and ended with the U.S. Government shutting down any attempt at a takeover due to national security interests.  Broadcom being currently domiciled in Singapore was at issue for the U.S. government.

Finally, I have pharmaceutical distributor Cardinal Health (CAH) as my last big decliner, tumbling from $71 to $62.  CAH has moved into my buy zone, after being on last month’s watchlist.  Don’t be surprised to see me add a few shares here while the price sits in this neighborhood.  At a minimum I’ll look to add 10 shares, as this would give me over 100 shares, allowing me to write covered calls on CAH.

 

Watch List

Speaking of my watchlist, here are the stocks I’ve got my eyes on this month.

If I decide to add to my existing Portfolio positions in the near term, a few stocks are currently at the forefront.  CAH is one I already mentioned above.

New holding Comcast (CMCSA) continues to be watched, as the price continues to fall after my purchase.  My CMCSA position is currently the 3rd smallest in my Portfolio, so I’m not opposed to averaging down.  The stock is currently sitting a bit above $33, and I’m certainly interested in adding more below that mark.

I continue to wait for Texas Instruments (TXN) to fall a little more.  This, too, is a small stock position (currently my smallest) and I’d like to build it up.  I’d average down with 25 more shares if it dips a litter further.  TXN dropped to about $97 during the market decline in early February and I’d entertain a purchase around that level.

Air Lease (AL) is currently my largest holding, but the recent price drop into the $41 range seems too pessimistic.  I’ll consider adding more should it drop below $40.  The yield for AL is low, below 1%, but the dividend growth is terrific, and the earnings growth is strong, too.

The last current holding that I might add to is Starbucks (SBUX).  This is a holdover from last month.  SBUX is currently trading above $56, but I could see adding about 25 shares should it dip below $53.

With regard to non-portfolio stocks that I’m watching, KAR Auction Services (KAR), mentioned last month, is still on my list.  KAR has held up quite nicely during the recent market swoon, currently trading above $53.  I may not get an opportunity to purchase below $50.  The stock is yielding 2.6% at this time, with a payout ratio a bit lower than 50%.

Specialty retailer Tractor Supply Company (TSCO) has been on a wild ride the past year.  TSCO dipped below $50 last summer, only to ride all the way up over $82 by mid January, and now back down below $60.  TSCO currently yields 1.8%, with a payout ratio around 26%.  Dividend growth has been well over 10%/year for a while.  I think they can grow earnings at a 10% clip.  A price drop below $57 would make it very enticing.

Also, should the market continue to fall and bring down stock prices further, I might look to enter a position in one of several companies that have seemed to be out of reach, especially this past year, due to a high valuation.  These include 3M (MMM), Boeing (BA), Costco Wholesale (COST) & Home Depot (HD).

 

Thoughts?

Did I mention any stocks that you are tracking for possible purchase?  Are stock prices looking good to you with the market’s downward trend?  Have you already made some purchases you’d like to highlight.  Feel free to share your thoughts!