After having to skip last month’s post due to my lack of time, I’m happy to be able to deliver another Portfolio Thoughts post. I’m just squeaking this in before March comes to an end, and it could be a bit longer, but hey, I got it done!
The top 3 spots in my Portfolio belong to materials company RPM International (RPM), railroad Union Pacific (UNP), and Consumer Staples giant Procter & Gamble (PG). UNP is close to wrangling the #1 position from RPM, but can’t seem to secure it. PG has had a nice run up in 2019 to move into the #3 spot. Not too far behind these three are Aflac (AFL), Visa (V), Pepsico (PEP) and Johnson & Johnson (JNJ). Of the top seven, five are companies that I started with over two decades ago (RPM, PG, AFL, PEP, JNJ). I don’t add much to any of the five these days. Last year’s small addition of PEP was the first time I’ve added to any of them in years. The weighting among them is rather even. They continue to grow, and raise those dividends, so I just sit back and watch them continue to climb. They seem to stay near the top spots in my Portfolio without too much effort. That’s what I like to see!
New capital investment in the Portfolio has been non-existent thus far in 2019, but I’m building up some cash to hopefully put that to an end in the near future.
Due to my missed post last month, I’ve got two months of price movement to look at this time around… some wild swings to note, for sure.
Also, I can’t say my watch list has changed much for companies outside my Portfolio, but on the inside, a few stocks have come to the forefront.
Anyway, let’s try to get inside my head and hear what I may be thinking when it comes to my Portfolio…
Transactions
I’ve yet to make a transaction in my Portfolio in 2019. I haven’t seen the need to sell anything, and limited funds restrict any efforts to make a purchase.
The number of stocks in my Portfolio thus remains at 42. I’ve still got no representatives from the Utilities sector, and just one from the Energy sector in Exxon Mobil (XOM).
Price Movement
Note – my price changes include 2 months of activity this time around, with closing prices from 1/29 to 3/27.
In my last post from January, I saw some positive price movement for my Portfolio stocks, and that continued over the past couple of months.
I saw a little better than a 4-to-1 ratio of stocks with price gains compared to price declines. 34 of my 42 holdings posted a gain over the past 2 months! I typically highlight a few stocks with 10%+ moves, but 7 of the 34 upward movers saw gains of 14% or more. An additional 7 stocks bested the 10% mark.
My clear price gain leader was Nexstar Media Group (NXST) with a rise of 31.1%. The strong price gains from NXST have vaulted it into my top 10 holdings since my purchase nearly 1 year ago. Another healthy price gain came from Altria (MO), climbing 22.6% after bouncing off some recent lows. These upward price movements were followed by homebuilder D.R. Horton (DHI) at nearly 16.0%, and tech giant Qualcomm (QCOM) with a 15.2% jump. Falling just shy of the 15% mark were Air Products & Chemicals (APD) and Lowe’s Companies (LOW)… not bad at all!
On the downside, I had 3 of the 8 decliners lose more than 10%. Falling the most was CVS Health (CVS), dropping 17.5%! CVS continues to digest the Aetna merger, and the regulatory uncertainty in the Healthcare sector doesn’t help them either. Other notable decliners for me were auto parts maker Gentex (GNTX) and Air Lease (AL), falling 11.1% and 10.2%, respectively. The latter two stocks have me looking at them for possible additions.
All in all, more up than down over the first quarter of 2019… a nice recovery from Christmas 2018 decline. Will the market give back the gains over the coming months, or continue to power upward?
Watch List
If I muster up some cash for a purchase, I’ll probably look inward for additions to existing positions, as opposed to adding a new stock to my Portfolio. We’ll see how it plays out.
Here are some of my Portfolio stocks that I’m watching for possible additions…
The size of my JPMorgan Chase (JPM) position is still in the bottom 5 of the Portfolio. The stock continues to hover around the $100 mark. Below that level I’d be interested in adding to my position.
As noted earlier, GNTX could be a possible add, too. I could see adding about 50 shares below the $20 level.
Cardinal Health (CAH) and CVS are at prices where I could see adding some shares, but due to all the uncertainty in the healthcare sector, I’m inclined to invest elsewhere with respect to any capital I raise.
What about sales?…
REITs have continued their climb to start 2019. The prices for Realty Income (O), W.P. Carey (WPC), and Crown Castle International (CCI) in my Portfolio are high enough that I may consider trimming one of these positions. I suspect the Fed decision to hold tight on interest raise increases for the near term has benefited these companies. If I do trim, I’m thinking 20 shares of O may fit what I’m looking to do.
As for non-Portfolio stocks that I’m watching…
After climbing like a rocket to start 2019, the price of Boeing (BA) has retreated after a second notable crash of one of their 737 Max 8 aircraft. I’m sure the company will respond to the issue in an appropriate manner, but the stock may languish for a while as the company deals with it. Due to the price decline, BA is on my radar again, but I’d like the stock much more closer to its recent low of ~$300.
The two other names I’ve been watching over the past few months, General Dynamics (GD) and FedEx (FDX), continue to look interesting to me. I’d be more inclined to initiate a position in GD or FDX at current levels than initiate one in BA.
Thoughts?
Has a lack of new capital hindered your plans to grow your portfolio? Are you happy with the pace of dividend income growth you’ve seen over the 1st quarter of 2019? Please share your thoughts!
It’s good to hear from you ED! Start of the year was definitely good with the price movement and I can see that you made some pretty good buys over the last year and it is showing results 🙂
Thanks for the ideas. FDX also looks interesting to me.
BI
Thanks, BI. I do like the changes I made last year… just wish I could have done more to keep up the capital investment momentum in Q1’19.
Still, the Portfolio is making progress on its own, which is awesome to see.
Appreciate you stopping in and commenting!
Hey ED, having a quiet patch can be a good thing, especially with investing! Things have been humming along pretty nicely it seems. Always tricky when deciding to trim some holdings – the vast majority of the time I regret the sales I’ve made, as I would have been better off just leaving them alone, but it’s a nice feeling to lock in gains! Good luck with your decisions.
Cheers, Frankie
Hey Frankie! Things have been humming along. I love seeing my Portfolio generate so much additional forward dividend income in the absence of any new capital investment.
I agree, deciding to sell can be tricky. However, I usually feel good about my sell decisions more often than not. The same can be said on the buy side. Of course, my decisions will never be perfect. I just try to learn something from what turns out to be the “less-than-desirable” decisions.
I actually trimmed some O the last time it crossed above $70 back in 2016. Happily, I was able to buy back all the shares and then some at $56 and $50 within 18 months. I didn’t sell in 2016 due to a dislike for O or their prospects, or with the hopes of buying back the shares at a lower price – but it worked out that way. I just thought O was over-valued at the time, and that reducing my exposure to O made sense. The recent O move above $70 has me reminiscing about that series of events.
I enjoy reading your portfolio thoughts, ED! Always interesting to hear the reasoning that stands behind your actions.
Looking at the watchlist, I do also like JPM, GD and BA.
Especially BA is quite interesting. Yes, there are many uncertainties linked to the 737 Max 8 issue. Agree with you that the we might see some volatility as long as this issue persits. But it’s also a good oprtunity for long-term investors to buy a great company. I hope to see prices around $300 again.
Just a question regarding utilities.
Is there any specific reason why you’re not invested in this sector yet?
Thanks.
-SF
Glad to hear you like the Portfolio Thoughts, SF. I enjoy putting it together.
I did have a utility last year in SCANA (SCG), but sold prior to the merge with Dominion (D). I sold SCG because there was a lot of uncertainty surrounding the deal going through, SCG’s prospects if the deal didn’t materialize, and there was talk of a possible SCG dividend cut, which there was. That doesn’t sound like a normal, steady utility, does it?
Anyway, in general, due to my investing horizon, I still prefer companies that skew toward faster growing earnings and dividend growth, and utilities are usually more suited for higher yield. I could easily see myself picking up a utility or two in the future, but I’m not in a rush. I do try to keep an eye on my fellow bloggers with regard to their picks in the utility sector, though.
As usual I really like your portfolio thoughts. So this post is a double whammy (which movie?) 🙂
I’ve been looking at FedEx and UPS for a while but still no idea what the right entry price for me is. So I just expanded existing positions this and previous month (see my post).
Hmmm, double whammy… that’s not ringing any bells… you’ll have to enlighten me, Mr. Robot.
I’ll be sure to check out your post. I always enjoy seeing the changes within your portfolio.
Judge Dredd with Sylvester Stallone. 🙂
No wonder I didn’t know it… I know of the movie, but have never seen it.
What does the winner of the race to your #1 spot get your ED?? I’m curious. It was surprising to see RPM in the top spot. Just not a common name in the community, but it is a great company nonetheless. One thing that surprises me about your dividend investing portfolio is that you only own one oil company and no utilities. Just not a trend you typically see, that’s for sure. Even though CVS has been a dud this year, I am still long on the company post merger. With where the industry is going and how things are progressing in the healthcare sector, having a combined drug store and insurance company will be huge. Imagine the benefits Aetna can offer their customers for using CVS as their pharmacy or purchasing items from there?
Bert
#1 gets never-ending love… as long as it can hold the top spot. 🙂
RPM is headquartered in your neck of the woods if I’m not mistaken, Bert. Is the company well-known in your area?
Yeah, not many energy companies or utilities, as they tend to be higher yield, but lower growth. I’m still in growth mode, and thus have shied away from those groups for now.
CVS is tempting here, but with all the changes with both the company and the industry I’ve decided to sit on the sidelines for now. A small additional purchase is not out of the question, though.