The positive market momentum that was established in June remains steady in July.  Therefore, I can happily report that my Portfolio value continues to march higher.  Thankfully, with history as a guide, more often than not this upward movement will come to fruition.

We are in the heart of earnings season now and the majority of companies appear to be delivering good news.  Of course, my Portfolio has seen its share of companies with good and bad reports, too, but it’s generally been more positive than negative.

With all the earnings news comes a bit more stock movement, and that subsequently results in some movement within my top holdings.  Again this month, I have a new stock at the top of the Portfolio in RPM International (RPM).  RPM has held my top spot before.  The company reached the top spot again this month thanks to an 8% pop on the back of a good earnings report.

Slipping to 2nd was Qualcomm (QCOM), which has drifted lower in price over the past month.  QCOM is slated to report earnings this week, and thus will most likely be on the move in my Portfolio as a result.  Visa (V) has managed to power into the 3rd spot (up from 4th last month).  V delivered good earnings earlier this week, but the stock didn’t react too much.  V just continues to steadily climb higher.  The low yield offered by V is more than compensated for by its price appreciation.

Spinoff Kontoor Brands (KTB) is by far my smallest holding.  This week KTB announced their first quarterly dividend payment, setting the dividend at the $0.56/sh. level that was outlined prior to the spinoff.  In the coming months, I’ll probably make a decision to either sell the 11 shares I received in the spinoff, or add some shares to made it a more significant position in my portfolio.  I could add 40 shares of KTB and it would still be in the running for my smallest position.

On the heels of the KTB dividend announcement came news that VF Corp (VFC) is lowering its dividend amount from $0.51/sh. to $0.43/sh.  As it turns out this is just a reflection of the KTB spinoff that VFC made.  The dividend dollars that are being paid by the new VFC and KTB equal the dividend dollars that were being paid by VFC prior to the spinoff.  However, due to the partial capital return in lieu of any fractional shares of KTB in the spinoff, my dividend total will be slightly lower post-spinoff.  I lost $2.02 of forward dividend income.  This is small enough to be made up in no time.

So what will I be covering in this Portfolio Thoughts post?… just the usual.  I’ll discuss my Portfolio transactions, price movement for my Portfolio stocks, and what might be on my watchlist.

Here we go…

 

Transactions

I managed to make one purchase in July to avoid being transaction-free during the month.  The purchase was actually a follow-on purchase of a stock I initiated a position in last month.

Fifty more shares of Chemical Financial (CHFC) were added.  CHFC is a regional bank in the upper Midwest.  The company is supposed to close a merger with TCF Financial (TCF) this coming week.

More details can be found in my Recent Buy – CHFC post.

This purchase added $68 to my forward dividend income, and it moved CHFC outside of the bottom 10 positions in my Portfolio.

The number of stocks in my Portfolio remains at 47.

 

Price Movement

Note – my price changes cover closing prices from 6/27 to 7/26.

For the 2nd month in a row, I had solid, across-the-board increases from lots of stocks.  It was close a 4-to-1 ratio of stocks with price gains compared to price declines.  37 of my 47 holdings posted a gain, with the other 10 posting a loss.

For the 1st time since March, QCOM did not lead either the winners or losers for the month.  I’m glad to see a little less volatility from this stock.

My top gainer this month is Starbucks (SBUX) at 18.61%.  SBUX posted strong sales comps and solid earnings numbers and shot up nearly 9% this past Friday alone.  However, SBUX has been on an upward trend for most of the entire month.

Other stocks with gains over 10% included the aforementioned RPM climbing 12.34%, Skyworks Solutions (SWKS) moving ahead 11.73%, Texas Instruments (TXN) rising 10.62%, and lastly Gentex (GNTX) gaining 10.41%.  The gains usually came in conjunction with a good earnings report from the company, although SWKS has yet to report, but moved in response to reports from some of the other semiconductor names.  The gain for GNTX followed up a 10%+ gain from last month as well!

Eight other Portfolio stocks rose at least 5%+, too.  Thus, there were plenty of contributions to my success in July.

In general, my technology stocks fared well yet again, as did many of my Consumer Discretionary names.  I’d say my Financial stocks looked good as well.

Looking at stocks declining in value this month, I’m happy to report that I didn’t have a single one with a loss of more than 10%.  In fact, my biggest loser was Johnson & Johnson (JNJ) with a decline of 7.08%.  JNJ continues to deal with negative news surrounding its talc powder, as well as a criminal probe focused on that.

My next largest declines were 3.20% from both Abbvie (ABBV) and Cardinal Health (CAH)… more companies from the Healthcare sector.

Lastly, Iron Mountain (IRM) retreated 3.14% to make the list of notable decliners.  When 3% losses make the list of largest declines for the month, you know things are going well in your portfolio.

Healthcare stocks were the most obvious laggards in my Portfolio this month, with 4 names from that sector posting losses for me, led by JNJ.

 

Watch List

There’s not too much on my watchlist these days, as even if I wanted to buy I’d be limited in the extent of my purchase due to minimal cash on hand.  However, I do have some cash to deploy so it’s best to have a few targets in my sights, just in case.

Within my Portfolio, here are some stocks that I’m watching for possible additions…

With JNJ trailing the market in recent weeks, I’ve got an eye on the stock.  JNJ was a top 5 stock for me for many years, but has been passed by several companies in my Portfolio over time.  JNJ is now in danger of falling out of my top 10.  I think a small purchase could get JNJ back within striking distance of my top stocks.  I could see adding about 10 shares, which would put my share count at just over 100.  I’ll be looking for JNJ to drop to around $126, where it reaches a yield of 3%.

A small purchase of Exxon Mobil (XOM) is not out of the question either.  A current price below $75 would be the lowest I achieved with any XOM purchase.

I’m on the lookout for an addition to my Lowe’s Companies (LOW) position as well.  However, the stock being in the mid $90s would make me more inclined to act.

3M Co. (MMM) is an option for me as well.  I’d take a closer look with a price south of $165, which would allow me to average down a decent amount.

As for non-Portfolio stocks that I’m watching…

Boeing (BA) and FedEx (FDX) continue to be watched.  I haven’t been inspired to initiate a position in either yet, despite months of watching these two.  I would say I’m probably waiting for the negative news to abate.  For the past few months, FDX was my first choice based on valuation, but more recently, the two candidates are looking more like equal choices to me.

A newcomer to my list is UnitedHealth Group (UNH).  While the healthcare sector has not been an out-performer relative to the market in recent months, UNH seems to have held up rather well compared to many of the other stocks in its sector.  UNH’s yield is a bit below the S&P 500 average, but its dividend growth rates over the past 1-year, 3-year and 5-year periods have been outstanding – all over 20%.  It’s payout ratio is still in the mid 30% range, so I’d hope the strong dividend growth can continue, even if at a reduced rate.  I would consider swapping out my CAH position, and maybe even CVS Health (CVS), for a foray into UNH.

 

Thoughts?

What portfolio adjustments have you been making recently?  Have you been focused on improving the quality of the stocks in your portfolio?  Maybe working to increase your overall yield?  Perhaps adding stocks in certain sectors?  Please share your thoughts!