After some impressive upward stock market movement in November, December has looked disappointing by comparison. There seems to have been some consolidation and rotation taking place in the stock market over recent weeks, but all-in-all it wasn’t a bad month. My Portfolio managed a slightly positive month, which is quite acceptable under nearly all circumstances.
As 2020 draws to a close, I’ve been taking a peak at the goals I set earlier in the year – and I came up short in a few instances (more on this in a future post). Needless to say, the dividend goals were difficult to achieve this year. Unfortunately, the pandemic took a toll on expected dividends, both from a dividend income and dividend growth standpoint, thanks to dividend cuts and suspensions.
However, I was able to continue investing. My investments, plus the rather swift recovery of most stocks from their March lows, allowed my Portfolio to continue growing in value.
Of course, my dividend income continued to grow, too… something I would expect even in the most dismal of years. Reinvested dividends, dividend raises and new capital investment fuel this growth, and even the unusual dividend cuts/suspensions we realized this year could not derail this income growth.
In my Portfolio, December movement within my top 10 stocks is back to normal after a surprisingly quiet November. As you will see, 7 of my top 10 stocks changed positions, although the top 10 stocks did remain the same compared to last month.
I’ve continued tweaking my Portfolio this past month. I made a few transactions, splitting the buys and sells. Little changed from a value or dividend income perspective though. I’ll share more on this later.
As for my watchlist, it remains decently populated, despite the higher markets in 2020. However, my watchlist has been thinning out as of late. I’ve found myself finding value in a particular area rather often. I’ll share that with you near the end.
What’s been going on in my Portfolio over the past 4 weeks? Am I thinking of making any changes as 2020 comes to an end? Let’s find out in my Portfolio Thoughts for December…
Value Movement
As previously mentioned, there was no change to my top 10 Portfolio stocks compared to last month, but there was some decent movement within the top 10.
The only 3 stocks that stayed in place were at #1, #2 and #10, which were Qualcomm (QCOM), RPM International (RPM) and Pepsico (PEP), respectively.
Near the end of December, here’s how things stood…
After 3 straight months of the top 3 stocks staying the same, Procter & Gamble (PG) slipped a spot down to #4. Surging ahead from #5 to #3 was Nike (NKE). NKE had another impressive earnings report recently, with digital sales continuing to exceed expectations.
Now holding down #5 is Skyworks Solutions (SWKS). SWKS powered ahead from the #9 spot it held at the end of last month.
BlackRock (BLK) dropped a couple of spots from #4 to #6. This had more to do with the good December performances of NKE and SWKS as opposed to any noticeably poor performance of BLK.
Climbing a spot from #8 to #7 was T. Rowe Price Group (TROW), which managed to slightly add to its strong November gains.
Visa (V) fell a pair of spots from #6 to #8. Again, slight under-performance from V relative to other stocks was the cause of this. The same can be said about Union Pacific (UNP), as it dropped from #7 to #9.
The #3 through #9 spots remain with fairly close Portfolio weightings, even after this month’s movement. Thus, expect to see the jockeying for position to continue within this group.
Sitting outside the top 10 a bit, but perhaps in striking distance of joining the top 10 with a good month are: Fastenal (FAST), Aflac (AFL) and Lowe’s Companies (LOW).
From the table above, my top 10 holdings now comprise 38.49% of my Portfolio value. This is an increase of 0.15% compared to last month. This was achieved thanks to the price performance of the top 10 during the past month relative to my other stocks.
As for the dividend weighting of my top 10, this ended the month at an even 28.00%, a decline of 0.30%. This stemmed from all Portfolio dividend raises in December coming from stocks outside my top 10.
Transactions
My December transactions consisted of a pair of stock swaps. Thus, 4 transactions in total – 2 buys and 2 sells.
I trimmed Caterpillar (CAT) in order to add to LOW, and then trimmed Air Lease (AL) nearly a week later in order to start a position in Merck (MRK)
The funds I gathered from the sales were essentially reinvested with the purchases, and my forward dividend income barely changed. All the details can be found in the following post…
Recent Transactions – Portfolio Tweaks
With the MRK purchase resulting in a new stock for my Portfolio, my number of Portfolio positions now stands at 50.
Price Movement
Note – my price changes cover closing prices from 11/27/20 to 12/24/20.
As noted earlier, my Portfolio managed a small gain for the month of December. This came on the heels of a monster November.
The month was fairly tame in terms of stocks making big percentage moves, but I did see a few stand out. I also avoided any stocks having large moves to the downside.
This month I posted about a 3:2 ratio of stocks with price gains compared to price declines. I can’t complain about that. Of the 49 holdings (not counting MRK yet), 30 moved higher, while 19 moved lower.
Of the 30 stocks that rose in price, I had four increase over 10% (the usual threshold I monitor), then another four that gained over 5%.
Leading the pack were these 10% gainers:
- The Walt Disney Co. (DIS), posting an 18.08% gain
- Air Lease (AL), climbing 13.72%
- Skyworks Solutions (SWKS), rising 11.05%
- Iron Mountain (IRM), moving up 10.97%
My group notching at least 5% gains were:
- Broadcom (AVGO), advancing 9.22%
- Johnson & Johnson (JNJ), gaining 5.88%
- Nike (NKE), jumping 5.47%
- Lowe’s Companies (LOW), forging ahead 5.24%
DIS paced my gainers. The stock gained nicely after they reported strong streaming success for Disney+ during an investor day.
I see a couple of Information Technology names and a pair of Consumer Discretionary names in this top group, but overall, fairly diversified from a sector perspective.
Of the 19 stocks that dropped in price, not a single one fell over 10%. Even better, not a single one fell over 5%. That’s 2 months in a row now that’s been the case – rather strange! Anyway, not too much action to the downside… I like that.
Here were my worst performers for December:
- Gilead Sciences (GILD), falling 4.93%
- Illinois Tool Works (ITW), retreating 4.61%
- Main Street Capital (MAIN), dropping 3.86%
- Quest Diagnostics (DGX), declining 3.66%
Not too bad if I say so myself… the loses were fairly well contained. Also, as was the case with the gainers, the decliners were diversified across sectors, too.
Watch List
With stocks continuing to creep higher in December, my watchlist keeps thinning out a bit. However, a few sectors continue to show some decent values.
In November, I added to my Healthcare sector holdings (by purchasing a couple of biotechs), and I did so again this month with my MRK addition. Several Healthcare names continue to look interesting to me.
I feel that I’m most overweight in the Industrials sector. The trims I made this month helped me to reduce that weighting a bit, but not enough to make much of a difference. I like my Industrial holdings, so I suspect I’ll remain overweight here.
The sectors I wish to increase my weighting in are Information Technology and Communication Services.
Within my Portfolio, here are some stocks that I’m watching for possible additions…
Amgen (AMGN) and MRK lead my watchlist. This is not only because I think they are fairly valued here, but because these are my two smallest Portfolio positions right now. I’d like to add to AMGN under $210, but may not wait for it to reach that level. MRK I’d be happy to buy south of $80, but again, I might pay a bit more to start building out the position.
I’m still keen on General Dynamics (GD), even though it’s in the Industrials sector. It’s currently trading around $149, and buying it here would lower my $160/sh. cost basis.
3M Co. (MMM) is another Industrials name that is on my radar. I could see adding a few shares below $170.
CVS Health (CVS) in the mid $60s and Realty Income (O) below $60 are options for me, too.
In an effort to boost my existing tech holdings, I would consider Cisco Systems (CSCO) based on valuation. I’d like to add some around $42-$43. I’d like to add to Microsoft (MSFT), too. However, this would not be valuation based, but rather to increase the stock’s weighting in my Portfolio. I might consider dollar cost averaging (a share at a time) into MSFT over the course of 2021. We’ll see.
As for non-Portfolio stocks that I’m watching…
Yet another name in the Healthcare sector, Bristol Myers Squibb (BMY) looks attractive here around $60.
Cogent Communications (CCOI) is still being watched, but it’s inching up and away from me as the weeks go by. A price below $55 is desired. Initiating a position here would help me increase my Communication Services weighting.
Flowers Foods (FLO) remains on my watchlist, but it too is creeping higher in price, making it less likely I’ll buy. I hope to catch the stock below $22.
That closes the door on my Portfolio Thoughts for 2020. I look forward to sharing more thoughts with you in 2021. Happy New Year, everyone!
Thoughts?
Did your portfolio weather the pandemic-related storm of 2020? Perhaps your portfolio was knocked off course a bit with regard to dividend growth or portfolio value? If so, what do you want to do to get it sailing in the right direction again? Please share your thoughts!