July brought more gains to my Portfolio, offering a quick turnaround from last month’s slight dip.  I won’t complain about that.

I’m wary of a pullback in the markets, though.  Thus, my capital investments have been more measured recently.

Progress on the dividend front continues to look good.  As I noted in my Mid-Year Review of 2021 Portfolio Goals, I’m well on my way to having my best year with respect to achieving my Portfolio goals.  I’m especially happy to see my forward dividend income steadily marching higher after a turbulent 2020.  Increasing that dividend income is the primary goal, right?

I don’t have any big changes looming for my Portfolio.  That being said, I’m sure there will be some tweaks here and there.  I still have some work to do with bringing my weighting for a few sectors in line with my preferences.  It will most likely be a slow transition.

Once again, my Top 10 contains the same stocks as last month.  However, as always, there was some movement within the group.  Half of the stocks changed position this time around, with one stock continuing its climb up the list.

During this past week I managed to make a pair of purchases.  If not for those, my transaction cupboard for the past month would have been bare.  I’ll catch you up on those moves.

There wasn’t much in the way of price movement for my Portfolio stocks this month.  No stocks moved up or down the 10% I normally monitor for.  However, my ratio of winners to losers turned positive this month.  I’ll let you know how positive is was very shortly.

In my fairly new Weightings section, I added another detail this month.  In the past, I’ve talked about how I try to keep my sector weightings with +/- 3 percentage points from that of their respective S&P 500 sectors.  Well, now you’ll be able to quickly see how far I’m off, as I now show the weighting differences and color code them as being overweight or underweight.

Lastly, let’s not forget to check out my monthly watchlist.  I’ll take a quick look at the stocks I’m watching both inside and outside of my Portfolio.  One of my purchases this month was part of last month’s watchlist.  Meanwhile, one stock from last month’s watchlist has reached target price territory for me.  Could this become an August purchase?

Here we go… my Portfolio Thoughts, July, 2021 edition.

 

Top 10 Review

While there was some shuffling of positions within my top 10, the stocks remained the same.  By the end of the month, 5 of the 10 stocks held down the same ranking as last month.  As you’ll see, most of the movement existed near the bottom of the top 10.

I like the names in my top 10, and they are fairly well diversified, too.  I’ve got 6 different sectors represented by my top 10 stocks.  I think I’d like to see a Healthcare name sneak into my top 10.  Johnson & Johnson (JNJ) is the closest Healthcare name I have in that regard, and AbbVie (ABBV) is not too far behind that.  JNJ used to be a part of my top 10, but fell out mid last year and hasn’t been back.  I haven’t added to JNJ in a while, and it’s not the fastest in terms of growth (more of a Steady Eddie).

 

 

For several months running, Qualcomm (QCOM) has been at #1 in my Portfolio rankings.  That didn’t change in July either.  In fact, QCOM managed to widen the gap between itself and the closest stock to it by having good performance this past month.

T. Rowe Price Group (TROW) posted more gains in July and secured the #2 spot for another month.  Highlighting the month for TROW was a tremendous $3/share special dividend it paid.  Thank you very much TROW!

Remaining hot after its stellar earnings report in late June, Nike (NKE) climbed two spots to #3.  NKE is close to tripling my investment in the company since I initiated my position back in 2016.

BlackRock (BLK) held steady at #4 again this month, despite a slight dip in its price.  Coupled with TROW, I’ve got a pair of financial powerhouses in my top 5 holdings.

Continuing its recent slide in my rankings is RPM International (RPM).  RPM slipped two spots to #5 on the heels of a negative monthly performance.  Months ago, it was RPM dueling with QCOM for the top spot in my Portfolio.  However, RPM has taken a breather recently.  The stock has drifted roughly 10% lower from the highs it reached about 3 months ago.

Holding down the #6 spot again was Visa (V).  V managed to post a solid return in July, adding to the positive performance it’s achieved over the past quarter or so.

My last stock to retain its ranking compared to last month is Skyworks Solutions (SWKS).  The stock would have finished higher in my rankings had it not fell 6% this past Friday after its earnings release.  Still, SWKS did post a positive month despite the recent dip.  More good news… SWKS announced a 12% dividend raise in that earnings release.

Now we get to the shuffling.  The last 3 stocks in the top 10 rankings changed spots in July.

Moving up a couple of spots to #8 was Procter & Gamble (PG).  After being at bottom of the top 10 rankings for the past 3 months, PG has secured a bit of a buffer.  PG had a good performance in July, managing to post a gain over 5%.

Fading a spot to #9 was Union Pacific (UNP).  UNP had a slightly negative month.  The stock has been rangebound for about 4 months.  UNP is my top Industrials holding, but Fastenal (FAST) isn’t too far behind.

Lastly, I have Lowe’s Companies (LOW).  LOW also slipped a spot in my rankings, to #10 in this case.  LOW was essentially flat for the month of July.  It appears to be consolidating after an impressive run up in the early Spring.

I’ve got a trio of stocks that are outside the top 10 and looking to get in.  There’s a bit of a gap to reach LOW, but a good month could do it.  Pepsico (PEP), Aflac (AFL) and FAST are the stocks that would like to unseat LOW and join the top 10.

 

From the table above, my top 10 holdings now comprise 37.18% of my Portfolio value.  This is 0.31% higher compared to last month.  Strong monthly gains from QCOM and NKE in July helped increase this number.

As for the dividend weighting of my top 10, it ended the month at 26.66%, which is an increase of 0.05% compared to last month.  TROW saw a bump from my reinvesting its special dividend, while SWKS got a boost thanks to its dividend raise.  The other top 10 stocks drifted slightly lower in their dividend weightings during July.

 

Transactions

I avoided a shutout with regard to Portfolio transactions in the last week of the month.  I made a couple of purchases to bookend the week.

Both purchases were of stocks that I already own in my Portfolio.

I added a single share of Lockheed Martin (LMT), and 10 shares of Merck & Co. (MRK).

You can find the details for these two purchases in the following posts:

 

Recent Buy – LMT

Recent Buy – MRK

 

All totaled, I invested $1,137.00 and increased by forward dividend income by $36.40.  About 2/3 of the total investment was directed into MRK.

Since I already owned both stocks I purchased, the number of stocks in my Portfolio remained at 54.

 

Price Movement

Note – my price changes cover closing prices from 6/25/21 to 7/30/21.

Despite a few days with some volatility during the month, it was generally a well-behaved stock market during the month.  In the end, the markets ended higher, as did my Portfolio.

In July, I notched a 1.7:1 ratio of stocks with price gains compared to price declines.  This put my Portfolio in the green for yet another month in 2021, which overall has been noticeably positive.  Of my 54 holdings, 34 holdings moved higher in price, while 20 moved lower.

I didn’t have any big movers in July, either to the upside or downside – no stocks eclipsed the 10% thresholds I look for.  However, the Portfolio definitely tilted to the positive side, with not only more stocks in the green, but with higher percentage gains from the positive group than percentage losses from the negative group.

 

Of my 34 stocks that rose in price, none offered up a gain over 10% (the usual threshold I monitor).  However, 11 stocks managed gains of at least 5%.

The top gainers this month were:

• Quest Diagnostics (DGX), launching 9.39%
• Qualcomm (QCOM), popping 8.83%
• Nike (NKE), rising 8.53%
• Microsoft (MSFT), advancing 7.51%
• Starbucks (SBUX), climbing 7.42%

While a Healthcare name (DGX) led my gainers this month, I got good representation from Information Technology and Consumer Discretionary names (for the 2nd month in a row), with 2 stocks from each sector.

NKE and MSFT were part of my top 5 gainers in June as well… they are running strong!

 

Of my 20 stocks that dropped in price, none dropped more than 10%.  Even better, only 2 stocks dropped more than 5%.

My worst decliners for July were…

• Walgreens Boots Alliance (WBA), sinking 9.61%
• Nexstar Media Group (NXST), dropping 5.18%
• Air Lease (AL), retreating 4.74%
• Caterpillar (CAT), falling 4.42%
• Organon & Co. (OGN), declining 3.91%

Industrial names AL and CAT were part of my top 5 decliners last month as well.  Here’s hoping they don’t make it 3 months in a row by the end of August.

The losses from OGN didn’t impact me much given that this MRK spinoff is the smallest position in my Portfolio.

 

Weightings

 

In general, I target being within +/-3 percentage points of the sector weightings of the S&P 500.

I’ve added the “Weight Diff.” column to quickly show which sectors sit outside my preferred weighting ranges.  If I’m overweight a sector, it’s shaded green.  If I’m underweight a sector, it’s shaded red.  If I’m within my target weighting range, then no shading exists.

You can see that I’m overweight the Industrials sector the most, but much less overweight the Materials and Consumer Staples sectors.  I’ll try to reduce the weightings in the Materials and Consumer Staples sectors naturally, by not adding to them in the short term, putting my investment dollars into other sectors, and thus slowly decreasing their weightings over time.

I may try to do the same with my Industrials weighting, but given that it’s so overweight, it would take a long time to bring it into compliance if I don’t take a more active role.  It’s possible I continue to trim AL and 3M Co. (MMM).  AL isn’t growing as fast as I’d like, and it’s a bit more volatile than my average stock.  Meanwhile, MMM has been disappointing me with their dividend growth.

As for the underweight sectors, there are only two: Information Technology and Communication Services.  These sectors are quite underweight in my Portfolio, too.  I’ve been talking about adding to both sectors for a while, but haven’t found good values there.  I’m closer to adding a name in Communication Services (see my watchlist).

As always, I’ll keep all these weightings in mind as I adjust my Portfolio, and my watchlist.

 

Watch List

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

I’ve got a handful of stocks in the lower half of my Portfolio rankings that I’d like to see increase in size.

They need to have a larger weighting in my Portfolio in order for any good performance to have a meaningful impact on my Portfolio.

Healthcare stocks Bristol-Myers Squibb (BMY) and Amgen (AMGN) are still primary targets.  I could add them now, but would prefer to add BMY below $66, and AMGN below $235.  These target prices have been increased compared to a month or two ago.

Adding to my Utilities would be good.  I’ve got NextEra Energy (NEE), Pinnacle West Capital (PNW) and OGE Energy (OGE) that could grow in size – especially the first two.  I’d like to add NEE below $70, PNW below $75, and OGE below my cost basis (currently $32.68)

I snatched up a share of Lockheed Martin (LMT) when it dipped below the $370 level this past week.  If the stock crosses below that mark again, another share or two might be added.

I’d like to add to my Microsoft (MSFT) position, too, but the valuation is just too high.

 

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

A stock I’ve been watching over the past few months has dipped into my target price range.  I’ve been watching Omnicom Group (OMC) from the Communication Services sector for a dip below $75.  Since this isn’t the highest quality stock, if I do decide to establish a position, it will probably start small with the idea to watch further and add more if it continues to drop.

I started watching toy/gamemaker Hasbro (HAS) last month.  Of course it had a nice earnings report this past week and the stock popped about 12% before pulling back some.  The stock now trades for just under $100/share.  I’ll continue to target $90 (3% yield) as the highest price I’d buy at, but a price under $85 is preferred in order to get a larger margin of safety.

I’ve been watching Huntington Bancshares (HBAN) ever since they acquired former holding of mine, TCF Financial (TCF).  I came close to initiating a purchase of HBAN at $13.15 earlier in the month, as I think they have good value around there.  I was holding out for $13, but it ran up thereafter.  I’ll keep watching HBAN in the short-term to see if I get another chance to establish that position.

 

Thoughts?

With the market continuing its upward climb, have you slowed down your purchases at all?  Might you be looking to trim any positions of yours that look overvalued?  Please share your thoughts!