It’s been 10 months since I began building out a dividend portfolio from scratch and it has been coming along fairly nicely. This is my first attempt building a portfolio with the focus on dividends and It is definitely a different ball game compared to growth investing.

As much as I love dividends, I am a growth investor at heart. Therefore, I will also focus on companies paying dividends with some better growth prospects down the line. It’s just more exciting investing in growth.

Investing in dividend stocks only for the purpose of dividends may often have investors falling into value traps. High yields often equates to higher risks therefore investors should always scrutinize them.

I often come across portfolios with heavy weighting on ultra yielding stocks which probably may have unintended risks on invested principal. It should not be taken lightly the importance in correlation between yield and risk. Everyone’s portfolio will reflect differently tailored to their risk tolerance but dividend investing have risks masked by yields. I will write more about this on a later post in more detail.

 

Looking at my portfolio as it currently sits, yielding 4.32%, I am fairly comfortable with my risk exposure. I am long in all stocks in the portfolio.

I enjoy picking stocks and personally managing my portfolio. Much of this is almost like a game for me and the main benefit that comes from personal management is the knowledge you gain from the research.

My hope for this website is to inspire those who are not yet invested to get started. My goal is to keep things as simple and straight forward as possible and not get too technical.

So, lets get into it!

 

Quick Recap

3M (Ticker: MMM) – Earnings came in as a shock to many investors resulting in a punishing drop in stock price. The company is facing a cyclical downturn that was somewhat should have been expected in my opinion. I think the stock somewhat got ahead of itself. Am I worried? Not for the company but rather it does make me curious about the magnitude of the economic slowdown after the 2018 tax stimulus wears off on the economy. Earnings for the next quarter should provide better insight on what to expect for the year.

Qualcomm (Ticker: QCOM) – Qualcomm finally settled with Apple resulting in a massive rally in the stock by around 50%. Settlement expectations came in better than expected with the two companies forging an agreement for QCOM to supply chips to Apple once again. Apple will also pay Qualcomm 4.5 to 4.7 billion in a one time payment to settle the dispute for good.  Much better outcome than I was expecting. It was a long 2 year wait but worth it. The company’s outlook looks great for the foreseeable future as well.

Altria (Ticker: MO) – FDA gave regulatory approval and clears way for iQOS paving way for retail of heated tobacco products in the U.S.. The company is dancing it’s way in a difficult regulatory environment and is currently in a transitory phase away from it’s tobacco revenue to electronic products by strategic acquisitions. This story will take at least 2-4 years to get to stabilized and more predictable revenue numbers in my opinion. Investors are paid to ride this out with high dividend yields combined with the continuation of strong dividend increases. Dividend increases may come in lighter the next 2 years.

AT&T (Ticker: T) – Company earnings came in as expected. Nothing too shocking for me. I expect messy numbers for the next 4-6 earnings before we see any sort of stabilization from their hemorrhaging legacy businesses. Investors are all waiting to see how the company executes their streaming business. With great IP after the Warner acquisition combined with their cellular business, there may be some interesting possibilities of unrecognized value and new synergistic business advantages between the two. Company sold partial ownership stake in HULU for 1.4 billion tripling it’s investment, as the CEO focuses on reducing debt going forward.

 

Buy Orders

I purchased 11 Shares of Bristol-Myers Squibb Company (Ticker: BMY) at $46.03, which will add an additional $18.04 in dividend income per year.

I purchased 11 Shares of Wells Fargo & Company (Ticker: WFC) at $47.49, which will add an additional $19.80 in dividend income per year.

The total addition of dividends to the year from this month’s purchase is $37.84.

Health care related stocks have been getting hammered due to investors worried about the political rhetoric related to Medicare and health care costs. Healthcare services related stock valuations have been coming down since 3rd quarter of 2017 and currently at about 3 year lows. It may be a good time to do some shopping here.

 

Sell Orders

There have been no sales for this month.

 

Dividends

Invesco S&P 500 High Div Low Vol ETF (Ticker: SPHD) – $149.48

Altria Group, Inc. (Ticker: MO) – $32.00

JP Morgan Chase & Co. (Ticker: JPM) – $30.40

This month the LBF portfolio paid out dividends in total of $211.88.

April is a weak month for dividend payouts so my plan is to add some more companies who payout on this month over time.

 

Dividend Increases

Enterprise Products Partners (Ticker: EPD) raised its dividend by 0.6%, which added an additional annual dividend income of $1.71 to the portfolio.

Johnson & Johnson (Ticker: JNJ) raised its dividend by 5.6%, which added an additional annual dividend income of $3.00 to the portfolio.

 

LBF Portfolio Summary

“Click photo to enlarge.”

The LBF portfolio closed the month at $128,567.14 which is 4.3% higher than the previous month total of $123,296.50. The portfolio now consists of 17 positions which have increased by 7 since inception of this portfolio back in July of 2018.

As of this month, the portfolio is expected to generate $5,369.03 in annual dividends. That is a 0.7% increase then the previous month which was at $5,331.19. The average current yield is at 4.32%.

A great tool to help keep track of all your investments that I use and recommend is Personal Capital.

 

Conclusion

We seemed to have mixed earnings and some capital shifting towards growth stocks this month. There are some interesting data that show many investors are sitting on more cash then normal. Many investors still believe we are in a late cycle and a recession is eminent in the next year or so.

Personally, I believe when too many investors are in this camp it’s probably less likely we may see this outcome fruition. We will have to see how second quarter earnings pan out to really gauge what is happening with economies around the world.

If the trade deal with China results to better than expected outcome with more open markets between China and U.S. businesses, this should improve business projections for many multi-national corporations and better sustainable valuations going forward.

I do see more political risks ahead which may bring some more volatility in markets as we get closer to 2020. I will be focused on building up my cash this year in hopes to see if any interesting opportunities arise towards the later end of the year or next.

Overall, this month has been another great month. Thank you for reading.