Amazing how fast markets have recovered in one month. Massive swings both ways in a matter of 2 months will be a rare occurrence for us all to invest through. These are historic moves that will be talked about for decades to come. The lessons don’t stop in the first 4 months of this year.

We can come crashing back down but how likely are we to test the recent lows? I’m betting the bottom is already put in.

The S&P 500 closed the month down only -10.2% YTD.

I doubt a V shape recovery but it sure looks like we are in the midst of one.

I’ve heard every single opinion by analysts and investors on why they believe markets are recovering so quickly. I placed all the opinions, facts, and data into my little tiny pot, stirred it up real good, stepped back, observed and had a taste. 🤓

The FED To The Rescue

Once again, It’s the FED’s. Remember that saying “Don’t fight the FED’s.”? Probably a good idea not to bet against them. They placed a foundation beneath the markets. At least for now.

FED’s lowered interest rates to near 0% leaving bond investors and those holding cash to hang dry.

They then pledged UNLIMITED amounts of capital to provide liquidity in bond markets. In other words, they said we’re bailing you out of bonds you desperately want to get out of. We are your door(buyer) out of bonds into stocks because they are on sale right now so go out and do your part to support stocks from free falling…. 🙄

On top of that, corporations knowing the FED’s are standing by the door buying up anything that comes their way made it easier to successfully raise capital by issuing bonds to weather the storm. Even companies likely to have failed to raise capital in this environment due to their credit ratings were successful.

A massive experiment is going on with the FED’s. I wonder what happens if many of the potential toxic corporate bonds on the FED’s books default. Big unknowns here.

But boy did people take advantage. FED’s balance sheet expanded up $2.4T in 1 month. In comparison, it took about 8 years since the financial crisis of ’08 to add $3.6T onto the FED’s books.

Many analysts/investors believe valuations are overdone and don’t make sense at current levels. Perhaps, but I wonder if elevated PE’s will be the new norm to some degree. We now have more capital chasing many of the same assets in many areas of the market. With negative interest rates in many places around the world. The world still seem to view US equities safest place to invest hence the current inflows from overseas. Particularly, companies with good balance sheets seem to be on top of many investors’ lists.

Should we re-calibrate how we feel about valuations going forward? So as long as interest rates are where they currently are??

Just some random thoughts to ponder. Anyhow! Reporting in on the dividends! 🚀

 

Highlights and Recap

3M (Ticker: MMM)

• Department of Defense has awarded 39M N95 mask contracts valued at 133M combined to the following companies: 3M (76M), Owens & Minor (29M), and Honeywell (27.4M).

AT&T (Ticker: T)

• HBO Max is expected to launch on May 27^th and will be offered on Apple devices from launch day.
• CEO, Randall Stephenson will be stepping down from his role after 13 years on July 1^st. COO, John Stankey will resume his position and join the board.

Boeing Company (Ticker: BA)

• 75 Orders for 737MAX from Avolon has been canceled. Avolon also canceled orders for 4 Airbus A330NEO and deferred delivery dates for 25 planes.
• Germany announced orders for 30 F/A 18 Super Hornets and 15 EA-18G Growlers.
• Company raising 25B through the bond market to keep liquidity flowing throughout their supply chain.

Enterprise Products Partners (Ticker: EPD)

• Company is converting NGL wells in Mont Belvieu, Texas to store gasoline.

 

Buy Orders

Raytheon Technologies (Ticker: RTX) – 2 shares purchased at $121.52. (+$5.88)

Waste Management (Ticker: WM) – 2 shares purchased at $88.86. (+$4.36)

JP Morgan Chase (Ticker: JPM) – 2 shares purchased at $83.74. (+$7.20)

JP Morgan Chase (Ticker: JPM) – 2 shares purchased at $95.27. (+$7.20)

Boeing Company (Ticker: BA) – 1 shares purchased at $141.58. (+$0.00)

AT&T (Ticker: T) – 6 shares purchased at $30.20. (+$12.48)

Amphenol Corporation (Ticker: APH) – 2 shares purchased at $80.78. (+$2.00)

Raytheon Technologies (Ticker: RTX) – 3 shares purchased at $62.93. (+$8.82)

Waste Management (Ticker: WM) – 2 shares purchased at $97.36. (+$4.36)

Wells Fargo (Ticker: WFC) – 7 shares purchased at $28.53. (+$14.28)

Boeing Company (Ticker: BA) – 1 shares purchased at $136.60. (+$0.00)

Caterpillar (Ticker: CAT) – 1 shares purchased at $110.97. (+$4.12)

Corning Inc (Ticker: GLW) – 10 shares purchased at $19.77. (+$8.80)

Chevron Corp (Ticker: CVX) – 2 shares purchased at $80.62. (+$10.32)

Energy Transfer LP (Ticker: ET) – 17 shares purchased at $5.69. (+$20.74)

Enterprise Products Partners (Ticker: EPD) – 6 shares purchased at $15.23. (+$10.68)

(NEW POSITION) Mastercard Inc (Ticker: MA) – 4 shares purchased at $246.42. (+$6.40)

Total dividends added this month amounts to $122.44.

 

Sell Orders

There have been no sales for this month.

 

Pass Go and Collect Dividends!

Coca-Cola Company (Ticker: KO) paid $2.46

Iron Mountain Incorporated (Ticker: IRM) paid $19.79

Amphenol Corporation (Ticker: APH) paid $5.75

Medtronic (Ticker: MDT) paid $4.86

Invesco S&P 500 High Div Low Vol (Ticker: SPHD) paid $179.61

JP Morgan Chase & Co. (Ticker: JPM) paid $36.00

Altria Group (Ticker: MO) paid $33.60

Total dividends paid this month comes to: $282.07

 

Dividend Increases & Decreases

Johnson & Johnson (Ticker: JNJ) raised its dividend by 6.3%. (+$7.20 in annual dividends)

Blackstone Group Inc (Ticker: BX) decreased its dividend by 36.1%. (-$55.44 in annual dividends)

• I was expecting a 50% haircut but I’ll take the 36%!

Raytheon Technologies (Ticker: RTX) raised its dividend by 17.4%. (+$23.69 in annual dividends)

• RTN shareholders received 2.33 RTX shares for each RTN shares from the merger with UTX. The equivalent dividend for the RTX shares comes to $0.4045 based on prior dividend payment. The recently announced dividend in the amount of $0.4750 is a 17.4% increase over the prior amount.

Invesco S&P 500 High Dividend (Ticker: SPHD) TTM yield has increased by 0.5%. (+$9.58 in annual dividends)

Apple Inc (Ticker: AAPL) raised its dividend by 6.5%. (+$0.60 in annual dividends)

Net changes to the annual dividends provided by companies from this month comes to -$14.37.

 

Portfolio Snapshot

“Click photo to enlarge”

• The dividend portfolio consists of 31 holdings. (+1 from the prior month)
• YTD Portfolio Value: -7.1%
• Net dividends contributed to portfolio this month: $108.07

 

Wrapping Up

Q1 earnings are starting to roll in and things don’t look as dire as I had expected. At least for the companies in my portfolio. My expectations for the next 2 quarters have somewhat improved since my last update.

My dividend cut expectations have somewhat improved as well. The following cuts and suspensions are shown below:

I’m expecting the worst case scenario when it comes to dividend cuts. Luckily, I am not reliant on this income to survive.

It looks like Boeing is becoming a much longer-term investment than I had expected. The long-term thesis is still in play so I will continue to accumulate shares. I am looking far out! (10 years out)

I plan on keeping my portfolio about this size going forward. I think my sweet spot is around 30 stocks for this portfolio. I don’t like being over diversified.

Can’t wait to see what the months ahead will hold. Hopefully, we can all beat this virus as quickly as possible!

It looks like states and government officials will have to make some difficult decisions on how to open up economies around the country. I’m more optimistic we can open up in phases while maintaining social distancing and requiring all citizens to wear masks.

Invest cautiously. Some industries such as airlines will be burdened with debt for years to come. Probably a good idea to avoid companies that will be paralyzed by debt going forward.

We still need to digest some bankruptcies and see some consolidation in some areas of the markets such as oil and gas. Permanent damage to the economy is likely but needs to be more realized.

Markets bounced really hard with all the uncertainty that is still out there. I feel like we are getting a bit ahead of ourselves. Investors obviously see the light at the end of the tunnel but the question remains, how far till we exit this tunnel? Let’s see what next month holds!

Till the next update, friends! Please stay safe and healthy!