2020 looks to be a year that will be remembered for decades to come. Such a tragic year with the pandemic and the George Floyd incident. I am reminded of Ray Dalio’s raising of concern regards to the wealth gap and income inequities in society. If you haven’t heard his talks in this regard, I recommend you do a quick YouTube search and hear him out. I also highly recommend you read his research. It’s very interesting.

Investing my way through the Covid-19 crisis is like walking through a thorny dark forest. Lots of uncertainty on many fronts of this ongoing pandemic. The fear is exacerbated due to the lack of historic events to take lessons from. It’s hard to ignore the advancements humans have made in technologies and in the field of biotech that helps me sit on the optimistic bench among the divided investors.

There are some interesting signs as traffic in Southern California is on the rise. I was stuck in traffic few days ago for the first time in many weeks!

People are definitely going back to work as many businesses parking lots are filling up. I drive around the industrial zones in Los Angeles and San Diego from time to time and you can definitely tell the lots are filling up. I haven’t seen that in months! I was quite surprised to see such dramatic change in a matter of few days.

The debate on when and how to open up the economy is hot and center. The realization that the US economy was never structured to be closed in the way it has is being quickly realized as many are becoming vocal about the risks of uncontrollable deterioration of the economy and even the potential risks of depression from keeping the economy closed further.

The longer the US keeps its economy closed, the more likely the job numbers shift to permanent losses. It’s either governments do another round of stimulus to place a crutch underneath the economy or suffer permanent economic damage. Data show economic losses are correlated to many health issues. It’s a complex balancing problem.

Tough morally controversial decisions are being made and it looks to be many states are opening with caution.

The price of these debated trillion dollar stimulus come with huge uncertainties themselves. The risks aren’t clear but it makes me wonder how much the country can afford to raise rates if we come across a hyper inflationary environment.

There is currently about 5 trillion sidelined on money market funds, up from 3 trillion since last May. I view that as a healthy amount of pessimism about the direction of the markets which is a good thing. It actually brings me comfort. I prefer this environment than the “sky is the limit” mood in markets.

So many argue that markets are overvalued. I think there are macro factors to consider.

Valuations seem high but perhaps because bond investors have no place to go in this environment. It’s hard to overlook S&P yields relative to treasuries. Capital around the world is seeking better yields and the US is looking like the best place to find them.

The S&P’s currently yields about 2.2% while the 10-year treasuries current sitting at 0.64% as of this writing. In Europe, most 10 year notes are in the negative. Japan is near 0%. Bond yields in all developed markets are practically near 0%. Where do the retired go for income??

What does this mean to me? We may have unusually elevated valuations going forward due to the influx of capital coming into the US equity markets seeking higher yields. 🤓

This is definitely a stock pickers market! Some companies will be weighed down by debt for years to come. Tread carefully and stay away from companies with slower expected growth weighted down by massive amounts of debt incurred during this pandemic. They are likely to tread sideways for quite a while. cough retailers airlines cruises… cough 🙄.

I wish I can rip open some ETF’s and rip out some stocks I don’t like! But that’s the drawbacks of ETF investing. The price to pay for convenience.

ANYWAYS! Time to check on those dividends!

Highlights and Recap

AT&T (Ticker: T)

• Company strikes last minute deal with Comcast to distribute HBO Max streaming service to its customers.
• HBO Max streaming service launches on May 27th.
• Company announced settling 12.5B in global notes with new sales of lower rate notes. Company forecasts dividend payout ratios are expected to be near the lower end of 60% for 2020.

 Boeing Company (Ticker: BA)

• According to NASA administrator Jim Bridenstine, American astronauts will be launching from American soil for the first time since 2011 around 1^st quarter of next year. Boeings Starliner program and SpaceX dragon capsule is expected to save NASA about $20B to $30B.
• Layoff’s announced due to reduced demands of more than 6,000 employees.

Mastercard (Ticker: MA)

• Company is seeing signs of normalization occurring in some markets. Some sectors recovering faster than others. With the relaxation of social distancing measures in specific markets and in combination of stimulus, switch volume is showing improvements in past two weeks, company states.

 

Buy Orders

Waste Management (Ticker: WM) – 2 shares purchased at $99.29. (+$4.36 added to annual dividends)

3M Company (Ticker: MMM) – 2 shares purchased at $148.23. (+$11.76 added to annual dividends)

Raytheon Technologies (Ticker: RTX) – 4 shares purchased at $58.58. (+$7.60 added to annual dividends)

AT&T (Ticker: T) – 7 shares purchased at $29.56. (+$14.56 added to annual dividends)

Boeing Company (Ticker: BA) – 2 shares purchased at $129.15. (+$0.00 added to annual dividends)

Fidelity High Dividend ETF (Ticker: FDVV) – 7 shares purchased at $25.04. (+$8.55 added to annual dividends)

Waste Management (Ticker: WM) – 2 shares purchased at $97.05. (+$4.36 added to annual dividends)

Amphenol Corporation (Ticker: APH) – 2 shares purchased at $86.71. (+$2.00 added to annual dividends)

Energy Transfer LP (Ticker: ET) – 12 shares purchased at $7.70. (+$14.64 added to annual dividends)

Enterprise Products Partners (Ticker: EPD) – 5 shares purchased at $18.01. (+$8.90 added to annual dividends)

AT&T (Ticker: T) – 7 shares purchased at $29.03. (+$14.56 added to annual dividends)

United Parcel Service, Inc. (Ticker: UPS) – 2 shares purchased at $93.66. (+$8.08 added to annual dividends)

Total dividends added this month amounts to $99.37.

 

Sell Orders

There have been no sales for this month.

 

Pass Go and Collect Dividends!

Bristol-Myers Squibb Company (Ticker: BMY) paid $4.95

AT&T Inc. (Ticker: T) paid $205.40

Blackstone Group Inc. (Ticker: BX) paid $24.57

Enterprise Products Partners L. (Ticker: EPD) paid $95.23

Apple Inc (Ticker: AAPL) paid $2.46

AbbVie Inc. (Ticker: ABBV) paid $25.96

Energy Transfer LP (Ticker: ET) paid $148.84

Caterpillar Inc. (Ticker: CAT) paid $18.54

Invesco S&P High Dividend (Ticker: SPHD) paid $178.66

Total dividends paid this month comes to: $704.61 😍

 

Dividend Increases & Cuts

Disney (Ticker: DIS) will not pay 1^st half of dividends for the year resulting in a 50% decrease for the year. (-$5.28 in annual dividends)

• Company pays dividend twice a year. Company decided to forgo 1^st half of dividend ($0.88 per share) to preserve $1.6B in cash in effort to weather current climate. Second half of the dividend still up in the air weather it will be paid or not. Looks like there is a good chance that will be cut as well but we shall see.

Medtronic plc. (Ticker: MDT) raised its dividend by 7.4%. (+$1.92 in annual dividends)

Invesco S&P 500 High Dividend (Ticker: SPHD) TTM yield has increased by 0.2%. (+$4.90 in annual dividends)

Net changes to the annual dividends come to $1.54. (I’ll take it!😅)

 

COVID-19 Dividend Cut (Projections)

My expectations for cuts are slowly improving. Total loss in annual dividends due to cuts now stands at -$365.18. Not bad! I am still expecting to see some cuts.

 

Portfolio Snapshot

“Click photo to enlarge”

• Net dividends added to portfolio this month: $100.91
• Removed my expectations for Disney’s dividend for the year.
• YTD portfolio value: -3.46%

 

Wrapping Up

Close call this month! I’m just glad the portfolio didn’t suffer any major dividend cuts!

It looks like the country is opening up. It’s likely we won’t completely normalize and it seems most investors already expect this. I would expect markets to tread sideways from here as long as we are not hit with something unexpected. Another escalation with China could probably elevate volatility. It looks like markets are expecting Trump to win second term. Potential for vaccines to be approved look to be about 3-6 months out.

The biggest issue is will we have a second outbreak big enough that will cause officials to determine closure. I hope not. Many seem to understand by now the impact of this pandemic. I believe businesses will be left to practice proper protocols. It will dampen the spread but likely not eliminate for some time. But i think life will go on.

I have to agree with many economists that going into this crisis with stronger banks and a strong economy really helped.

Wow! I sound like an optimist. Time to question myself to death on why i’m feeling so optimistic right now. 🤔

Well till next month my friends. Please stay safe and healthy!