Much anticipated Q2 earnings are hitting the wires and the numbers look as expected. Scary but could have been much worse.

Q2 GDP report came in a little better than the expected showing a decline of -32.9% from April to June on an annualized basis. As crazy as this sounds, markets expected worse at about 34.7%. Fairly inline with expectations.

Q3 is widely expected to show a fairly large bounce off this quarters numbers. If we don’t see a strong bounce on the Q3 numbers, all bets may be off in terms of a quick economic recovery. More companies are finally providing guidance. Q3 numbers will be critical.

Tech has been leading the recovery with many value names stuck in the rut.

Many principled income investors who only hold value dividend paying stocks are still in the red.

Many value stocks are in the slump but seems we are seeing the early signs of a rotation towards value. I’m assuming rotation to value will likely accelerate as positive data from phase 3 trials on vaccines start to hit the wires.

Window to buy value on the cheap may start to close up in the next 2-6 months. So, with that in mind! Time to pick up on these value names while I can!

Time for the progress update!

 

Highlights and Recap

3M (Ticker: MMM)

• Company announced they are working with MIT researchers to develop a rapid diagnostic test for COVID-19.

Apple Inc (Ticker: AAPL)

• Foxconn’s plant in India has now begun production on iPhone 11 models. Apple continues effort to diversify their supply chain away from being concentrated in China.
• Apple crushes Q3 earnings with revenues up 11% on the year to $59.69B vs $52.3B expected. Company states iPhone 11 was a hit.
• Apple board of directors approved a 4 to 1 stock split to be effective on August 31.

Boeing Company (Ticker: BA)

• Company lands military contract worth $23B for F-15EX fighter jets.
• Q2 numbers hit the wire with massive hit on revenues down -25% YY. EPS of -$4.79. Consolidated debt is up to $61.4B with $32.4B in cash. Operating cash flow came in at -$5.3B. Backlog is at $409B. Operating margin at -25.1%. 🤦‍♂️
• 737MAX ungrounding looks to be pushed back to anywhere from 3 to 5 months which includes the time for pilot training.

Company earnings came in worse than expected. I had hoped management to take more aggressive measures! I understand that the nature of this business makes cost cutting extremely difficult but wow! If it wasn’t for the backlog and my long term thesis on future growth in the space and launch division, I may have considered cutting my loss here and moved on. Not happy about SpaceX making Boeing look like amateurs also. 🙄

Energy Transfer (Ticker: ET)

• US district court ordered the shut down of the Dakota Access Pipeline by August 5^th pending further environmental review on July 6th. ET filed an appeal and the order was halted by the U.S. circuit and is pending review. Oil is allowed to flow while the court considers whether the line should be shut due to permitting issues dating back to 2017. 🤷‍♂️

Supreme court may be asked to intervene if decision is unfavorable against ET. 

 Mastercard (Ticker: MA)

• Goldman Sachs places MA on the firm’s conviction buy list. Damn you Goldman! 🙄

Chevron (Ticker:CVX)

• Company will acquire Noble Energy (Ticker: NBL) in an all-stock deal valued $5B and will absorb another $7B of NBL’s debt. That is a 7.6% premium CVX is paying for NBL with $300M in expected synergies.

Qualcomm (Ticker: QCOM)

• Company announces new Quick Charge 5 standard for Android devices. Charge time from 0 – 50% in 5 minutes. 100W charging. 70% more efficient and 10 degrees Celsius cooler operation temps than the Quick Charge 4 and 4+. Product is expected to appear in commercial devices in Q3 of this year.

Come on Apple! We need this for the iPhone!

• Dispute settlement with Huawei has been reached and an agreement for a long-term global patent license agreement has been finalized. Q4 outlook to assume past due royalties of $1.8B from Huawei.

Quite a bit of interesting news to digest this month!

 

Buy Orders

 

Sell Orders

 

Pass Go and Collect Dividends!

 

Dividend Increases & Cuts

Invesco S&P 500 High Dividend (Ticker: SPHD) TTM yield has dropped by -0.03%. (-$0.63 in annual dividends)

Altria Group, Inc. (Ticker: MO) raised its dividend by 2.4%. (+$3.20 in annual dividends)

Net changes to the annual dividends: +$2.57

No cuts for the month! I’ll take it!

 

COVID-19 Dividend Cuts & Projections

• Removed Altria Group from projections.
• Removed Corning Inc from projections.
• Removed Iron Mountain from projections.
• Blackstone Group from 50% to 36.1%.
• Removed Walt Disney from projections (Position liquidated).
• Removed Marriott International from projections (Position liquidated).

My expectations for dividend cuts are slowly improving. HOPEFULLY, the worst is behind us. 🤞🤞🤞

 

Portfolio Snapshot

“Click photo to enlarge”

• The portfolio consists of 27 holdings down from 28 last month.
• Net dividends added to portfolio this month totals $119.37.
• YOY Monthly Dividend is up 24.9%.
• YOY Projected annual dividend is up 29.7%.
• Total YTD Dividend income: $3,712.76

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Wrapping Up

In March, I was expecting massive dividend cuts to result from the pandemic. I was ready to gut upwards of 20% in dividend cuts to my total dividend portfolio.

Luckily, as of this update, this portfolio has only suffered about 5 to 6% in dividend cuts in total. The storm hasn’t fully passed and there is still a good chance we will experience more cuts but I feel the eye of the storm is behind us.

I learned a lot during this pandemic. That is what’s most important. The lessons that we take with us. The experience of investing through such times will make us veterans to the next similar event.

The pandemic is still spreading around the world and the race for a vaccine continues. Fear and angst are relatively still high among the investors. Gold is hitting all time highs and cash is sitting on the sidelines in record numbers.

This pandemic really set the tone for tech and has been a huge reminder that the role of technology will remain crucially important in our future.

Well that is it for this month folks! Onward! 🚀🚀🚀