Happy Memorial Day everyone! I am guessing many are traveling and spending time with friends and loved ones. For me, holidays are now officially days I stay indoors to avoid crowds and traffic. Thanks to FIRE, holidays are in abundant supplies as all weekdays are my new holidays. 😊

All I need today is a nice cup of coffee and some good food to share with loved ones to make me happy.

The more wealth I built, I eventually realized where the limits of happiness wealth contributes to life. It is important to discover internally what makes you happy and learn the powers that come with being grateful. Otherwise, you may find yourself emotionally challenged after early retirement.

What saved me from any struggles was my fascination in investing and business that kept my mind well engaged to keep me excited about the future day after day. There is never an ending to learning about business and investing.

I would like to remind all my friends and family not to forget that laughter is medicine! Share it! Give it! And receive it! We all need more of it!

Anyhow, let’s get into a quick update with the dividend portfolio, shall we? 😊

Picture of the Month

Portabella mushroom steak with garlic mustard olive oil sauce. Black rice with sesame oil and seaweed rolled into a ball. Spring mix salad with orange and apple. We are trying to eat more mushrooms in replacement of meat! So good!

Did this for the first time! What a work out! I only wish these things came with more gears.

News That Matters

AT&T (Ticker: T)

AT&T announced they will spin off all media assets and merge them with Discovery (Ticker: DISCA). AT&T shareholders will get 71% of the new company while DISCA shareholders will get the remaining 29%. AT&T will cut dividends, but we don’t have exact figures. We only have estimated guidance of $20B+ in estimated free cash flows post spin off at AT&T and they expect about 40% of this to be paid out in dividends. Keep in mind John Stankey likes to sandbag guidance. AT&T will also take $43B in cash from the deal and put that towards paying off debt leaving the company with a much-improved balance sheet. The reaction from the stock once the announcement was made clearly showed many people relied on T for its high yielding dividend income and was a slap on the face for such investors. However, for those like myself who invested into T not only for the dividends but primarily for the potential of the media assets, this is a positive announcement that should pay off in capital appreciation for investors in 3-4 years. Markets should over time reward the new company with multiples in line with its competitors as the new company executes on its plans to rapidly reduce debt in the first two years as they roll out the streaming business internationally. You are also left with a much flexible AT&T with its much-improved debt structure and balance sheet. I also expect AT&T yields post spin off to be quite reasonable at about 4.5-5%.I look forward to owning the new media assets as I am bullish on Warner Media’s library of assets but more importantly optimistic about the industry overall. I expect the spin off to compliment the streaming business roll out globally thanks to Discovery’s management experience overseas. My research on CEO David Zaslav leads me to be more optimistic overall about what to expect from his leadership with the new company. I also believe the new company may also become an interesting takeover target for one of the tech giants in the future.
AT&T dividends have become a significant payer in my portfolio contributing about 23% of my total dividends. This was due to allocating additional cash into T to shelter from inflation. I expect about 40-50% cut in AT&T dividends. That should amount to about $700-$1000 in annual dividends being cut next year. Post spin off, my view on AT&T being a place to park cash is no longer the best option. So, I may reduce my holdings in T after the split. Till then I will continue to collect my near 7% divy checks. As for the new company shares, I plan on holding them long. The new company will likely not pay any dividends. Perhaps one day when I feel the shares are overpriced, I will take some profits and reallocate towards dividend paying companies. Till then It will sit on the dividend portfolio. That is the plan for now.

At first, I believed T should have held off with the spin off for another few years but after reading about what has been happening behind the scenes in the industry, it looks to be a good move to be the one to make the first move. Interesting lessons were learned from investing in AT&T. I expect long term investors of the new company to be rewarded.

Buy Orders

Sell Orders

I cleaned up the portfolio. Got rid of some small positions and sold off Boeing. I still love Boeing and believe they will do well but this is a dividend focused portfolio and decided to reallocate towards Apple, Mastercard, JP Morgan Chase, and Waste Management. I will likely get back to building a position into Boeing on a later date in the future.