Friday, July 25, 2014

You Sunk My Battleship, One Sale and Two New July Buys

Sometimes you just have to let go so that you can keep moving forward.  Earlier this week I sold out of my position in NAT.  This position was originally bought as a bet that the shipping industry was about to see a turnaround.  While I think the shipping industry is an interesting one at this time I felt like my position in NAT was a bit of a hot potato.  The company is well known for destroying shareholder equity by issuing shares and diluting value.  On one hand this is directly damaging to shareholders, on the other this allowed NAT to raise money without taking on debt, something which has helped the company immensely as the industry has tanked since the recession.  Similar shipping companies have not fared as well as the debt piled up and earnings fell.  Then there is always the ticking time bomb of China, whose shipyards are churning out more and more new ships which is leading to oversupply.

Overall I felt like I was stuck in a do loop, continuously analyzing this stock until I finally decided to take my profits and invest them elsewhere.  I sold 157 shares for a total of $1450.07 accepting an adjusted gain of just over 10%  Not bad for one month and definitely a learning experience for me.  This brings my total stock trading profit up to $432 for the year.

With this money, and some extra capital I initiated two new positions for my portfolio.  I ended up purchasing 22 shares of POPE (Pope Resources) for a total of $1501.59.  I also picked up 10 shares of BA (Boeing) for a total of $1252.49.  Boeing is one company that I have been interested in owning for a long time.  I took the recent sell off after earnings as an opportunity to initiate a position and it is one of those companies that I plan on holding long term.    After this portfolio reshuffling my 12 month forward dividends now sit at $2260.16 and I am sleeping significantly better at night.

Wednesday, July 16, 2014

June Spending, Dividend Income and a July Buy

It's looking like blog updates are going to be less frequent for the foreseeable future as my work hours are starting to pile up once again.  Overall June was my best month of the year for both dividend income and spending.  The numbers speak for themselves!

June Spending 

Total spending came in at a very low $849.81.  This is by far the best spending month I have had since I started this blog back in February.  The main reasons this number is so low has to do with the fact that my first mortgage payment wasn't due until July 1st so I had no rent or mortgage to pay in June.  June was also the first month that my work has started making my student loan payments.  This saves an additional $121 every single month which I will happily put to work earning me dividends.

My food and dining, shopping, and utility bills were higher than normal.  I had to pay utilities on two properties in June which propped up spending.  I also needed to buy a few household items to do some repairs/renovations on the new house.  I took friends out for dinner a few times and also bought groceries for a family barbecue which increases the food bill to slightly higher than normal.

June Dividend Income

The majority of my stocks have dividend distributions that occur in June.  As such it was by far my biggest dividend haul to date.  Dividend payments were as follows:

AWLCF: $50.51
INTC:      $10.13
CVX:       $9.63
TGT:        $7.74
MCD:      $8.91
PSEC:      $33.13
SDRL:      $43.00
GLPI:       $16.12

The total haul for the month of June was $179.17  When compared to last quarters March dividend income of $46.82 we have an increase of over 382%  I couldn't be happier with the increase which is mostly attributed to the fact that almost all of my high yield income investments pay out in this time period.  This brings my total dividends received in my first 6 months of investing up to $348.58.

Total dividend coverage for the month of June was 21.08% That little sliver of dividend income has had its first very noticeable month.  This is mainly due to the supplementation of my dividend growth stocks with high income investments.  My ideal portfolio at this time is an equal combination of dividend growth and income investments.  The higher yield income investments typically carry higher risk in particular risk to dividend distributions/increases due to very high, sometimes greater than 100% payout ratios.  There is a very real possibility of a poor quarter causing a dividend decrease.

 I carefully monitor these higher yield investments and consider all of these positions as possible trades.  I will typically pick up higher yield positions in industries that have seen hard times.  For example SDRL and AWLCF (offshore drilling) which has been rallying nicely for the last few months after a severe decline.  NAT (shipping) which is an industry that has still not recovered well since the financial crises.  However indicative rates (how much it costs to contract out an oil tanker) have risen substantially in the last few weeks causing the stock to bounce nicely (might sell soon).  Conversely my dividend growth positions I plan on holding and allowing the distributions to grow long term.  They are my SWAN (sleep well at night) investments that require significantly less attention and preening.

July Stock Buy

Earlier this month I picked up 59 shares of CVRR for a price of $25.69 per share for a total investment of $1525.69.  My new 12 month forward dividend income sits at $2,316.4 with this purchase.  This is another high income play for me that pays out the majority of its free cash flow in dividends.  A risky play similar to my purchase of AWLCF, CVRR owns and operates two refineries.  The company is currently recovering from difficulties at one of their refineries last year which caused a major decrease in income/company value.

Currently considering for my second July purchase:
RY, WFC or TD  (I keep wanting to buy a financial but the prices keep rising.  I like each of these companies and might just pull the trigger regardless instead of missing the bus)
NORSB:  illiquid microcap great analysis here:
GE, RTN, LMT, AGU, POT (still need to do more analysis.)
Also closely monitoring the merger of RAI and LO for a buying opportunity.

Considering selling my position in NAT

Thanks for reading folks!