Tuesday, February 6, 2018

Three More Home Runs!

Well, the markets are going nuts and volatility is back big time! As I write this, the CBOE Volatility Index (VIX) is at 42.84, way up from the sub-15 levels it has been at for most of 2017.

Stock prices are see-sawing furiously, so I'm questioning the value of writing this article while things are so volatile. But I'm doing it anyway to keep up-to-date with DivGro's home runs.

Recall that I use the term home run to describe any position in DivGro that has crossed the 100% mark in total returns. Once a position reaches home run status, it retains that status, even if the share price drops. And that's the case with the home runs I'm reporting today. All three of them reached home run status on Friday, 26 January, but now they're trading below the 100% level.

Here is the list of my previous home runs:
  • Home run #1: General Dynamics (GD) — up 226% (46% annualized)
  • Home run #2: Nippon Telegraph & Telephone (NTT) — closed for 125% gain (37% annualized)
  • Home run #3: Digital Realty Trust (DLR) — closed for 102% gain (44% annualized)
  • Home run #4: Altria Group (MO) — up 111% (28% annualized)
  • Home run #5: Reynolds American (RAI) — closed for 180% gain (53% annualized)
  • Home run #6: Main Street Capital (MAIN) — up 50% (20% annualized)
  • Home run #7: Microsoft (MSFT) — up 210% (45% annualized)
  • Home run #8: UnitedHealth Group (UNH) — up 164% (45% annualized)
  • Home run #9: Northrop Grumman (NOC) — up 117% (43% annualized)
  • Home run #10: McDonald's (MCD) — up 85% (25% annualized)
As mentioned, once a position reaches home run status, it retains that status. In the list above, MAIN is at only 50% because I bought more shares (at a higher cost basis) after the stock reached home run status. Similarly, MCD is down to 85% due to the recent market correction.

Home Run #11


My 11th home run stock is AbbView (ABBV), a worldwide, research-based biopharmaceutical company based in North Chicago, Illinois. ABBV is a Dividend Challenger with a streak of 6 years of dividend increases. The dividend is growing at a 3-year dividend growth rate of 15.5%. The stock yields 2.63% at $108.16 per share.


Ticker
Date
     #
   Amount
 Comm
Acct
Init
Ann.Div
Curr
Ann.Div
Total Divs Received
Last Div
     Cost
Basis
   Init
YoC
DABBV2015-08-17362,516.200.00IBR2.040002.84000699.08NOV69.892.92%
DABBV2016-03-09442,470.960.00IBR2.280002.8400056.164.06%
DABBV2016-07-18201,279.940.00IBR2.280002.8400064.003.56%
DABBV2016-12-051006,055.59-7.00IBR2.560002.8400060.564.23%

I bought shares of ABBV on four occasions and now own 200 shares at an average cost basis of $61.61 and an average initial yield on cost of 4.61%. ABBV closed at $124.03 per share on 26 January, easily doubling my average cost basis. Additionally, I've collected about $700 in dividends from ABBV.

Here is a five-year price chart of ABBV showing my buy prices:
Since August last year, the rise in ABBV's stock price has been meteoric. In all likelihood, the stock price will continue to correct until market stability returns.

Home Run #12


My 12th home run stock is Lockheed Martin (LMT), a global security and aerospace company based in Bethesda, Maryland. LMT is a Dividend Contender with a streak of 15 years of dividend increases. The dividend is growing at a 5-year dividend growth rate of 12.4%. The stock yields 2.39% at $333.36 per share.


Ticker
Date
     #
   Amount
 Comm
Acct
Init
Ann.Div
Curr
Ann.Div
Total Divs Received
Last Div
     Cost
Basis
   Init
YoC
DLMT2014-01-0371,032.910.00MOC5.320008.00000280.70DEC147.563.61%
DLMT2016-02-1971,498.630.00MOC6.600008.00000214.093.08%

I bought shares of LMT on two occasions and now own 15 shares at an average cost basis of $180.82 and an average initial yield on cost of 4.42%. LMT closed at $344.64 per share on 26 January, not quite doubling my average cost basis. However, I've collected about $281 in dividends from LMT and total returns topped my initial capital outlay to give LMT home run status.

Here is a five-year price chart of LMT showing my buy prices:
LMT's 5-year price chart is pretty impressive and I'm quite happy with the stock's performance!

Home Run #13


My 13th home run stock is Raytheon (RTN), a leading U.S. military contractor based in Waltham, Massachusetts. RTN is a Dividend Contender with a streak of 13 years of dividend increases. The dividend is growing at a 5-year dividend growth rate of 10.1% and the stock yields 1.61% at $198.01 per share.


Ticker
Date
     #
   Amount
 Comm
Acct
Init
Ann.Div
Curr
Ann.Div
Total Divs Received
Last Div
     Cost
Basis
   Init
YoC
DRTN2014-01-0311982.880.00MOC2.420003.19000183.84NOV89.352.71%
DRTN2016-02-19131,595.490.00MOC2.680003.19000122.732.18%

I bought shares of RTN on two occasions and now own 24 shares at an average cost basis of $107.43 and an average initial yield on cost of 2.97%. RTN closed at $208.86 per share on 26 January, not quite doubling my average cost basis. However, I've collected about $184 in dividends from RTN and total returns topped my initial capital outlay to give RTN home run status.

Here is a five-year price chart of RTN showing my buy prices:
RTN's 5-year price chart also is pretty impressive and I'm quite happy with the stock's performance!

Concluding Remarks


Before becoming a dividend growth investor, I sold half of my shares when a position doubled. I justified the action by saying that now I'm playing with "house" money.

I no longer think that way. Most of my positions are income-generating dividend growth stocks and cutting my income in half just because the position has doubled, seems silly. Now I'm more than happy to hold my home runs and to continue collecting their growing dividends.

Thanks for reading! Hang in there in these turbulent times and stick to your investment strategy!

10 comments :

  1. GOGOGOGOGOGO! I lost 42k yesterday. Made half of it back today. Vol is crazy...

    ReplyDelete
    Replies
    1. Thanks, Financial Velociraptor. I hope you didn't sell everything to "lose" the $42k! You lose only if you sell low :-) Yes, the volatility is crazy!

      Delete
  2. Replies
    1. Thanks, Passivecanadian! It's exciting to be able to count off home runs!

      Delete
  3. Got to love this volatility for selling options. Sadly I was pretty tapped out on capital without risking over leveraging myself. Looks like the defense sector has treated you well. I'm guessing a lot of those purchases came with the threat of defense spending cuts of course that was just noise. Congrats on 13 doubles...err...home runs!

    ReplyDelete
    Replies
    1. The increased volatility is good for options selling, for sure. Unfortunately, I'm so busy at work that I'm not getting enough time to look for options trades. Sounds like you're careful about not over leveraging, which is a good thing. It's best not to overdo it, especially in this volatile market.

      Delete
  4. Great job DivGro. Its awesome seeing so many homeruns in your portfolio. I hope to see a lot more. Thanks for sharing!

    ReplyDelete
    Replies
    1. Hi, More Dividends -- thanks for commenting. It's fun to count home runs and I sure hope I'll see a lot more, too! Take care and happy investing!

      Delete
  5. Omygod DivGro.. That's insane! Way to go!

    DI

    ReplyDelete
    Replies
    1. Hi, DI -- yes, 3 in one day and then the market capitulated! Very interesting journey!

      Delete

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