Saturday, May 19, 2018

Home Run Number 16

About a month ago, I revealed DivGro's fifteenth home run stock, Intel (INTC). A home run stock is any position in DivGro that crosses the 100% mark in total returns.

In that article, I mentioned that Aflac (AFL) was closest to earning home run status, as it was the only stock with total returns above 90%.

Well, another stock beat AFL to the punch! The stock soared 20% in the past month, and today it recorded an all-time high of $121.04 before closing at $120.56. Read on to learn about DivGro's 16th home run!

Before revealing my latest home run stock, let's look at DivGro's previous home runs.

Previous Home Runs


Here is a list of DivGro's previous home runs with updated total returns (and annualized total returns):
  • Home run #1: General Dynamics (GD) — up 241% (42% 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 21% (5% annualized)
  • Home run #5: Reynolds American (RAI) — closed for 180% gain (53% annualized)
  • Home run #6: Main Street Capital (MAIN) — up 60% (22% annualized)
  • Home run #7: Microsoft (MSFT) — up 242% (49% annualized)
  • Home run #8: UnitedHealth Group (UNH) — up 195% (49% annualized)
  • Home run #9: Northrop Grumman (NOC) — closed for 132% gain (46% annualized)
  • Home run #10: McDonald's (MCD) — up 85% (23% annualized)
  • Home run #11: AbbView (ABBV) — up 79% (41% annualized)
  • Home run #12: Lockheed Martin (LMT) — up 89% (25% annualized)
  • Home run #13: Raytheon (RTN) — up 105% (34% annualized)
  • Home run #14: Netflix (NFLX) — up 115% (125% annualized)
  • Home run #15: Intel (INTC) — up 103% (38% annualized)
Once a position reaches home run status, it retains that status even if the stock price drops and the total returns dip below the 100% mark. This is what happened with MCD, ABBV, LMT, and RTN.

Furthermore, if I buy additional shares of a home run stock at a higher cost basis, the calculated total returns could drop below 100% as well, such as with MO and MAIN above.

Home Run #16


My 16th home run stock is Valero Energy (VLO), an independent petroleum and marketing company founded in 1955 and based in San Antonio, Texas. VLO’s refineries produce conventional and premium gasoline, including gasoline meeting the specifications of the California Air Resources Board.

VLO is a Dividend Challenger with a streak of consecutive years of higher dividend payments. I own 180 shares of VLO, which should deliver dividends totaling about $576 in the next year.

Here is a table showing the buy dates, number of shares, and cost basis of each lot:


The average cost basis is $62.13 and the average yield on cost is 5.15%.

Today, VLO closed at $120.56 per share and the stock yields 2.65%.

Note that VLO's share price is not yet double my average cost basis. But I've collected about $777 in dividends since Augst 2015, which pushes this holding above the 100% mark in total returns.

Here is a six-year price chart of VLO showing my buy prices:


At first, my VLO position performed poorly, allowing me to buy additional shares at a lower cost basis. But since June 2017, VLO's performance has been spectacular!

Home Run Contenders


AFL is stubbornly staying just below the 100% mark. The stock is at 97% and shows an annualized profit of 19%. The next highest total return is from Apple (AAPL), which is up 83% or 35% annualized.

Concluding Remarks


With total returns of 100.9%, VLO is the latest home run stock in my DivGro portfolio.

Before I became a dividend growth investor, I sold half of any position when it doubled. I justified the sale by saying that I'm now playing with "house" money.

I no longer have a trader's mentality. Most of my positions are income-generating dividend growth stocks and cutting my income in half just because the position has doubled is silly. Rather, I allow my winners to run as I continue to collect the regular (and growing) dividend "checks".

Thanks for reading! 

Please tell me about your own home run stocks and how many you have in your portfolio.

6 comments :

  1. Nice Divgro. Congrats on another homerun!

    ReplyDelete
    Replies
    1. Thanks, Passivecanadian! It's fun to celebrate when this happens, but its more fun to collect dividends every month! Take care and happy investing.

      Delete
  2. Ferdi,

    I think you have earned yourself a glamorous strut around the bases for yet another home run here. Now here is the big question, did you flip your bat when it crossed 100%, stand, and admire the ball before jogging around the bases :)

    Congrats on another great investment success!

    Bert

    ReplyDelete
    Replies
    1. Hi Bert -- thanks for your hilarious comment!

      Thursday night I saw Brandon Belt hit his fourth home run in four consecutive games. This one was unique, though, as the ball seemed to bounce back into the field off of the top of the wall. Belt stopped at 2nd base, where he stayed for several minutes until reviews confirmed that the ball actually bounced off of the railing ABOVE the top of the wall. Belt then had to complete the second half of his home run!

      Some DivGro home runs seem to be ones where the stock gets stuck about half-way for a long time before completing the home run...

      Delete
  3. Outstanding, FerdiS! The hits just keep coming with you. Congratulations.
    It looks like I have a potential home run in Visa (V) if it can creep over $136.

    ReplyDelete
    Replies
    1. Thanks, Engineering Dividends! I enjoy the celebration and the fun baseball metaphor.

      Fingers crossed that V does its thing!

      Delete

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