Monday, July 30, 2018

Home Run Number 17

It has been more than two months since my last home!

I use the term home run to identify a stock in my portfolio that crosses the 100% mark in total returns.

I expected Aflac (AFL) to become my sixteenth home run, but the stock stubbornly stayed just below the 100% mark for two months running and Valero Energy (VLO) beat AFL to the punch!

Last time I identified two contenders for DivGro's 17th home run: AFL and Apple (AAPL). And today I'm happy to reveal the winner! Did AFL finally break the 100% barrier, or did AAPL beat AFL to the punch?


Before answering, 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 216% (40% 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 26% (6% annualized)
  • Home run #5: Reynolds American (RAI) — closed for 180% gain (53% annualized)
  • Home run #6: Main Street Capital (MAIN) — up 65% (22% annualized)
  • Home run #7: Microsoft (MSFT) — up 280% (55% annualized)
  • Home run #8: UnitedHealth Group (UNH) — up 50% (12% annualized)
  • Home run #9: Northrop Grumman (NOC) — closed for 132% gain (46% annualized)
  • Home run #10: McDonald's (MCD) — up 82% (21% annualized)
  • Home run #11: AbbView (ABBV) — up 55% (26% annualized)
  • Home run #12: Lockheed Martin (LMT) — up 93% (25% annualized)
  • Home run #13: Raytheon (RTN) — up 91% (28% annualized)
  • Home run #14: Netflix (NFLX) — up 135% (122% annualized)
  • Home run #15: Intel (INTC) — up 83% (29% annualized)
  • Home run #16: Valero Energy (VLO) — up 95% (50% 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. 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.

Home Run #17


My 17th home run stock is Aflac (AFL), a supplemental health and life insurance company founded in 1955 and based in Columbus, Georgia. In the USA, AFL sells health and disability insurance, mainly as part of employer sponsored group insurance plans. In Japan, AFL provides health insurance, life insurance, and annuity products.

AFL is a Dividend Champion with a streak of 36 consecutive years of higher dividend payments. I own 100 shares of AFL, which should deliver dividends totaling about $104 in the next year.

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


AFL split 2:1 in March.

My split-adjusted cost basis is $25.03 and the initial yield on cost is 2.8%.

On Friday, 27 July 2018, AFL closed at $46.31 per share and the current yield on cost is 4.15%.

Although AFL's share price is not yet double my average cost basis, I've collected about $430 in dividends since April 2013, pushing this holding above the 100% mark in total returns.

Here is a price chart of AFL indicating my buy on 16 April 2013:


Home Run Contenders


AAPL dropped to below 90% in total returns. It sits at 88.6% (or 34% annualized). On AAPL's heels is Amazon (AMZN), on of DivGro's non-dividend-paying stocks. AMZN has returned 82.2% (or 74% annualized). AMZN seems to have the momentum, so it will be interesting to see who wins out!

AAPL and AMZN are in involved in another race, namely to become the first ever trillion dollar company by valuation! As mentioned, AMZN has the momentum and many investors think the honors will go to AMZN instead of AAPL!

Concluding Remarks


With total returns of 102.2%, AFL is the latest home run stock in my DivGro portfolio.

I used to sell half of any position when it doubled in price. This happened in my days as a trader, and I justified such action by saying that I'm now playing with "house" money.

I no longer have a trader's mentality. As a dividend growth investor, most of my positions are income-generating dividend growth stocks and cutting that 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.

2 comments :

  1. Fantastic work. I am still a little while away from a home run but I really like that term. Thanks for sharing!

    ReplyDelete
    Replies
    1. Thanks -- just hang in there and you'll get one soon... that's one benefit of DGI. You buy dividend paying stocks and hold onto them for the long-run, and good things happen!

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