Thursday, February 11, 2021

Home Run Number 34

Yesterday, I noted that DivGro hit two more home runs thanks to record-setting market highs on Monday. I reported that The Walt Disney Company (DIS) became DivGro's 33rd home run stock with respectable annualized returns of 18%.

Today, I'm reporting DivGro's 34th home run stock, one with very impressive annualized returns of 34%! I opened this position in April 2016, so the stock doubled my original capital outlay in just less than three years!

It appears that this recent string of home runs is over now. The closest contender has total returns of 80%, so it has some ways to go before hitting a home run!

DivGro's Home Runs


Here is a list of DivGro's home runs with updated total returns (and annualized total returns):
  • Home run #1: General Dynamics (GD) — up 43% (20% 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 12% (3% annualized)
  • Home run #5: Reynolds American (RAI) — closed for 180% gain (53% annualized)
  • Home run #6: Main Street Capital (MAIN) — up 87% (21% annualized)
  • Home run #7: Microsoft (MSFT) — up 442% (84% annualized)
  • Home run #8: UnitedHealth Group (UNH) — up 100% (28% annualized)
  • Home run #9: Northrop Grumman (NOC) — closed for 132% gain (46% annualized)
  • Home run #10: McDonald's (MCD) — up 54% (24% annualized)
  • Home run #11: AbbView (ABBV) — up 96% (21% annualized)
  • Home run #12: Lockheed Martin (LMT) — up 33% (15% annualized)
  • Home run #13: Raytheon Technologies (RTX) — up 46% (54% annualized)
  • Home run #14: Netflix (NFLX) — up 173% (59% annualized)
  • Home run #15: Intel (INTC) — up 195% (27% annualized)
  • Home run #16: Valero Energy (VLO) — up 23% (5% annualized)
  • Home run #17: Aflac (AFL) — up 114% (21% annualized)
  • Home run #18: Apple (AAPL) — up 432% (84% annualized)
  • Home run #19: Xcel Energy (XEL) — up 24% (17% annualized)
  • Home run #20: Amazon.com (AMZN) — up 162% (55% annualized)
  • Home run #21: Salesforce.com (CRM) — up 72% (31% annualized)
  • Home run #22: Procter & Gamble (PG) — up 88% (13% annualized)
  • Home run #23: Taiwan Semiconductor Manufacturing (TSM) — up 212% (73% annualized)
  • Home run #24: Pinterest, Inc (PINS) — up 192% (405% annualized)
  • Home run #25: Air Products and Chemicals, Inc (APD) — up 66% (30% annualized)
  • Home run #26: QUALCOMM Incorporated (QCOM) — up 118% (68% annualized)
  • Home run #27: Cummins Inc (CMI) — up 110% (27% annualized)
  • Home run #28: NextEra Energy (NEE) — up 114% (43% annualized)
  • Home run #29: BlackRock, Inc (BLK) — up 89% (43% annualized)
  • Home run #30: T. Rowe Price Group, Inc (TROW up 103% (31% annualized)
  • Home run #31: Texas Instruments Incorporated (TXN up 99% (33% annualized)
  • Home run #32: Alphabet Inc (GOOG) — up 102% (34% annualized)
  • Home run #33: The Walt Disney Company (DIS up 101% (18% 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. Also, if I buy additional shares of a home run stock at a higher cost basis, the calculated total returns could also drop below 100%.

      I've reopened positions in NOC and DLR, both of which achieved home run status before I closed my original positions. Repeat positions like NOC and DLR will have to earn home run status again... they don't get a free ride!

      Below is a snapshot of DivGro's existing home run stocks, sorted by total profit/loss%:


      Thirty of my existing positions are home run stocks. The Information Technology stocks MSFTAAPLTSM, and INTC top the list based on annualized returns. I'm also happy that some of my growth stocks, PINS, NFLX, and AMZN are near the top of the list as well. 

      Home Run #34


      My 34th home run stock is Lowe's Companies, Inc (LOW), a home improvement retailer founded in 1946 and based in Mooresville, North Carolina.

      I opened my position in LOW on 16 April 2018, paying $92.50 per share for 100 shares. I've not added any shares to my position since. 

      Below is a summary of my LOW transaction:


      Here is a price chart of LOW indicating my trade:

      Source: Trading View

      I'm happy with the timing of my opening trade and with LOW's performance, which, as mentioned earlier, is impressive given annualized returns of 34%!

      Home Run Contenders


      There is only one non-home run stock in my portfolio with total returns of 80% or above:
      • Broadcom Inc (AVGO) -- up 80% (47% annualized)

      Concluding Remarks


      With total returns exceeding my initial investment, LOW is the latest home run stock in my DivGro portfolio. It appears that this recent string of home runs is over now, with the closest contender being AVGO with total returns of 80%.

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      2 comments :

      1. HI,
        New reader on SA.
        Have you written or can you speak to two concepts ?
        1) What does your target portfolio look like ? For example Chowder give some recommendations, what do you use ? I notice you used the concept of a full position, so obviously you have a structure in mind.
        2) Secondly, and I believe is strongly related to the first question; how would you go about migrating from a full cash position to the portfolio mentioned in #1. Examples of this issue coming up being severance pay and inheritance.

        Thank you very much for sharing. If you have already written on these subject, point me in that direction. Or if not and you think your readers would be interested, I'll happy to wait and read as they are published.

        Steve Adams

        ReplyDelete
        Replies
        1. Hi, Steve Adams -- thanks for your note.

          (1) I don't have a specific target portfolio, though I do now monitor the supersector distribution of stocks in my portfolio with a view to increase my defensive exposure:

          https://seekingalpha.com/article/4381967-65-dividend-aristocrats-ranked-quality-score

          Furthermore, I use DVK Quality Snapshots to assess the quality of stocks, and bias investment decisions to favor higher quality. Also, I accommodate smaller margins of safety (valuation) for higher quality stocks and even consider paying slight premiums for stocks with very high quality scores:

          https://seekingalpha.com/instablog/1033943-ferdis/5389052-dvk-quality-snapshots

          I consider a full position to be about 1% of total portfolio value, for no specific reason other than I have about 90 stocks. I don't like to accommodate positions much larger than about 3.5%.

          (2) This is tricky question to answer, because it depends on your specific goals, which you don't share.

          With the markets at all time highs, there are some crucial questions to answer. What is your investment horizon? Would you need to access any of the cash in the foreseeable future. Do you need to withdraw any money for living expenses? If you invest everything and the market tanks 40%, how would you respond?

          If your investment horizon is long (> decade) and you don't anticipate needing to withdraw money, answering these questions may be easier.

          I can't and won't give specific advice. Here's how I answer those questions, which might help you think through your own situation.

          My investment horizon is at least a decade. Though I'm planning to retire within 10 years, I have a substantial 401(k) portfolio in a money market account to draw from through at least age 70. So, I'm not planning on making any withdrawals from DivGro. As a dividend growth portfolio, primarily, I can expect to collect at least $2,700 per month in dividends, on average, from DivGro. Reinvesting all those dividends will increase the monthly average dividend income over time. If the market tanks 40%, my dividend income should remain about the same, barring dividend freezes, cuts, or suspensions. This would allow me to buy MORE shares with about the same dollar amount every month, so increasing my monthly average dividend income even faster (as I wait patiently for the market to recover from the crash).

          If I inherit a substantial sum of money today, I'd invest most everything in the same way as I've done since starting DivGro in 2013, namely in high-quality dividend growth stocks trading at or near fair value.

          For anyone who might need to access (some of the) money sooner than about 10 years, there are 3 possibilities, all focused on Dividend Growth Investing:

          (1) Invest a portion in dividend growth stocks and keep a portion in a money market account where you can access it easily when needed.
          (2) Stair-step into a full investment over an extended period of time, for example by only buying high-quality and UNDERVALUED dividend growth stocks.
          (3) Invest everything in dividend growth stocks so as to immediately start benefiting from (larger) dividend income, but put a trailing stop on (a portion of) your investments to avoid catastrophic losses in case the market tanks.

          Good luck!

          Delete

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