September 2019 Portfolio - More Uncertainty in the Market, but Portfolio Doing Fine

Sept. 30, 2019


First, here is the portfolio's VALUE BREAKDOWN, with:

1. Total Capital Invested (not including reinvested dividends);

2. Total Dividends Received; and

3. Capital Gain (from price appreciation)


Once again, I didn't add much capital to the portfolio this month. I expect this to change by next month, October, as I begin to gain back some stability. So in all, I added only $26.13 to the portfolio in the month of September, bringing my raw invested capital to $4,269.58


Again, it's interesting to see that my expectations for the broad market have been pretty spot on for the last few months, as the S&P did rally back to 3000 this month.  


However, I think the market is at an inflection point right now; a tight sideways corridor for September between 2940 and 3020 is likely to be broken in October. Although, I'm not entirely confident which way that'll be. If I really had to guess, I'd say 'up' as the market is still trending up (higher highs, higher lows).

Regardless, I'm very happy with the portfolio's performance. With the S&P near the highs, Solid Dividend has an annualized return of 15.25%.

BUYS AND SELLS -

I trimmed my position in KLA-Tencor (KLAC) by half, realizing a gain of 84.2% on that half position. This is a tremendous result, producing an annualized yield of 135%. The stock has basically gone straight up since I purchased it at the beginning of the year. 

The reason I decided to trim is because the stock is now trading with a P/E ratio of 18.25, moderately overvalued on my portfolio's scale, and I wanted to move some of my capital into a stock that's become very attractive at fair value. 

That stock is United Health (UNH). I purchased about half a share for $216.72. It's P/E ratio is 15 and the 2020 forward P/E is 13.


Yes, there are some fears going around that sweeping health insurance changes will cripple the company's earnings, but I don't think that's the higher probability. 

BENCHMARKING against the S&P500 shows that I'm lagging the index by 0.78%, which is a fairly fast improvement from last month's 3.26% underperformance. My prominently value portfolio has benefited from the big swing between value and momentum stocks, where value has begun to outperform in the past couple weeks.

The two lines are starting to converge; a little more time will tell if my value approach will begin to outperform.

Now, let's take a look at the SECTOR distribution and performance in my portfolio. 

Healthcare jumped quite a bit and is now a more important sector in the portfolio after my purchase of UNH. 

The best performing sector is Technology with an unweighted average performance of 35.07% (including dividends) across the four stocks in the sector. 

Next, let's check the average performance of stocks based on their DIVIDEND STATUS.

KLAC raised their dividend for the 10th consecutive year, so I gained one additional Contender, which is great. I also added a new Contender by way of UNH, with 10 straight dividend increases as well. 

The INDIVIDUAL PERFORMANCE of every stock in the Solid Dividend portfolio:

Adding UNH to the portfolio, I now own 42 stocks and am positive on 32 of them. Over the entire but brief history of my portfolio, I have a positive stock picking accuracy of 77%. Famed investor Peter Lynch once said that a 60% success rate is more than enough to beat the market in the long run

My best performing stock is no longer Lithia Motors (LAD) as it was for many months. The stock has taken a pause, which by any means is understandable considering the upward move. 

KLA-Tencor (KLAC) has taken the lead, up 85.5% in total since my purchase in January; this includes the partial sell as well as the remaining shares held and dividends received. 

The SOLID DIVIDEND Snapshot (9/30/19)


Annualized Return

As of Sept. 30th, 2019, my portfolio has an annualized (or internal rate of) return of 15.25%, which accounts for the different time periods I invest capital.


If I continue picking good businesses at appropriate valuations and I'm patient for moderate or severe market pullbacks, I expect an annualized return above market average, which on the extremely long-term is 9.8%.

As a long term investor, I'm excited by what lies ahead!


Valuations of Current Holdings


Financials (CFG, CMA, PACW, and SYF) continue to be undervalued or in deep value, understandably so because of lowering interest rates.

AbbVie (ABBV) has bounced handsomely but is still a deep value based on forward expected earnings at least 2 fiscal years away. 

I'm still looking to sell one stock as it approaches a reasonable target: Home Depot (HD). It's already "Highly Overvalued" on my scale.


Currently trading slightly over 23 P/E and with expected growth in single digit percentages for the next 2 and half years, I'm aiming to sell and collect my gains at $250/share, or 25 P/E. 


Waterfall Chart





Stay tuned for more stock analysis, buy updates, and monthly analytics.


Check below for past months' analytics and dividend updates. Stay Solid!