Friday, January 3, 2014

2013 Year in Review

2013 was quite a year - the S&P was up 30% and everything seemed to be going right!  And then there was my portfolio...

Thoughts: Looking back on 2013
I started the year knowing I need a strong business plan, but did not immediately create one and was investing based on a loose set of principles .  My portfolio was a mess in January - I held 8 strong dividend paying stocks, and 5 growth companies (4 being risky biotechs).  In early spring, I completed my business plan and created a model portfolio, one which I hoped to trade to by year end. 

I made a very big mistake in May after the completion of my business plan.  Instead of reducing my 5% position in Amarin, I believed there was easy money to be made so I increased it above my speculative stock allocation limit of 1% to 7% in this case.  This mistake cost me $3k or 4% in performance for the year, potentially more if you assume I put that $3k in another company that had positive returns.

My second issue was that I traded too much in 2013.  In total, I had made 30 trades at a cost of $300.  This was mainly due to the repositioning of the portfolio, but I expect to reduce this to 20 trades or less in 2014.

In a more positive light, I added 7 new dividend paying stocks and increased my yearly income by 24% versus last year.  I have revised my plan a bit and pull it out weekly to ensure I am working to get my allocations in line with the limits that the business plan specifies.

All in all, I've learned some valuable lessons this past year.  Number 1, sticking to one's business plan is essential.  The plan helps remove much of the irrational and performance chasing behaviors that we as investors may exhibit from time to time. It also provides goals to achieve and rules to play by to achieve those goals.  Second, wealth building takes time.  I've created my own calculator and it shows what inputs are necessary to achieve my goal of $2M in dividend paying assets by 60.  This will help me understand if and when I have to contribute more capital to meet the expected portfolio value instead of moving money to riskier assets to play catch up.  Last, I've learned that investing in higher quality company requires less of my time.  Almost every day in 2013 I watched my positions and the market.  In 2014, I am going to reduce the amount of time I spend reviewing my portfolio significantly. 

Thoughts: 2013 Year End Moves
Sold - ACTC: Management was not delivering according to their timelines and too much cash would be needed which means dilution.  I like the science this company is working on, but from an investment standpoint, I'm moving on to another company. 
Buy - SCRC: This replaced ACTC.  SCRP is a turnaround play on wholesale distribution and sales of OTC drugs to small pharma.  The company is a mini McKesson and has been increasing revenues quite a bit in the last few months.  Their wildcard play is for RapiMeds, a rapid melting form of Tylenol for children in China.
Sold - AMRN: sold half position for long-term loss of ($3050), which reduced capital gains of $4041.  This was done for tax purposes.
Buy - KO: initiated half of a full 4% position in KO at 39.35 for consumer staple exposure.
Buy - DE: initiated position of 2.5% for DE, will not buy to 4% given cyclicality of company earnings, but stock is up 10% in 4 weeks.
Sell - SO: sold to realize short term loss ($215) vs short term gains of $2288 (due to covered call profits in 2013).  Will look to add back to SO after wash sale period ends.
Buy - XEL: bought with SO proceeds, initiated half of a full 4% position.  XEL appears undervalued by ~15%.


Thoughts: Next Year (2014)
In 2014, I plan to further maneuver my portfolio in line with the model. This mainly involves increasing the core port of dividend growth names from 60% to 70% minimum. This occurs by way of reducing ATRS holdings throughout the year to 10% and AAPL growth holdings to 5% or less. 
Early in the year, I am looking to initiate positions in JNJ and GIS, as well as KMP or PAA depending on what is not on my company's restricted/watch lists. In addition, I will look to initiate positions in 1 or 2 young dividend growers (eg. SBUX, V, or DNKN).

Wednesday, January 1, 2014

December 2013 Results


December 2013 Results
Present Plan:
To contribute $500+ per mo. to the trading portfolio, aiming for returns of 10% YoY, with increasing dividend income. 
At present, my immediate plan is to get my model portfolio in place in the dividend growth part of the portfolio.  I still need to trim to positions and add to others, so I expect to make a few trades near term.
 
All dividends are currently being reinvested back into the companies paying the dividend. New cash will be used to add to positions or create new ones at $1k increments.
 
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DIVIDEND and PERFORMANCE Highlights:
Portfolio was up 4.33% in December, outperforming the S&P by 1.97% 
Total dividends for December are $204.97, up 36.5% YoY!
Total dividends for 2013 are $2.148.43, up 23.9% YoY from last year! (very happy with these numbers)
Monthly Dividend Raises
PFE increase of 8.3% this month from 0.24/qtr to 0.26/qtr
O increase of 0.2% this month from 0.18185/mo. to 0.18217/mo.
YTD Dividend Raises
The average dividend raise for 2013 was 11.0%, compared to 10.9% for all Dividend Champions, and
10.7% for my personal watchlist. MFA was excluded since 2 special dividends were paid in 2013.
MAT increase of 16.1% to 0.326/qtr on 2/1/13
MCD increase of 5.2% to 0.81/qtr on 9/18/13
CVX increase of 11.1% to 1.00/qtr on 4/24/13
OXY increase of 18.5% to 0.64/qtr on 2/14/13
CSX increase of 7.1% to 0.15/qtr on 4/16/13
AAPL increase of 15.1% to 3.05/qtr on 4/23/13
PFE increase of 8.3% to 0.24/qtr on 12/16/13
PM increase of 10.6% to 0.94/qtr on 9/11/13
WMT increase of 18.2% to 0.47/qtr on 2/21/13
T increase of 2.2% to 0.46/qtr on 12/13/13
VOD increase of 6.1% to 1.5895/qtr on 5/21/13
MFA decrease of -9.1% to 0.20/qtr on 12/11/13 (2 special dividends paid in 2013 - .50 and .28)
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DECEMBER 2013 DIVIDENDS RECEIVED: 
Note:  Walmart paid on 12/27 last year, will pay next on 1/2/14.  WMT only paid 3 dividends in 2013.
TAXABLE ACCOUNT: (Dividends Reinvested)
Pfizer (PFE) ………...…  $27.38…..bot 0.861 shs
Southern (SO) …...….… $43.42…..bot 1.057 shs
Chevron (CVX) …...….… $21.01…..bot 0.170 shs
CSX Corp (CSX) …...….  $22.57…..bot 0.825 shs
Mattel (MAT) …...…...… $38.24…..bot 0.841 shs
McDonalds (MCD) …...…$30.77…..bot 0.326 shs
Qualcomm (QCOM) …….$12.31…..bot 0.170 shs
ROTH IRA: (Dividends Reinvested)
Realty Income (O) …...… $9.27…..bot 0.000 shs (brokerage forgot to enter DRIP instructions)
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DIVIDEND PORTFOLIO HOLDINGS:
Symbol ….. Shares ... Mkt Value ... Total Divs… Gain/Loss 
AAPL ……. 5.382 ...... 3,019.58 ….  60.23 ……... 25.7%
T     ……..  88.04 .….. 3,095.45 ….  322.10 …….. 35.6%
CVX …….. 21.18 ..…. 2,645.47 ….  168.88 …….. 41.0%
CSX …….. 151.32 ....  4,353.53 ….  149.29 …….. 42.6%
DE   …….. 25.00 .….. 2,283.25 …..  0.00 ……..   10.7%
KO   …….. 45.00 .….. 1,858.95 …..  0.00 ….…..   5.0%
MAT …….. 107.06 …. 5,093.77 …..  457.68 …... 131.1%
MCD …….. 38.31 .….. 3,717.41 ….  458.46 ……. 74.1%
MFA …….. 334.76 ....  2,363.43 ….  226.17 ……  (-2.9%)
OXY …….. 20.44 .….. 1,943.36 ….  38.69 ……...  13.3%
PFE …….. 114.96 .…. 3,521.22 ….  340.71 …….. 88.4%
PM   …….. 35.96 .….. 3,133.02 ….  163.52 …….. 20.8%
O   …..…..  51.00 .….. 1,903.83 …..   9.27 ……...  (-6.2%)
QCOM…… 35.35 .….. 2,624.66 ….  24.56 ……..   21.7%
SO   ……..  41.62 .….. 1,710.87 …..  66.26 ……..   4.4%
VOD …….. 84.39 .….. 3,317.49 ….  204.95 …….. 52.3%
WMT …….. 46.99 .….. 3,697.25 ….  234.46 …….. 63.4%
XEL ……..   64.00 .….. 1,788.16 …..  0.00   …….. 0.1%
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Dividend Account Value …………....... $52,069.56
GROWTH HOLDINGS:
Symbol ...... Shares …... Mkt Value ….. Gain/Loss 
AAPL  …..…  15.00  …...  8,415.30..…  37.6%
ATRS …..…  5000.00  .... 22,355.00  … 25.7%
AMRN …..… 300.00  .....  591.00  ….  (-72.1%)
PSTI  …..…   800.00  ….. 2,816.00  .....  9.9%
SCRC  ....…  5000.00  ….. 650.00  ….. (-17.7%)
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Growth Account Value ………………... $34,827.30
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CASH ….………………………….….… $2,461.38
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Trading and IRA Account Value ..........     $89,358.24
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401K Plan - my firm, at its discretion, may match dollar for dollar up to 4% of my salary
Actual Allocations
Target Retirement 27%
Fixed Income 0%
US Equity 53% 
International Equity 21% (incl. 8% global REITs)
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401K Account Value …....................    $124,365.04
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Total Portfolio Value ………........        $213,723.28
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SOLD POSITIONS - REALIZED GAINS/LOSSES (starting Jan 2013):
DIVIDEND GROWTH
Company ….. Date ..... Gain/Loss ……G/L %....... Reason/Result
BUD ……..10/17/13 ….. 1,336.87..….. 108.0% …. Stock moderately overvalued, selling to 0
TGH …….. 10/11/13 …..351.35. ……  11.3% …. Position did not fit criteria, reinvest elsewhere
BUD……..  7/31/13 ….. 1,370.78 ……. 91.9% …. Reducing to 3% wgt, raised cash for SO purch
MFA …….. 6/24/13 …. 1,004.50 ……. 44.7% …. Swapping MFA into Roth IRA account
BUD……..  6/17/13 …. 1,144.36 ……. 88.0% …. Reducing overweight, buy QCOM tech exposure
PFE……... 4/2/13 ……. 566.61 …….  83.8% …. Reducing overweight, no trade identified
T   …….... 2/19/13 …...  502.55 ……. 44.7% …. Reducing overweight, buy OXY for energey exposure
NLY …….  2/12/13 …… 73.88 ……… 5.9 % …. Reducing mREIT exposure, adding to ATRS position
GROWTH and SPECULATIVE
Company ….. Date ..... Gain/Loss ……G/L %....... Reason/Result
PSTI call ……. 12/21/13….. 108.39 ….. n/a …. Covered call, expired worthless (yield 4.1% at purch)
AMRN  ……..  12/20/13 …(-3,049.74)...(-84%) … Taking tax loss (disregarded allocation max of 1%) 
ACTC   ……..   12/2/13 …..(-385.51)….(-41%) … Tax loss, plus mgmt not delivering, dilutive financing 
ATRS call …... 10/15/13  ….763.98 …. n/a…... Covered call, bot@.25, sold @.05 (yield 5.7% purch)
ATRS call ……. 8/19/13 …. 781.98 ….. n/a …. Covered call, expired worthless (yield 4.9% at purch)
ATRS call ……. 6/22/13 …. 381.99 ….. n/a …. Covered call, expired worthless (yield 2.5% at purch)
PSTI call …….. 3/16/13 ….. 76.39 ……. n/a …. Covered call, expired worthless (yield 3.0% at purch)
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Total Cash Gains ... $5,048.39