Welcome back to Dividend Dollars and our weekly review!
March FOMC minutes came out this week and confirmed expected balance sheet reductions and future rate increases possibly being 50 basis point jumps or more. Following this, Treasury yields of all timeframes jumped with the 10 year moving up 34 basis points and the 2 year moving up 10 basis points. Longer term notes were pushed even higher by the March ISM Non-Manufacturing Index which showed the Prices Paid Index hit its second highest reading ever.
Essentially, the Fed news harkens concerns about the central bank potentially making policy mistakes that could sent the economy into recession, which would lower earnings prospects and valuations. Growth stock valuations were pressured by this and rapid rise in rates this week.
Having paid very close attention to rates this week, I had a good conversation with @ScoreBDInvestor on twitter who ended up doing a great write up about TIPX and treasury inflation protected securities. It might be timely to read into and consider adding it as an inflationary hedge.
At the end of it all, the S&P and Nasdaq headed for their first weekly loses in four weeks. The DJIA lost 0.3%, NASDAQ 3.9%, Russell 4.6%, and the S&P 1.3% with 5 of the 11 sectors making gains. Biggest losers included information technology, consumer discretionary, and communication services while the biggest gainers were the energy, healthcare, and consumer staples sectors.
Now let’s move on to reviewing our portfolio’s performance for the week.
To date, I have invested $7,900 into the account, the total value of all positions plus any cash on hand is $8,449.48. That’s a gain of $549.81 for a total return of 6.96%. The account is up $8.90 for the week which is a 0.11% gain.
We started building this portfolio on 9/24/2021 and when compared to the S&P 500 we are outperforming the market so far! Within that same timeframe, the S&P 500 is up 0.74% whereas our portfolio has an overall return of 6.96%! Let’s keep up this good progress with smart adds to the portfolio.
We added $120 in cash to the account this week. The stock purchases made with this will be broken out below.
Above is a dashboard of the portfolio that tracks annual dividend income, yield, beta, dividend growth, and more.
Below is a table of everything we are invested in so far. There you can see my number of shares, shares bought through dividend reinvestments, average cost, gains, and more. The tickers in green are positions that I bought shares in this week.
This week our annual dividend income increased by $9. My portfolio’s dividend yield may be just slightly higher than what you will see in other portfolios, however that is strategic per my time horizon. I am in my 20s and am just starting off this investment journey, so a higher dividend yield gives me greater cash flow now to reinvest which helps me realize the benefits of compounding sooner.
Our beta usually hovers right around the mid 0.6s which is good, especially in times of uneasiness. It means my portfolio won’t dip as much as the rest of the market on red days, however, it does go the other way around and I won’t have as much green on the good days. Therefore, it is good to watch your beta in terms of cyclicity. View the chart above to see the performance of my portfolio versus the S&P 500, notice how my portfolio’s green days are not as substantial as the S&P’s but neither are my red days, that is beta at work. My beta so far has led to better returns than the market since beginning this portfolio, however, on rally weeks I underperform. In order to combat that, I have started adding to a levered position to raise my beta. I would like to see it in the 0.8s.
This week we did not receive any dividends, however a handful of positions did announce dividends in the upcoming month or two, so our below dividend graph is updated for those.
In my portfolio, all positions have dividend reinvestment enabled. I don’t hold onto the dividend, I don’t try to time the reinvestment, I just let my broker do it automatically. All dividends were reinvested (except for KO, that will be reinvested on Monday).
Dividends received for 2022: $73.25
Portfolio’s Lifetime Dividends: $96.17
Here’s the breakdown of the trades I made this week (it was a light week):
- April 4th
- SBUX – added 0.5 shares at $86.62
- SMHB – added 0.5 shares at $11.64
- UWMC – sold covered call $5 4/14 for a $2 premium
- April 5th
- SMHB – added 1 share at $11.48
- April 6th
- SBUX – added 0.25 shares at $82.68
- SCHD – added 0.126568 shares at $79.01 (recurring investment)
- XYLD – added 0.202268 shares at $49.44 (recurring investment)
- SMHB – add 1 share at $11.25
- April 7th
- SMHB – added 1 share at $10.94
That is it for the update this week. Let’s kill it next week. Stay patient and be ready to buy income producing assets at a discount!
Let me know what you think of the progress so far, share with me your progress and questions, interact with me on twitter and Instagram using the links below!
Thank you for reading! See you next week!