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Economics Market Recap Market Update Stock Market

Stock Market Recap & Outlook (3/17/23) – Continued Banking Concerns Amongst Surprising Strength

This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!

Weekly Market Review

Summary:

Banking scares that surfaced late last week continued to worry investors throughout this week. Continued developments of the situation and actions form the Fed, Treasury, and FDIC kept us all on our toes. Those actions were designed to shore up confidence in the banking industry, but price action did not reflect that.

With investors lacking confidence, a risk-off mentality was behind most price action this week. Certain mega-caps viewed as distant from the banking fallout were bought hand-over-fist. Companies with strong balance sheets and perceived recession resiliency, like $GOOG, $NVDA (sorry TagTrades), and $MSFT. These stocks all gained more than 12% this week.

$MGK, the mega-cap growth ETF from Vanguard was up over 5% this week, helping to prop up returns for the main indexes despite an otherwise weak market.

A flight to safety also showed itself through an outperformance of defensive sectors like utilities (up over 3%), consumer staples, and health care sectors (both up over 1%).

Treasury note yields tanked this week, driven by a belief that the Fed won’t be able to raise rates as much as previously thought in lieu of the banking issues. However, the CME FedWatch Tool shows a 59% probability of 25 basis point hike at the next meeting, and a 52% of another 25 basis point hike at the May meeting after that.

Meanwhile, the European Central Bank agreed to raise its rate by 50 basis points this week despite concern surrounding Credit Suisse ($CS)

Monday:

Monday started a volatile week for us after a busy weekend of banking sector news. The market learned through a joint statement from the FDIC, Treasury, and Fed Market that all depositors at Silicon Valley Bank and Signature Bank of New York would be fully protected even though both had been taken over by regulators.

he Fed also introduced a Bank Term Funding Program that will help banks avoid selling government securities at a loss by allowing them to pledge those securities to the Fed, which will value them at par, as collateral.

These items together makes it so that all depositors would not lose money and that banks would have a different avenue to raise liquidity through the BTFP rather than selling assets at a loss like $SVB did. Smart moves, in my opinion, however they did not calm the stock markets. In fact, their approach created a feeling that this banking issues is larger than we initially thought.

Regional Banking ETF $KRE fell another 12% and SPDR S&P Bank ETF %KBE fell another 10% with the biggest individual losers being $FRC, $WAL, $CMA, and $PACW.

Still, the main indices spent a good portion of the session in positive territory thanks to gains in mega-caps as stated in the summary.

Treasury yields declined as a potential less aggressive Fed is priced in due to this bank fallout and the potential for it to have a disinflationary impact on the economy.

Tuesday:

Stocks opened higher, bolstered by strength in the bank stocks and a small measure of relief that the February Consumer Price Index (CPI) wasn’t much worse than feared.

The quickly oversold market brought some opportunistic trading moves. The S&P 500 would climb as much as 2.1% to 3,937 before stalling at the test of its 200-day moving average (3,939).

Treasuries were selling off with some of the safety premium they had enjoyed in recent sessions being drained away and CPI data influencing prices. 

The rebound momentum reversed after failing to break through its 200-day moving average. Bank stocks began to pull back due to a report from the S&P that they had put $FRC on a credit watchlist shortly after Moody’s had downgraded the US banking system to Negative from Stable.

The day looked to end poorly excepted for a large buying effort in the last 45 minutes of the day that left major indices ending on an upbeat note.

Data on Tuesday was the CPI release and the NFIB Optimism Index.

Total CPI was up 0.4% MoM in February, in line with expectations, and up 6% YoY. This was the smallest 12-month increase since September 2021. Core CPI was up 0.5% MoM against a consensus of 0.4%. The key takeaway from the report was that inflation is still (no surprise here) well above the 2% target. Banking problems have mainly taken a 50 point hike off of the table of the next meeting, this CPI reading definitely keeps a 25 point hike as a possibility. Not raising rates may signal that the banking issues are bigger than people think, so the Fed must tread carefully here.

The February NFIB Small Business Optimism Index had a slight increase to 90.9 from 90.3 last month.

Wednesday:

Cautious trading was back in play. Selling interest on financials picked up after Credit Suisse’s ($CS) largest shareholder said they can’t give additional financial help due to regulations.

This news brought worries that banks may be more risk-averse, tighten their lending standards, and manage their balance sheets more conservatively. Those measures would slow economic growth and lead to further downward revisions to earnings estimates. So, it was not surprising that cyclical areas of the market were under the most pressure.

Things shifted by the close. Some nice gains in the mega cap space had the main indices close near their best levels of the day.

The upside moves were also helped along by the Swiss National Bank saying “Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks. If necessary, the SNB will provide CS with liquidity.”

Data on Wednesday brought us the February Retail Sales reading, the PPI reading, and a number of other less significant pieces that I won’t mention.

February retail sales fell by -0.4% versus a consensus of +0.2%. Excluding autos the number was -0.1%, in line with expectations. The key takeaway from the report is that there were declines in most retail sales categories following large gains in January, suggesting consumers are being more conscious about their spending budgets.

February producer price index came in at -0.1% versus an expected 0.3%. Core PPI was flat compared to an expected 0.4% increase. This is overall a good inflation report, and should be pleasing to the Fed.

Thursday:

It shaped up to be a pretty good day in the stock market, but it didn’t start out that way. It started out with bank stocks remaining under pressure and Treasury yields declining in continued flights to safety.

At their lows for the day, the Dow, S&P 500, and Nasdaq were down over .5% as news came out that the European Central Bank agreed to raise its key policy rates by 50 basis points due to inflation being projected to remain too high for too long.

Sentiment shifted around midmorning, though, when a Wall Street Journal report highlighted a potential solution to the issues at First Republic Bank ($FRC). The report suggested big banks had been discussing a capital infusion deal for FRC totaling $30B.

Also, sentiment in the banking sector improved as Treasury Secretary Yellen told the Senate Finance Committee that “Americans can feel confident that their deposits will be there when they need them.”

For data on Thursday we received the Weekly Initial Claims reading, the Housing Starts report, and the February import/export data.

The Weekly Initial Claims came in well under the expectation at 192K. With initial claims were back below 200,000, we see that employers are reluctant to let workers go.

February Housing Starts hit 1.45 million, beating the expectations by over 100,000. Building Permits  hit 1.524 million, beating expectations by almost 200,000. The key takeaway from the report is that the stronger-than-expected activity wasn’t just a multi-unit story. Single-family starts were up 1.1% month-over-month while single-family permits increased 7.6%.

February Import Prices -0.1, February Import Prices ex-oil 0.4%, February Export Prices 0.2%, and February Export Prices ex-ag. 0.1%. The takeaway here is the moderation in year-over-year changes. Import prices were down 1.1%, versus up 11.4%, for the 12 months ending February 2022. Export prices were down 0.8%, versus up 16.8% for the 12 months ending February 2022.

Friday: 

On Friday’s quadruple witching options expiration day, investors were thinking risk-off again. Thursday’s strong finish was largely a relief rally on news. That relief short lived and investors sold FRC again on Friday following a dividend suspension.

Market participants were also reacting to reports that banks borrowed $11.9 billion from the Bank Term Funding Program and a record $153 billion from the Fed’s discount window for the week ending March 15, exceeding anything during the financial crisis. More and more items to digest when thinking about the health of the banking industry. Bank stocks were largely down for the day.

Selling efforts were broad in nature, excluding some mega-cap names.

Friday had an industrial production release and the Consumer Sentiment Index preliminary release for data.

Total industrial production was unchanged month-over-month in February, compared to an expected 0.5% increase. The capacity utilization rate held at 78%, also compared to an expected 0.5% increase. The key takeaway from the report is that industrial production activity is softening, evidenced both by the year-over-year decline in total production and a capacity utilization rate that is near its lowest level since September 2021.

The preliminary University of Michigan Consumer Sentiment Index for March dropped to 63.4 from 67 last month. It was expected to increase to 67.2. In the same period a year ago, the index stood at 59.4. Roughly 85% of responses had been recorded prior to the failure of Silicon Valley Bank. The key takeaway from the report is the moderation in inflation expectations, which will please the Fed somewhat, although year-ahead inflation expectations still remain well above the 2.3-3.0% range seen in the two years prior to the pandemic.

Overall, 2 of the 3 main indices ended the week on a gain. Mega caps and defensive sectors ended higher while energy, financials, industrials, and materials made substantial losses during the week.

Dividend Dollars’ Outlook & Opinion

That’s it for the recap. Now for my opinion!

This week was heavy with economic data (two key inflation reports) and plenty of banking news to keep up with. Though both inflation reports were not negative, both were overshadowed by investor anxiety related to banking.

With all of the fear surrounding banking and the treasury market volatility, it did not feel like a strong week for the markets. However, it surprisingly was!

SPX ended below all of its key moving averages at the end of the week, though it did temporarily break above the 200 day and 100 days averages on Thursday. Friday it struggled to get back above those marks.

A number of indicators have surprisingly moved into bullish territory this week including VIX OI change, ETF OI change, and VIX OI put/call ratios. SPX OI put/call ratios and general equity OI changes worsened over the week.

Banking sector uncertainties and rate changes signal more volatility to come, even though markets may continue to trend slightly higher overall, especially with a light economic calendar next week (except for the interest rate decision).

That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.

And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.

Regards,

Dividend Dollars

Categories
Dividend Stocks Dividends Portfolio Stock Market

Dividend Portfolio: 3/10/23 Weekly Update

Welcome back to the weekly Dividend Dollars portfolio review! I apologize for missing an article last weekend! I was traveling for a wedding and did not have time to write. This article will catch us up and detail all the moves I’ve made in the past two weeks.

This portfolio update is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!

Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!

Portfolio Value

To date, I have invested $14,170 into the account the total value of all positions plus any cash on hand is $13,752.36. That’s a total loss of 2.95%. The account is down $641.82 for the week which is a 4.46% loss.

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 down -13.3% which puts us 10.38% higher than the market! I love tracking my portfolio against a benchmark like the S&P. The above chart comes from Sharesight which makes portfolio and dividend management a breeze!

We added $440 in cash to the account in the last two weeks, trades made will be broken out below.

Portfolio

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, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI increased from $507 to $583.

Dividends

These two weeks I received $22.50 from four dividends ($XYLG, $INTC, $CMI, and $MSFT).

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.

Dividends received for 2023: $91.17

Portfolio’s Lifetime Dividends: $501.58 – WOOT WOOT $500 mark hit!

Trades

These two weeks weren’t too busy for me an account of my travels and then coming back home in midst of a major bank collapse! I deployed all of my stored cash and added even more for buys late this week in NYCB. The buy zone and the channel in the chart from two weeks ago was totally blown apart by the news in the banking sector. NYCB, BAC, and ALLY are my main bank holdings and are still safe investments in my opinion, I will be adding to them more in the coming weeks as the Silicon Valley Bank situation plays out.

I wrote about the happenings of the week in the Market Recap & Outlook, make sure to read that here and checkout out the full breakdown of my trades below:

  • February 21st, 2023
  • March 1st, 2023
    • New York Community Bank ($NYCB) – added 5 shares at $8.80
    • Global X S&P 500 Covered Call & Growth ETF ($XYLG) – $4.33 dividend reinvested
    • Intel ($INTC) – $12.20 dividend reinvested
  • March 2nd, 2023
    • New York Community Bank ($NYCB) – added 5 shares at $8.56
  • March 7th, 2023
    • New York Community Bank ($NYCB) – added 15 shares at $8.43
  • March 9th, 2023
    • New York Community Bank ($NYCB) – added 20 shares at $8.13
    • ETRACS 2xMonthly Pay Levered ETN ($SMHB) – added 10 shares at $6.63
    • Cummins ($CMI) – $3.75 dividend reinvested
    • Microsoft ($MSFT) – $2.22 dividend reinvested
  • March 10th, 2023
    • New York Community Bank ($NYCB) – added 50 shares at $7.52

Next week I will look to continue my weekly buys into $SPY, $SCHD, and $XYLG as I did not do those for the last two weeks. I will also look at adding to beaten down bank stocks even more, plus some other adds to my redder positions in $INTC and $MMM.

Summary

That is it for the update this week. The market recap and outlook is also posted and provides tons of information on what macro statistics I look to at to keep a temperature gauge on the market and inform my portfolio movements. Read that here!

Let me know what you think of the progress so far, share with me your progress and questions, interact with me on Twitter and CommonStock and other socials using the links below!

Thank you for reading! See you next week and stay safe!

Regards,

Dividend Dollars

Categories
Economics Market Recap Market Update Stock Market

Stock Market Recap & Outlook (3/10/23) – The Collapse of Silicon Valley Bank

I apologize for missing the report last week, was out on vacation but we are back now and have TONS to cover!

This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!

Weekly Market Review

It was a big losing week for the market as investors analyzed Fed Chair Powell’s testimony before Congress, the February employment report, and news of SVB Financial’s Silicon Valley Bank being shut down. All major indices ended the week down over 3.5%.

Monday started on an upbeat note with early gains being supported by positive moves in some mega cap stocks. Apple ($AAPL) was a leader in that respect after Goldman Sachs initiated coverage with buy rating with a $199 price target.

Under the surface though, there was some anxiousness felt as the market waited for key events in the week ahead. Even at midday, as the indices were trading near their highs for the day, the number of stocks declining was greater than the number of stocks increasing.

Mega cap strength started to face and selling ramped up in the Treasury market. The main indices were in a slow grind lower for the rest of the day.

Economic data for the day was only the January Factory Orders. This fell 1.6% month-over-month (consensus -1.8%). Shipments of manufactured goods increased 0.7% MoM after falling 0.6% in December. The key item in the report was the strength seen in nondefense capital goods orders, excluding aircraft. This criteria, which factors into GDP forecasts, were up 1.1% after a 0.6% decline in the last reading.

Tuesday started mixed with the market waiting for Powell’s testimony before the Senate Banking Committee. Both stock and bond markets reacted quickly to key comments.

Powell stated, “Although inflation has been moderating in recent months, the process of getting inflation back down to 2% has a long wat to go and is likely to be bumpy… the latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated. If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes. Restoring price stability will likely require that we maintain a restrictive stance of monetary policy for some time.”

Powell’s Q&A portion afterwards added that data doesn’t suggest that the Fed has overtightened yet. Data suggests they have more work to do, increasing the likelihood that peek rates are higher than the Fed’s projections from the December meeting may be increased. The hearing and Q&A session ultimately suggested that a 50 point hike is back on the table. Markets moved lower throughout the day upon this news.

Data on Tuesday was the January Wholesale Inventories and the Consumer Credit reading. Inventories were down 0.4% MoM and was in line with expectations.

Consumer Credit increased by $14.8B in January compared to the expected $22.9B. The takeaway is that consumer credit expansion is slowing, likely a result of rising interest rates. The decrease was driven predominantly by revolving credit and was the 2nd lowest increase in the last 12 months.

Wednesday had the markets start off choppy as the second day of Powell’s testimony kicked off. Treasury markets signaled economic concerns with the 2 year and 10 year spread hitting its widest margin since 1981.

With that move, stock prices deteriorated and the major indices slipped closer to their lows of the day. They did close above the lows, though, thanks to mega-caps running in the last hour of the day. That momentum slowed with the S&P 500 neared its 50 day moving average ($3,997) which turned from support to resistance on Tuesday.

Economic data for the day included the Weekly MBA Mortgage Applications, ADP Employment Change, the JOLTs job report, and the January trade deficit reading.

The weekly MBA mortgage application index rose 7.4% with refinancing applications increasing 9.0% and purchase applications 7.0%.

The ADP Employment Change showed private payrolls rose by 242,000 in February against a 195,000 consensus. The January reading was revised upwards by 13,000.

The JOLTS Job Openings reading total 10.8M in January after a 0.2M upward revision for December.

The trade deficit for January grew to $68.3B compared a consensus of -$69B. December numbers were revised upwards by $0.2B. Imports for January were $9.6B more than December imports. Exports were $8.5B more than December exports. The takeaway here is that both imports and exports increased compared to December, reflecting a pickup in global activity and demand.

Then Thursday came around, and the situation that we’ve all been watching unfold for days now had kicked off.

The day started green, lead again by mega-caps and hope that higher-than-expect jobless claims could be followed by a weaker-than-expected nonfarm payrolls reading on Friday.

Initial jobless claims for first week of March increased by 21,000 to 211,000 compared to a consensus of 198,000. Continuing claims increased by 69,000. This was the highest claims level since December and teased the idea of some labor softening. However, current claims levels still are at levels that are indicative of a tight labor market overall.

The opening was short lived as bad news and price action in the banking space weighed down the market.

The S&P 500 cut under its 200 day moving average and closed near lows for the session in a steady and broad based sell off.

Bank stocks took the bulk of the losses as concerns about rising rates, higher deposit costs, and weaker loan demand collided with the news that Silvergate Capital ($SI) is voluntarily liquidating and that SVB Financial Group ($SIVB) sought to raise capital through the sale of marketable assets at a loss and a potential stock offering to combat their increased cash burn.

The second part of that last paragraph was the main trigger of worries about the state of deposits and capital positions for smaller banks that drove major selling interest.

Ultimately, things break when the Fed is in an aggressive tightening cycle, and banks, whether or not they are involved in a specific problem, will get pulled into the downfall regardless of their roll.

Treasury yields also fell lower that day, yet stocks did not respond in the opposite way. This leads us to believe that the flight to treasuries was more of a flight-to-safety than anything else.

Friday opened considerably lower and kept that theme up for most of the day. The employment report brought some good news with nonfarm payrolls being strong and average earnings growth being weaker, but the SVB Financial situation was by far the largest driver of price action. A broad sell off brought the S&P 500 under 3,900 on big volume.

Silicon Valley Bank was shut down by the FDIC in the late morning. This is the second largest bank to get shut down by the FDIC since Washington Mutual in 2008.

The FDIC also created the Deposit Insurance National Bank of Santa Clara to protect insured depositors of $SIVB. This news followed earlier reports that the Founders Fund (Peter Theil’s VC fund) had advised companies to pull their money out of the bank and that deposit outflows were outpacing the process of selling SVB to a prospective buying banks.

Wide concerns about SVB’s troubles and their potential contagion effects continued the flight-to-safety in the Treasury markets on Friday.

Most views from analysts so far are that SVB’s situation won’t be a systematic banking problem given how well capitalized the system is. That said, the market saw a rebound effort squised after it was reported the SVB was being shut down. The market lost their hold and broad based selling picked up putting the S&P 500 to a low of $3,846.

The sudden collapse of SVB could leave billions of dollars belonging to companies and investors stranded. As of the end of 2022, SVB was the 16th largest bank in the US with just over $200B in assets. Their tech and start up focus has felt the brunt of the aggressive interest rate hikes by Fed.

The Treasury bond assets they sold on Thursday incurred a $1.8B loss as the value of those bonds fell with the rising rates, the value of their hold to maturity assets have incurred an even larger, though unrealized, loss.

The main office and all branches will reopen on Monday and all insured depositors will have full access to their insured funds. That is good news, however, roughly 89% of the banks $175B in deposits were uninsured as of the end of 2022. What happens to these funds is anyone’s guess.

We can assume that the FDIC is working this weekend to find a bank that is willing to acquire SVB. A merger by Monday could secure the safety of those uninsured deposits, but no deal is certain.

I have seen headlines that Roblox Corp ($RBLX) and Roku Inc ($ROKU) have hundreds of millions deposited with the bank. With most of these funds uninsured, share prices have dropped by a considerable amount.

Collectively, the banking sector has lost over $100B in stock market value from Thursday and Friday, with European banks also feeling some pain. Some analysts are forecasting more pain for the sector as hidden risks become more clear.

All eyes will be on the FDIC and if they are able to secure an acquirer for SVB or if they will be force to liquidate the bank.

Dividend Dollars’ Outlook & Opinion

That’s it for the recap. Now for my opinion!

To be blunt, this week was insane. The market made big moves down on the SVB news. Economic readings and Fed speak were worth paying attention, but when it really came down to it SVB and the concern it has caused for the banking sector has defined this week. It may even be the definitive moment for the year.

This week was so red that $SPX broke down through numerous key points. The week started above every key point of support, but quickly took them all out as the week came to an end. The market broke through the 50 day moving average first on Tuesday, then the 100 and 200 day moving average on Thursday, and broke down below the long term downtrend established at all time highs in the beginning of 2022 before testing the bear market level at $3,855.

Price action broke down below that level briefly before ending the week just above it at $3,861.86.

As you can see by the three circles I have on the chart, following significant breakdowns underneath the bear market level, the following days are extremely volatile. I expect the next fews days to not be an exception, if anything they’ll turn up the volatility as the SVB situation unfolds.

Up until this week, the market in 2023 has been playing red-light green-light with inflation readings and Fed meetings. Markets have been quick to react to every little item that gives insight into what the Fed will do moving forward.

Now we had a giant wrench thrown into that theme this week. Fed Powell’s testimony affirmed the position that Fed is willing to pick up the pace on rate hikes if economic data shows it is needed. Add to that, SVB has collapsed due to the effects that these rate hikes have had on them as bank and their customers. Granted, there’s a lot to pick apart and criticize with that situation as safe and sound banking strategies are not wholly evident, however, it is yet to be seen if this situation will change the Fed’s approach at all.

Will they remain focused on inflation and protecting the value of the dollar despite the giant problem on the horizon that is the SVB collapse? We will have to wait and see till the next rate decision on 3/22/23.

Because of this, the CPI report on Tuesday and the employment reports that follow may be difficult for the market to wrap their heads around the meaning of those readings. Anticipate a lot of volatility as all eyes are on this situation and Fed.

I anticipate more red next week, mostly due to investors being jaded by SVB and the effects on the market, but also as a result of the CPI and PPI reports. Forecasts for both are expecting an improvement on the MoM and YoY readings. If these come in higher than expected, expect the negative reaction to be larger than normal.

That’s it for my recap! Go check out my portfolio update to see how I am navigating these markets while building dividend-based wealth.

And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.

Regards,

Dividend Dollars

Categories
Dividend Stocks Dividends Portfolio

Dividend Portfolio: 2/24/23 Weekly Update

Welcome back to the weekly Dividend Dollars portfolio review! This portfolio update is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!

Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!

Portfolio Value

To date, I have invested $13,730 into the account the total value of all positions plus any cash on hand is $13,745.45. That’s a total gain of 0.11%. The account is down $306.24 for the week which is a 2.18% loss.

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 down -10.9% which puts us 11% higher than the market! I love tracking my portfolio against a benchmark like the S&P. The above chart comes from Sharesight which makes portfolio and dividend management a breeze!

We added $120 in cash to the account this week, trades made will be broken out below.

Portfolio

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, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI this week decreased from $536 to $507, mostly on account of the $INTC dividend cut.

Dividends

This week I received $4.21 from two dividends ($SMHB and $SBUX).

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.

Dividends received for 2023: $68.68

Portfolio’s Lifetime Dividends: $479.08

Trades

This week was a slower week for my portfolio, starting with the weekly buys in $SCHD, $SPY, and $XYLG. After that, only buys we had were in Intel and New York Community Bank. $NYCB is a new position, primarily based off of a chart that appears to be reaching a technical bottom. It’s a solid regional bank stock with decent financials and a consistent dividend. Will look to add down into it in the $9.00 – $8.50 area for a potential bottom and bounce. This is not intended to be a long term hold. View the screenshot below for the chart.

I also reinvested the $SMHB dividend, the $SBUX dividend will be reinvested on Monday. Lastly, I took a loss on an AT&T $(T) covered call. I sold at the wrong time, at it moved against me. However, if I had held it would have expired worthless as intended. Lesson learned.

Below is a breakdown of the trades I made this week:

  • February 21st, 2023
    • SPDR S&P 500 ETF ($SPY) – added $10 at $402.03 per share (weekly buy)
    • Global X S&P 500 Covered Call & Growth ETF ($XYLG) – added $10 at $26.15 per share (weekly buy)
    • Schwab US Dividend Equity ETF ($SCHD) – added $10 at $75.83 per share (weekly buy)
    • ETRACS 2xMonthly Levered ($SMHB) – dividend reinvested
  • February 22nd, 2023
    • Intel ($INTC) – added 1 share at $26.41
    • AT&T ($T) – sold $19.5 2/24 covered call for $7
  • February 23rd, 2023
    • AT&T ($) – closed call position at $15 ($8 loss)
    • New York Community Bank ($NYCB) – added 5 shares at $8.99

Next week I will continue to add $10 into each ETF ($SPY, $XYLG, and $SCHD). I’m being less focused on preserving cash at this point. I think the early 2023 rally is going to be the last solid rally we see for a little while, so I am more than happy to begin deploying more cash now on the way down. Next week I’ll be watching $SHOO and $BAC for opportunities to buy before the coming ex-dividend date. I will also look to add more to $NYCB.

Summary

That is it for the update this week. The market recap and outlook is also posted and provides tons of information on what macro statistics I look to at to keep a temperature gauge on the market and inform my portfolio movements. Read that here!

Let me know what you think of the progress so far, share with me your progress and questions, interact with me on Twitter and CommonStock and other socials using the links below!

Thank you for reading! See you next week and stay safe!

Regards,

Dividend Dollars

Categories
Dividend Stocks Dividends Portfolio

Dividend Portfolio: 2/17/23 Weekly Update

Welcome back to the weekly Dividend Dollars portfolio review! This portfolio update is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!

Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!

Portfolio Value

To date, I have invested $13,610 into the account the total value of all positions plus any cash on hand is $14,027.70. That’s a total gain of 3.07%. The account is up $13.41 for the week which is a 0.1% 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 down -8.45% which puts us 11.5% higher than the market! I love tracking my portfolio against a benchmark like the S&P. The above chart comes from Sharesight which makes portfolio and dividend management a breeze!

We added $120 in cash to the account this week, trades made will be broken out below.

Portfolio

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, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI this week decreased from $525 to $536.

Dividends

This week I received $8.74 from four dividends ($APD, $ALLY, $O, and $TXN).

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.

Dividends received for 2023: $64.47

Portfolio’s Lifetime Dividends: $474.87

Trades

This week was my heaviest week for buys in 2023 so far. The market ended this week red for the second time in a row for this year, so it was time to take advantage! We mostly bought down in $INTC and then added a tad to positions that are going ex-dividend soon ($MMM and $BAC). We also initiated a new position in $FIS.

Our weekly buys in $SCHD, $SPY, and $XYLG and reinvested all our dividends.

Below is a breakdown of the trades I made this week:

  • February 13th, 2023
    • Air Product Chemicals ($APD) – $1.65 dividend reinvested
  • February 14th, 2023
    • Fidelity National ($FIS) – added 2 shares at $ $67.90
    • AT&T ($T) – sold $19.5 2/17 CC for a $6 premium
    • 3M ($MMM) – added 0.11 shares at $113.27
    • Bank of America ($BAC) – added 1 share at $35.63
    • Texas Instruments ($TXN) – $1.85 dividend reinvested
  • February 15th, 2023
    • Realty Income ($O) – $3.04 dividend reinvested
  • February 17th, 2023
    • AT&T ($T) – covered call closed at $2 ($4 profit)
    • SPDR S&P 500 ETF ($SPY) – added $10 at $405.12 per share (weekly buy)
    • Global X S&P 500 Covered Call & Growth ETF ($XYLG) – added $10 at $26.43 per share (weekly buy)
    • Schwab US Dividend Equity ETF ($SCHD) – added $10 at $76.50 per share (weekly buy)
    • Intel ($INTC) – added 1 share at $27.65
    • Bank of America ($BAC) – added 1 share $34.98

Next week I will continue to add $10 into each ETF ($SPY, $XYLG, and $SCHD) and will continue to hold onto some cash if the market gets lower. I have started to slowly deploy that cash in case a bottom has already been hit, but only time will tell. I really want to deploy this cash position into $CMCSA, and $INTC to build 100 share positions in them for covered call activities. I will also be watching $T for opportunities to sell covered calls.

Summary

That is it for the update this week. The market recap and outlook for this wild week will be posted soon, so make sure to have the site bookmarked or subscribe via email on the homepage!

Let me know what you think of the progress so far, share with me your progress and questions, interact with me on Twitter and CommonStock and other socials using the links below!

Thank you for reading! See you next week and stay safe!

Regards,

Dividend Dollars

Categories
Dividend Stocks Dividends Portfolio Stock Market

Dividend Portfolio: 2/10/23 Weekly Update

Welcome back to the weekly Dividend Dollars portfolio review! This portfolio update is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!

Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!

Portfolio Value

To date, I have invested $13,490 into the account the total value of all positions plus any cash on hand is $13,852.71. That’s a total gain of 2.74%. The account is down $230.10 for the week which is a 1.63% loss.

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 down -8.19% which puts us 10.93% higher than the market! I love tracking my portfolio against a benchmark like the S&P. The above chart comes from Sharesight which makes portfolio and dividend management a breeze!

We added $120 in cash to the account this week, trades made will be broken out below.

Portfolio

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, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI this week decreased from $518 to $525.

Dividends

This week I received no dividends, how sad!

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.

Dividends received for 2023: $55.72

Portfolio’s Lifetime Dividends: $466.12

Trades

This week was a week of buying down into some DCA worthy positions leading into coming ex-dividend dates. We added to $AY, $MMM, and $SHOO. $AY’s next dividend hasn’t been declared yet, but I am expecting it to hit in mid-March.

The $MMM add was in anticipation of the dividend hike that was expected to be announced that day. The hike was another token small hike in order to keep their streak alive, which was to be expected given the situation with their litigations. I’ll continue to add slowly to this one, the litigations will not put $MMM out of business by any means but is a significant headwind for them in coming years. Long-term, these litigations provide a great value opportunity to buy into a powerhouse of a company.

Then both $SHOO and $ATVI were DCA’s. $ATVI was down on regulatory news, but that does not change my thesis on the merger arbitrage play with expected completion in June. At almost 4% of my portfolio, this position probably won’t get much bigger than here.

We also completed our regular ETF buys on Wednesday.

Below is a breakdown of the trades I made this week:

  • February 6th, 2023
    • Activision Blizzard ($ATVI) – added 1 share at $71.42
  • February 7th, 2023
    • 3M ($MMM) – added 0.25 shares at $115.28
  • February 8th, 2023
    • SPDR S&P 500 ETF ($SPY) – added $10 at $413.62 per share (weekly buy)
    • Global X S&P 500 Covered Call & Growth ETF ($XYLG) – added $10 at $26.73 per share (weekly buy)
    • Schwab US Dividend Equity ETF ($SCHD) – added $10 at $77.11 per share (weekly buy)
    • Steven Madden ($SHOO) – added 1 share at $34.19
  • February 9th, 2023
    • Steven Madden ($SHOO) – added 1 share at $33.91
    • Atlantica Sustainable Infrastructures ($AY) – added 1 share at $26.45
  • February 10th, 2023
    • AT&T ($T) – Covered call expired worthless, 100% gain on the premium

Next week I will continue to add $10 into each ETF ($SPY, $XYLG, and $SCHD) and will continue to hold onto some cash if the market gets lower. I have started to slowly deploy that cash in case a bottom has already been hit, but only time will tell. I really want to deploy this cash position into $CMCSA, and $INTC to build 100 share positions in them for covered call activities. I will also be watching $T for opportunities to sell covered calls.

Summary

That is it for the update this week. The market recap and outlook for this wild week will be posted soon, so make sure to have the site bookmarked or subscribe via email on the homepage!

Let me know what you think of the progress so far, share with me your progress and questions, interact with me on Twitter and CommonStock and other socials using the links below!

Thank you for reading! See you next week and stay safe!

Regards,

Dividend Dollars

Categories
Dividend Stocks Dividends Portfolio

Dividend Portfolio: 2/3/23 Weekly Update

Welcome back to the weekly Dividend Dollars portfolio review! This portfolio update is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!

Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!

Portfolio Value

To date, I have invested $13,370 into the account the total value of all positions plus any cash on hand is $14,048.98. That’s a total gain of 5.08%. The account is up $302.22 for the week which is a 2.20% 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 down -7.16% which puts us 12.24% higher than the market! I love tracking my portfolio against a benchmark like the S&P. The above chart comes from Sharesight which makes portfolio and dividend management a breeze!

We added $120 in cash to the account this week, trades made will be broken out below.

Portfolio

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, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI this week decreased from $509 to $518.

Dividends

This week I received three dividends. $0.91 from $SPY, $3.98 from $XYLG, and $27.79 from $T!

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.

Dividends received for 2023: $55.72

Portfolio’s Lifetime Dividends: $466.12

This week marks the end of our second January of dividend investing. Our dividend income this January was 26% greater than the income from January 2022! Great progress and looks like February is going beat that by a lot!

Trades

This was quite the volatile week with the FOMC meeting raising rates another 25 bps and the historically strong labor data. But it was volatile in the up direction, not the down, counter to my expectations!

The market rallied very strongly this week. I hate buying stocks when they’re up, so you’ll see that most of my activity this week was buying down into my worst performing stocks like $INTC and $AY. We sold a very conservative covered call on $T, reinvested dividends, and kicked off the weekly ETF buys on Friday.

Pretty standard week, with the exception of the new position we added on Thursday! All week I have been working on an analysis of the soft lines industry and finally posted that article last night. You can read that here. The thesis is that with normalizing inventory levels, falling shipping and material costs, and an improving macro backdrop, soft line retailers (specifically luxury good retailers) are in a great position to realize large margin recoveries and growing sales. For that reason, I started a position in Steven Madden $SHOO. However, the article does have a number of other picks for the industry as well, so please go read it and assess your options if you agree with the analysis!

Below is a breakdown of the trades I made this week:

  • January 30th, 2023
    • Intel ($INTC) – added 2 shares at $27.86
  • January 31st, 2023
    • Atlantica Sustainable Infrastructures ($AY) – added 1 share at $26.85
    • S&P 500 ($SPY) – dividend reinvested
    • S&P 500 Covered Call & Growth ETF ($XYLG) – dividend reinvested
  • February 1st, 2023
    • AT&T ($T) – sold covered call $21.5 2/10 for $2 premium
    • AT&T ($T) – dividend reinvested
  • February 2nd, 2023
    • Air Product Chemicals ($APD) – added 0.1 shares at $293.40
    • Steven Madden ($SHOO) – added 1 share at $37.83
  • February 3rd, 2023
    • SPDR S&P 500 ETF ($SPY) – added $10 at $413.79 per share (weekly buy)
    • Global X S&P 500 Covered Call & Growth ETF ($XYLG) – added $10 at $26.69 per share (weekly buy)
    • Schwab US Dividend Equity ETF ($SCHD) – added $10 at $77.38 per share (weekly buy)

Next week I will continue to add $10 into each ETF ($SPY, $XYLG, and $SCHD) and will continue to hold onto some cash if the market gets lower. I have started to slowly deploy that cash in case a bottom has already been hit, but only time will tell. I really want to deploy this cash position into $CMCSA, and $INTC to build 100 share positions in them for covered call activities. I will also be watching $T for opportunities to sell covered calls.

Summary

That is it for the update this week. The market recap and outlook for this wild week will be posted soon, so make sure to have the site bookmarked or subscribe via email on the homepage!

Let me know what you think of the progress so far, share with me your progress and questions, interact with me on Twitter and CommonStock and other socials using the links below!

Thank you for reading! See you next week and stay safe!

Regards,

Dividend Dollars

Categories
Dividend Stocks Due Diligence Earnings Economics Stock Analysis

Soft Lines – The Retail Segment for Early Cycle Moves

This article is brought to you by 3X Trading, a community that highlights experience and expertise of the professionals within. While other groups rely on algorithms or inexperienced traders, 3X relies on its team of seasoned professionals to navigate markets, providing you with analysis, classes, and a personal service to ensure you are always informed and making good trading decisions, for any strategy. Join the Discord server for free and learn from dividend investors and day traders alike. I frequently share analysis and insights throughout the week, so I hope to see you in there! Thank you Discord members @Jenlevit and @Alladin for working on the marketing and the charts of this piece!

Market Cycle

The market is in a weird spot to kick off 2023. So far, this year feels like the inverse of 2022. High inflation, which defined most of the last year, seems to have given way to a narrative of falling inflation. Wages data, small business surveys, CPI, and ISM data (all items we cover regularly on the weekly market recaps) suggest softening.

The graph above is called “The Psychological Pitfalls Of A Market Cycle”. It’s broken up into four distinct areas indicated by the colors. The orange color on the far left is the Mark Up phase of a cycle, next is Distribution, followed by Mark Down, and ending with Accumulation in the dark red before the cycle repeats again with Mark Up.

We have had three consecutive inflation reports that showed no major inflation concerns. In fact, two of those three reports actually contained negative surprises! The Fed on Wednesday acknowledged weakening inflation while also mentioning that they still have work to do. Anyways, it is clear that the market’s narrative has shifted to declining inflation and that the Fed will pivot dovish sooner or later. Therefore, now is a great time to look for some early cycle outperformers.

The Soft Line Industry

Before I dive into why this sector could be good for cycle moves in the near term, lets discuss what soft lines are. If you google what the soft line industry is, you will see a site that says they sell primarily soft merchandise. Not a very helpful explanation, but it is technically correct and is a term that is used in retail quite often.

Soft lines are retailers that sell smaller items that are usually soft. Consumer items like linens, clothing, shoes, bags, towels, mats, pillows, and sometimes even beauty products. These kinds of goods may be called soft items. They are typically more difficult to handle in the supply chain than hard goods. Hard goods are stackable, easy to store, and easy to transport while soft goods need to be packaged carefully, they can wrinkle, they need to be presented aesthetically in stores, and are more sensitive to restocking.

Soft Line – Early Cycle Mover

Now back to the cycle. The uncertain backdrop of the economy appears to be closely tied to the health of the US consumer. With that said, I believe the soft line industry is at an interesting value point. Morgan Stanley’s US Soft Lines Retail Equity Analyst, Alex Straton, called the coming year a ‘tale of two halves’ in a Thoughts on The Market Podcast last week when discussing soft lines.

What they meant by this is that the first half of what retailers are facing is harder expectations from an income statement perspective caused by an ongoing excess inventory overhang (Nike’s large inventory in the end of 2022 is a great example of this) and possible recessionary conditions from a macro perspective. An article from Morgan Stanley claimed that census forecasts for the S&P 500 have earnings growth at almost 4%, this is overly optimistic in their view. Consensus earnings growth expectations specifically for soft lines are even more optimistic at 15%.

These stocks can be moved significantly based on earnings revisions. If we have negative earnings revisions ahead based on the assumption that expectations are unrealistic, it’s likely that the stocks move downwards from here, hitting a bottom sometime in the first half of the year.

The second half of the year presents a very different story – hence the tale of two halves. If earnings revisions/expectations become more realistic, the industry will be in a position to more easily meet top line returns and margins may receive year-over-year relief. This relief may come from falling fright costs, falling price of cotton, promotions, etc. On top of that, as we go through the year, inventory should mostly reach normalization. Lastly, a recovering macro perspective should be more solidified in the second half of the year. With this improving backdrop and the fact that soft lines are early cycle outperformers, they could quickly pivot off the bottom and see gains.

It is impossible to ever call a bottom accurately and consistently on anything. But given the case for the industry turn around as we have laid out, there are a few data points to keep an eye on to help you realize when the time to initiate might be near. The first indication is 2023 guidance, and we should get more information on this in the coming weeks as earnings season continues.

The other item that we will spend more time explaining is inventory levels. Cleaner levels are essential to having a view on how long the margin risk that hit retailers in the second half of 2022 could potentially linger into this year. Last year, there was a lot of market discussion around the inventory problem. It was seen as a key risk to earnings with oversupply and lagging demand creating the perfect storm for pressuring margins.

Today, retailers have made good progress of working down inventory levels in the third quarter of 2022, but there’s still much room to go. Look at the examples below from Tapestry’s ($TPR) Q1 2023 earnings report, Ralph Lauren’s ($RL) Q2 2023 earnings report, Nike’s ($NKE) Q2 2023 earnings report, and VF’s ($VFC) Q2 2023 earnings report. What we would rather see here is that inventory levels are in line with forward sales growth.

How To See The Opportunity

As we look across the soft line space for opportunities to take advantage of for an early cycle move, make sure that you’re sticking to sound fundamental and intangible analysis. What I mean by fundamental is if the company is growing or outperforming (beauty stores like Ulta are a great example of this), look for diversification in selling channels, be aware of company events such as restructuring or leadership changes, understand if their margins reasonable, and look to see if investors are rewarded with buybacks, dividends, and/or sufficient price appreciation. What I mean by intangible is if the company has a strong brand, if the brand has value, if that brand value had an upward trajector, and do the products speak to the consumer.

If you can answer most of these items in a positive light, then you may have located a good company for this early move.

For me, certain subsectors of this industry particularly interest me and others that don’t. One to avoid, in my opinion, is activewear. These items saw strength in Covid as people gained a higher affinity for staying healthy, exercising, and taking care of their bodies. Long term, the category has really nice upside potential, but for the purposes of getting early cycle returns, the lingering strength from Covid may negate the strategy.

My other point is on mid-tier brands vs luxury/high-tier brands. A debate as old as time. I lean high-tier, for a couple of reasons. One is that higher wealth consumers will be less affected by a recession if one happens. The global economy is growing, China is opening, and India looks to be on the verge of its most performative decade ever. These items will boost attention to and desire for world-renown luxury brands. Another point I have is called revenge shopping. The Economist touched on this phenomenon which is where people are more willing to splurge on high-end items currently because they have been pinching pennies and living a stressful life since Covid that they feel they should treat themselves.

My Picks

Having said this, here are a couple of stocks I have my eyes on:

Tapestry ($TPR), the luxury brand company that operates through Coach, Kate Spade, and Stuart Weitzman. P/E ratio of 12.3, pays a 2.57% dividend, and has had decent sales growth over the last five years.

Ralph Lauren Corp. ($RL) sells premium lifestyle products including the well-known Ralph Lauren clothing brand but also sells accessories, home furnishings, and many other soft line products. P/E ratio of 17.3, pays a 2.35% dividend, and has performed great share buybacks of the last 10 years.

Steven Madden Ltd. ($SHOO) designs, markets, and sells fashion-forward footwear through several well-known brands including Steve Madden, Anne Klein, GREATS, and others through wholesale and direct-to-consumer segments. P/E ratio of 11.4, pays a 2.3% dividend, and has shown impressive sales growth over the past decade with the exception of 2020.

Burberry Group PLC ($BURBY) is a holding company that designs, manufactures, and sells apparels and accessories under the luxury Burberry brand. P/E ratio of 21.18, dividend yield of 2% that pays semi-annually, and touts some very stable margins and impressive FCF per share.

I also like Columbia Sportswear ($COLM) but did not dive into them too much as I believe seasonality may dampen the early cycle mover strategy discussed here.

Of these five, I have initiated a small position in Steven Madden Ltd. ($SHOO) and will wait for their earnings report on February 23rd before adding heavy. The reason for this is so that I can get another temperature check on the inventory levels, sales levels, and the margins are trending in the right direction. So far, sales and margins are. Inventory, which is the key, still needs improvement however.

Thank you for reading! If you like pieces like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week. And go check out the 3X discord where I’m actively conversing about ideas like this!

Regards,

Dividend Dollars

Categories
Dividend Stocks Dividends Portfolio Stock Market

Dividend Portfolio: 1/20/2023 Weekly Update (Revision)

It came to my attention that I missed alerting some moves in this portfolio update! I apologize about that. This post is mostly a repost, but it does contain edits to include items that I missed. You can find these in the bolded and italicized font.

Welcome back to the weekly Dividend Dollars portfolio review! This portfolio update is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!

Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!

Portfolio Value

To date, I have invested $13,130 into the account the total value of all positions plus any cash on hand is $13,332.90. That’s a total gain of 1.55%. The account is down $233.43 for the week which is a 1.72% loss.

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 down -10.84% which puts us 12.39% higher than the market! I love tracking my portfolio against a benchmark like the S&P. The above chart comes from Sharesight which makes portfolio and dividend management a breeze!

We added $120 in cash to the account this week, trades made will be broken out below.

Portfolio

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, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI this week decreased from $500 to $505. This is mainly because of a drop in the yearly payout from $XYLG following their most recent dividend declaration.

Dividends

This week I received no dividend, bummer!

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.

Dividends received for 2023: $14.88

Portfolio’s Lifetime Dividends: $425.28

Trades

This was quite a busy week with a large mid-week dip that I took advantage of followed by a sweet two-day rally to leave the market and my portfolio significantly higher.

I made lots of buys in the portfolio on the down-day Wednesday and then a little more on Thursday. Firstly, we initiated a new position in Orsted (which I wrote a brief article on how they are poised to be a huge renewable power player in the North Sea, you can read that here), added to my favorite DCA’s of ALLY, INTC, and BAC, and also executed our weekly $10 adds in SPY, XYLG, & SCHD.

The buys on Wednesday were partially funded by sales in $JNJ and $MDT. Those positions were my only healthcare positions at the time. Though many would argue that both are strong companies and great holds, I personally don’t feel too confident in my knowledge of the sector.

I could go on and on listing the items I am not well-read on, but the main ones are: there are lots of moving parts with regulators, R&D into new drugs and technologies can be risky, patents and their expirations create frequently shifting product portfolios that need to be monitored, and increased political focus on cheaper healthcare. All of these things put the sector above my head. Now this isn’t to say that I won’t ever invest in the sector, I just simply to need to do a bit of research and familiarizing myself before committing to it.

Always invest in what your comfortable with. Take $INTC or $T for example. I’ve been following their business plans for quite some time. I am very familiar with where they’re at and where they’re going as companies. This familiarity gives me conviction and comfort. Because healthcare is pretty foreign to me, I don’t have that and am stepping back from it with these sales.

Lastly, my first covered call on AT&T expired worthless this week giving me a 100% gain on that premium. I will be watching their earnings call next week and will be looking for a spot to write another.

Below is a breakdown of the trades I made this week:

  • January 17th, 2023
    • Orsted ($DNNGY) – added 3 shares at $34.17
  • January 18th, 2023
    • Microsoft ($MSFT) – added 0.14 shares at $240.79
    • Ally Financial ($ALLY) – added 3 shares at 26.84
    • Johnson & Johnson ($JNJ) – sold position of 1 share at $170.63. Loss of $7.85.
    • Medtronic ($MDT) – sold position of 2.016938 shares at $78.87. Gain of $4.26.
    • Bank of America ($BAC) – added 2 shares at $33.72
    • Intel ($INTC) – added 2 shares at $28.77
    • SPDR S&P 500 ETF ($SPY) – added $10 at $394.45 per share (weekly buy)
    • Global X S&P 500 Covered Call & Growth ETF ($XYLG) – added $10 at $25.88 per share (weekly buy)
    • Schwab US Dividend Equity ETF ($SCHD) – added $10 at $76.39 per share (weekly buy)
  • January 19th, 2023
    • Ally Financial ($ALLY) – added 1 share at $25.70
    • Intel ($INTC) – added 1 share at $28.34
    • 3M ($MMM) – added 0.5 shares at $120.20
  • January 20th, 2023
    • Orsted ($SNNGY) – added 1 share at $29.73
    • AT&T ($T) – $20 Covered Call expired, 100% on $3 premium

Next week I will continue to add $10 into each ETF ($SPY, $XYLG, and $SCHD) and will continue to hold onto the rest of my cash if the market gets lower. I have started to slowly deploy that cash in case a bottom has already been hit, but only time will tell. I really want to deploy this cash position into $CMCSA, and $INTC to build 100 share positions in them for covered call activities.

Summary

That is it for the update this week. The market recap and outlook for this wild week will be posted on Saturday, so make sure to have the site bookmarked or subscribe via email on the homepage!

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 and stay safe!

Regards,

Dividend Dollars

Categories
Dividend Stocks Earnings Stock Analysis

Comcast ($CMCSA) Q4 2022 Earnings – Mixed Earnings but a Light Is At The End of the Tunnel

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Summary

On Thursday, 1/26/2023, Comcast ($CMCSA) reported fourth quarter earnings that beat most expectations despite a lack of strength in subscriber growth and losses from Peacock (their streaming service).

Performance

Earnings per share came in at $0.82 for the quarter, beating expectations of $0.77 by 6.4%. Revenues came in at $30.6B beating expectations of $30.4B and a previous quarter of $29.8B. Good news so far!

Unfortunately, Adjusted EBITDA fell by 15% to $8B from $9.5B from the prior quarter. This was mostly due to higher severance expenses as hinted at by CFO Mike Cavanagh in the third quarter call. He said, “As we enter the fourth quarter and look to our year ahead, we remain focused on driving long-term growth during an increasingly challenged economic environment… We expect we will be taking severance and other cost reduction-related charges in the fourth quarter in anticipation of expense reduction actions that will provide benefits in 2023 and beyond.”

Cable Communications

Comcast report 26,000 lost broadband customers for the quarter, attributing impact to Hurricane Ian which hit Florida and South Carolina in September. The hurricane caused severe damage and losses to the homes of subscribers. When looking at total customer relationships, the firm estimates the total number decreased by 36,000 and broadband increased by 4,000 when excluding the effects of the hurricane.

Though subscribers are growing, the pace has slowed compared to quarters prior to Covid. Competition from telecom and wireless providers are growing, and a housing slowdown in the US contributes to a lack of new customers as the shift to new homes. Total customer relationships of 34.3M increased slightly form 34.2M last year.

Comcast’s wireless segment, Xfinity, added 365,000 customers in the quarter, brining the total subscriber base to over 5.3M. Wireless customer growth has been consistent since jumping into the business in recent years. This was offset by a loss of 440,000 cable video subscribers as customers continue to cut traditional TV bundles in favor of streaming.

NBCUniversal

NBCUniversal is the business segment that contains the media (cable, streaming, and related advertising figures), studios (movie studios such as Universal Pictures, Dreamworks, and Focus Features) , and theme parks (5 Universal Parks and Resorts) businesses.

Revenues for Universal were up about 3% from the prior quarter to $9.8B. Revenues was boosted by the 2022 FIFA World Cup which aired on Peacock and their Spanish-language network Telemundo.

Though overall results are good, Peacock has continued to weigh on the business. Adjusted earnings fell by nearly 50% to $817M due to Peacock losses and severance expenses. $978M of that is attributed to Peacock losses compared to a loss of $614M last quarter.

This quarter, Peacock added 5M new paying Peacock customers to the subscriber base, brining the total number to 20 million. This increase could be attributed to the World Cup, football season, and English Premiere League. The company remains committed to earning a return on their Peacock investment, though next year doesn’t look like the year for it. Overall, Peacock’s losses for the year of $2.5B were in line with the company’s earlier outlook. Next year, Michael Cavanagh says they expect losses to be near $3B.

Theme parks remained a bright spot for the segment this quarter with $2.1B in revenue, right behind the studios revenue of $2.7B. Studios revenues were actually down compared to last quarter, however the segment ended the year strong with a #2 rank in the world wide box office for year thanks to movies like Jurassic World: Dominion and Puss In Boots: The Last Wish.

Sky

Lastly, Sky, the segment that holds one of Europe’s leading media and entertainment companies, reported 129,000 net customer additions. This was reflected in a revenue growth of $163M compared to last quarter. For the year, Sky revenues decreased 11.5% to $17.9B. When excluding the impact of currency, revenue only decreased $1.2%, highlighting the segment’s sensitivity to exchange rates.

Final Thoughts

These 4th quarter results won’t change any negative sentiment around the company, but it’s a step in the right direction. Broadband customer growth is still anemic. I believe the lack of growth in the broadband service is mostly an economic one. Comcast is well positioned to combat competition and maintain pricing power. Broadband business lost customers this quarter for the first time. Average revenue per customer, however, grew 3.5% year over year. The cable segments’s EBITDA margin was flat versus last year, but would have hit a record 45% if the higher severance costs hadn’t hit.

Peacock showed better growth this quarter with 5 million net adds, but still reported a loss, crushing the margins of the Universal segment. Universal faces more challenges, but a rebound in theme parks and the growth in Peacock is a good step in the right direction.

Free cash flows took a hit for the year, dropping to $12.6B from $17.1B. Expenditures were heavily tied to a rebound in content and higher cash taxes. Both items should show less of an impact for 2023. The company’s balance sheet is strong and has allowed the company to raise its dividend by 7.4% to $1.16 for 2023, their 15th consecutive increase. Approximately $17.7B was returned to shareholders this year through $4.7B in dividends and $13B in share buybacks.

Overall, $CMCSA still looks undervalued to me. It has the stability of a telecom stock with it’s focus on broadband, has potential growth aspects of similar streaming companies with Peacock, an impressive ability to bring in revenues at the box office, and a knack for stretching profits out of popular franchises with a growing theme park business. All of these items make them a diversified company that is hard to compete with and an attractive opportunity for long-term investors.

All information provided is available on Comcast’s Earnings page with access to the earnings releases, presentations, and transcripts. Both the Q3 and Q4 2022 earnings materials were used in this article.