Dividend Portfolio - First year in market review

[Phidius]

My first year just completed. Check out my one year dividend portfolio review here: https://youtu.be/OUxuaU8z5i8

Positions:
$GECC
$KMI
$T
$DFS
$EIX
$COP
$HCFT

Recent Moves:
Sold $SBUX for $EIX and $TGT
Started $BRY after their new IPO
Started $SWI after new IPO

Long strategy:
The market can not be controlled, so the most important aspect of managing your own portfolio is how you increase your positions in stocks. My dividend weight will be "U" shaped, having heavier dividend positions in the beginning and also in retirement. More emphasis at beginning to help buy shares, and at retirement when I rebalance to dividends from growth. I believe the perfect state is 25% divided, 50% growth, 25% other (bonds).

Feedback:
Feel free to let me know how I did my first year, advice on strategy going forward, or ask questions on any position.

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[fenders53]

You asked for advice so here it is.

Add a few blue chips while on sale and dump some of the risk for now. You'll understand why later. It's never too late to make your port more speculative. Keep learning! Time in the market is the only way to learn because you have skin in the game. When you have survived your first bear market your perspectives will mature. It's hard to describe until you live it. Best of luck to you and hope you participate here regularly.

[Phidius]

I liked your input. I didn't mention I sold my first dividend producer: $GE.

Aren't dividend investors okay with a bear market? As long as dividend stays healthy I just want to worry about increasing positions. I think the risk you warned about was new IPO investing, so that makes sense. Let's get some Blue Chips on the menu!

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[ChadR]

Is there a reason why you sold SBUX? This is one of the stocks that I plan on never selling. Thinking of adding more with it's P/E below 20. I personally think it is the time to buy it. I agree with fenders, I wouldn't load up on speculative stocks. It's fine to have some, but don't go overboard. And load up on some blue chips.

[Phidius]

In the video I showed the timing, but I can explain that the relative strength indicator showed Starbucks as overbought and Edison International as oversold. So I sold high and bought low in the swap.

EIX has a better dividend and they were raising it. Unless the California wildfires bankrupts them through lawsuits, it seemed like a good buy.

I like $SBUX, I would buy back in if it ever comes back to below $67 where I sold it. It still at $65 but as their repurchase program kicks in that price may disappear for good.

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[fenders53]

(12-13-2018, 12:04 AM)Phidius Wrote: I liked your input.  I didn't mention I sold my first dividend producer:  $GE.  

Aren't dividend investors okay with a bear market?  As long as dividend stays healthy I just want to worry about increasing positions. I think the risk you warned about was new IPO investing, so that makes sense.  Let's get some Blue Chips on the menu!

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A bear market is part of the reality of long-term investing for sure.  History says you will endure 3 or more during your equity investing career. We generally invest through the turmoil and average our positions down in the stocks of our choosing.  If you happen to have some cash on hand it can be a wonderful opportunity.  All dividend investors do not have to same risk tolerance. It's rough watching your port get devastated.  It's one thing to say you are OK with huge losses, another to experience it and react correctly.
Some cash out and run away from stocks forever.  I know I can't time the market, but there is little doubt we are late cycle and the bear is coming some year soon.  I am not going to head into it 90% in equities, and I won't have a port loaded with speculative stocks.  That 35% port drawdown could turn into 75%.  You have considerable control over the likelihood.  Have you ever had a stock go to zero?  I have only a couple times in 35 years and it's painful.  Thousands of dollars gone forever.  Buy and hold only works if your stocks survive the recession.  Preferably all of them, and definitely most of them.

2001 was my worst beating. Waited a decade for INTC, MSFT and PFE to recover. A few tech stocks went out of business (JDS Uniphase and Nortel) They were must own stocks a few years earlier. My truly safe stocks helped me keep the faith. (JNJ, XEL, etc.) The speculative stocks were mostly vaporized and I was 100% invested in equities. Easily avoidable mistakes and I never repeated them, but it was avoidable in the first place. It's cliche, but "don't lose money" should be high on your list of investing rules. I enjoy speculative stocks but they are a very small part of my overall port. 2007 was really bad but my core holding were now blue chips and I had some cash this time. 2007 cancelled, or at least delayed a lot of people's retirement plans. Now I am approaching retirement so I need to dial back the risk even more. I'll never abandon equity investing no matter how old I become, but the bear will return. You can't be afraid of the bear but you have to respect him.

Consider adding a few dividend aristocrats, and keep your speculative positions small is how I would begin de-risking your port. If you get lucky and a few risky stocks quickly go to the moon, don't confuse that with investing brilliance and double down. That is exactly how I got in trouble in 2001.

[Phidius]

No, I have not had a stock fall to zero. But a stock I loved was $BWP Boardwalk Pipeline Partners. It was a master limited partner, but it was on a constant price bleed and $L Lowes suddenly took it private. I made a small profit, but long time investors were considerably upset. I learned quickly not to get too attached to stocks that fit my comfort zone.

So speculating on new IPO stocks seems risky, but let me make a case for $SWI Solarwinds. They were public before they got an offer to be bought and taken private. Now going public a 2nd time. I worked in the Information Technology field for five years, and was liking what I saw in their marketing and service products overview. Their clients are 499 of the Fortune 500. Wow!

I cover the details here: https://youtu.be/FrIOJFTvhlY

I just bought a few shares, so currently just 1% of my portfolio. So here is my question: how do you grow a new position? 1) buy chunks at a time and hold 2) buy and wait for dips. 3) sell price jumps and move on until you can buy back in at a sweet value?

Thank you so much for taking the time to go over this with me. I do hope you know I appreciate someone willing to share their experience and market stories.

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[crimsonghost747]

(12-14-2018, 08:51 PM)Phidius Wrote: I just bought a few shares, so currently just 1% of my portfolio.   So here is my question:   how do you grow a new position?   1)  buy chunks at a time and hold 2) buy and wait for dips. 3) sell price jumps and move on until you can buy back in at a sweet value?

For me it's a mix of 1 and 2. 
Most of us put some new money into our portfolios monthly. I personally invest this new money in 2-4 different companies every month, main idea is to buy those stocks that seem to be fairly priced at the moment but of course I also keep balance in mind. As long as the stock in question doesn't rise too fast, I'll end up buying chunks every once in a while.

Sometimes it this also fails. Example: I wanted to get in on OMC when it was around $67 - $68. I remember selling a couple of $67.50 puts but they never got assigned so i ended up just buying a small chunk around the same price. This was supposed to be the start of a long term position. But now, in a couple of months, the stock has run up from those levels to $75+ and I don't really feel comfortable buying at this level... especially when there are other good deals to be had. So now I'm stuck with a miniature position... I'm very much considering selling it because I don't see a point in keeping such small positions and I don't feel like adding.

[fenders53]

I have the benefit of hindsight and this is not how I did it. Start with a diverse group of stocks you like and follow them. Industrials, finance, healthcare, communications, utiilities, consumer cyclicals, consumer non-cyclicals etc. Over the course of a few years you notice the market rotates. Always put some portion of your new money in an out of favor beaten up sector. All of these sectors have dividend paying stocks. I's OK to own a small cap but go easy until you see what they do in a market downturn. Some of them disappear every bear market.