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Going Forward

There are eleven stocks in the Royal Dividends portfolio, what I call the Portfolio for the Ages. Let’s look at the portfolio and note some of the characteristics it possesses:

  • The dividend yield is at a very significant level of 4.2%, well above that of the S&P 500 at 1.77%.
  • There is exposure to every sector.
  • Each position is nearly equally weighted.
  • The portfolio beta of 0.88 is less than that of the S&P 500.
  • Nine of the eleven stocks are Dividend Kings.
  • The dollar-weighted average dividend increase streak of the portfolio is 49.98 years.

So, what’s next?

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Going ForwardRead More »

Free Money

Today, an unknown party purchased a call option that gives them the right to purchase 100 shares of TDS for $17.50 per share, on or before February 17, 2023. The call cost them $55 ($0.55 per share). Who sold them this contract and collected the $55?

I did.

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Purchase Confirmation [TDS]

My market order to purchase 100 shares of TDS executed at market open today for the price of $14.54. Subsequent to that I placed a limit order to sell a 1 contract call @ $17.50 with an expiry of February 17, 2023, for a credit of no less than $0.55 per share. Unfortunately, because the stock market has been in freefall for over two weeks, TDS was already trading lower at market open, and my order did not process. The order is good until cancelled (GTC) and should trigger if TDS increases to perhaps $15. So, I am going to let it ride for at least a few days.

I updated the portfolio and summary by sector. Also, check out the portfolio’s performance to date. These exhibits are filling out nicely, particularly the summary by sector. The exhibits will be updated periodically and will have more meaning as the portfolio grows.

Dividend Stock of the Week [TDS]

There are 45 Dividend Kings. Collectively, they provide exposure to ten of the eleven Global Industry Classification Standard (GICS) sectors. However, later this fall, Computer Services Inc [CSVI] is expected to complete its merger with the Centerbridge and Bridgeport partnerships and go private. With the loss of CSVI, the Kings lose exposure to the Information Technology sector. In anticipation of that change, we acquired Qualcomm Inc [QCOM], a company with a 20-year dividend increase streak with promising growth within the semiconductor industry. The Portfolio for the Ages now has exposure to all but one sector: Communication Services. The Dividend Kings can’t help us, and the Queen is dead.

The Communication Services sector has been destroyed so far this year with a return of -37.5%. However, there is one stock that has done slightly better (-28.75% YTD) with a 48-year dividend streak. This Monday is their lucky day.

That’s right, 17 months early and even before Charles III enjoys his coronation, Telephone and Data Systems Inc [TDS] becomes royalty.

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A Consummate Performer

Too many years ago, my friends and I had tickets to see a triple bill of Cheap Trick, REO Speedwagon, and Foghat at the New York State Fair. The real interest for me and another one of my friends was Foghat, a band that could effortlessly combine blues and sleazy rock ‘n’ roll. We got to our seats and then immediately learned that Foghat would not be performing that night. I cannot remember why or whether a reason was even given, but our mood tanked immediately.

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Dividend King of the Week [LEG]

The Consumer Discretionary sector has returned -23.24% this year. That is the third worst behind Information Technology (-26.31%) and Communication Services (-34.18%). I’ve avoided selecting a King from this sector for weeks because discretionary businesses typically do not thrive in recessions. But it’s time to dip our toes in the water. And we want a company that is steady and resilient. I found one.

Come Monday morning, Leggett & Platt Inc [LEG] joins the Portfolio for the Ages.

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Dividend King of the Week [MMM]

When I see a juggernaut of a company barely above their pre-pandemic lows, I take notice. When I see a 10% drop in a single day on news that is not timed with an earnings announcement, I take notice. The market loves to overreact – in both directions. Sometimes the overreaction is such that it makes sense to take action.

Formerly known as the Minnesota Mining and Manufacturing Company, 3M Company [MMM] joins the portfolio this Monday.

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The Best Way to Reinvest Dividends

Now that the Royal Dividends portfolio has received its first dividend, it makes sense to address what we should do with them. Whenever you receive dividends from your various stock holdings, you have three options:

  1. Spend the dividends.
  2. Do nothing.
  3. Reinvest the dividends.

All three options have merit. For instance, dividends are often a significant source of income for retirees. Retirees may use their dividend income to pay bills or buy groceries. However, for those in the saving phase of their lives, spending dividends is to be avoided. Reinvesting is best and oddly enough, the best way to reinvest involves doing nothing – at least initially.

Let me explain.

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The Best Way to Reinvest DividendsRead More »

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