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Mr. Market is Rash

At 4:10 pm, on October 10, 2022, Legget & Platt Inc [LEG] issued a press release announcing a reduction in their estimate of earnings for 2022 and some business acquisitions. I only noticed this after-market news release because there was an inconsistency between my spreadsheet, that uses the day’s closing price, and a certain exhibit of TD Ameritrade’s website that displays where prices have landed after all post-close trading is complete.

In just 10 minutes, LEG’s share price fell from the day’s close of $34.68 to $31.10, or -10.3%.

We’re in a bear market and an economic recession. The market has lost a quarter of the value it has built up in over a century in just three quarters of a year. But 10% in 10 minutes for a single company? I was intrigued.

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Dividend Stock of the Week [QCOM][2]

This week, three of the portfolio holdings ranked in the Top 10, MMM, QCOM, and TDS.

TickerAccount Value
MMM1,182.72
QCOM967.28
TDS1,358.00

The lowest amount belongs to QCOM. In order to invest a minimum of $250 in QCOM, I need to purchase 3 shares this Monday. Unless the market price on Monday is vastly different from Friday’s close, doing so will not violate the stock weight or sector weight constraints.

Dollar Cost Averaging

According to Chuckles Schwab, ‘dollar cost averaging is the practice of investing a fixed dollar amount on a regular basis, regardless of the share price’.

As they go on to say, ‘it is a good way to develop a disciplined investing habit’. It is also a good way to achieve average returns. We can do better.

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Confirming Market Orders

Unless my acquisition price is markedly different than the previous trading day’s close, I will not be providing purchase confirmations for market orders going forward. The portfolio and performance pages have been updated. The average cost of MMM has been changed on the performance page. Previously the portfolio had eight shares from one purchase at a price of $124.75 per share. Today, I purchased three more shares at $111.69 per share. My average cost now reads $121.19. The calculation is simple.

Averaging down is a form of dollar cost averaging. Sometimes averaging down gets a bad rap. Royal Dividends will be employing this approach frequently and doing it for the right reasons, in a way that makes sense. Look for a more detailed post on this topic in the near future.

Dividend King of the Week [MMM][2]

This week, two of the portfolio holdings ranked in the Top 10, MMM and QCOM.

TickerAccount Value
MMM884.00
QCOM903.84

Currently, there is less invested in MMM. In order to invest a minimum of $250 in MMM, I need to purchase 3 shares this Monday. Unless the market price on Monday is vastly different from Friday’s close, doing so will not violate the stock weight or sector weight constraints.

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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Dividend Stock of the Week [TDS]Read More »

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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A Consummate PerformerRead More »

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