BITO - Rose's Income Garden: 27 Transaction Review In 2023

2024-01-19 08:35:50 ET

Summary

• Rose's Income Garden Portfolio is a quality, value-built, primarily defensive income portfolio with rising dividends for income generation.
• RIG ended 2023 with a green value up 2.41% without dividends and a 5%+ dividend yield.
• RIG had 13 sells and 14 buys in 2023, all listed and explained.

Rose's Income Garden Portfolio

The RoseNose investing style has been written about since 2015 on Seeking Alpha before the portfolio itself was given the RIG name on November 18, 2021. The style is to have and maintain a quality, value-built, primarily defensive income portfolio with rising dividends for income generation. It currently has 80 stocks from 11 all sectors. RIG contains investment-grade common stock along with high yield ("HY"), business development companies ("BDCs"), and real estate investments. It will have less beta price movement than the overall market, while it strives for retirement income and high dividend yield. It ended 2023 with value up 2.41% without dividends and a 5% dividend yield.

My last article for December here , goes into more depth about the actual RIG performance returns and explains all the December dividends received from about 50% of the stocks in it.

RIG goes into 2024 with 80 investments having started 2023 with 79. The transaction facts reveal 13 sells, 14 buys, 25 add ons and 9 trim trading alerts throughout last year. It was not extremely busy nor dull, just a Goldilocks year for action within the portfolio. The goal for RIG is to have a green portfolio value each year along with a dividend yield above 4% - 5%, both were realized. All Sells and buys are revealed along with what was added to or trimmed. This is a quick, easy summary and my own honest recounting of 2023 transactions.

Sold 13

The stocks are listed under the month the transaction was completed.

January 2023

1- PennantPark Floating Rate- ( PFLT )

Monthly paying BDC high yield "HY" investment had a price nearing overvaluation, so it was riskier and also a lower yield made it time to sell.

2- Newmont Mining- ( NEM )

This gold miner along with many others was showing weakness with a dividend getting smaller and smaller. The price had hit near a high and it was time to take profits.

3- Warner Bros. Discovery- ( WBD )

Spin off from ATT. It never lived up to the pre-spin hype along with no dividend reward. That trend seems to continue even now with discouraging earnings. It appears to be a loser spin-off that I am glad to have sold.

March:

4- ZIM Integrated Shipping- ( ZIM )

Dividends were terrific in 2022, but in April 2023 it made a last dividend payment and suggested most likely they would be held for some time. I did not stick around and perhaps even stayed too long.

5- Barrick Gold- ( GOLD )

Another gold mining company that showed earnings weakness and a declining dividend. It would need time for a recovery which I did not desire to wait for, I took profits.

April

6- Triton Shipping- ( TRTN )

This shipping company was one I wanted to keep and liked owning. It was bought out giving shareholders really no choice other than to sell now or sell later. I sold almost immediately at the announced take-out value. That value actually did decrease after each of the last few dividends were paid out.

7- Molson Coors Beverage Co. - ( TAP )

This beer company did well in 2023 secondary to the Bud Light debacle, but future earnings do not look as robust and actually appear to become flat. The dividend has been poorly managed after being stopped in March of 2020 at 57c, missed 5 quarters and was restarted September 2021 at 34c (~60% cut). It was encouraging for it to raise it in 2022 to 38c (~11.8%) and up to 41c in 2023, but still way behind the old payment, yield and glory. It also looks to have slow to flat growth estimates moving forward.

May

8- BCE - ( BCE )

This Canadian telecommunication company's earnings were slipping along with the price, so I took profits before it sunk even lower. I wrote an article about it in May here. Earnings look to have bottomed in late 2023 and will remain flat for some time along with the dividend. The dividend fluctuates with the foreign exchange rate which also makes it somewhat annoying to own. Free cash flow continues to not cover the payment, so I will watch from afar.

July

9- NY Community Bancorp - ( NYCB )

This is a regional bank that was hitting price highs making it time to take profits even with nice yield. It has a history of 6-7 years with no dividend raises and most likely not going to offer one for some time.

October

10- Crestwood Equity Partners LP/ Preferred shares

Crestwood was acquired by Energy Transfer Partners and its preferred shares are now listed as (ET-I). I decided to sell, not due to mistrust, but only desiring something else with a higher yield. It has a K1 tax form.

11- Danaos Corporation - ( DAC )

This Greek headquartered marine shipping company has great value and earnings but was not offering a dividend raise. The price moved a bit but stayed pretty flat near $65 after 7 quarters of profits. The lack of a dividend raise revealed it was not being very shareholder friendly while it racked up quick a war chest of profits. At the time, the $3 dividend gave it a 4.6% yield, not bad, but other shipping companies were doing better. After I sold, the raise came and was 5c, or 6.7% and the share price rose to ~$75, which gives it a 4.2% yield. It most likely has price potential, time will tell, but I am not sure about the distribution ever growing much at all.

November

12- Net Lease Office Properties - ( NLOP )

In a spin off I received 6.66 shares of this for each 100 of W. P. Carey ( WPC ) owned. It resulted in a very small position that I did not want to add to at all. I saw how Realty O ( O ) did a similar spinoff of its office properties creating Orion (ONL). It started well and dropped hugely in price even with a decent dividend. I look at it as a good example of what could happen with this spin off. There has been a dividend paid, but I believe it to be only a yearly payment. It was encouraging it would seem and its price has soared. I wish "Good Luck" to those that held or even bought more.

December

13- Macerich Co. - ( MAC )

This is a retail REIT and the owner of more quality high scale properties, which at one time was actually pursued by Simon Property Group. Sadly the management turned down the offer, which, I believe, they regret to this day. It has since performed poorly especially through covid like most others did. I have owned it way too long and paid too much. Its price spiked recently and I saw a great time to unload it for a lesser loss. It looks to have flat earnings and flat dividends for years to come, so I'm done, "Adios".

Bought 14

The stocks are listed under the month the transaction was completed.

January

1- Blue Owl Capital ( OBDC )

When purchased it had the ticker ORCC and the name Owl Rock Capital. July 6th, 2023, it was renamed to Blue Owl Cap Corp. to keep with the management team name. It is a BDC with a portfolio of mostly senior secured loans and floating rates. The total dividend for 2023 was $1.59.

Current price is $15.10 giving it a yield of 10.5%. It pays quarterly and has a BBB- S&P credit rating.

February

2- PennantPark Floating Rate - ( PFLT )

This BDC dropped nicely in price since I sold it in January giving an opportunity to buy it back, yes, quite quickly, in February. It was a wise move as it truly outperformed in 2023 by raising the monthly dividend from $1.14 to $1.23 while also rising in price to hold a nice yield of ~10.2%. Unfortunately, it is on the cusp of being overvalued once again and close to being sold. The next earnings report in February will decide its future.

3- Blackstone Mortgage Trust - (BXMT)

This mortgage REIT is involved in mostly commercial whole loans and is externally managed. It was selling attractively throughout most of the first half of 2023. The distribution has remained the same since 2016. The current price and dividend provide a hard to ignore yield of ~ 11.6%.

March

4- DigitalBridge preferred shares H - (DBRG.PR.H)

This company is an asset manager that has converted to REIT status and into data storage. The preferred-H shares have a $1.78 distribution and at the time a delightful 10% yield. However, these preferred shares "H" have gotten more popular along with the common. The "H" price is rising and sits near $23 and a lower yield of 7.7%.

April

5- UGI Corp -(UGI)

This company is a natural gas utility and a dividend champion for 36 years. The industry is being misunderstood as to how efficient and environmentally safe natural gas can be. This has caused a downward spiral in its price, which makes for good opportunity if you believe in the product and company. The $1.50 yearly dividend at the current price of $23.70 a 6.3% yield. Time will tell if it will be back to its former price and glory. I am willing to hold on.

6- SeaPeak LLC preferred shares A - (SEAL.PR.A)

Sea Peak was formerly known as Teekay and operates marine transportation for LNG / NPG worldwide. It has the preferred shares A and B, which I own in RIG. This is the purchase of the A shares which have a somewhat higher distribution of $2.25 per year and at the price of $25 = 9%.

June

7- JPMorgan Ultra Short Income ETF - ( JPST )

This fund pays a varying distribution monthly which amounts to about $2.50 per year and is usually announced on the 1st of the month and paid a few days later. It has ~5% yield, depending on the price purchased. It is a parking spot for some of the RIG cash.

8- Neuberger Berman Energy Infrastructure and Income Fund - ( NML )

It is a closed end financial asset management fund that invests primarily in energy or MLP and limited liability companies. It pays monthly and most recently has held the distribution constant at 5.84c for a 70c yearly distribution. The current price of $6.60 gives it a yield of 10.6% with no K1 tax form.

August

9- NuStar Energy LP preferred shares C (NS.PR.C)

This is a marine shipping company involved in the transportation and Terminaling of fuels and ammonia. This preferred C share has passed its call date of December 15, 2022, and is now at a floating rate of 3M Libor +6.88% or ~$3.19 yearly with the last distribution being 77.43c.

10- DynaGas LNG- preferred shares B (DLNG.PR.B)

This marine company owns and operates LNG carriers. These preferred shares just went off fixed rate November 2023 with the last payment. It could therefore be called at any time, but most likely will not happen as yet. The next payment has not been announced but should be 3M Libor +5.67% and is guessed to be $2.75 yearly from $2.19. The last quarterly distribution was 54.69c with the next one to be just under 69c and paid in February. This would give it a yield near 11%. I await that new distribution announcement eagerly.

October

11- iShares 0-5 Year HY Corp bond ETF - ( SHYG )

This fund pays monthly and announces each payment near the first of the month and pays a few days later. The yearly amount varies but last year was $2.76 or ~ 23c monthly or about a yield of 6.6%. It is another parking spot used for extra cash with a yield to smile at.

November

12- NLOP - ((NLOP))

This was a spin off from WPC which I repeat again as mentioned in the sell transaction list from above.

In a spin off I received 6.66 shares of this for each 100 of W. P. Carey ((WPC)) owned. It resulted in a very small position that I did not want to add to at all. I saw how Realty O ((O)) did a similar spinoff of its office properties creating Orion (ONL). It started well and dropped hugely in price even with a decent dividend. I look at it as a good example of what could happen with this spin off. There has been a dividend paid, but I believe it to be only a yearly payment. It was encouraging it would seem and its price has soared. I wish "Good Luck" to those that held or even bought more. I sold out.

13- ProShares Bitcoin ETF - (BITO)

This is pure speculative ETF small in size that I wish to use as a learning experience. I admit to not knowing the bitcoin technical aspects and hope to gamble / dabble in it along with even having fun with owning it. The yield makes it fun too, paying monthly a varying amount of ~23c making it ~$2.83 yearly with the current price providing a yield of ~15% (smile).

14- Arbor Realty Trust preferred shares-F - (ABR.PR.F)

Arbor Realty is a mortgage REIT and these preferred shares when I purchased them had a price that gave a yield of just over 9%. It pays $1.56 yearly with quarterly distributions. Its price has popped a bit, smile and I will hold.

Add Ons and Trims

25 Add Ons

I added on to 25 separate companies, some just once and others numerous times. I rarely start a position at its full size unless I know its dirt cheap, but then who ever really knows how low or high any investment will move.

These are the 25:

PennantPark Investment (PNNT), Medical Properties Trust (MPW), Ready Capital (RC), Blackstone Mortgage (BXMT), CVS, Rithm preferred shares D (RITM-D), Ares Dynamic Credit (ARDC), Dynagas LNG preferred shares A (DLNG-A), Seapeak LLC preferred shares A (SEAL-A), Verizon (VZ), UGI, British American Tobacco (BTI), DNP, Sabra (SBRA), DigitalBridge preferred shares H (DBRG-H), Crestwood preferred shares (CEQP-), AT&T (T), W. P. Carey ((WPC)), JPMorgan ETf ((JPST)), Enbridge (ENB), FMC, Dynagas LNG preferred shares B (DLNG.PR.B), Altria (MO), Neuberger Berman MLP ETF ((NML)) and iShares HY bond fund ((SHYG)).

9 Trims

When position size gets too big, or I get cautious about price I will trim. A trim is exactly that, as RIG still owns all of the following but in smaller amounts except for BCE that eventually was completely sold.

These are the trims:

Kenon (KEN), LyondellBasell (LYB), AbbVie (ABBV), Merck (MRK), BCE, Omega (OHI), CVS, JPST and Broadcom (AVGO).

I am content with having trimmed those except for AVGO, a mistake, but only for being too early with the trim. I still retain a nice large position size, but who really doesn't always want a higher price. I think it has finally found a top. I include JPST, as I trim it to get cash for a purchase and will add back when I get too much cash once more.

Summary/ Conclusion

RIG proudly has had positive returns and is doing great for income along with meeting goals. The "Trades Log" data for the RIG portfolio at the service has all the exact prices and dates for all transactions and add-ons since the September 2021 inception. December, as well as November, gave RIG a nice big kick in value making it end the year near an all-time high, which it did hit on January 2nd. More income was received with keeping cash alternatives earning at least a 5% yield. The want-to-buy list is constantly updated for all the dividend raises in existing positions and other desired stocks for good values. Some of those new buys listed will also help bring in more income which I estimate to be around 16% more in 2024 if all stays the same.

My forward thinking is the economy is on hold and could even be in a recession soon with stock prices falling, so I am very glad to have ~14% cash and cash equivalents to work with this year. Some of those that will bring in more income are new buys you may have noted are listed in this article. January 2024 has already seen some action with some transactions which I hope to discuss in a future article.

For further details see: