FSK - Rose's Income Garden 78 Stock May Dividend And Transaction Review

2023-06-02 03:37:23 ET

Summary

• Rose's Income Garden (RIG) Portfolio maintains a steady yield of around 4.8% with value down 2.04% YTD excluding dividends to end May.
• May dividend income rose YoY 5.7%, with 19 out of 78 companies in RIG providing payments.
• Transactions included two sells, reducing RIG to 78 stocks, and several add-on buys in the first three weeks of May.

• 19 companies paid in May along with 1 special payment and income rose YoY 5.7%.

• Feb Q1 / May Q2 Income 2023 was 4.4% lower primarily from Vodafone paying 2x yearly and not quarterly, but up 2.1% if it is excluded.

• Rose’s Income Garden “RIG” Portfolio yield is holding steady near ~4.8% with value down 2.04% YTD excluding dividends to end May.

• Transactions included 2 sells to take RIG down to 78 stocks.

Rose's Income Garden "RIG"

RIG is a defensive income-quality value-built portfolio with 78 stocks from 11 sectors. RIG contains investment-grade common stock along with high yield ("HY") business development companies ("BDCs") and real estate investments.

My RoseNose profile has each sector listed with the number of stocks within along with the highest value stock mentioned. The RIG goal is to have 50% income coming from defensive sectors/ stocks along with a minimum 4% yield which now is 4.8% along with ~17.6% cash. SPY has a yield of 1.55% and no cash. RIG continues to outperform SPY by double digits from its Nov 2021 inception being up 14.85%. It ended May YTD being down 2.04% without dividends, behind SPY 11.69%. Investors currently seem to be chasing AI tech stocks, which I believe, is the main reason for RIG to be lagging, but dividend collection remains alive and well and it will continue to do well.

May RIG Dividend Income Providers

Dividend payments came from 19 out of 78 companies in RIG or ~24%, 4 are monthly and there was 1 special payment. The following are the other abbreviations used:

• /share = US $ Dividend paid in May

• Yearly $ Divi = US $ yearly forward dividend estimate

• Div % Yield = Estimated dividend yield using current listed price and dividend

• Curr = US on June 1st, 2023.

• Comments = Miscellaneous raise or dividend payment information.

DNP, NYCB, OHI, SBRA and T are not expected to raise the dividend anytime soon, but no one ever knows, so it could happen.

Income Changes:

May YoY income rose 5.7%, aided with adding RITM-D in 2023.

2023 Q1Feb to Q2May saw income fall 4.4%. However, if Vodafone income is excluded the quarterly change is up 2.1%.

Cash rose from ~2.8% for May 22 to 17.6% now.

All in all, the outcome is positive which is pleasing.

Raise -1

General Dynamics Corporation - GD

General Dynamics, an aerospace and defense industrial sector company has an “A-” S&P Credit Rating and has 32 years of raising the dividend making it a champion.

The raise was 6c which = 4.8% from the previous $1.26. The past 5-year dividend growth rate = 8.7%, so this was somewhat low on average.

The price is near $205 gives it a yield of 2.6%.

Below is a FASTgraph which shows GD is sitting very close to an average/ normal fair value.

The FAST Facts are on the right side of the chart and will match the colors in the chart.

Black line is price which gives a P/E of 16.57x earnings.

Blue line is the normal P/E line which right now is 16.78x earnings.

Green area represents earnings in regard to everything else.

White line is the dividend and shows its covered by earnings and even shows the pay out where the line meets the side of the graph. Here that junction is at about a low 40% level/ pay out, which is quite low and nice.

The orange line is a 15 P/E where many companies achieve about a 6.7% earnings yield, and many consider it to be average.

As what also should be noted is that the price is cyclical and was down considerably during the covid years, shaded in the chart. As I have noted in my RIG service article with the Morningstar “M*” analyst price listings, is that the price is below the fair value of $240. M* has a cheap, really cheap, 5 star buy price on it of $168. There is still quite a way to go to get there as yet, but anything can happen, as we all know, thus I consider it a hold if you own it.

The chart also shows future earnings estimates with dotted lines that are rising up, which is an encouraging sign. Any “E” after a black number at the bottom of the chart refers to it also being an estimate. I like that 2023-24 has a 17% earnings estimate rise which might mean the price could stabilize to near where it is now. I consider GD to be a defensive company stock and will increase size if the price falls to where I want the yield to be, as noted on the RIG WTB list at the service. My own cheap, “Buy Cheap”, price is $182 giving it a 2.9% yield.

Transactions

The 2 sell transactions take the portfolio size down to 78 stocks.

Sold -2

Molson Coors Beverage Company (TAP)

The Trading Alert here from the service on May 1st was to sell it all.

The 1 year Yahoo Finance price chart below shows the more recent price surge quite well.

The FASTgraph “FG” shows how its price has risen and is falling again right back to ~ $60, where that was actually quite high for it. It benefited from the Anheuser Busch decreasing sales debacle regarding Bud-Light, which might just continue for some time. Normal P/E is 11.78x and not at 14.56x where it is now as seen in the “FG” chart below.

Normal 11.78 P/E x $4.10 earnings = $48.29 for price for 2022 and estimated $4.16 2023 earnings = $49. Being generous might give it a $55 price tag. In the YF chart that is the price it seemed to rise up and move around. $60+ is generous for it now.

BCE, Inc. (BCE)

The trading alert here was to sell it May 5th near that recent high.

The Yahoo Finance 1 year price chart below shows how cyclical it is.

It was sold for having a suspect dividend coverage, currency variation in the dividend payment and flat future earnings estimates. The yield remains quite good at over 6.2%, but Verizon, Vodafone and T in the same sector are now above or near 7% yield. BCE might get there too, but only with the price going lower. I do not see it offering normal high dividend raises.

Add-Ons

There were lots of good add on buys in the first 3 weeks of May including:

UGI, PNNT, BXMT, SEAL-A, BTI, CNP, CVS, DLNG-A, MPW, SBRA and ARDC.

Summary Conclusion

The Trades Log data for the RIG portfolio has all the exact prices and dates for all transaction, add-ons since the September 2021 inception.

UGI and DNP are both utility sector holdings and I want and like the defensive nature of them.

The end of May gave me pause to watch the US debt ceiling legislation, along with consumer spending issues to be reported and more. Real Estate is definitely getting appealing for yield, with many showing 5-6%, but to be real steals for this economy I might have to wait just a bit longer for a higher yield to buy them. I am also watching preferred shares already owned for lower entry prices. Glad to have 17.6% cash for it all.

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