Since I missed a September update, I figured I should do a quick Portfolio Update for October 2020. I think it should be obvious some of the site changes here at Invest Like Dad, and I hope you like the new look and feel.
From a savings standpoint, my savings accounts interest rates keep dropping and now reside at .60%. The Fed is doing its job and forcing investors to invest! I have put more money to work, but I have paused some as the election uncertainty has caused the markets to seesaw quite a bit in the past few weeks.
There are some new positions, and I am building my buy list to prepare for the next expansion of my portfolio. I hope you enjoy, and please share what you are invested in and any questions you might have.
My brokerage positions are newer and, as such, have had some big swings up and down in this crazy market. Overall I am very comfortable and happy with my positions. See details around each position below:
Apple (APPL) is my tech exposure to try to balance out my financial stocks. I view App as an outstanding growth stock too! Apple is a fantastic company that generates a ridiculous amount of cash. It is a true cash cow! While Apple does have some regulatory concerns from Congress as it pushes an Anti-Trust agenda/desire to break up the big tech companies. Most of this is a non-factor still, and the more significant fear is Biden’s tax proposal more than regulation for its app store.
Apple has a big reveal on October 13th to show off the new iPhone 12. iPhone is a significant revenue generator, and this event should bring some excitement to drive sales!
Some might say Apple is overvalued, but it’s performing well, and in the long term, it is an outstanding stock. I am up ~11.5% with Apple. I am undecided if I would add more at this level, but this is a stock to buy and hold forever.
Ally Financial Inc
Ally Financial (ALLY) has been an outstanding stock and a stable company. Being an online bank that invests in tech, it has grown in the past few years. A generous dividend of 3.1% also doesn’t hurt. Ally’s downside is that it is heavily invested in the auto sector, which was the cause of the big dip this year.
While Banks are not exciting investments, I am up 96% right now and enjoying the dividends! At its current price of almost $28, I think we are getting a little high for new investment and it’s a hold for me.
Bank of America Corp
Bank of America Corp (BAC) is another solid bank stock. This is probably Warren Buffet’s new WFC. This stock has been up and down and, as of today, is still in the red. I am down half a percent overall. Even being down, I am still comfortable holding this and reinvesting the dividends to prepare for the growth once the rates rise in a few years.
BAC began to offer small, short-term loans to cash-strapped customers. These loans will be called Balance Assist and have a $500 limit. This is a direct attempt to go after the payday loan market and possibly get more checking accounts.
CVS Health Corporation
CVS is one of the stocks that is killing me! While I bought it after doing some research after an impressive Q2 2020 earnings, the stock just has not worked out as I had hoped. Since investing, I have seen almost a 4% drop. I will probably not expand my position except through reinvesting dividends. This will be a slow-growth company, but I will continue to collect a 3% dividend.
A side note CVS has announced it is cutting jobs at Aetna as it continues to consolidate operations. The actual number of employees were not disclosed but is expected to be small as state regulators required CVS to maintain 2018 staffing levels for at least four years after the $69 billion purchase.
Fidelity National Financial Group
FNF is a dominant player in the title insurance field that is seeing record levels of transactions. The company is similar to Apple in the sense that it generates tons of cash. FNF boasts a 4% dividend yield, and I am bullish that the stock will recover as it is still more than 25% down from its pre-COVID highs. I am currently up about 2.6%. I will continue to add to my position.
This is probably one of the most undervalued dividend stocks on my list.
Ford Motor Co.
Ford (F) has a new CEO who wasted no time in shaking up leadership. Ford abruptly named a new CEO (Farley) after Jim Hackett’s semi-failed restructuring plan during his tenure. Ford is heavily investing in the auto market’s emerging areas like electric cars, self-driving cars, and shared mobility businesses. It is also looking at boosting its commercial unit with more software subscription models to boost its earnings.
Ford’s leadership wants to see results, and the company is positioned well for the future. Since my purchase, I have seen my Ford shares rise 49%, and I am still optimistic about its future as when I bought it. I should note that I will not be buying more, but I may increase my position if the stock dips.
JPMorgan Chase & Co
JPM is a best of bread big bank. They have multiple revenue streams and have some of the best leadership in the industry. They had gotten caught up in some money scandals hitting the banks, created some weakness, and an excellent opportunity to enter. I am currently up 6% and will add more on a dip.
NTST is a new net-lease REIT that you could compare with WPC or O. They are an excellent company with some outstanding leadership. I started to write up an article about it but have not completed it. You can expect to see more about this REIT as it is a good one.
I am currently up 13% and receiving a nice dividend. I may expand my position if it drops again.
PEP is a great company that also helps diversify some from banks. The snack and soda company has a significant market position and sales. It also delivers a 3% dividend to enjoy while you hold this stock. I am currently up 6% and holding.
Philip Morris International Inc
Currently, PM is paying almost a 6% dividend, and my shares are now up 13% so far. While PM has a lot of debt, the management team makes the right moves by paying down debt and focusing on a smoke-free future. I believe the future is bright!
Prudential Financial Inc
Prudential Financial (PRU) is over 100 years old insurance and retirement management company that isn’t about to go out of business anytime soon. While insurance companies are struggling with low-interest rates, especially the more aged business on their books, PRU has been doing well and focuses on cost-saving/efficiencies.
Another thing that you should know about annuity companies is that most have surrender charges and market value adjustments (MVA) built in to deter withdraws. During the COVID-19 crisis, the number of policyholders choosing to withdraw money has risen, and this has caused some issues since most companies base their MVA on the treasury rate, which is almost zero.
PRU has a dividend-yielding 6.3% and has some growth but will probably stay stable till interest rates rise. PRU is up 6.5% right now.
I am invested in RKT, and I am down 6%. Since this was only a speculation purchase, it isn’t hurting my overall portfolio that bad. Further, I did some Research and Analysis of Rocket Companies IPO and happily concluded that it is a great company. This should be a reliable company and investment in the long term, most likely. I will probably sell some covered calls to generate some income from this position and recover some of my losses in the short term.
Wells Fargo & Co
At this point, you may have caught on that I like financial companies, especially during the low-interest-rate environment, as they are “cheap” and pay dividends. Wells Fargo (WFC) has had a horrible few years with trust and regulatory issues, but it finally seems to be getting its act together under new leadership.
If this company can clean up all the issues and get the Fed to approve it to grow, this stock will jump! The Fed will not lift its restrictions anytime soon, but between that and interest rates that will eventually go up, this stock has an excellent opportunity to grow a fair amount.
Even with the dividend cut, it still has a 1.6% yield, which is not horrible, and right now, I have not lost or gained anything for WFC. Overall this is a speculative investment to a point, but I believe it has great potential if you’re willing to wait a year or two.
With all that said, I have no intention to pour any more money into WFC but happy to leave what is there and wait for a payday in the future.
WP Carey Inc
WPC is a much less popular net less REIT than Realty Income. The main reason is probably that WPC pays its dividend quarterly vs. Realty Income monthly. Also, I think it is the top net lease REIT; if you dive deeper, you will learn it is better positioned and a stronger company than Realty.
I started a fairly good size position, and while I am only up a little over 1%, I have no regrets!
ETFs to Help Balance out Risk
Even though this is not my retirement money, I still like to have some more conservative positions, so I have bought two ETFs. I have held Vanguard Total International Bond Index Fund ETF Shares (BNDX) & Vanguard Long-Term Corporate Bond Index Fund ETF Shares (VCLT) for about two months both yields over 3% and have good growth. I personally like Vanguard funds as they usually have some of the lowest expenses you will find.
Ally Managed Investment Portfolio
I am invested in Ally’s Core Aggressive Growth managed portfolio which is basically a 40% split of US equity ETFs + 26% International stock ETFs + 3% US Bond ETFs + 1% International bond ETFs + 30% cash growing at 1%.
I started this account in March, and it has a net return of 22% since. My concern was the heavyweight of cash, which is supposed to provide more stability but could weigh on performance. So far, it has not, and I am happy with the account.
I need to write a post about how Health Savings Accounts (HSA) are probably the most powerful retirement account that you can have. Anyways I currently have my investments split between Vanguard Equity Income & Vanguard Extended Market Index. These have done well for me and are up about 5% so far.
To avoid going into a ton a detail, I will just list all the different investments as I believe picking your funds is better than picking a target fund as the expenses are higher. Ok below are my Retirement investments; if you have questions leave a comment below:
- American Water Works (AWK)
- Fidelity 500 Index Fund (FXAIX)
- Realty Income Corp (O)
- Pimco Dynamic Income (PDI)
- iSHARES TR PFD and INCM (PFF)
- Philip Morris International (PM)
- Dodge & Cox (DODGX)
- FA new Insights (FINSX)
- FID SM Cap IDX (FSSNX)
- FID 500 Index (FIDAIX)
- Loomis Core PL BD (NERYX)
- JPM High Yield Bond (OHYFX)
My account is currently invested in 66 projects that roll up into ten positions. Only two of my positions are operating at the moment, but it is yielding 3.8% YTD. Overall, about a year in, I have seen a 6.2% return, which isn’t too bad. The biggest downside for Fundrise is lack of liquidity. The upside is strong returns and dividends. As long as you can put the money away long term, this could be a good investment for you too.
This almost doesn’t count as an investment as it is such a small amount of money, but I wanted to see how it would perform. I have invested in 22 loans, and of them, four have repaid their loan with interest. I projected that my return would be 11.3% on the outstanding loans, and I had a yield of 14.4% on the four repaid loans. Overall this seems to be ok, but I am sure I will get a loan default at some point. I also like the short term nature of these loans being 6-9 months.
Over I am happy with my portfolio’s performance and the Invest Like Dad site’s updated look. I was thrilled to be featured in a recent article about what investing will look like after COVID. There are some interesting opinions, and it is probably worth a read.
Let me know if you have any comments or want to share your investments and thoughts!