Q2 2019 Portfolio Review

The second quarter ended and this time I wanted to be quicker with my portfolio review.

The market dropped in May but quickly recovered in June. Other than that there was no real excitement regarding the markets/portfolio. On a personal note, we were again on a two week surf trip to northern Spain. We also visited the wedding of my sister and did a catamaran sailing trip on Lago di Como last weekend. Very exciting, but very bad for my saving rate. But I still won’t trade these experiences for more available money.

Capital Contribution

My capital contribution this quarter was $0. I could have added a little bit, but I need more visibility for the coming tax payment. I still haven’t finished my tax declaration for 2018. Hopefully I can compensate the missing contributions in the coming quarters, but for now it seems very unlikely and I think I’ll miss my annual contribution target.

Portfolio Changes

These values come straight from my broker and differ a little bit of my own calculations, mostly because of including fees and some unpublished options plays, which I list separately for myself.

Stock Transactions

  • I sold my remaining shares of Sabra Health Care REIT because I don’t see a positive outlook of their FFO numbers for the future. In fact it continues to fall as seen in Q1 report (FFO 48 cents, down from 63 cents). The dividend coverage is getting smaller and smaller. I don’t need to wait to see the outcome. This is a similar reasoning as with my OHI sell last year.
  • I sold my Ensco position with a big loss after they decided to cancel the remaining (symbolic) dividend. The offshore business is still in recovery mode, but it’s unclear, at the moment, how long the turnaround will take and who will survive and in which form (restructuring, etc.). The problem remains: most ships are under contract at the moment and new contracts only get very low day rates. Too low to be sustainable. You have to keep in mind, these companies have an enormous amount of debt. And even if the day rates will see a drastic upside movement, there are simply not enough ships (warm stacked or idle) available to take the opportunity. The situation will change slowly, I’m sure of it, but I’m not using my dividend portfolio to trade (or continue to hope any further) on a hypothesis.
  • Last but not least I doubled my Abbvie position and bought 25 ABBV shares after they announced the Allergan acquisition and the share price dropped 15% on a single day. To be honest I thought it will drop further and I can continue to add. But I’m happy that I took the opportunity. I don’t understand the initial negative reactions to the acquisition. The cost of debt is far lower than the added cash flow which will further improve the “Humira dividend risk”. This is what I wanted Gilead to do. Aggressive cash flow acquisitions instead on betting on more risky R&D buys. That’s why I decreased my Gilead share count last year.

Dividend Income

I’ve received $636.97 in dividend payments in the second quarter. This is an 4.56% increase over last year Q2.

Outlook for Q3 2019

Because of my SBRA sell (a very high yield REIT), my annual dividend income, compared to Q1, decreased even more. Even after buying more ABBV shares which were also yielding a high 6.5% at the time of purchase, I couldn’t compensate the loss. All REITs are overvalued at the moment, so I don’t think I find an adequate replacement. Maybe the outlook of falling rates will turn this tide to my advantage. But as always I’m looking for opportunities.

Looking at my 2019 goals, I’m lagging behind all my targets. Let’s see how this will plays out in the end. 6 more months to go!

6 thoughts on “Q2 2019 Portfolio Review

  • July 4, 2019 at 9:40 pm
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    Doubling your ABBV is certainly a great start to replacing the dividend income for your two closed positions. Hopefully we’ll get some opportunities soon.
    You get some decent surf in Spain? I’m headed to Costa Rica for a week on the 8th.

    Reply
    • July 4, 2019 at 10:40 pm
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      Hey Passive Cash,
      thanks for stopping by!
      Yes, the surf was very good. I’m more and more leaning towards longboarding and thus I’m more looking for not too big but consistent waves. It was great. Best thing was a moonshine session in the night. Only thinking about it lifts me up 🙂
      And Costa Rica sounds great, hopefully you get some nice waves and small crowds. Have fun!!

      Reply
  • July 11, 2019 at 1:20 am
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    Nothing wrong with $0 contribution in Q2. The dividend portfolio and income can grow organically too. Congrats on over $600 in Q2 and the 4.56% YoY grow is very awesome. Keep it up.

    Reply
  • July 11, 2019 at 12:55 pm
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    Hi Tawcan,
    thanks for your comment and encouragement! I’m also more looking on the contribution amount for the full year.

    Reply
  • July 22, 2019 at 4:19 am
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    Like Tawcan said, there is nothing wrong with no additions during the quarter. If there isn’t the right value, don’t do it. I think you’ll be happier with the sell/buy reallocation into ABBV in the long run. I like the combined entities long-term prospects as well.

    Bert

    Reply
    • July 22, 2019 at 9:45 am
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      Hi Bert,
      good to know you’re also a fan of the merger. Let’s see how well Abbvie will manage their Humira “problem”.
      Thanks for stopping by and commenting!

      Reply

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