Ultimate Sustainable Dividend Portfolio – September 2014 Update – Moving Ahead

avatar By: IS
Date posted: 09.18.2014 (4:20 am) | Write a Comment

 

Dollar treeAs many of you know the Ultimate Sustainable dividend portfolio was built over a year ago as an attempt to slowly become financially free. By that I mean having enough passive income to not “need” to work any longer. I track my progress every month and I’m looking at many different ways to get that done which include real estate, my own business, etc. That being said, the core of my strategy relies on income generated from my portfolios.

The USDP, along with my ETF portfolio generate the bulk of my passive income and I decided to track this with a monthly post in order to keep myself accountable and also because I’ve heard from many of you that this would be helpful.

As is always the case, you can get extra information in my newsletter, it’s free to sign up for here:

Without further wait, let’s get started. Here are the portfolio holdings as of last night:

Ticker
Name
Shares
Sept 17 2014 Prices
Sept 17 2014 Values
OMCOmnicom Group Inc32$70.33$2,250.56
MSFTMicrosoft Corp74$46.52$3,489
JCIJohnson Controls Inc42$46.37$1,993.91
PEPPepsiCo Inc/NC30$92.85$2,878.35
ETNEaton Corp33$66.36$2,256.24
DOVDover Corp26$84.72$2,287.44
ITWIllinois Tool Works Inc30$88.63$2,658.90
XLNXXilinx Inc39$43.92$1,756.80
SJMJM Smucker Co/The21$99.71$2,193.62
BLKBlackRock Inc13$329.74$4,616.36
TROWT Rowe Price Group Inc31$79.30$2,537.60
OXYOccidental Petroleum Corp24$98.17$2,454.25
XOMExxon Mobil Corp21$97.08$2,135.76
ADIAnalog Devices Inc46$49.63$2,332.61
HASHasbro Inc31$53.77$1,720.64
MATMattel Inc45$34.16$1,571.36
AFLAflac31$58.33$1,866.56
BAXBaxter International26$72.65$1,961.55
IVZInvesco Ltd69$40.85$2,859.50
CVXChevron20$124.72$2,619.12
TXNTexas Instruments Inc32$48.37$1,596.21
VWOVanguard FTSE Emerging Markets81$44.20$2,696.20
BNDVanguard Total Bond Market46$81.46$2,932.56
Cash$2,550.94
USDP$58,216.04
SPX16.17845817$3,643.33$60,943.46

Dividends Received

Things are going absolutely great from this perspective. You will see in the below chart a clear trend in monthly income when you compare to the same period the previous year.

usdp2

 

Ultimate Sustainable Dividend Portfolio News

Not much to report here. I can’t say I’d blame these companies for not announcing dividend increases in the middle of the summer!

Returns

Overall returns continue to be decent but I did not yet catch up on that S&P500 uptick. The main stocks that have let me down from that perspective so far this year are:
Mattell (MAT): -26% so far this year (total return)
ETN Corp (ETN): -10,55%
Of course, it’s one more example of the importance of diversification in a portfolio like this one.

usdp1

 

Trades

Not much going on from that perspective but you can expect a change or two before year-end.

Time To Get Out Of eBay ($EBAY)

avatar By: IS
Date posted: 09.15.2014 (3:00 am) | Write a Comment

$ebayI’ve written a decent amount about eBay (EBAY) over the years and have generally been a believer. Today, as I take a new look at things, I’m not as convinced. Why? There area few reasons that I’ll get into. But the one thing that seems apparent is that the current web ecosystem plays ($AAPL, $GOOG, $FB, $AMZN, $MSFT) are now very much ready to take on eBay and I don’t think the company has been able to properly prepare itself. It’s not impossible to survive in such a context (Netflix ($NFLX) and Twitter ($TWTR) are 2 great examples but I feel like eBAY is about to run out of time on that front.

Turns Out Carl Icahn Was Right.. But Maybe Too Late

A few months ago, Carl Icahn waged a very public war with eBay’s board, arguing that they were not doing their job and among other things, should spin out Paypal. Even at the time, I had argued that he was right but I’m believing that more and more. The company is reportedly still considering the move but at some point it will be too late. The problem isn’t so much about having both an auction store and the leading internet payment site in the same company. The issue is that Paypal didn’t get the attention it deserved. I’ve personally said for years that I was valuing eBay as a payments company because that was where the growth and the future was.

So what did Paypal need to do? It needed to quickly build a customer and offline business base that were very active, to support developers (what % of apps that you use try to get you to pay through Paypal?), etc. On those fronts, Paypal has made very little progress.

ycharts_chart

What Just Changed?

For years, Google has been trying to build a payments solution, Facebook has built “Facebook credits” while Amazon’s “Payments” has slowly but surely continued to gain ground. But what changed was Apple’s recent “Apple Pay” announcement.

Not only does that confirm how serious Apple is taking “Payments” but it will force competing players to up their game VERY quickly because you can bet that Apple will become a major player in the payments space. Apple Pay will also be used for online payments in apps, websites, etc. That is very serious competition for eBay’s Paypal and you can bet that Amazon, Google and Facebook will react to this news very quickly.

The Game Is Not Lost… YET

Of course, Apple only offers payments to its customer base leaving a majority of users unsupported. It is likely that at least one more player will emerge in this space and eBay could certainly compete. I don’t think its chances are good compared to a few years ago when it was by far the dominant payment player. Paypal has around 150 million active users and Apple will almost reach of that number when its new operating system ships next month:

iphone

credit Statista

 

Apple has also signed up all 3 major credit card issuers as partners, will have hundreds of thousands of retail points from the start, etc. Paypal was apparently pushing to be part of Apple’s payments effort but that has clearly failed.

And again… eBay is not so focused on Paypal. Instead last week it announced:

ebay2

 

 

An Ad Network?!?!? To compete with Apple, Google, Facebook, Twitter and others in an ultra-competitive business where eBay has little to no competitive advantage? I don’t think I need to argue this one. Yes eBay knows a lot about what its users like to shop for… but an ad network??? It’s even worse than the focus on same day shipping. eBay is not a technology company or an ad specialist.. so where does this make sense? Why not focus on the area where the company makes most of its money and is being targeted by the world’s leading ecosystems?

Disclosure: Long eBay (EBAY).. but not for long

Closing 1 Trade ($PCLN, $P)

avatar By: IS
Date posted: 09.15.2014 (2:00 am) | Write a Comment

Overall, it’s been an outstanding year for my long & short stock picks but today is one of those days where I’m closing a trade that’s a losing one. On August 4th, I did the following:

-Long Priceline (PCLN) & Short Pandora (P)

PCLN Chart

PCLN data by YCharts

As you can see, things have not quite worked out. I thought the rationale of this trade seemed right (obviously) and I usually still believe that when I close losing trades. I’m changing my mind (slightly) on Pandora which I’ll surely explain a bit later on. Not saying I’m going to buy some, I’d still likely short, but I do see a way for them to do well. More on that later I guess:)

You’ll also see a post about eBay in an hour and probably wonder why I’m not closing my long $EBAY trade. Unfortunately, there is a lot of volatility on the name, given the rumours and Apple news so for now I’ll sit tight but might close it out later this week.

Facebook ($FB) Increasingly Looking Like A Strong Ecosystem Play

avatar By: IS
Date posted: 09.08.2014 (3:00 am) | Write a Comment

$FBAs I’ve stated several times over the past few years, I’m a big believer in the ecosystem play when it comes to technology stocks. I won’t get too much into why but you can certainly look at these posts for a better idea:

-Ecosystems rule the world
-Have you put your chips on the web ecosystems yet?

Most of us would all agree that Google (GOOG), Apple (AAPL) and Microsoft (MSFT) all qualify as ecosystems. They are at the center of mobile and desktop worlds thanks to their control through the operating systems (Windows, iOS, Android) that has extended over time. I’ve also personally had Amazon (AMZN) and Facebook (FB) into that group which I know many of you disagree with. These companies are increasingly competing in all kinds of different ways but I think it’s safe to say that Facebook is headed in the right direction as I tweeted a few days ago:

In this post, I won’t discuss the valuation or revenue expectations simply because I’ve done so in the recent past and I’m also more focused on explaining why I think Facebook is an ecosystem play.

The Current Environment

In an increasingly mobile world, it’s all about dominating the app landscape. You’d rightfully assume that players which have their own O/S have an easier path to promoting their own apps and that’s certainly true but Facebook has been able to achieve incredible numbers.

-The Core Facebook app remains the most used app by a significant portion of users. It is the only non-Google app to reach 1 billion installs on the Google Play app store.
-Facebook messenger is currently the most downloaded app on Android and iOS
-WhatsApp has confirmed it now has over 600 million users, with Zuckerberg saying it could end up reaching several billion users
-For all of the talk of “youngsters moving away from Facebook”, they have been moving towards a few apps, Instagram, owned by Facebook is arguably the top one.
-It continues to innovate with new apps such as Hyperlapse and Paper.

Yes, Facebook lacks an operating system and did try its own version with Facebook home but that was a failure. I do personally love to see Facebook being so aggressive and while they have and will continue to fail, overall the growth has been nothing short of spectacular, both in terms of users and revenues:

dau

revs

credits: Facebook IR

 The Coming Years

If the “desktop era” was the first big step in the “Social Web”, then I think it’s fair to say that mobile is the current era. In most of the world, that has translated into big companies such as Google, Apple, Microsoft and others unbundling their core apps into different “single purpose” ones. I’m not sure if that model will remain so or if the “China model” where a few apps make it possible to do just about anything dominate. If that ends up happening, I think Facebook has a great position through its core app, but also its messenger plays.  It is very plausible that in the next “web”, search will no longer be at the “center” but it could be other core functions such as maps or messaging.

If we’re taking an even longer term view, the recent purchase of Oculus Rift by Facebook certainly gives it a leg up in trying to compete with Google in terms of artificial intelligence.

What Are Your Thoughts On Facebook As A Dominant “Ecosystem”?

Disclosure: Long Facebook (FB)

Top 100 Dividend Stocks – September 2014 Edition – WIN Remains On Top

avatar By: IS
Date posted: 09.03.2014 (3:41 am) | Write a Comment

maldivesIt’s that time of the month again. Things are always slower in the summer in terms of news, dividend increases, etc. There are still some great opportunities out there and I’m always on the lookout for ways to improve my Ultimate Sustainable Dividend portfolio. Why? Because it’s a key part of increasing my monthly passive income (see last update here). There is no “perfect” stock of course. The market is fairly efficient so it’s all about finding high quality stocks that are a good match for my portfolio and provide a good potential/downside risk ratio. Obviously, yield is just one criteria but it’s an important one and for that reason, looking at the top large cap stocks in terms of dividend payout is a great way for me to get started.

WIN Takes A (small) Step Back

WIN continues to look very solid although it did take a slight step back in the past few weeks. Take a look at this chart:

WIN Chart

WIN data by YCharts

Here is the list!

Ticker
Name
Price
Dividend Yield
Payout Ratio
Ex-DVD
WINWindstream Holdings Inc11.059.05250.779/26/2014
DODiamond Offshore Drilling Inc42.968.1588.6910/30/2014
RIGTransocean Ltd37.987.963.7911/12/2014
ESVEnsco PLC48.936.1336.99/4/2014
FTRFrontier Communications Corp6.795.89362.429/10/2014
NENoble Corp plc27.475.4625.211/6/2014
CTLCenturyLink Inc40.865.29#VALUE!12/4/2014
TAT&T Inc34.845.2853.1310/8/2014
HCPHCP Inc43.095.06106.9211/6/2014
TETECO Energy Inc17.844.9396.6611/10/2014
MOAltria Group Inc43.194.8281.439/11/2014
SOSouthern Co/The43.84.79107.3611/6/2014
HCNHealth Care REIT Inc67.264.733110.7711/6/2014
DRIDarden Restaurants Inc47.754.61157.3710/10/2014
RAIReynolds American Inc59.084.5479.19/8/2014
VTRVentas Inc65.414.43164.069/10/2014
EDConsolidated Edison Inc57.164.4167.8911/10/2014
PMPhilip Morris International Inc85.494.468.079/23/2014
MATMattel Inc34.584.455.211/24/2014
PBCTPeople's United Financial Inc15.044.3987.6710/29/2014
ETREntergy Corp76.384.3583.1111/10/2014
PPLPPL Corp34.274.3579.799/8/2014
PCLPlum Creek Timber Co Inc40.584.34135.5111/12/2014
DUKDuke Energy Corp73.454.3382.3811/12/2014
KMIKinder Morgan Inc/DE39.864.31138.4810/31/2014
FEFirstEnergy Corp33.694.27245.2311/7/2014
VZVerizon Communications Inc49.774.2651.7310/8/2014
LOLorillard Inc59.524.1369.9211/26/2014
SCGSCANA Corp51.324.0960.39/8/2014
AEEAmeren Corp39.344.0775.819/8/2014
TEGIntegrys Energy Group Inc66.974.0661.8811/28/2014
PEGPublic Service Enterprise Group Inc36.584.0558.579/3/2014
PNWPinnacle West Capital Corp56.154.0460.3110/30/2014
POMPepco Holdings Inc27.533.92245.459/8/2014
PCGPG&E Corp47.293.85100.6110/3/2014
CNPCenterPoint Energy Inc24.743.84114.1511/14/2014
KIMKimco Realty Corp23.533.82174.4810/1/2014
SPLSStaples Inc12.633.844.269/24/2014
MACMacerich Co/The65.523.79252.3511/12/2014
XELXcel Energy Inc31.693.7958.439/16/2014
AEPAmerican Electric Power Co Inc52.883.7864.4611/10/2014
EXCExelon Corp32.833.7873.5511/17/2014
WMBWilliams Cos Inc/The59.293.78222.629/10/2014
GASAGL Resources Inc53.13.6970.9311/19/2014
COHCoach Inc36.753.6747.889/5/2014
CINFCincinnati Financial Corp48.283.6552.229/15/2014
COPConocoPhillips80.223.6441.6610/16/2014
PAYXPaychex Inc41.93.6381.3710/31/2014
KRFTKraft Foods Group Inc58.553.5945.059/26/2014
CMSCMS Energy Corp30.243.5759.6911/5/2014
DTEDTE Energy Co77.423.5668.539/11/2014
GRMNGarmin Ltd53.923.5657.449/11/2014
PFEPfizer Inc29.263.5557.6811/5/2014
FCXFreeport-McMoRan Inc35.493.5284.8210/16/2014
LEGLeggett & Platt Inc35.393.5187.719/11/2014
HSTHost Hotels & Resorts Inc22.833.5169.529/26/2014
WECWisconsin Energy Corp44.73.4956.9611/12/2014
CACA Inc28.653.4950.3911/18/2014
MCDMcDonald's Corp92.83.4955.7611/28/2014
TGTTarget Corp60.193.4653.3211/14/2014
NUNortheast Utilities45.443.4659.459/11/2014
DDominion Resources Inc/VA69.473.4572.8812/3/2014
GMGeneral Motors Co34.83.4509/8/2014
WYWeyerhaeuser Co33.993.4184.9511/5/2014
GEGeneral Electric Co25.853.453.119/18/2014
CVXChevron Corp127.543.3634.8911/19/2014
CLXClorox Co/The88.663.3466.1610/20/2014
NAVINavient Corp17.983.34#VALUE!9/10/2014
OKEONEOK Inc70.233.28117.511/5/2014
HASHasbro Inc52.6653.2772.8810/30/2014
CVCCablevision Systems Corp18.523.24122.8611/13/2014
PLDPrologis Inc40.913.23288.829/11/2014
SESpectra Energy Corp41.723.2180.5611/12/2014
PSAPublic Storage175.33.19105.029/11/2014
WMWaste Management Inc47.263.17696.949/3/2014
CAGConAgra Foods Inc32.113.11140.910/29/2014
KMBKimberly-Clark Corp1083.1158.089/3/2014
PGProcter & Gamble Co/The82.983.16110/15/2014
LLYEli Lilly & Co63.683.0844.8911/14/2014
GISGeneral Mills Inc53.363.0753.4110/10/2014
SPGSimon Property Group Inc170.123.06111.9611/10/2014
LMTLockheed Martin Corp173.83.065211/27/2014
ABBVAbbVie Inc55.073.0576.9910/15/2014
CSCOCisco Systems Inc24.883.0547.999/30/2014
SYYSysco Corp38.23.0472.3110/1/2014
KKellogg Co64.793.0336.1611/28/2014
EQREquity Residential66.33.02#VALUE!9/18/2014
GMEGameStop Corp43.753.0237.2111/28/2014
AVBAvalonBay Communities Inc154.153.01932.949/30/2014
AIVApartment Investment & Management Co34.523.0131414.2711/12/2014
IRMIron Mountain Inc36.092.99213.919/24/2014
NEENextEra Energy Inc97.232.9865.1111/26/2014
MRKMerck & Co Inc59.792.94116.539/11/2014
KOCoca-Cola Co/The41.642.9357.859/11/2014
MCHPMicrochip Technology Inc48.7752.9271.1411/18/2014
ADIAnalog Devices Inc50.622.9260.329/3/2014
AVYAvery Dennison Corp48.152.9145.8512/1/2014
IPInternational Paper Co48.462.8941.0511/14/2014
DEDeere & Co83.772.8721.139/26/2014
DDEI du Pont de Nemours & Co65.832.8658.8211/14/2014

It’s Not All About Yield

Of course, as I always mention, dividend yield is one criteria but there’s a lot more involved here and finding a stock with strong overall fundamentals is key. I generally try to get stocks that respect the 7-7-7 rule. That is 7% of 5 year growth in dividends, earnings and sales.  If I remove those with a payout ratio over 80% and a dividend yield over 3%, I get very few results but these are clearly high potential stocks:

Ticker
Name
Price
Dividend Yield
Payout Ratio
Ex-DVD
EPS 5Y Growth
DVD 5Y Growth
Sales 5Y Growth
NENoble Corp plc27.475.4625.211/6/201424.6345.059.14
NUNortheast Utilities45.443.4659.459/11/201432.5410.448.7
CVXChevron Corp127.543.3634.8911/19/201446.259.59.6

I will be writing more about these names soon in our free mailing list, join now if you have not done so yet:

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Closing 1 Trade (TWTR, DMD)

avatar By: IS
Date posted: 09.03.2014 (3:00 am) | Write a Comment

Ahhh… on the one hand, this certainly feels like great news but I do feel like this stock is running away. Too late to get in? Time will tell. Back to today, I will be closing the August 11th trade: Long Twitter (TWTR) vs Short Demand Media (DMD) which is up about 37%!!

The overall return of the portfolio remains around +30% although I do have 3 losing trades that are alive and will hopefully stage a comeback:)

TWTR Chart

TWTR data by YCharts