Month in Review – April 2018

April kind of sucks for the Wizard Family from a cash flow perspective.

First of all, the tax bill is due. We always have a tax bill because I’m not in the business of giving the government an interest-free loan.

Second the credit card statement comes due where we have to pay for our Warrior’s basketball playoff tickets. We have season tickets and therefore get our seats throughout the playoffs. Now that we live in Colorado, we don’t go to any of the games; we sell them on the secondary market. So we’ll be getting that money back shortly (plus a tidy profit), but in the meantime there’s a dip in the amount cash on the books.

The tax money doesn’t come back though. That is gone forever. And It makes me angry every April.

Oh well. Not much I can do about that is there?

I realize that it’s been kind of quiet around here, and looking back to last year the same thing happened in 2017.

I have been making trades, but they’re in names I’ve already completed theses for, so there hasn’t been much to post about. Do you follow me on the twitter? There’s been a little bit more action there, although not much.

The bus is kind of driving itself for the moment, which is a good thing really.

So, let’s dig in to April’s investment summary and try to see if there’s a silver lining in Uncle Sam’s spring shit storm.

Portfolio Summary

Metric

End of April 2018

End of March 2018

Total Invested

$448,131.48

$445,183.54

Market Value of Total Invested

$474,856.93

$469,169.86

Allocation % – Equity

60.51%

61.43%

Allocation % – Bonds

19.11%

18.33%

Allocation % – “Other”

2.69%

2.73%

Allocation % – Cash

17.60%

17.43%

Income Assets – Invested

$276,548.55

$286,267.37

Income Assets – Market Value

$281,808.09

$289,710.06

Projected Annual Income

$15,742.40

$15,635.75

Invested Yield

5.69%

5.46%

Market Yield

5.59%

5.40%

Stock Purchases

1 stock purchased. It is an addition to an existing position; projected annual income is unchanged because I don’t count automatically reinvested divies towards projected income.

04/03/18 – VCF: 115.3512 shares purchased @ $14.41/share. I’m continuing to build a position in this muni-bond closed end fund in our taxable account.

I have the sharebuilder auto-invest feature set up to buy $1,666 worth of shares once per month. The account is funded with 4 more months worth of cash for these auto-investments, so this will continue to show up here for a while.

I’m dollar cost averaging into the position because I expect negative pricing pressure on bonds this year as rates rise and inflation picks up.

Since the dividends are set to be automatically reinvested, I don’t count this investment towards my total projected investment income.

Choose the Form of the Destructor

No UVXY trades this month. The increased market volatility appears to be somewhat sustained lately, and I’m still not sure of the effect of the reduced leverage on the fund’s decay rate.

All UVXY put trades are documented in the “UVXY” tab of the Dividend Income Tracker, and any future trades will also be documented on the twitter (as long as I can remember to post them).

For the uninitiated, I had been shorting UVXY because it was the worst ETF ever. They lowered the leverage ratio from 2.0X to 1.5X so it is slightly less awful, but still probably deserves to be shorted.

I use long put positions so I can avoid the use of margin and do these trades in tax-advantaged accounts. I haven’t done much with this recently, and may kill this section in the future, but for now I’m leaving a spot open for some future experimentation.

Pay Days

Dividend Income Tracker is published here at the mothership and has been updated.

Total investment income of $1,098.85 with a taxable total of $16.34. We’ll call it 10 “pay days” with 33 individual payments received.

Options premiums represent $473.14 of that total.

Capital gains made up $0.00.

Which leaves $609.37 of actual bona fide dividends (plus $16.34 of interest from P2P lending).

Lending Club

Lending club income is aggregated into a single income record for simplicity’s sake. It actually arrives as a lot of small payments over the course of the month.

One loan got charged off this month. Boo!

It would appear that nothing revived to “current” and we added another bad actor. This freshly late note is showing up in the 16-30 days late column (presumably it breezed through the grace period since last month’s summary.)

The number of bad loans we’ve invested in so far has creeped to 14 out of 220 or 6.36%.

Oh well.

Month

In Grace Period

Late (16 -30 days)

Late (31 – 120 days)

Charged Off (aggregate)

End of 2017

0

0

6

8

January 2018

1

0

4

9

February 2018

0

4

1

13

March 2018

0

2

3

13

April 2018

0

1

4

14

I’m glad I started tracking this stuff last year. It should be fun to continue to follow it through 2018.

Lending club’s algorithm is suggesting I should write down $64.05 worth of principal for the five loans that are late, but as the eternal optimist, I’m going to continue to wait until the loans are actually charged off to recognize the loss.

That is up ever so slightly from what it suggested last month ($58.56).

I continue to lose interest in my distressed debt experiment which involves buying late notes on the secondary market at a discount. I feel like I have a good set of rules to follow to pick out decent loans among the garbage on the secondary market.

But it’s so tedious to do. It continues to remain a separate deal for the time being. If/when I ever decide to just cut bait on this half-baked idea, I’ll recognize the loss here and move on.

Anyway, here’s the latest on all that.

Comparisons

Month over month, investment income was down -59.09% compared to $2,685.72 in March. Of course skewing those numbers is the $1,300 capital gain recognized from my SCHB covered call getting assigned in March.

If we take that out of the equation, it was really only an 11% decrease.

Month over month comparisons are a little weird with the way I count “income”, since options activity and capital gains are going to be erratic. But that’s how I count it, so it is what it is.

I now have over 4 years (!) of data on my income tracking sheet.

So I’ve been including this table in this segment to look at longer term trends:

APRIL – INVESTMENT INCOME HISTORY

Year

Dividends

Options

Capital Gains

P2P

Total

2015

$313.09

$0.00

$0.00

$0.00

$313.09

2016

$519.32

$58.70

$0.00

$0.00

$585.52

2017

$344.89

$318.86

$0.00

-$16.33

$647.42

2018

$609.37

$473.14

$0.00

$16.34

$1,098.85

Pretty cool huh?

I find two things particularly interesting about this month’s table. 1) I like the steady increase of the total income received in subsequent years. 2) Isn’t it weird that my P2P interest last year was the mirror image of this year?

Raises

There were several raises worth mentioning this month.

DSW raised their quarterly dividend from $0.20 to $0.25/share. That is a 25% increase! DSW isn’t on a lot of dividend growth bloggers’ radar because it isn’t on the CCC list, but I think it’s a pretty awesome dividend stock. The growth may be a little more erratic than some more common names, but it’s there! And the yield is still nearly 4.5%.

The other big increase came from CSCO, who boosted their quarterly payout from $0.29 to $0.33/share, which is good for a 13.8% increase. That is a very healthy raise, but it only brings the yield to 3% at the current share price. I’d like a little bit larger margin of safety before building a much bigger position.

In the “not really a surprise, but still kind of a surprise” department, XEL raised their distribution 5.55% from $0.36 to $0.38/share. When I outlined my investment thesis I mentioned that they were due for an increase, so this is entirely expected. At the same time it boggles my mind how a company bogged down with that much debt can just keep paying out more and more dividends. This might be one of my least favorite holdings. But I want the sector exposure dammit, and I’m not giving the dividends back.

Bringing up the rear with an absolutely pathetic 1.96% increase to the quarterly payment from $0.51 to $0.52/share we have WMT. Now let me say this: WMT needs their cash right now as they develop their online presence and position themselves for a future that doesn’t involve AMZN eating their lunch…so I FULLY support muted dividend increases during this “transition”. But the stock price has gone bananas with this recent market runup and the yield is absolutely stupid. Shares are overvalued right now, but it’s a small position in the ROTH IRA so meh…I think we’ll ride it out.

Honorable mention goes to KMB, who bumped the quarterly payout 3.1% from $0.97 to a nice round $1.00/share. This represents the first dividend received from this stock, so we don’t get to take credit for the increase. Them’s the rules…but there was an increase and it’s worth noting.

So that was April. Sorry for the lack of posts this month, I just haven’t made any trades in new names. I’m kicking around some other post topics, but need to find time away from the day job to write them up.

What do you think of my month? How was yours? If I believe that stocks can be over- or under-valued, shouldn’t I sell WMT when it’s over-valued regardless of how small a position it is? Should I kill the segments that have no activity like UVXY and the distressed P2P experiment?

Surely you have something to say. Let’s hear it in the comments!

 

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