We are now into 2020 and it is time for my monthly portfolio review, this time for January. Let’s get into it :
Apple (AAPL) – 17.27%
Cisco (CSCO) – 8.63%
Royal Dutch Shell (RDS.B) – 8.10%
Abbvie (ABBV) – 7.15%
AT&T (T) – 6.76%
Bank Of America (BAC) – 6.58%
Vanguard Emerging Markets ETF (VFEM) – 6.53%
Unilever (UN) – 6.16%
Caterpillar (CAT) – 6.01%
Pfizer (PFE) – 5.49%
Qualcomm (QCOM) – 5.19%
Vanguard US Corporate Bond ETF (VUCP) – 4.64%
Activision Blizzard (ATVI) – 4.15%
BP (BP) – 3.68%
New Positions
BP
BP is the newest addition to my portfolio. I initiated a position in the last couple of days and I am planning to increase my holding a bit over time. There are a couple of reasons for that.
The Dividend
For anyone following my blog you probably know that I am a dividend investor, I love dividend income and my goal is to achieve Financial Freedom using dividends.
BP fits my goals perfectly with a nice dividend of a bit more than 6%. I rate it a very safe one aswell, with a good chance of increasing over the coming years. Maybe not straight away, but the company is certainly heading in the right direction that will provide more income for dividends.
Of course there are some risk – their payout ratio is quite high at almost 85%. But I trust that the management is very responsible and they are not going to raise the dividend before they start generating bigger amounts of free cash flow.
Forward Looking
A lot of people think of petrol and oil when thinking about BP. But the company has been making a lot of moves to enter new segments of the market and they have been executing really well. They now operate a lot of renewable energy production facilities and are getting into electric vehicle recharging stations.
Those moves make me feel safe about the future of the company going forward and I am pretty sure they are going to capitalise on the gradual change of energy consumption to renewables.
I want to make one thing straight – oil is not going anywhere anytime soon and BP is still making the majority of their revenues from oil and oil products. This is what I like about them – they know very well their business and know the best way to capitalise on it.
Let’s talk about their valuation. At the moment they have 12 forward PE, crazy low PEG of 0.42 and only 0.12% of their shares are shorted on the market.
On the negative side their debt is a bit big, but nothing crazy. It is usual for companies in the energy sector to have bigger debt because of the very capital intensive nature of their business.
Plans For The Month
Wait And See
The markets have been going higher and higher in the last couple of months and stocks have been getting way out of reach valuation-wise. Almost any stock at the moment is trading above 20 PE, no matter if it provides any growth or not.
There are a lot of good companies on my Watchlist, but I am not a fan of their valuation at the moment.
There is of course a good side to that – for example my Apple investment has almost doubled for less than a year. But on the other hand I would not invest at those levels at the moment.
The good part is that there are always some companies trading at fair levels, as long as you research well. I have been very happy with all of my picks in the last year.
Check The Earnings Season
Almost all of the S&P500 companies are reporting earnings this and the next month. If you have been following me you probably know that I love earnings season for one reason.
The markets love to overreact to slightly negative earnings and we can see companies dropping down in price massively in just a day or two. In fact that’s how I started almost all of my positions.
This is of course my strategy once again. I have a lot of good companies on my watchlist and I will be checking on their earnings reports and how the markets react to them.
Conclusion
Overall it has been a good month for me. Initiated a new position and I now have 14 stocks, all of which are providing me with a nice stream of dividens.
Thank you all for reading and don’t forget to subscribe if you want to stay updated on new articles.