Rose’s Income Garden “RIG” is a defensive, value-built, income-quality portfolio of 89 stocks across 11 sectors. It contains primarily investment grade common stocks, but also has high yield (“HY”) business development companies (“BDCs”) and real estate investments. The goal is to get 50% of earnings from defensive sectors/stocks and maintaining a 4% minimum dividend yield, which has increased from 4.8% in April to 4.9% now, even as the portfolio value increases.
Recent RIG changes are revealed and discussed in the May Transactions section. The full RIG portfolio is listed and available at The Macro Trading Factory (“MTF”), along with a trading section, performance charts, “ex” dividends and payment dates, and a newly added “WTB”/Want To Buy list for all RIG and a high-quality “non-RIG” watch list. MTF also has macro “FMP” and “SOP” portfolios managed by The Macro Teller that significantly outperform the market primarily through fund investments that offer a simple, relaxed, non-intense success investing method.
The portfolio value remains green, up 6.1% year-to-date, the second best after March when it rose 6.78%. It continues to outperform most indices YTD easily and by double digits as shown for some in the list below:
– S&P down 13.3%
– Dow Jones down 9%
– Russell down 17% in 2000
– RIG is +6.1%
RIG easily outperforms this by ~15-20+%, making it successfully green along with its 4.9% dividend yield.
Holdings in defensive sector stocks, particularly healthcare and utilities, helped portfolio value. My last article here, written in mid-May, reveals information about the RIG-9 health stocks.
RIG Income – The return is 4.9%
Earnings in May beat 2021 by 25.35% but was actually lower than February’s first quarter as expected, down 12.69%. This was due to no dividend from 2 companies, Vodafone (VOD) (OTCPK:VODPF) and Ontrak, Inc. 9.5% SER A PFD (OTRKP), and Danaos (DAC) deferred its payment to June. Don’t worry, RIG will catch up in June and provide more revenue throughout the year.
The chart below shows 19 company payments by date, along with the 1 raise.
The abbreviations used are as follows:
dept = dividend.
div % yield = Dividend yield calculated using the currently displayed price and the annual dividend
Current $ price is for the market price at the end of the day on June 3rd.
|Can||Part /||$ annually||div %||Other dividend||6/3|
|(DG)||6||1.26||5.04||2.19%||To lift from 1.19||230.13|
General Dynamics (GD) is in the industrials sector and has been paying rising dividends for 31 years, which I think is defensive. It has a credit rating of “A-” and a “Value Line” security rating of 1, which is the best; price tends to be cyclical and I see it close to fair value plus.
PFLT – PennantPark Floating Rate Fund
“BDC” Business Development Company has a high yield of 9.6% and rarely changes the payment amount or date.
SLRC – SLR Investment Corp. – Information below under Add-Ons for May Transactions.
DNP – Duff & Phelps Select Income Fund
“CEF” closed-end fund investing primarily in utilities/bonds with a constant monthly payment of 6.5 cents. The yield currently stands at 6.8%, with the price selling at a small premium.
MTBCP – CareCloud (MTBC) preferred
Healthcare Technology Preferred Issue has a 10.2% yield and pays 22.92 cents a month. It reveals the last payment dates 3 at a time and has started claiming shares in smaller lots at $25. As such, and most likely, I won’t own it for the rest of this year, but until it’s fully advertised, mine, or when the price dwarfs the payment value, I’ll be selling it.
ARDC Ares Dynamic Credit Allocation Fund – See May Transactions below for information.
These non-payments were as expected and not a surprise, but worth mentioning.
Vodafone is a telecommunications company headquartered in the UK and pays twice a year in the months of February and August. So, as expected, no May payment. The announced dividend of $0.4725 was subtracted on June 3rd to give an annual dividend of ~99 cents and will not be paid until August. The next dividend announcement is in November for a December ex-date with a February 2023 payout. It’s a tedious and tedious method that many overseas companies use, but I’m sticking with it because of the ~6% yield as a decent defensive income stock .
OTRKP -Ontrak, Inc.
Ontrak is a telehealth technology telecommunications company that has suspended its preferred stock payments. The normal payment is $0.5938 per quarter, or $2.3752 per year, which at a price of $25 yielded a 9.5% return. I have been collecting payouts for some time but there has been only silence from the company lately, not good. If they restarted, they would pay all previous distributions. It’s the black sheep sitting in the portfolio at the moment, which I always seem to have at least one of, that’s it.
DAC – only delayed
Greece-headquartered Danaos Marine Shipping is relatively new to the portfolio and offers almost, but not quite, its dividends quarterly. The normal May payment is made in early June.
(NRZ.PD) – New Residential Investment Corp. Preferred Stock D
BDC companies with preferred stock paying $1.75 annually or $0.4375 quarterly in February, May, August and November. Didn’t buy it early enough to get the May distribution but am looking forward to the 2 remaining this year.
Trading alert to buy for RIG was issued on May 3rd in MTF service.
ARDC Ares Dynamic Credit Allocation Fund
CEF – Fixed Income Mutual Fund invested in bonds with generally short maturities. I repurchased it at a lower price and a yield of 9.6% now. The dividend is c9.75 per month and is paid on the 31st.
Trading Alert to Buy for RIG was given on May 12th here on MTF service.
WAREHOUSE – STORE Capital Corp. (STOR) is a predominantly single-tenant real estate triple-net with longer leases and was featured in more detail here in last month’s April article. It has over 2500 profit centers across the US. It has a 5-year dividend growth rate of 5.9%, with the last 2 years being 4.7%, with 7 years of increasing payments. Rated BBB by S&P. Trading alert to buy for RIG was issued on May 2nd in MTF service.
SLRC – SLR Investment Corp is a CEF, calling itself BDC, specializing in senior secured and specialty loans with first liens and recently started paying monthly. The payment is $0.1367 or $1.64/year and currently has a yield of ~10.4%, which is considered a high-yield “HY” investment. Trading Alert issued on February 23rd in MTF service for RIG to buy.
Summary and Conclusion
The 50% return target from defensive sectors and stocks continues to be met but slips from time to time. Surprisingly, these defensive holdings comprise 43 stocks, or ~50% of the 89-stock portfolio. The remainder, or 46 stocks, are made up of the non-defensive sectors, and as such help push the sums off target with some quite gigantic dividend/bonus payments. Below are some very honorable contributors to RIG income recently:
– LyondellBasell Industries NV (LYB) in Materials – increased dividend by 5.3% and paid a $5.20 bonus!!
– Star Bulk Carriers (SBLK), the industrial bulk shipper, continues to pay amazing dividends, last seen at $1.65 for June. No raise, but still very much appreciated.
No complaints, but I know these are not reliable and can fluctuate, so I have no qualms about sticking with the defensive 50% income target.
I look for high quality, low debt/high credit companies and review them often in RIG and now offer a nice “WTB” price list for all 89 stocks along with a non-RIG list for subscribers to follow.
The search is always on and the objectives and specifics I would like to include are the following:
– Quality-rated dividend stocks.
– underrated but may have fair value for additional quality ratings.
– low debt/very good creditworthiness.
– Payouts and cash flows to easily cover the dividend along with an increasing dividend growth rate.
– defensive in nature with products or services that I understand and can easily follow.
The market is showing weakness as we head into the summer and midterm elections. Cash should be king and therefore my actions are very consistent with its conservation, currently at ~3.8% in RIG. With an established quality dividend portfolio like RIG, I’m confident that it will ride the valuation rollercoaster while continuing to accrue dividends/income as expected given the quality expectations and stated target(s).
Happy investing everyone.