Not so smooth sailing: Carnival Corporation has come under revenue and selling pressure due to the global CORVID-19 outbreak. Pictured is the Costa Fortuna.

Portfolio updates w/c 2/3/2020

With the market meltdown in full swing, I decided to push some money into my Stake account and make some portfolio updates. Looking for some deep value in dividend stocks, I ended up with two new positions.

ADD: Carnival Corporation & Plc (CCL) @ $31.83

Kicking of with a new starting position, I have been looking at CCL for a long time now. I had been putting it off, and concentrating on getting some bulk to existing holdings. New positions were being ignored. That ended today with a purchase late into Tuesday’s US session.

Hunting for deep value stocks, and nothing has been hit harder than CCL in the COVID-19 outbreak than the cruise lines. Carnival is my pick here due to lowest unit cost, highest yield and local operations here (under P&O). If I able to accumulate enough stock then I am more likely to take advantage of the shareholder benefits on a cruise.

The dip in share price late in the session gave me an entry point, and while not quite as low as early Friday morning, my account funding had not cleared in yet. Jeremy over at Telsa Education Financial Education channel on Youtube is buying, as are a number of other financial youtubers. I may take a second bite later this week and average into a larger position.

AVG DOWN: Vermillion Energy (VET) @ $10.16 avg

Vermillion has been one of my longest-held stocks in the reasonably short life of my US Portfolio. I like it for high yielding monthly dividends and I am sure some out there will cry ‘high risk!”. Yes, it is not totally without risk, however today I doubled my holdings in two buy tranches. This resulted in a significant reduction in average cost price.

There is something to be said about seeing solid cash amounts being paid to you each and every month. It certainly keeps you on track and focused. I will write a post about my thoughts there at a later time. Just $500 spent today provides an additional annual return of $104.30 on a forward basis. That is an annual return in excess of 20% p.a.

This stock has been beaten down on oil price concerns and a Natural Gas supply glut in Europe which it is exposed to. Some think that the dividend is at risk however it seems to be well covered by cashflow right now. A rising oil price after the COVID-19 outbreak as China energy demand pumps upward will help drag it up. I expect to see around $15-$17 range and a profit for my stock holding.

ADD: PepsiCo, Inc (PEP) @ $135.58

Opened a second position today because… well I could. And the shackles were off today with my Carnival buy. Pepsi is a solid consumer staples company with some nice brands and diversification in snackfoods, cereals, rice and pasta. It is not just a drinks company.

Just a single share purchased as I was looking for an additional January payer to help bolster income in that month. One of my goals is to smooth down my cashflow outside the 2nd month of a quarter. A single share will focus me on growing the position. More to come with this one of course, but it sits alongside my single Coca-Cola (KO) share.

AVG DOWN: Prospect Capital Corporation (PSEC) @ 5.71

Here is another stock that pays monthly yet is looked down upon by many investors. Yet with over 100 shares, this is producing a stable, 6c dividend per share every month. The purpose of this holding is cashflow, and the ability to DRP one additional share every month, and also write covered calls to further boost returns.

A stock like this is a reasonably small position in terms of deployed cash. You are also not emotionally attached to the holding is perfect for covered calls. If your stock does get called away, you have made additional cash from selling the option and getting your cash for the shares. You can either use the proceeds to buy other shares, or plough it back into the same stock on a pullback.

I am not quite to where I would like to be with this stock, but with a 12% starting yield right now, it won’t take long to build it up and then deploy that cashflow into other positions.

Possible targets for the remainder of the week

At this stage, for further portfolio updates I would like to try to pick up some more 3M (MMM), Cyrus One (CONE) or InterPublic Group (IPG) to build larger positions. AT&T (T), Verizon (VZ) and Pfizer (PFE) are also targets to accumulate.

EDIT 2/3/20: Additional tranche of CCL was purchased at $29.98 on limit order placed prior to Thursday’s session. Although I had seen the negative news for CCL, I had not expected it to drop so much during the session, and as such had set up a snipe if it fell under the $30 mark. Not the ideal outcome at the end of the day but I will continue averaging down on CCL.

The author is long on the following US-listed stocks: CCL, VET, PEP, PSEC, KO, MMM, CONE, IPG, T, VZ & PFE.
The author has no position on other stocks mentioned, including no short positions.

1 thought on “Portfolio updates w/c 2/3/2020

Leave a Reply