Filling in the holes….

soldToday I sold some shares of one of my best performers and picked up a few shares of a couple new names. Over the last few months I’ve been mostly focused on adding new names to the DDI Portfolio in an effort to “Fill in the holes”. After all, the goal is to generate income *EVERY* day!

Looking back over the last 8 years while building the DDI portfolio, I believe I’ve built a good base of companies that have worked hard to provide an increasing stream of monthly income. After watching the destruction of the 2007 Global Recession it’s not unfathomable that the DDI portfolio could take a 60% haircut or more from current levels. And I know we’ll see a pull-back in the market sometime in the future, it’s just part of how the market works, but my intuition tells me that what we saw starting in 2007 was likely a “once in a lifetime” event.

When to sell?

One of the things I’ve struggled with in building the DDI portfolio has been if / when to sell a position. Way back in the day, I proclaimed that my holding period was much like Warren Buffet – that is “forever”. But then just a year or two later after seeing some fantastic gains, I panicked and ended up selling a good number of positions. I sold my position in Costco (ticker: cost) a few years back for around $110/share only to buy it back last October for $150/share – whoops!health-care-trust

Today I sold 100 of my 300 share position in Health Care Trust of America (ticker: HTA). This was originally a private REIT that was sold to accredited investors back in 2007 at between $9 – $9.50/share. Today the share price is near the $30 mark and so I decided to sell a portion of this holding to redistribute into other companies. My thinking moving forward is to start “harvesting” the DDI Portfolio of any holdings that reach 100% appreciation. My plan is to take some percentage, probably 100% of the original investment, and cash it in. I’m still working out the details, but my intention is to have a “hard and fast” plan that I can stick to.

As I’m now focbingo-ddi-investmentsused on filling holes in the portfolio, I’m looking for companies that will pay out on days that my current holdings don’t. The goal here is to try and reach “BINGO!” each and every week. BINGO! is a catchphrase I came up with to describe any week that I get a dividend payment everyday, Monday through Friday.

Past Mistakes

WARNING! There is an inherent flaw in what I’m proposing to do here by owning companies that will pay each and every weekday – and I’m guessing you’ve already figured it out. By buying companies based on their payout dates, and not completely on their financial worthiness, I could be setting the DDI Portfolio up for some oversized losses.

For now, it’s a risk I’m willing to take. What I often find when searching for companies that payout on a certain day is that there are several to choose from. Many of these companies tend to be smaller niche-y firms that have been around for 20, 30 or more years and have a good record for dividend payments. Also, by the sheer fact that the DDI Portfolio is over diversified, a hit taken by any one company isn’t going to sink the over all income stream or capital gains of the DDI Portfolio.

Case in point – in 2015 I purchased about 20 shares of United Development Funding IV (ticker: UDFI) and started collecting some nice oversized 7%+ dividends. By early 2016 UDFI had been accused of fraud and possibly running a ponzi scheme – both the dividend *AND* the shares were halted! Now I not only lost my income stream but couldn’t even get what was left of my principal out! I originally paid $1768 for 100 shares in August 2015 and sold those same shares after trading resumed in December 2016 for $429.00 – taking a little over a $1300 loss. With the DDI Portfolio currently valued near $550,000.00, this loss represents less that 2 tenths of 1% of the total portfolio value. I believe it’s a small price to pay and really, short of not buying the shares, I don’t think that I could have foreseen the problems before they happened.

So, what did I buy?

Today I bought:

  • 100 Shares – Bluerock Residential Growth REIT: ticker BRG -next payout Thursday Feb. 3rd
  • 20 Shares – MASCO Corporation: ticker MAS – next payout Monday Feb. 13th
  • 50 Shares – Vodafone Group PLC: ticker VOD -next payout Thursday Feb. 3rd

I’m too late (past the x-dividend date) to get the payout for each of these companies this month, but I’ve planted the seeds and will begin to reap the benefits next quarter.

I’m always interested to hear what you are buying and why? I’d love to hear from you in the comments below – thanks for following along on the Daily Dividend Investor journey!