Dividend Builder – July 2020

Fog covered Tuscan hills.

My theme for the July update is to remember the wonder of simple dividend payouts. July 2020 did not live up to July 2019 in the dividend payout department. But, I got paid for doing nothing more than diverting money into companies. I’m still a wide-eyed school boy who gets excited about the idea of passive income and compounding growth over time.

July 2019 featured an outrageous fifty cents a share dividend from New Residential Investment Corp (NRZ). Outrageous because NRZ was trading in the fifteen dollar range resulting in an annual yield around 13%. Was it sustainable? Possibly in a world without pandemic. Real life came around and brought the yield of jubilee down to more mundane levels. Some would say more realistic or sustainable levels. NRZ cut the dividend to five cents a share and later raised it up to ten cents a share. The yield currently hovers around 5%. Not too shabby in this era of anemic interest rates.

NRZ’s massive dividend payout in July 2019 versus the mild dividend payout in July 2020 is the key driver for this July under-performing last July.

July 2020 Dividend Payouts

TickerCompanyDiv Income
ETEnergy Transfer LP Unit$15.86
HRZNHorizon Technology Finance Corp$3.00
ORealty Income Corp$0.47
STAGStag Industrial Inc$1.20
Total: $20.53

REITs SPG, NRZ, STOR, and FRT still led the charge for dividend income. The sector has taken a beating, and my overall account value reflects that beating. I’m holding on through thin. I believe recovery is underway and indeed all three are still rewarding me with passive income. REITs are a heavy part of my portfolio Maybe too heavy. When share price recovers sufficiently, I may redeploy some REIT funds into other sectors.

July 2020 First Time Additions

No new additions. I am eyeing up potential new companies to add in the next large dip in the market. However, I’m more likely to add to positions I already hold including CSCO, MDT, STAG, GE, BAC, and IRM. New additions on my watchlist include T, VZ, CONE, CRM, LAND, and INTC. Please let me know, in the comments, what you’re watching or what you’d recommend.

July 2020 Increased Positions

One of the investing and trading strategies I am continually working on is the patience to hold and build up funds in order to deploy them strategically when the time is right. I did deploy funds for a swing trade which I’ll discuss below, but no new or increased positions in July. As I free up or add to my cash holdings through trimming, trading, selling options, and collecting dividends, I resist the urge to immediately buy and instead hold out for market opportunities. I do not want to hold forever or wait for the “perfect” moment because I want my money out there working. For me, it is a balance between the pull of those two forces.

My post Swing Trading FedEx for Profit documents a strategic deployment of ready funds when I saw an opening for a quick profit.

July 2020 Position and Swing Trades

My love-hate with Ford (F) continues. I sold a covered call at the $6.50 strike price for a $30 premium. My cost basis for Ford in this account is $6.89, so I ended up losing $9.00 on this one. However, I am not taking into account prior covered calls I sold on this particular lot of 100 shares. If I did, the overall accounting would put me out slightly ahead. I have often sold covered calls for strike prices under my cost basis. Many times it works out especially in the case of Ford where for so long the share price was well below my cost basis. Ideally, I’d always sell the call above my cost basis, but those higher strike prices had little value as the share price had dropped well below my cost basis. I’m calling it a loss of $9.00 on this trade.

My foray into the banking sector, as chronicled in Fear and Greed in a Pandemic, has really propped me up and kept me above water when so many of my other plays have floundered and taken on water. JP Morgan (JPM), Bank of America (BAC), and Mastercard (MA) all rebounded well from the lows of March. The true champion of my four banking plays has been T. Rowe Price (TROW). I trimmed that position by a couple of shares to net a profit of $64.00. A 33% profit on my investment.

This next trade was a pretty classic swing trade with NRZ. I grabbed 30 shares at $7.05. Later, it dipped well in to the $6 range. I held through the continued dip and then relieved myself of those 30 shares at $7.70. A gain of 5.91% and a profit of almost $13.00. NRZ dipped lower and climbed higher then my entry and exit, so my execution could have been better. I will take the gain though and keep watching for more chances for quick-strikes.

As a little preview, my experiment of Swing Trading with $300 has grounded to a halt. Many lessons learned. I plan to dedicate a post to share how that adventure is going.

July Summary

I earned $42.50 in dividend payouts which is a 21% decrease from the $54.11 I earned in July of 2019.

Swing and position trading yielded me $68.00 in profit.

The total result for July 2020 is $110.50. Thanks for following along with this month’s stories of investing and trading. I continue to have fun, to learn, and to enjoy the whole process. My passive income is still a trickle, but actively investing and trading is much more satisfying and rewarding then watching four cents of interest ghost into my fuddy old bank savings account each month.

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