blue and yellow graph on stock market monitor

Tweaking My Portfolio For Better Performance

It’s been a while since I’ve published an article here on Dividend Derek, but rest assured, I haven’t gone anywhere. Most of you probably follow me on Seeking Alpha, where I do most of my writing. I wanted to make a quick post about some portfolio changes that have occurred this month.


  • Medtronic (MDT)
  • Schwab U.S. Dividend Equity Fund (SCHD)
  • Invesco Nasdaq Next Gen 100 ETF (QQQJ)


  • Travelers (TRV)
  • Berkshire Hathaway (BRK.B)
  • Prudential (PRU)


Part of my purchase process is to always look around at my portfolio and see if anything is worth adding to. Oftentimes, the best stock to buy is one you already have. One prime reason to consider adding to a holding is on the heels of a nice dividend raise. Medtronic announced an 8.6% dividend raise at the end of May, extending its annual streak to over 44 years. As COVID is winding down, elective surgeries are coming back and ultimately will allow the company to continue growing well into the future.

Schwab U.S. Dividend Equity Fund

SCHD is by far my favorite dividend ETF and one I write about frequently. Adding to SCHD was part of a trade with my sale of Travelers. I’ll cover more of the specifics below, but suffice to say, I took my proceeds from that sale and added another 100 shares of SCHD.

Invesco Nasdaq Next Gen 100 ETF

This purchase was part of another trade with my sale of Berkshire Hathaway. Though I primarily have dividend stocks, I have an allocation to growth as I have decades before “official” retirement. QQQJ is a new ETF dating back to just late in 2020, and it targets the next largest 100 companies (generally in technology and communications) that would otherwise be in the Nasdaq 100. With a tilt towards smaller cap companies, this one should do extremely well over the long term.


I take selling stock pretty seriously; there were stints where my turnover was much higher than I wanted it to be. Generally, though, I am pretty content with not selling shares and just letting my portfolio ride. As I would perform monthly analyses on my portfolio, TRV continued to stand out as one of my lackluster performers. For comparison, the performance lagged SCHD by close to 50% over the past seven years.

In absolute terms, it returned about 10.5% for me annually, and it was actually one of my oldest holdings dating back to 2014. So again, this was a 7+ year holding before I decided to set up a limit-sell order. As the company hit the $160 mark, I had set a limit as I decided I would not ride this one back down, should it happen. I was content holding shares as long as they continued to march upwards. Additionally, both the yield and the dividend increase in April were lackluster for me. Shares only yield about 2.4% versus 2.7% for SCHD, and a 3.5% increase is below my target of 7%. This is also on the heels of a 3.7% increase last year as well.

Rather than continue holding a company that has lagged in both total returns but also dividend yield and growth, I opted to roll that capital into SCHD and focus on better individual names.

Berkshire Hathaway

Berkshire was another very conflicting sale for me. Like Travelers, I had set a limit sale order should the price tumble. Though I’m a huge Warren Buffett fan, the company has not performed exceptionally well over the past decade. It’s done fine for me, but as part of my growth allocation, it has lagged just owning the S&P 500. Not great results when also considering I’m receiving no dividend income from them. Again, I did not take this decision lightly as I’ve owned shares since 2015.

The company has oodles of cash and makes billions each quarter, but they are hesitant to use much of it as asset prices remain high. They are also slightly hesitant to repurchase their own shares if it’s above their intrinsic value calculation. I took the money from Berkshire and QQQJ to juice my growth while also removing individual equity risk.


The last sale this month was Prudential Financial. Alongside Travelers, this was another lackluster investment since I’ve held shares. I had some good purchases, overpaid on other blocks of shares, and the net result was about a 7.7% annual return since 2016. Though it has a higher yield, the results are similar to those of just owning the SPDR Portfolio S&P 500 High Dividend ETF (SPYD).

Unfortunately, the 4.5% dividend increase earlier this year was the worst since the Great Recession and much lower than the 13% annual increase seen over the past five years. In a similar vein to both TRV and BRK, I had a limit sell order set a bit below the current share price when shares were trading around $110. I have not reallocated that capital yet, though it’s at least earmarked right now for SPYD.


I sold three companies this month that I’ve owned for over five years, so I don’t take the moves lightly. Even using limit orders for all three, I ultimately let the market decide if and when they would sell. I rolled the capital from those sales into either higher growth or better dividend growth names.

Thanks for taking the time to read my work, and please leave feedback in the comments. If you like my work on Seeking Alpha, consider signing up for a premium account if you have not.

Trimming My Watchlist

If you are a reasonably active investor, you probably have a watchlist. And if you are anything like me, that watchlist has grown over time. At this point in my investing career it’s time to trim my watchlist some. This will be an active exercise of that process.

My reasons are numerous; I am going to focus on my better ideas and “average” ideas are probably better in a diversified ETF. It’s hard to have conviction about 40+ different names. It’s also less leg work on my end. New investing ideas will be compared to a determined benchmark for merits. For example; a stock with a 3% yield and may be expected to grow 5% per year is what I would call “table-stakes”. That is average growth and average yield – there are plenty of dividend ETFs that I could buy as an alternative to that instead. I take individual equity risk out of the equation and a big difference is an ETF that I believe in – I will continue average in over time. Even on some level, I would stop adding to an individual stock based on position sizes.

Commonly ideas are bought to take advantage of “mean reversion” or stocks that are temporarily out of favor. Of course – stocks can continue to stay out of favor for extended periods or never return to former valuations. It does make for some exciting possible big winners in a short time but I’ve had mixed success when that is part of the thesis. I don’t mind using that as a “kicker” to a thesis but it shouldn’t be the prime reason. A crude example of this would be a stock that tends to trade for a P/E of 20 currently having a P/E of 10. History alone may suggest it will eventually return to 20 which would be a 100% return.

One trick is using the dividend scores from Simply Safe Dividends. While not an absolute benchmark, the scores should provide a thumb in the air gauge as to the overall quality of a stock. An “average” company would score 50 for safety, 50 for growth and 50 for yield (150 total). There are over 100 companies that score over 200 which is the area I am looking into more.

Here is the scorecard for Kraft Heinz (a recent sell of mine) – their total score of 159 is middle of the pack. In fact – with their dividend cut this year the growth score should be much lower. It also highlights that having a low safety score is not something I want.

This exercise will involve cleaning up my watch list on Seeking Alpha and my alerts that I’ve created on Custom Stock Alerts. With that said, I’ll provide some of the names on my list and try to highlight a few high level points about why it’s being removed and what would make me take a second look.

TickerSSD ScoreNotesAlternatives
GEO154Staying away from prisonsSRET
CXW177Staying away from prisonsSRET
F183Staying away from autosDIV
LTC139Not interestedREIT ETF
LOW219Home depot is the better performerHD
AOS227Not really interestedNOBL SCHD
CLX181Low growth, can probably do better indexingSCHD SPYD
BA191Just not really interestedSPY SCHD
UL184Similar to CLX, muted growth, just index hereSCHD SPYD
ATVI193Decent growth expected, maybe worth a second lookSCHD
PH215Could be interesting, maybe worth another lookNOBL
AFL208Muted growth, need a big stock pullbackSCHD
APLE165No FFO growthSRET
CLDT164No FFO growthSRET
VZ169Where’s the growth?SPYD
WBA207What’s the opportunity?SCHD
UTX187Low yield, not interested in defense contractorsSCHD

After going through this analysis there are even some names that I’ve reiterated as being on my watchlist.

TickerSSD ScoreReason
PNC208Strong performer, muted growth but low valuation. Maybe better entry point.
CAT199Great score, could be a good winner, maybe after a recession though
BLK236Solid score, strong growth expected over time

The opportunities I see here would have to involve strong growth, preferably 10%+ which will support high dividend growth going forward. In fact – I need to dive into BLK because their extremely high total score caught my eye. They are probably in the top 15 combined score in all of the dividend stock paying universe.


Every so often it is a worthwhile exercise to trim your watch list. This is not even the exhaustive trim I have done and I have more names to review. Hopefully you can find this useful as some starting points and processes for helping to review and trim your list.

August Transactions So Far

August has seen a bit of turbulence in the markets. The Fed cut the benchmark rate 25 basis points at the end of July and we’ve begun seeing a tad of a correction. I am very slowly looking to take advantage if we start seeing a real correction. Last December I was disappointed not having enough dry powder as they say.




Here’s a quick update of what I’ve done so far this month. When I’m reviewing my potential buy list, I will cross reference my dividend tracking spreadsheet and my upcoming dividend alerts that I built in Custom Stock Alerts. Here is one example (though the numbers are different)

On the 15th I put in a limit order for Prudential @ $80 per share. It took most of the day but it eventually triggered which gave me another traunche of shares at the 5% yield point. As you can see from the screenshot above (taken on the 16th), shares climbed a bit dropping the current yield.

The picture above is a quick snippet from my tracking spreadsheet and I wanted to highlight the Prudential row. I added green shading to the “Current Share Price” column whenever the current price is less than my “DRIP basis” which is my cost when I bake in any impact of reinvesting shares. So not only was Prudential below my cost basis but coupled with the upcoming dividend yield capturing 5% it felt compelling to add. I will say this is also under the guise that while the recent earnings announcement disappointed investors and thus the sudden and sharp stock price drop, the long term thesis is still intact.

In a similar theme, I added some more shares of 3M (MMM) to jump in before an upcoming dividend. Again, this is all in my tax advantaged account so I’m not trying to capture the short term dividend with implied taxes.

Possible Transactions

I may add to my Walgreens stake though I haven’t decided one way or the other yet. The current yield is quite nice at 3.6% and I’m down a little bit from my initial stake. The yearly increase of about 3% was low but it is still an increase.

June Transactions So Far

I had a reader request a few weeks ago to try and give a heads up when I make transactions. Typically my transactions are on a month lag until I write my portfolio review article. I am trying to get ahead of that and provide some insight as to what I’ve been up to so far in June.


TickerNameSharesYieldIncome (Yr)
SDIVGlobal X SuperDividend ETF1009.5%$162
IRMIron Mountain1007.9%$244
SPYDSPDR Portfolio S&P 500 High Dividend ETF1004.15%$161

The trend here has been to find more yield plays in this increasingly difficult environment.

  • SDIV is my global basket approach to yield and continues to pay a nice monthly dividend which helps fuel future purchases.
  • IRM had been on my watchlist for close to two years before a large enough pullback to warrant an individual purchase.
  • SPYD I wrote about twice recently and decided to take a starter position while waiting for a more opportunistic buying opportunity


TickerNameSell TypeReturn
ABTAbbott LabsAll>100%
CSCOCisco SystemsAll>100%
WPCW.P. CareyAll40%

All four of these trades have to do with valuation concerns. With an elevated market once more, the individual valuations seem less compelling. One of the great advantages of having individual stocks is being able to take advantage of mean reversion over the short to medium term. All four seem to be stretched and have done better than both my own expectations and the market. The question is whether that continues or not.

Possible Trades

TickerNameBuy/SellWant PriceDesired Yield
BRPBrookfield Property REITBuy$16.508%
STAGSTAG IndustrialTrim$30

I have some possible trades on both sides. On the buy side, I’m interested in adding more 3M or starting a position in Brookfield Property REIT at the listed prices.

On the flip side, I’m looking to possibly trim my STAG and Travelers holdings. I’m also open to closing out my positions in both Ameriprise and Cummins at those listed prices. All of the sells would represent large, market beating gains.

Here’s a sample alert I have setup for Cummins. I’ll be notified if it dips below $160 with my memo stating that it was sold.

Added To Simon Property Group

Simon Logo

Simon Property Group (SPG) is a global leader in the ownership of premier shopping, dining, entertainment and mixed-use destinations and an S&P 100 company (Simon Property Group, NYSE:SPG). Our properties across North America, Europe and Asia provide community gathering places for millions of people every day and generate billions in annual sales.

To begin with, there has been a constant drum beat about the death of retail and the death of malls. Simon is the big fish in this pond as the largest operator of class A malls around the country. The stock has been in a downward trend since peaking in July of 2016.

Fast Graph Analysis

Fast Graph of SPG

The Fast Graph pictured above shows a few important elements to call out. Firstly as I noted, the stock price has declined for nearly the past 3 years. At the same time, the FFO (funds from operation) have continued to grow each year. This multiplying effect of increased earnings with a declining stock price has made the P/FFO multiple decline rapidly. At the peak in 2016 shares traded at about 22x FFO. Compare that with a value of 13x today and you can see the P/FFO contraction in full force.

This creates a great opportunity for a long term investor to create a margin of safety by buying great companies when they are temporarily hated. Based on historical values, the “normal” P/FFO ratio for SPG is about 16.8. That is about a 30% increase from where we sit today if FFO were to not grow.

That is one positive effect waiting in our corner though that can take time to play out. The second is the continued FFO growth per year. Best estimates still peg growth in the low single digits for the next few years. In the meantime however we can collect a fantastic 5% dividend yield from this company.

YCharts Dividend Yield for SPG

Looking at the historical dividend yield for SPG from YCharts, the yield has not been this high since the great recession. There was another brief blip in the beginning of 2018 when the yield also touched 5%.

Another bright spot to point out is the credit quality of SPG. They are A rated from S&P which is both fantastic in absolute terms but incredible when you consider that REITs must pay out most of their earnings to shareholders. REITs tend to rely on a lot of leverage and constant share issuance to continue growing which negatively impacts their credit quality. Simon is battle-tested and prepared going forward.

Simply Safe Dividends

Simply Safe Dividends

From Simply Safe Dividends, the scorecard for SPG rates quite well. Recall that these figures are percentile based based on the whole universe of dividend paying stocks. Based on the combination of many factors, SPG scores safer than 74% of dividend stocks. This is crucial importance for us to not have to worry whether they can pay their dividend obligations. The growth will be a tad slower as it needs to move in conjunction with FFO growth. Finally the yield at 5% is obviously higher than most dividend stocks.

My Purchase

For me – I added more shares to this holding at the end of May. This was a new position for me all together only in April. In April I had about 3/4 of a position with my initial buy and with this add I’ve now filled it out. At this point shares may need to touch about a 5.5% yield for me to consider going overweight.

SPG Alerts from Custom Stock Alerts

From Custom Stock Alerts that’s what I’ve done. I revised my alert based on dividend yield to let me know if crosses above a 5.5% yield.

For me personally, SPG also offers a different option from an ETF. I try to look to ETFs first when adding to gain the instance diversity they provide. What I think SPG offers is both a higher yield than many REIT ETFs as well as some great upside when the pricing eventually returns to historical norms.


Simon Property Group continues to be in a downtrend though underlying business results don’t reflect the pricing reality. This has created a nice opportunity to either start or add to a position in the company. Enjoy a safe 5% dividend yield until the narrative changes.

Take a Bite From This Apple (No, Not That Apple)

As part of my goals for this year, every interesting stock idea must successfully pass through my investing framework. This is a series of qualifications on both an individual and portfolio level.

The first company under that lens is Apple Hospitality (APLE).

Apple Hospitality is a real estate company that owns a portfolio of hotels across the United States. You may not realize it but the companies that operate hotels rent them from real estate companies. Just take a look at the hotel brands that operate inside of the hotels owned by Apple. Brands such as Hilton, Hampton, Courtyard and Marriott to name a few.

From Finviz, here is a quick look at the competitors to Apple in the hotel / motel REIT industry. They are not the largest player in the space but they do currently sport the best dividend yield.

Not only do they sport the highest dividend but they actually have the lowest debt/capitalization than any peer!


From Fast Graphs, the company has actually seen declining stock price since it first IPO’d. The reason is quite obvious to me, funds from operation (FFO) has simply not grown. What has happened is the market has repriced shares and will not grant them a premium. They traded at approximately 15x FFO (equivalent to a P/E of 15) but have trended down to under 11. What this has done is boost the yield to the current juicy 7.6% level.

This has resulted in a very reasonable payout ratio which gives them room to maintain the current dividend. The dividend has not increased in years but that can be OK. My thesis does not involve an increasing dividend from Apple. If they are able to maintain the dividend this is a high yielding cash cow.


Be sure to read my primer on correlation if you need more background information.

Part of the investing framework is defaulting to using ETFs in place of individual holdings where possible. An ETF can give broad exposure to an asset class while avoiding individual name risk. It’s also easier to monitor and doesn’t require digging through quarterly or annual reports.

The correlation matrix for Apple Hospitality versus some peers is quite telling. I added VNQ, SRET, KBWY and REM for my Real Estate ETF comparisons. All ranked as only having an average correlation of 0.50 which actually shows that Apple does not move much in conjunction with other Real Estate ETFs. Finally, I added the S&P as a proxy and interestingly enough, the results were similar at 0.47 for the S&P.

With that information as a backdrop, I want to mesh those thoughts against some of the questions I’ve outlined as part of my investing framework.

How does this fit into my portfolio?

Apple Hospitality fits into my portfolio as a high yielding opportunity. As part of this process, I created a pie chart approximating my investments by category. Approximately 2/3 is already in what I would consider “dividend growth stocks”, which can include ETFs by the way. I decided to include Visa and MasterCard in this group though they blur the lines between growth and dividend growth since they have lots of both.

About 18% is in growth stocks which includes Amazon, Facebook, Google and the broad S&P. “High Yield” holds my REITs and AT&T currently. I have Altria as a dividend growth stock, though the current yield is quite high over 7%. Finally there is a cash component and my “Former Dividend Growth” is CVS which I have not been happy with.

I am still working on the final allocations of a target portfolio but I approximately see 60% as core “dividend growth”, 20% growth and 20% “high yield”.

With all of that said, Apple Hospitality fits into my portfolio as a high yielding opportunity.

Am I excited about the business?

I wouldn’t say I’m necessarily excited about the business but I see it as a stable business that may offer some low growth over time. I am optimistic given the low debt profile when compared to other players in their space.

What are expected returns?

I’m expecting about 8% returns, virtually all from the dividend yield. There may be some small growth over time from actual business growth.
I’m not actually expecting the dividend to grow at this time. It has been fixed at $1.20 per year ($0.10 per month) since the IPO. Additionally, market gyrations may provide an opportunity to add or subtract from my holding.

Should the stock rise materially, without a fundamental change in the business, I may write covered calls to generate more income. Alternatively should the price drop significantly, again, without a fundamental change, I may either add to my stake or sell puts to generate income and possibly add to my stake.

Does it offer something materially different than an equivalent ETF?

This is where I ran the correlation calculation above and did not see much linkage to current ETFs within the REIT space. It also does offer a higher yield than many REIT ETFs.


Apple Hospitality is a select-service REIT with strong brands such as Hilton and Marriott operating their businesses within their hotels. Though the business seems like it is not currently growing, it sports a fat 7.6% dividend yield and has the lowest debt metrics in its class.

It does not seem to be correlated to passive alternatives and seems like a stable business to add to my portfolio. The high yielding component of my portfolio could use some shares of Apple Hospitality to bring that allocation closer in line with my target 20%.

In conclusion, I added 100 shares, a small starter position to my portfolio. I have the flexibility to add more down the road depending on market opportunities. Dividend reinvestment is not turned on, I will be receiving the income generated as cash while exploring my next investment opportunity.

3M Logo

3M Is Attractively Priced Here

3M has been a company on my watchlist for several years now.  High quality companies often come with a price premium as to be expected.  It is a company with fantastic products and has been a great grower of wealth over time.  Now that shares have fallen 20% since their highs, shares now look attractive in my opinion.  With that said, I finally bought shares of 3M and here’s why.

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W.P. Carey Added To The Portfolio


  • I bought shares of W.P. Carey after reading some convincing analysis
  • The stock is trading below it’s historical P/AFFO level
  • Currently sports a 6.2% dividend yield that may grow substantially in the next few years



W.P. Carey is a triple net lease REIT that I recently added to my portfolio.  Per investopedia,

A triple net lease is a lease agreement that designates the lessee, which is the tenant, as being solely responsible for all the costs relating to the asset being leased, in addition to the rent fee applied under the lease. The structure of this type of lease requires the lessee to pay the net amount for three types of costs, including net real estate taxes on the leased asset, net building insurance and net common area maintenance. This type of lease can also be referred to as a net-net-net (NNN) lease.

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