Thursday, March 4, 2021

I love it when you call me BPOPO...


Well...Groundhog Dave has had his restful, non-stock trading 2021 peace broken once more....boooo!

To be fair with the market now back up to nosebleed levels I've not had much to say on the subject of dividend stocks in quite some time so maybe it's a good opportunity to earn my keep for a change. Not that the market for stocks is any better at the moment, prices still do look pretty high across the board so still really sitting back and receiving the dividends makes the most sense to me.

So what stirred me from my restful place?

First up was our slow, steady and (as far as I thought) old dependable position in People's Bank (PBCT) which is being bought out by M & T Bank Corporation (MTB) at a price of 0.118 per share. Looking at the math on this eventually if we did nothing would mean a 50% dividend cut in the final product since MTB is paying 2.71% versus PBCT's 3.76% bearing in mind our buy-in price.

This is not to say M&T isn't a high quality company, it most definitely is but right now or at least until we reach full conventional retirement age when the full cavalry arrives, it's still preferable to buy a little bit higher yield whilst trying to retain a high quality level.

With the resulting cash from the transaction I decided to open up a new position in Franklin Resources (BEN) which is a new name for the portfolio. Yield sits at about 4% which is more in line with the outgoing PBCT with a nice long dividend growth history from all the way back in 1982. Not too shabby.

Payout ratio is a little on the high side at 70% but bearing in mind the pandemic I'm cutting some slack on that metric as long as I can see better growth times ahead. Plenty of opportunities I think since the Franklin family of funds includes Templeton, Fiduciary Trust, Darby, Balanced Equity Management, K2 and LibertyShares brand names.

Is it as cheap as I'd like? Well it bottomed at about $16 last year so it's not too terrible a valuation increase from there at my $26 buy-in price. To be fair though the portfolio has been a little spoiled with all the March 2020 lows so we just have to re-calibrate to "real life" prices now. Those levels are basically unicorn events so it's critical to understand that when making newer purchases.

Also starting to see some movement on the redemption front on some of the Preferred's, all par for the course unfortunately. Pun intended...

Gladstone (GAIN) has just set up to replace their monthly Preferred GAINM with what is being provisionally touted as GAINN. Rather than wait around I decided to get ahead for a change and sell while we're sitting above the $25 par redemption value. 

I flipped those proceeds immediately into the final of the three Preferred options for Popular Bank Inc, another monthly payer! Yay!! Since I already own BPOPM and BPOPN it now made sense to grab BPOPO, sounded a bit Biggie Smalls to me hence the title of the post.

Since it's a bank this is non-cumulative unfortunately which is a bit off-putting versus GAINM which was cumulative. (Gladstone would still be on the hook for back-payments should they ever stop paying a distribution in hard times)  

The reason I like Popular though is a combination of solid earnings, low payout ratio for their common divided which I use as a metric indicator on how reliable the payments are, that and these issues are Perpetual so hopefully less prone to the regular calls like Gladstone has been. Obviously nothing is ever guaranteed but it's been feeling like we can never really rest easy on the income from Gladstone with the calls constantly being expected in this lower interest rate environment. Good for the company, not good for our income stream dependence.

Apart from that there is still their GM Motors old Austin facility that still isn't being re-used just yet, their biggest asset. Maybe just the right time to replace them with a bank. Still have GAINL though for now but we'll see how that plays out.

House-wise I've taken advantage of the mild February weather on our little island to get outdoors and start digging the foundations for the patio ready for spring. Been a good long while since we've had the luxury of a garden to work on so quite the novelty, especially after apartment living for so many years.  

Finding I definitely have a soil surplus here so might have to come up with some ingenious way to get rid of some of it..

Apart from that we had the Covid pandemic land right on our doorstep! Yikes. 

With having our son and his girlfriend living with us this was always a risk the delicate ecosystem so should have been expecting the "she's positive" statement at some point.

Nope. Still an insane shock.

We pretty much stood like two deer's in the headlights then proceeded to run around randomly bleaching pretty much every corner of the house in blind panic mode with our two family members restricted to their room for the 10 days.

We held our breath for our own testing but luckily they came back negative for both of us. So then just 10 days of marigolds and waiter service to the upstairs bedroom and we were all back to normal.

It's pretty strange to truly be in quarantine house-arrest style without the daily exercise and I have to be honest and say I didn't like it one bit, really missing pure unadulterated freedom now and am getting really ready for this vaccine process to get to us. Allegedly we're on for this month but it all depends on how fast this island is getting through the older folks before us.

Like I say, truly can't wait to get this whole thing behind us and get roaming the globe again. Will always appreciate the freedom and take full advantage of it from here on in.

Vietnam? Bali? Turkey? Oh for the Dividend Nomad days when we had these choices...

Long BPOPM, BPOPN, BPOPO, BEN and GAINL.

Love to all,

DD4L

(Image at the top of the post is the last one taken of Biggie by photographer Barron Claiborne)



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