During December portfolio value did move a bit, portfolio value at year end was 40,118.03 USD or 38,984.33€. Received dividends of 121,12€net of withholding tax, biggest contributor was Telia with a additional dividend. Over 50% of December dividend was from Telia.
Biggest losers in my portfolio is Colony Capital, Kraft Heinz and Bayer AG. Bayer with a so far failed Monsanto acquisition costing shareholders a lot in legal claim and Kraft Heinz with operational issues. Colony Capital is a bit of a different story as the company has some difficulties yet have so far managed to handle many cash flow challenges well, this however has not removed the full risk (as with all companies there is a risk).
Portfolio Changes
I increased my positions in AT&T, Telia Company, Peoples United Financial, Canadian Utilities and BCE. Increased positions in these companies mainly to reduce the average acquisition price (also called ”dollar cost averaging”) as well as trying to use the market momentum when they are moderately priced. BCE as you will see was acquired at a higher price than before, this is due to my belief that usage of data and mobile phones will continue the current trend of being dominant (I do not expect the market to grow as it has over the last 10 years).
Canadian Utilities was increased as the price has decreased even though demand for energy will most likely increase in the future. The company is stable, balance sheet is good, financial statement solid and cash flow good. Bought 3 shares in Canadian Utilities at a price of 31,57 CAD/ share, the weighted average purchase price decreased a bit yet not significantly. Most of the business earning comes from regulated business, making it a stable way to earn yearly returns. There is obviously the risk of sudden regulation which might harm the business however, do not see it as likely in the future.
AT&T bought Warner Media a time ago, they have some additional debt yet based on cash flow there should not be any issues unless the basic business starts to choke. Note that AT&T stopped purchasing their own shares to secure dividends. Increased the position from 75 shares to 80 shares at a average price of 28,89 USD/ share, the weighted average paid price per share dropped by 0,18 USD to 31,60 USD/ share.
Telia Company was again increased as I still see the company as a stable cash generating business. Their dividend is based on cash flow and not on earnings as many companies, therefore id the cash flow from operations is weak then dividend will decrease and vice versa. 19 shares were bought since last update in beginning of December, the average purchasing price per share was 3,43€/ share dropping the weighted average price per share to 3,79€ from 3,80€.
BCE 2 shares was bought at 55,42 CAD/ share increasing the weighted average price paid per share from 54,63 CAD to 54,71 CAD/ share.
People's United Financial was increased by 3 shares at a price of 13,00 USD/ share, decreasing the average paid price by 0,03 USD to 13,80 USD a share.
Dividends
In December I received 142,39€ in gross dividends, net 121,12€. Biggest contributor was Telia with an additional dividend. Without Telia 3M Company would have been the single biggest contributor.
Portfolio and Market in General
Have mainly increased positions in boring companies, not sexy tech or super ESG highlighted companies. Had for a short time iShares Global Clean Energy in 2020 yet sold that position when the underlying values in the ETF rose to too high levels for me. As I cannot with full certainty evaluate ”clean energy technology” I stick to moderately valued companies and sell them once their value is far beyond what is reasonable. As this creates opportunities in other places, like the boring companies and industries. If any of these industries or companies, see their value decrease to old moderate levels then I will most likely enter with a modest investment.
I shared the Shiller P/E ratio which is at really high level. This level can temporarily be sustained, yet not forever. Reason why not forever is due to investors demanding a return on their capital and companies with negative return on capital cannot demand capital from owners and lenders forever. This is one major variable that worries me, are people knowingly ready to finance non-profitable companies forever or is it mainly the greed of belief that someone else will pay more for it 10 years from now.
My opinion is that some companies are overvalued while others not so sexy are under- to moderately valued under current market conditions. This creates opportunities to buy good or great companies at reasonable prices while via ETFs ride the general opinion of highly valued companies.
I am considering buying a few shares in iShares S&P 500 ETF once the value has come down a bit as I would not feel comfortable getting into the index at these values.
I also like to look at companies and markets we have temporarily forgotten for one or another reason. Here value can be found and once the public returns the positions can be sold at a profit.
Hope for a good 2021 investment year with good dividends and maybe some small capital gains.
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