Stocks Have Worst Week of the Year. How Did our Portfolios Do? (Still Beating the S&P 500) -Week 140 

Thanks! What's currently your favorite dividend-payer?

@@RexJacobsen VALE, based on essentially all of its metrics except possible near term growth, looks like a pretty good value at its current price. PRDO looks pretty incredible. QFIN looks like it has incredible stats as well--even though it may be slowing in the short term. CSWC has a 10% yield and might currently be a bit overpriced. However, with their guidance regarding forward growth and their yield being 2x treasuries, it is a fairly compelling buy and hold imo. CMPO is one that I am watching because it looks like it's going to be very promising in the near future. Other than that, SPY, VICI, JEPQ, and SCHD are currently my largest holdings. I recently began researching some of the newer covered call funds like NVDY etc. just because they look pretty interesting. I actually noticed fairly recently that many of my single stocks were the highest % holdings in some ETFs, so I have also been trying to find overlap between them in order to just buy an ETF instead of holding single shares of an ETFs top 5. For instance, PGJ has four stocks in its top five that I owned individually. JD and YUMC in particular were two I had held for quite awhile. I essentially sold out of the majority of those positions and just put it into PGJ. It's been a good move so far.

Thanks! It's fun to watch the portfolio steadily grow and to see which stocks make the list each week.

@RexJacobsen I'm curious, if you had a windfall and had the opportunity to lump sum in, would you? If so, would you use the same picks/methology and get the money in all at once? Or would you spread out the lump sum over a period of time by increasing your weekly buys? Thoughts?

@@DzDivz Historically, 73% of years see the stock market having a positive return, so the sooner one gets the money into the market, the more the odds are in your favor. Personally I would likely immediately put the money into either an index fund, or a dividend-paying ETF like SCHD and then weekly move some of that money into the weekly buys. That's what I'm currently doing with my SCHD holdings.

@@RexJacobsen Thanks Rex. That's exactly what I was considering. Cheers!

Great question. Here's my long-winded answer: Of the 4 main areas that we analyze for this strategy (valuation, quality, past dividend growth combined with current yield, and the company’s outlook for future dividend growth), valuation is by far the most challenging. When trying to determine if a stock is over or under-valued, we want to make sure that our methodology is looking at the company’s future and not ONLY the recent past. This is so we can avoid buying a company whose business is about to tank. For example, if a drug company’s main source of profits is a single drug and that drug is going to go off patent, simply looking at the company’s Price-to-Earnings ratio won’t give you a warning sign. So for this particular strategy, we don’t use a simple formula that looks at past data to determine if a stock is undervalued; we need to look into the future which involves making estimates. And that’s where utilizing the time and effort of “trusted” analysts comes into play. Their full time job is to look at each individual company’s future outlook, something we obviously can’t do since we start with a database of 6,700 companies. And I say “trusted” analysts because many analysts are NOT independent and are simply courting companies with “buy” ratings on their stock in order to earn that company’s investment banking business (one such analyst company notoriously has a “sell” rating on only 0.4% of the stocks that they cover; when everything is a “buy,” then that company’s ratings are worthless). The analysts we use can change at any time, so we can’t simply list them. We are always tweaking our methodology, but for valuation, we currently use the target prices of independent analysts (preferably multiple analysts employing multiple philosophies, such as value and growth) and combine that with the company’s risk profile to determine the company’s margin of safety (ala Warren Buffett and Benjamin Graham). Margin of safety is important because we’d rather invest in a low-risk stock that is 10% undervalued rather than a high-risk stock that is 13% undervalued. And of course, from there we do a deep dive into the company’s accounting practices to look for red flags/accounting irregularities to hopefully avoid frauds like Enron. And we look at dividend sustainability, growth potential, buy-backs, etc.

We are using Excel's XIRR (internal rate of return) function. It's the same method that Quicken uses to calculate portfolio returns.

look into TPL

Currently, my choice would be Chevron (CVX)

@@RexJacobsen thanks 🙏 I’m loading a portfolio w no more 7 stock I have MS, UPS, BMY, CMCSA, PZZA and now add CVX i need 1 more to complete 7 I think 1 w excelente dividend grow what you think this sir ?

Is good portfolio?

So far your portfolio seems to be missing Tech. So I would consider adding a technology company.