August 2017 Financial Overview

Oh, the summer is gone! I can already feel the days are getting shorter and shorter. Even though I never liked when September came, we have plenty of things to look forward this time. Especially since August was a sad month financially, as I had to sell shares…

If you follow this blog for a while, you might know that in July we made a deal on our first rental property. I already wrote about our selection criteria. There we made 3 categories in terms of the price. Unfortunately the final price of the property falls under the third category, which means that we were in the need of selling some shares in order to have sufficient money for the purchase.

Every time I purchase stocks, I do it with the intention of keeping them for a long period of time. Unfortunately in this case I had to break this rule. On a positive side, the sale did not have to be done due to personal needs, so you might call it as an investment reallocation. Regarding the timing, it also did not come in the worst time in my view. The stock valuations are high and we did not have to sell with a loss. At the same time the EUR/USD exchange rate is very high comparing to the last few months, which does not help at all.

Due to the sales, our portfolio has changed quite significantly comparing to the previous months.

Portfolio Fun Facts

During August I sold my holdings in the below companies:

  • Diageo
  • Yum Brands (besides of 2 shares that are with my new broker)
  • Sanofi
  • Banco Santander
  • Emerson
  • Exxon Mobil
  • ABN Amro
  • Archer Daniels Midland
  • Visa

Some of the above shares were sold because I considered them as a weaker link in the portfolio. Some others (e.g. Sanofi, ABN Amro) were sold because of the strong euro and based on the fact that they won’t pay dividends until next year. I will probably buy them back later on.

Unfortunately these sales will also mean that our dividend income in the near future will surely drop. The plan is that we will put our savings mainly against the mortgage until the outstanding principal amount drops again below 85% of the value of our home. This will then decrease the mortgage interest rate. Afterwards the free cash flow will go again towards buying stocks.

Dividend Changes

In August, Brinker International has declared a dividend increase of 11.7%. The result? The share price continues to plunge. Right now the dividend yield is over 4.8%. I honestly don’t understand the reason behind this big negative sentiment around the company. I am really interested to hear your idea. From my side I continue to be a shareholder and believe that every further decline is only a better buying opportunity.

Unfortunately I also have to report a dividend cut. Prospect Capital has cut its monthly dividends by 28%. Ouch… The company still offers a great yield (especially after the recent share price drop), but this highlights the fact that higher yields always come with higher risks.

Winners and Losers

The 3 best performing stocks in the portfolio were:

  1. Apple
  2. Lockheed Martin
  3. Western Digital

Apple seems unstoppable in 2017. It had a small correction in June, but now it’s at all time high again. Lockheed Martin is clearly benefiting from the situation around North Korea. In addition investors can look forward to a dividend increase in September. The only question is the amount here. Western Digital had a bit weak July, but in August the share price increased again. It continues to be far my best investment, having an unrealized gains (excluding dividends) over 75%.

The 3 worst performing stocks in the portfolio were:

  1. Prospect Capital
  2. Brinker International
  3. HCP

I already wrote about both PSEC and EAT before. Although I can’t really explain the fall of HCP, but I’m not really worried about it. I truly believe that health care REITs like HCP have a good place in a long term dividend growth portfolio.

Cash

The money got from the sale of stocks are in cash now. We will need to pay both the deposit and the remaining value of the rental property in September. Our cash balance stands at EUR 47,691. I don’t include the cash we got as a mortgage. That will be considered in the real estate report that I will publish from next month onward.

The Road to One Million

Summarizing everything, let’s see where we are on the road to one million!

The closing amount of August is EUR 101,847. This is EUR 890 less than last month. This is mainly due to the continuously weakening USD, furthermore the big decline in the share price of PSEC and EAT did not help either.

I would not be surprised if the decline would continue in September as there will be a lot of expenses around the new apartment. We will need to pay property transfer tax, notary fees, spend on furniture, decorations etc. It will be a difficult period, but I hope we will find a tenant soon and our growth will continue in a rate better than ever before!

How was your August? Any milestones achieved? Did you make new investments? Or you had a relaxing holiday?

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Disclaimer: This post or any other information on the site is not intended to be and does not constitute financial advice or any other advice. I am solely sharing my idea, plan and progress on financial independence and early retirement.

 

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