Portfolio Update for August 2019

As we are approaching the beginning of September, it’s about time to have a look at the performance of the previous month. In general, it has been a hot summer for those who are invested in stocks. The equity markets kept climbing and reaching new highs almost every week. Finally, however, we have witnessed a minor correction for the S&P500. The dominant topics remain the same. In this context, we have the FED & interest rate expectations, the ongoing trade conflict with China and the imminent risk of a recession (inversion of the yield curve for US Treasury bonds). So no surprises here.

As the whole market is moving, my portfolio is subject to fluctuations as well. In the following, I’m going to present the latest snapshot and discuss some changes for the past month.

SF Portfolio Snapshot

As of August 30, 2019, I’m invested in 31 companies.
The SF Portfolio has a total value of €58,354 ($64,773) and is expected to generate €1,865 ($2,070) in pre-tax forward annual income.

(Equity Allocation: August 2019)

Looking at the total return, this portfolio is down by -1.38% since the last update one month ago. The S&P500 (SPX) dropped by -3.35% in the same period. All in all, I’m not surprised to see a better performance in a down market. This is mostly due to the high exposure of defensive businesses (Staples, Healthcare, and Utilities) in this portfolio. I like these companies primarily because of the reliability of their income. Do you think people will stop buying food, neglect healthcare or discontinue using electricity/gas if the recession hits us? I doubt it.

From the YTD perspective, this portfolio is showing a total return of +18.1%. The S&P500 is up by +16.5% YTD. In this context my top 3 performing stocks are: SBUX (+53.4%), GIS (+40.8%) and V (+37.9%). Just to be clear, I don’t aim to beat the index. My goal is about cash flow. However, some people are of the opinion that by focusing on income one inevitable compromises on total return. Nothing could be further from the truth in my opinion.

There are many investors out there who manage to outperform the index by simply focusing on high-quality dividend growth stocks. I invite you to check the total return numbers of “boring” Utilities (NEE, D, SO, etc.) or Staples (PG, PEP, CLX, etc.). Use FastGraphs f.e. and select a 20-year time frame. You will be surprised to see these companies beating the S&P 500 in terms of total annualized ROR.

Top 10 Holdings

(Top 10 Holdings: August 2019)

The top 10 list shows zero changes compared to the last update in July. Johnson & Johnson, Starbucks, and Allianz remain my three largest positions by market value. Speaking about JNJ, we can immediately notice the poor YTD total return of +1.54% in the table above. The reason for this is that JNJ is dealing with some lawsuit battles at the moment. One of them relates to the accusation that JNJ’s baby powder may cause cancer. The other major one is addressing JNJ’s involvement in the U.S. opioid crisis. Although it’s difficult to predict what the end result will be, I still have big confidence in this company. JNJ scores the highest possible grades at Value Line Safety (1), Value Line Financial Strenght (A++), S&P Credit Rating (AAA), Morningstar Moat (Wide) and SSD (99). It’s exactly the kind of stocks that I want to own in this portfolio.

Sector weightings

(Sector Weightings: August 2019)

The defensive-sensitive-cyclical allocation is sitting at 34%-30%-36% at the moment. While this portfolio has a higher exposure to the defensive sector compared to the S&P500, I’m still looking for opportunities to increase my stake in Staples, Healthcare, and Utilities. Ideally, the defensive share should amount to 50% of the total portfolio value. The remaining 50% will be equally spread among sensitive and cyclical businesses. The reason why I want a 50% defensive share is linked to my overall goal of building a reliable income stream. History shows that most of the dividend cuts came from companies outside the defensive sector. Therefore I plan to play defense by purchasing more Utilities, more Healthcare and more Staples in this portfolio.


  1. Engineering Dividends September 7, 2019 at 8:32 am

    That’s a great top 10, SF. They provide a nice foundation for your portfolio. I own half of your top 10, with PEP being the largest of those positions.
    I seem to recall that you aren’t looking to add any JNJ with it being your largest holding, but it just so happens that I’m looking into a small purchase to keep it in my top 10. As you noted, there’s a lot to like about JNJ.
    There have been many stocks that have popped in price this year after the declines late in 2018. You named 3 and I’m happy to see that I own two of them in SBUX and V. I’m hoping I find a few others in my portfolio when I check performance at year’s end.

    1. Snugfortune September 8, 2019 at 4:21 pm

      Thank you, ED!
      I see your reasoning regarding JNJ and personally I like it. I can’t remember when JNJ’s yield was at 3% the last time. Hard to resist. As you mentioned, it’s my largest holding already, otherwise I would add more.
      Good luck.


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