Economy:
GDP soars by record 33.1% annual pace in third quarter, but coronavirus resurgence threatens U.S. economic recovery - MarketWatch This is the first estimate. Real GDP growth for 2020 is still negative. Note that the 33.1% increase is annualized as was the 31.4% decline in the second quarter. Obviously, neither of those two numbers will reflect at year end the real GDP growth rate for 2020. See also, The First Estimate for Q3 Real GDP Growth is 33.1% at an Annual Rate
Real Gross Domestic Product-St. Louis Fed
Trade war with China didn't boost U.S. manufacturing or cause jobs to return to U.S.- MarketWatch
New Orders for Durable Goods Increased 1.9% in September
New U.S. jobless claims fall 40,000 to 751,000 in latest week - MarketWatch
New home sales dip slightly in September, but remain strong going into fall - MarketWatch; New Single-Family Home Sales Declined 3.5% in September
U.S. durable-goods orders climb 1.9% as manufacturers grow for fifth straight month - MarketWatch;
Aircraft orders slump to record low as COVID pandemic and quarantines hit travel - MarketWatch
Fed lowers minimum loan level for small business lending program
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Markets and Market Commentary:
Through last Friday, the total return for the S&P 500 ETF Trust (SPY) was 2.94%.
With a negligible yield, the iShares 7-10 Year Treasury Bond ETF (IEF) had a total YTD return of 9.9%.
Close on 10/30/20: S & P 500 3,269.96 -40.15 -1.21%, down 8.11% from the intraday high of 3,588.11 hit on 9/2/20. Historical
VIX 38.02 +0.43 +1.14%: CBOE Volatility Index, intraday high of 41.09; Unstable VIX Pattern, possible surge higher similar to the early March 2020 pattern: VIX Recent Historical Daily Numbers
There was a significant percentage surge in intermediate and longer term treasury yields during October:
The 10 year treasury yield closed at 1.88% on 1/2/20, so I would put the October uptick in that context. 2020 Daily Treasury Yield Curve Rates
The stock market is overvalued, according to almost every measure dating to 1950 - MarketWatch (opinion piece by Mark Hulbert). I commented on this article here.
See also: Is the Market Still Overvalued? - dshort - Advisor Perspectives
Donald Trump will win re-election, and a revolution is coming, billionaire investor Jeffrey Gundlach predicts - MarketWatch Gundlach did predict that Donald would win in 2016. If Donald does win, my survival may depend on being able to tune him out, focusing only on his actions and proposals that may directly impact my investments.
Why COVID-19 whiplash won't last and the S&P 500 will be 13% higher by June, from UBS - MarketWatch
Druckenmiller says stock market 'right now,' is in 'an absolute raging mania' - MarketWatch
It's been years since investors have been this fearful of a stock market crash, Robert Shiller warns - MarketWatch, referencing this Shiller opinion article: People Fear a Market Crash More Than They Have in Years-The New York Times
Looks like a ‘double top’ in the S&P 500, investor Mark Mobius warns
Big media companies reorganize for world of 50 million TV subscribers
Forget AT&T’s Lofty 7.8% Yield. Its Dividend Looks Safe. | Barron's (10/29/20, subscription publication)
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Portfolio Management:
There continues to be a continuous stream of early corporate bond redemptions.
Those early redemptions fall into two general categories.
(1) Some issuers are redeeming in the short period just prior to maturity date when they are allowed to do so without having to pay a make whole payment. Usually that period is 1 month prior to maturity, but some issuers have sufficient bargaining power to extend the period to 2 or even 3 months. The bargaining power for a longer period in some instances may go beyond the credit quality issue and include the acceptance of a higher than normal coupon for the credit rating.
A recent example is Lockheed Martin's redemption one month early of a 2.5% SU note:
(2) The other category involves required make whole payments to exercise the optional redemption rights.
A recent example is this 3.7% Corporate Office Properties note that would have matured on 6/15/21, where the issuer had to pay a 2.18% premium to the $1K par value:
Item # 3.A. Bought 2 OFC 3.7% SU Notes Maturing on 6/15/21 (5/10/18 Post)
In both categories, the issuer has to pay accrued interest. I received a $25.29 interest payment with the principal payment of $2,043.61 for the two $1k par value bonds.
The prospectus for the Corporate Office Properties note would have allowed an early redemption without a make whole payment within two months prior to maturity Pages S11-12
Even though the time to maturity is short, only about 8 months, the make whole payment is juiced by the size of the coupon and the extremely low treasury rate + 25 basis points used to discount the remaining interest due and the principle amount to present value. The low discount rate in effect adds almost all of the remaining interest to the principal amount that has to be paid when exercising the early redemption right.
I still own a Corporate Office Property L.P. 3.6% SU maturing on 5/15/23. FINRA Bond Detail (currently rated Baa3/BBB-); Item # 1.E. Bought 2 OFC 3.6% SU bonds maturing in 2023 at a TC of 98.264 (4/23/17 Post)(YTM then at 3.922%) For a new purchaser of that bond, and based on recent transactions, the YTM would be about 1.1%.
The problem with the early redemptions is that they are lessening the usefulness of my bond ladder and providing me with even more proceeds that are landing in my broker sweep accounts paying .01% on top of regularly scheduled redemptions, interest and dividend payments.
I have managed to stabilize over the past few weeks the cash allocations as percentage of each brokerage accounts total value. That is primarily due to net purchases, a rise in risk asset prices and a slowdown in the total value of bond redemptions from the levels experienced between January and August 2020.
Electric Utility Stocks:
I like most utility stocks less now than when I started to buy. Valuations are high and yields are relatively paltry. I have started to pare my small ball positions in EVRG, DUK, and PEG, as discussed below.
I have not pared PPL which is owned in multiple accounts with unrealized profits in 2 ROTH IRA accounts and 2 taxable accounts and an unrealized loss in my largest position bought first.
Part of the paring has to do with comparative dividend yields and partly to valuations after price spurts in EVRG, DUK and PEG. I am unable to generate any excitement in owning those stocks and will not be buying more shares at current prices.
DUK is my second largest electric utility position. I am playing small ball with that one, selling near $90 or higher and buying near $80 or lower.
I did recently start a position in NJR, a natural gas utility, which I will discuss in a few weeks. New Jersey Resources Corp. (NJR) The NJR yield was somewhat better than the EVRG or PEG.
Currently Owned Electric Utility Stocks-All Small Ball
Public Service Enterprise Group Inc. (PEG)
I currently have 1 share Placeholder positions in two electric utility stocks:
Southern Company (SO); Consolidated Edison, Inc. (ED)
American Electric Power Company (AEP).
I sold out of Dominion Energy (D) after the company announced a substantial dividend slash.
The consensus E.P.S. estimate for PEG is for $3.4 this year and in 2021.
The consensus E.P.S. estimate for EVRG is for $3.2 this year and $3.25 next year.
While I am not buying any $1K par value bonds traded in the bond market, I have been nibbling on a few exchange traded bonds and equity preferred stocks ($25 par values).
I discuss the purchase of CCNEP, an equity preferred stock in Item # 2 below and adds to the exchange traded bond HTFA in Item # 4 below.
More Emphasis on Dividend Income:
Interest income is in a dive mode as fixed income securities mature or are redeemed early.
Tennessee municipal bond interest payments have eclipsed corporate bond interest payments.
The following snapshots are from my Fidelity account:
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Trump:
I am slowly plowing through the audio version of Woodward's book "Rage", which is Donald's normal state of being. I can only tolerate a few minutes when Woodward is quoting from a tape of an interview. I just finished listening to the part where Donald said everyone involved in the Russian investigation was guilty of treason and needed to be sentenced to 50 years in prison so they would all die there.
Donald Trump Wants 'Anonymous' Author Miles Taylor to Be Prosecuted
Hopefully, we will know when I publish my next post whether Donald will be given another 4 years as President.
It is certainly possible that voters will give this lying, malevolent, ignorant, demagogic malignant narcissist with dominant authoritarian tendencies another 4 years as President. He is obviously unfit to be President.
About 78% of white evangelical christians support Donald:
White Christians still favor Trump over Biden, but support has slipped | Pew Research Center
They admire his honesty and good character. Donald is the kind of decent christian man that their children can aspire to emulate as a role model. And, Donald keeps the bible on his nightstand and reads one of his favorite passages before tweeting.
When pressed some will say they approve of the "conservative" justices that Trump has appointed, meaning justices that will overrule Roe v. Wade. That justification is no longer going to fly since the Supreme Court already has a relatively youthful reactionary majority, packed with 5 deeply reactionary Justices and one that floats back and forth from reactionary to conservative. Roe v. Wade is toast.
If he loses, hopefully Demagogue Don will be totally ignored by a majority of Americans thereafter and will be view as nothing more than a source of brain pollution. I will certainly ignore him but ignoring him will not remove the permanent stain on the U.S. that he has left. Sure, he will make frequent appearances on Fox "news" to spread fact free conspiracy theories and thousands of demonstrably false assertions, but his audience will be limited to those who like watching My Pillow commercials.
Sarah Cooper has a special on Netflix where she mouths Trump's lines from the Access Hollywood tape with Helen Mirren doing Billy Bush lines. Watch Helen Mirren, Sarah Cooper recreate Trump Access Hollywood tape | EW.com; Senator Kelly Loeffler (R-GA) says she is 'not familiar' with Access Hollywood tape
Watch #Unfit: The Psychology of Donald Trump | Prime Video; Unfit: The Psychology of Donald Trump - Official Trailer - YouTube;
Mattis told Coats Trump is 'dangerous,' 'unfit': Woodward book | TheHill;
President Trump's former national security advisers say he has 'no moral compass' in 'Rage' book
John Bolton says Trump ‘not fit for office’ Video - ABC News
Sean Hannity has reportedly privately admitted he thinks Trump is a 'bats shit crazy person'
Trump is averaging more than 50 false or misleading claims a day - The Washington Post (10/22/20) Trump is on track to make over 25,000 false and misleading claims starting with his inauguration through 11/3/20.
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One out of 3 republicans believe that the QAnon conspiracy theories are mostly true. Civiqs | Report: Americans Pessimistic on Time Frame for Coronavirus Recovery (9/2/2020). I am anticipating that this number will increase and cross over 50% within a few years. Trump and many other republican politicians provide fertile ground for baseless conspiracy theories to go mainstream.
Trump admin dismantles 'firewall' for editorial independence at U.S.-funded media outlets This is just another small step in an authoritarian's playbook.
Michigan will allow the Trumpsters to carry their guns into polling places. Judge overturns ban on open carry of guns at Michigan polling places-Axios The Trumpsters had previously invaded Michigan's legislative chamber with their automatic weapons. Waving confederate flags is another political statement that they like to make.
Inside the far-right militias preparing for the election's aftermath - YouTube
Donald Trump's secret sauce for not paying his debts, referencing this NYT article: How Trump Maneuvered His Way Out of Trouble in Chicago - The New York Times (Just stiff your lenders after making bad investment decisions. Why anyone would loan money to Donald or buy part of a loan made to him is beyond my comprehension. You really have to be just plain stupid IMO given Donald's long history of business failures and stiffing bond owners and lenders. I am not surprised that Deutsche Bank continues to lend money to Trump)
Trump Stirs Rallies by Tarring Biden With Views That Aren’t His Donald knows that lying all of the time about almost everything works on tens of millions. It is just too difficult, and would be psychologically traumatizing as well for the Trumpsters to learn facts that contradict Demagogue Don's perpetual and constant stream of demonstrably false reality creations.
Trump on the Stump - FactCheck.org (identifies 46 false and misleading claims that Donald has recently made at his Mass Infection Events)
Turkish Bank Case Showed Erdogan’s Influence With Trump - The New York Times This case shows how Barr and Trump interfered in a SDNY criminal investigation.
Trump has signaled he won't accept an election loss. Many of his voters agree. Trump has done a great deal of damage to institutions necessary for a properly functioning democracy, which is what can be expected from a demagogic authoritarian with widespread support numbering in the tens of millions. Trump's GOP is not a conservative American party but the antithesis of one.
The Economist Endorses Joe Biden, Says Donald Trump 'Must Be Soundly Rejected'
How a fake persona laid the groundwork for a Hunter Biden conspiracy deluge
The republican congressional candidates who have engaged with the QAnon conspiracy theory
The Minnesota voting ruling relies on an absurd conservative legal theory - The Washington Post I would not call the republican justices and judges who are interfering in state election rules, or attempting to do so, conservatives. They are instead implementing the republican authoritarian inspired policies aimed at not counting votes and making voting difficult.
Republicans shift from challenging rules to preparing to challenge individual ballots - The Washington Post (e.g. "In Texas, Republican officeholders and candidates sued this week to have more than 100,000 votes invalidated in the Houston area because they were cast at drive-through voting centers the GOP has asked a judge to declare illegal.") The GOP is doing everything conceivable to steal the election for Trump. The only way to fight back is to cast your vote in person.
Don the Authoritarian: “It would be very, very proper and very nice if a winner were declared on Nov. 3, instead of counting ballots for two weeks, which is totally inappropriate and I don’t believe that that’s by our laws.” Trump has made it clear that it wants to toss mail-in votes. PolitiFact | Donald Trump wrong that a winner has to be announced Election Night (rated as Pants on Fire)
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Covid-19 Updates:
 |
| As of 10/30/20 |
Trumpsters have a constitutional right to infect and kill people with Covid-19. Wearing a mask is an unconstitutional restraint on their freedom to infect. Just ask them and they will tell you.
Trump downplays pandemic on campaign trail as cases top 9 million - CBS News (video)(Michigan hospitalizations up 96% since 10/1 at 2 minute mark; Trumps mocks Laura Ingraham for wearing a mask at 2:35 mark; falsely claims Doctors get an extra $2,000 by classifying a death as caused by Covid); Birx warns of "broad surge" across the country, as Trump claims U.S. is "rounding the turn" - CBS News (10/30/20); Trump MOCKS Fox News' Laura Ingraham for Wearing Mask at Michigan Rally - YouTube There is no boundary on the false statements that Disgusting Don will make.
Coronavirus: Trump campaign rallies led to 30,000 cases, Stanford researchers say
Donald Trump Jr. Says COVID-19 Deaths 'Almost Nothing' As 5,000 Reported in One Week; Donald Trump Jr. says Covid deaths are 'almost nothing' on a day reporting 90,000 infected, 1,000 dead; Explaining Donald Trump Jr.’s embarrassing claim about the coronavirus death toll - The Washington Post, republished at MSN: Explaining Donald Trump Jr.’s embarrassing claim about the coronavirus death toll
U.S. counts more than 90,000 cases in a single day and The Lancet says Trump pandemic response is ‘disastrous’ - MarketWatch (10/30/20) The Lancet is probably the world's preeminent medical journal.
The US election 2020 - The Lancet
Coronavirus update: U.S. counts almost 100,000 cases in new one-day record; The Lancet says Trump pandemic response is ‘disastrous’ - MarketWatch (10/31/20) My state hit a new daily record for deaths yesterday.
REGN-COV2 Independent Data Monitoring Committee Recommends Holding Enrollment in Hospitalized Patients with High Oxygen Requirements and Continuing Enrollment in Patients with Low or No Oxygen Requirements This press release had a negligible impact on REGN's stock yesterday: REGN $543.56 -$12.23 -2.20%
New rise in coronavirus cases in counties that held Trump rallies - CNN Video
Two test positive for coronavirus after Trump rally in NC | Charlotte Observer
Trump falsely claims California requires people to wear 'special' and 'complex' mask at all times
Reporter Covering Donald Trump Rally Tests Positive For COVID-19 – Deadline
23 COVID-19 cases linked to Trump rallies in Minnesota- ABC News
In TrumpWorld, the Fake News media is blowing the pandemic out of proportion as part of a radical left wing conspiracy with the socialist Democrats to deny him reelection. Trump downplays COVID-19 and attacks mail-in voting- CBS News (video)(Trump said his son Barron was a "case" and he sniffled once, blew his nose, threw away the kleenex and was fine.)
Trump: “Did you ever notice, they don’t use the word death. They use the word cases, cases. Like Barron Trump is a case. He has sniffles. He was sniffling, one Kleenex, that’s all he needed… and he was better."
Trump’s Closing Argument on Virus Clashes With Science, and Voters’ Lives - The New York Times (10/28/20); republished at MSN: Trump’s Closing Argument on Virus Clashes With Science, and Voters’ Lives Most attendees at Trump's Mass Infection events refuse to wear masks or to socially distance.
Hospitals Are Reeling Under a 46 Percent Spike in Covid-19 Patients - The New York Times
Herd immunity: Coronavirus antibodies fall after infection, study says
Eli Lilly COVID-19 antibody treatment comes up empty in NIAID study (NYSE:LLY) | Seeking Alpha That leaves Regeneron's antibody cocktail, the one given to Donald.
Mike Pence will not quarantine after four aides test positive for Covid-19 At least 5 people in Pence's orbit, including chief of staff Marc Short, are positive for coronavirus One of the aides is Marc Short who is Pence's Chief-of-Staff who is in quarantine. Pence regards his continued campaigning as being necessary as an "essential" worker under CDC guidelines.
Mark Meadows: "We're not going to control the pandemic". ‘We’re not going to control the pandemic’: White House chief’s comments undermine Trump’s message - POLITICO This is yet another of a long list of messages sent by Trump and other republicans that mask wearing does not control the pandemic. Meadows may me right that there is no control in states where republicans refuse to wear masks and attend congregate gatherings without socially distancing.
In North Dakota, the republican governor Doug Burgam repurposed $16M of unused CAREs Act funds to the fracking industry, even though hospitals beds are already full in many areas with rural hospitals transferring patients out-of-state. Mask wearing has not been mandated by Burgam, even though infections are surging and hospitals are near capacity before the start of flu season. Wearing masks in that republican state is the exception. North Dakota officials look to shift $16M in federal coronavirus stimulus funds to fracking grants | Grand Forks Herald; North Dakota Covid Map and Case Count - The New York Times; Facility Beds Available: Updated 10-25-2020 1600 (most hospitals in ND had no available ICU beds left)
COVID-19 Patients Swamp Rural Hospitals | The Pew Charitable Trusts
Idaho county drops mask mandate despite warning of overwhelmed hospital - CBS News (After the third most populous county was overwhelmed with Covid cases, members of the regional health departments voted to end the mask mandate: Walt Kirby voting member: "I personally do not care whether anybody wears a mask or not. If they want to be dumb enough to walk around and expose themselves and others, that's fine with me. Nobody's wearing the damned mask anyway... I'm sitting back and watching them catch it and die. Hopefully I'll live through it." Allen Banks voting member: "Something's making these people sick, and I'm pretty sure that it's not coronavirus, so the question that you should be asking is, 'What's making them sick?" Idaho is controlled by republicans and will heavily vote to give Don the Authoritarian 4 more years as President. It really is not hard to understand why infections are surging in that state and the Dakotas.)
Pence absent from Covid-19 planning calls for more than a month - POLITICO Donald put Pence in charge of the Administration's pandemic response.
Trump Baselessly Suggests COVID-19 Deaths Inflated for Profit - FactCheck.org
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1. Small Ball:
A. Restarted DEA-Bought 10 at $22.66; 5 at $22.37; 5 at $21.9; 5 at $21.4; 5 at $20.5:
Quote: Easterly Government Properties Inc.
As of 6/30/20, DEA "wholly owned
Closing Price 10/30/20: DEA $20.90 +$0.21 +1.01%
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy/Bond Substitute
Last Elimination: Item # 1.A. Sold 21+ DEA at $28.81 (6/6/20 Post)(profit snapshot = $272.6)
Last Substantive Buy Discussion: Item # 4.A. Bought 10 DEA at $17.4 and 10 at $15.74-Used Commission Free Trades (1/9/19 Post)
Average Cost Per Share this account: $21.92 (30 shares)
Dividend: $.26 per share ($1.04 annually)
Easterly Government Properties Announces Quarterly Dividend
Dividend Yield at AC = 4.74%
Last Ex Dividend Date: 8/12/20
Next Ex Dividend Date: 11/10/20
5 Year Historical GAAP:
3 Year Historical FFO and Adjusted FFO:
The CAD calculation subtracts certain actual cash expenses from the AFFO number (cash used for tenant improvements, routine capital expenditures; leasing related expenses and acquisition costs). Cash used to pay those expenses are not available for distribution to the shareholders.
I have to calculate the CAD per share numbers by dividing the CAD dollar amount by the outstanding diluted shares using the date provided by DEA.
CAD Per Diluted Share (rounded):
2019 $1.035 DEA Earnings Report for the Q/E 12/31/19
2018 $ .875
2017 $ .954 DEA Earnings Release for the Q/E 12/31/17
2016 $1.02
AFFO Per Diluted Share: (sourced same documents)
2019 $1.18
2018 $1.03
2017: $1.14
2016 $1.17
Comparing 2016 with 2019, there is almost no growth in the per share numbers.
Annual numbers do fluctuate up and down depending on the dollar adjustments to the AFFO and CAD calculations.
Last Earnings Report (6/30/20): SEC Filed Press Release
The third quarter report is scheduled for release on 11/2/20. The following table includes three cash flow calculations: FFO, Adjusted FFO, and CAD.
CAD per share was report at $.27, up from $.2522 in the 2019 second quarter.
The third quarter report is scheduled for release on 11/2/20.
Other Sell Discussions: Item # 3.A. Sold 10 DEA at $22.39 (11/20/19 Post)(profit snapshot = $47.24); Items 1.A. and 1.B. Sold 10 DEA at $19.81 and Eliminated DEA in Schwab Account at $19.81 (8/24/19 Post)(profit snapshots $74.38); Sold 10 DEA at $21.44-Used Commission Free Trade (5/17/18 Post)(profit snapshot = $22.59); Item 5. A. Sold 50 DEA at $21.59-Used Commission Free Trade (12/11/17 Post)(profit snapshot = $97.85)
DEA Realized Gains to Date: $543.52
Purchase Restriction: Each subsequent purchase, other than through dividend reinvestment, must be at the lowest price in the chain.
Maximum Position this Account: 100 shares
Goal: A total return in excess of the dividend payments. So far, that goal has been achieved since I have a $543.52 realized gain on the shares when a one cent gain would be viewed as acceptable given my objectives.
B. Started PFG-Bought 2 at $38.4:
Quote: Principal Financial Group Inc. (PFG)
Closing price 10/30/20: PFG $39.22 +$0.10 +0.26%
Classification: Currently at Placeholder Status
Investment Categories: Contrarian Value/Bond Substitute
Last Bond Offering in August 2020: Prospectus $100M of 2.125% SU Bonds Maturing in 2030; FINRA Bond Detail (rated Baa1/A-)
Dividend: Quarterly at $.56 per share ($2.24 annually), last raised from $.55 effective for the 2020 first quarter
Principal Financial Group Inc- Dividends
Yield at $38.4: 5.83%
5 Year Financials:
5 Year Chart:
Last Earnings Report (9/30/20): Principal® Announces Third Quarter 2020 Results This report was released after my purchase. The Stock Jocks reacted negatively to it. Discussed at Principal Financial Q3 trails estimate on actuarial assumption review, other variances-Seeking Alpha
There were a number of unexpected items that reduced operating E.P.S. to $.85 vs the consensus estimate of $1.40. Those included the following hits to operating E.P.S.: $.41 from a boost to reserves resulting from an annual "actuarial" review, 14 cents to COVID; 4 cents from integration costs, and 3 cents due to issues in Latin America.
Sourced from SEC Filed Press Release
See also, Principal Financial Group (PFG) CEO Dan Houston on Q3 2020 Results - Earnings Call Transcript-Seeking Alpha (discussion of extraordinary items starts at page 4)
Broker Reports:
Credit Suisse (10/26/20): Neutral with a $46 PT (viewed 3rd quarter as okay excluding the "noise", with non-GAAP E.P.S. which excludes the noise, at $1.51)
S & P: 3 stars with a $43 PT, cut $3 after 3rd quarter report
Purchase Restriction: Each purchase must be at the lowest price in the chain.
C. Added 5 QYLD at $21.46; 5 at $20.58 (Schwab Taxable Account):
History this Account:
Quote: QYLD | Global X NASDAQ-100 Covered Call ETF Overview
Last Discussed: Item # 1.B. Bought 5 QYLD at $20.73 (7/11/20 Post)
Sponsor's website: Nasdaq 100 Covered Call ETF
Global X NASDAQ 100 Covered Call ETF (QYLD)-Morningstar (currently rated 5 stars)
Expense Ratio: .6% which include expense waivers of .06% that expire on 3/1/21
Dividends: Monthly at a variable rate.
Average Cost per share this account: $20.96
Yield at $20.96 = 11.69% (based on last 12 monthly payments of $2.45 per share rounded annual number)
Goal: Harvest dividends and then escape at whatever profit may be available.A covered call strategy for the Nasdaq 100 has resulted in lower total returns than investing in QQQ. The covered call strategy will generate higher dividends.
Invesco QQQ Trust (QQQ) Performance | Morningstar
Global X NASDAQ 100 Covered Call ETF (QYLD) Performance | Morningstar
In 2019, QQQ had a total return of 38.96% compared to 22.68% for QYLD.
D. Added 5 QYLD at $21.45; 4 at $20.52 (Vanguard Taxable Account):
See Item B. above.
15 QYLD shares are held in this account
E. Eliminated VNQI (Vanguard Taxable)-Sold 5 at $48.59:
Quote: Vanguard Global ex-U.S. Real Estate ETF Overview
Profit Snapshot: +$4.29
Item # 1.H. Bought 5 VNQI at $47.74 (8/15/20 Post)
I substituted 5 shares of QYLD in this account for VNQI. I discussed the reasons in a 9/28/20 comment. The basic rationale was that VNQI, which normally pays quarterly dividends, has not made a payment so far this year. No explanation has been given by the sponsor. QYLD makes monthly dividend payments
F. Added to ENB (Vanguard Taxable Account)-Bought 5 at $29.51; 5 at $28.95; 5 at $27.4 :
Quote: Enbridge Inc. (U.S.: NYSE)
Stock Information as of 10/30/20:
Investment Center Dashboard - Enbridge Inc.
Last Buy Discussions: Item # 1.C. Added 5 ENB at $30.65-Fidelity Taxable (8/15/20 Post); Item # 1.C. Added 1 ENB at $27.23; 1 at $26.21; 1 at $25.49; 1 at $24.29; 1 at $23.68 (4/18/20 Post)
Last Sell Discussions: Item # 1.B. Sold 8 ENB at $42.36 (2/19/20 Post)(profitably sold shares bought with dividends in my Fidelity taxable account); Item # 3.B. Sold 17 ENB at $40.21 (1/18/20 Post); Item # 1.B. Sold 15 ENB at $37.61-Used Commission Free Trade (2/20/19 Post); Item # 3 Sold 50 ENB at $39.03 (12/21/17 Post); Sold 10 ENB at $40.14 (1/5/18 Post)
Average Cost Per Share Vanguard account: $29.13 (20 shares)
Dividend: Quarterly at C$.81 (C$3.24 annually)
Dividends and Common Shares - Enbridge Inc.
Yield Before Taxes at AC = 8.34%. The yield before taxes will depend on the CAD/USD conversion rate when each payment is converted into USDs. To make a rough calculation, I assumed that the CAD/USD exchange rate will remain constant, which will not happen of course, at .75 which gives me US$2.43 per share.
If the CAD/USD exchange rate was at 1 for an entire year, the yield before taxes would increase to 11.12% with no change in the dividend rate.
If the CAD/USD was at .65 for an entire year, the yield would decrease to 7.23% with no change in the dividend rate.
Dividend Reinvestment: I am not reinvesting the dividend in this account. I am reinvesting the ENB position in my Fidelity account.
5 Year Chart as of 10/30: Ugly
Last Earnings Report (6/30/20): Enbridge Reports Strong Second Quarter
The 3rd quarter report is scheduled for release on 11/6.
Broker Reports (available to Schwab customers):
Morningstar (10/20/20): 5 stars with a $43 FV
Argus (8/4/20): Buy with a $38 PT
S & P (10/24/20): 4 stars with a $44 PT
Purchase Restriction this Account: Each purchase must be at the lowest price in the chain.
H. Added to PDM (Schwab Taxable Account)-Bought 5 at $13.6; 5 at $13.3; 5 at $12.5; 5 at $12.3; 5 at $11.69; 5 at $11.4; 10 at $11.3 :
Quote: Piedmont Office Realty Trust Inc. Cl A (PDM)
Piedmont Office Realty Trust, Inc- Investor Relations
Investment Categories: Equity REIT Common and Preferred Stock Basket Strategy/Bond Substitute
Last Discussed: Item # 4.C. Started PDM-Bought 10 at $14.5 (6/27/20 Post)
Dividend: Quarterly at $.21 per share ($.84 annually)
Dividend History | Piedmont Office Realty Trust, Inc.
The penny rate has not been increased since it was raised from $.20 effective for 2014 4th quarter payment.
Average Cost Per Share this account: $ 12.65 (50+ shares)
Yield at AC = 6.64%
Last Ex Dividend: 8/27/20
Dividend Reinvestment: I am not reinvesting the dividend. I may use the cash to average down when the purchase price is at the lowest price in the chain or what I would call choosing the reinvestment price rather than accepting random ones.
5 Year Chart: Like other office REITs, PDM has taken a beating due to the pandemic.
Last Earnings Report (9/30/20): This report was released after my purchases. SEC Filed Press Release
"Core Funds From Operations of $0.48 per diluted share for the quarter ended September 30, 2020 as compared to $0.45 for the quarter ended September 30, 2019;
Executed leases for the quarter reflected cash rent roll ups of 6.5% and accrual rent increases of 9.1%;
Collected approximately 99% of billed tenant receivables for the third quarter;
Completed inaugural "green" bond issuance - $300 million in aggregate principal amount of 3.15% Senior Notes due 2030 used to provide long-term financing for the acquisition of the LEED-certified Galleria Office Towers in Dallas, TX.
Sold a portfolio of the three remaining assets located in NJ: 600 Corporate Drive and 200 and 400 Bridgewater Crossing, for approximately $130 million, or $176 per square foot."
The preceding snapshot does not contain the CAD per share number but does provide the CAD (called AFFO by PDM) dollar amount of $37.606M and the diluted average shares at 126.385 which produces a CAD per share number of $.298 (rounded). That comfortably exceeds the quarterly payment of $.21 per share.
2020 Guidance: May change of course
Purchase Restriction: Each subsequent purchase must be at the lowest price in the chain.
Maximum Position this Account: 100 shares
I. Started PDM in Fidelity Taxable Account-Bought 10 at $11.67:
Yield at $11.67 = 7.2%
Maximum Position this Account: 50 shares
J. Started NMFC (Schwab Taxable Account)-Bought 10 at $9.61; 5 at $9:
History This Account:
That snapshot reflects why long term holding periods for most BDCs can be unproductive on a total return basis.
Quote: New Mountain Finance Corp. (NMFC)
Closing Price 10/30: NMFC $9.06 -$0.08 -0.82%
Management: External
Company Website: New Mountain Finance Corporation
2019 Annual Report (risk factor summary starts at page 21 and ends at page 47)
Last Buy Discussion: Item #4.F. Restarted NMFC; Bought 10 at $11.45; 10 at $11.15; 10 at $11.15; 10 at $9.85; 5 at $8.3; 2 at $7.36; 3 at $5.96; 1 at $5.94; 2 T $4.95 (4/4/20 Post) Those purchases were made between 3/10/20 through 3/23/20 and the progression highlights the risk of BDC stocks. In this Fidelity account, I am reinvesting the dividends. I have changed the purchase restriction from lowest price in the chain to each purchase, other than through dividend reinvestment, must reduce my average cost per share.
Dividend: Quarterly at $.30 per share ($1.20 annually), reduced from $.35 effective for the 2020 2nd quarter payment. Dividends & Tax | New Mountain Finance Corporation
Yield at $9.41 AC = 12.75%
Last Ex Dividend: 9/15/20
Dividend Reinvestment: No for this account
5 Year Financials:
Net Asset Value Per Share History:
6/30/20: $11.63 10-Q at page 3
3/31/20: $11.14 10-Q at page 4
9/30/18: $13.58 10-Q at page 3
3/31/18: $13.60 10-Q at page 3
6/30/18: $13.57
12/31/17: $13.63
12/31/16 $13.46
9/30/15 $13.73
12/31/14 $13.83
9/30/14 $14.33
12/31/13 $14.38
6/30/13 $14.32
12/31/12 $14.06 Sourced from 10-Qs
IPO: $13.75 Prospectus (filed May 2011)
5 Year Chart:
Last Earnings Report (Q/E 6/30/20): SEC Filed Press Release
The next report is scheduled for release on 11/4.
Sell Discussions: Item # 2 Eliminated NMFC-Sold 102+ at $14.2 (1/25/20 Post); Item # 2.A. Sold 50 NMFC at $13.95 (1/15/20 Post); Item # 1.B. Eliminated NMFC-Sold 60 at $13.96 and 50 at $13.94 (2/9/19 Post); Item # 1 Sold Remaining 50 Shares of NMFC at $14.63 (11/1/14 Post); Sold 100 of 150 NMFC at $14.4773 (10/23/14 Post); Item # 8 Sold Highest Cost NMFC Lot at $15.37 (9/14/2014 Post)
NMFC Trading Profits to date: $299.57
Goal: A total return in excess of the dividend payments.
Purchase Restriction: I am not reinvesting the dividend in this account. Each subsequent purchase must be at the lowest price in the chain.
K. Restarted AROW-Bought 5 at $24.9:
Quote: Arrow Financial Corp.
"Arrow Financial Corporation is a multi-bank holding company headquartered in Glens Falls, New York, serving the financial needs of northeastern New York. The Company is the parent of Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company. Other subsidiaries include Upstate Agency, LLC and North Country Investment Advisers, Inc."
The Glen Falls National bank has 10 branches located in Queensbury, Hudson Falls, Glen Falls, and Fort Edward New York. Locations The main office is located at 20 South Street, Glen Falls, NY.
The Saratoga National Bank has 10 branches including the main office located at 171 South Broadway, Saratoga Springs New York. Locations The branches are located in Saratoga Springs, Wilton, Clifton Park, Albany, Corinth, Troy and Schenectady New York.
Stock Information as of 10/30/20:
Last Elimination: Item # 1.A. Sold 52 AROW at $37.5 (7/2/2018 Post)(profit snapshot +$661.34)
Dividend: Quarterly at $.26 per share ($1.04 annually)
Arrow increases the dividend by issuing 3% stock dividends once per year over the past 12 years:
Yield at $24.9: 4.18%
Next Ex Dividend Date: 12/1/20
Properties: AROW's main office and 27 branches are owned:
5 Year Financials:
Last Earnings Report (9/30/20): Arrow Reports $11.0 million in Q3 Net Income as COVID-19 Response Continues
"While COVID-19 did not have a material adverse effect on our third quarter 2020 financial results, we are actively monitoring the impact of the pandemic on our business and results of operations and we can make no assurance as to the future negative impact on our operations or results."
"Total stockholders' equity was $325.7 million at September 30, 2020, up $33.4 million, or 11.4%, from September 30, 2019."
E.P.S. at $.71, up from $.65 in the 2019 3rd quarter
NIM (tax equivalent, annualize): 2.93%, down from 3.12% in the 2019 3rd quarter
ROA: 1.23%
ROE: 13.35%
Return on Tangible Equity: 14.61%
NPL Ratio: .24% (non-performing loans to total loans)
NPA Ratio: .17% (non-performing assets to total assets)
Charge Off Ratio: .02%
Coverage Ratio: 452.82% (allowance for credit losses as a percentage of non-performing loans)
The NPL, NPA, Charge Off, and Coverage ratios are excellent as of 9/30/20.
ROE and ROA are far above average now since most banks have taken hits in both Return on Equity and Return on Assets due to the pandemic and recession. The ROE of 13.35% was higher than the average of 12.14% in the 2019 4th quarter, which plunged to 3.21% in the 2020 second quarter.
Return on Average Assets for all U.S. Banks-St. Louis Fed
Return on Average Equity for all U.S. Banks-St. Louis Fed
Other Data:
L. Started AROW Schwab Account- Bought 5 at $27.33:
M. Started FCVSX-Bought $100 at $36.8:
Expense Ratio: .51%
Dividend History: Quarterly at a variable rate
N. Pared DUK (Fidelity Taxable Account)-Sold 1 at $91.4:
Quote: Duke Energy Corp. (DUK)
Closing Price 10/30/20: DUK $92.11 -$0.13 -0.14%
DUK Analyst Estimates-MarketWatch
Investors - Our Company - Duke Energy
Investment Category: Bond Substitute
Profit Snapshot: $1.99 (10/2 sell only)
New Average Cost Per Share this account: $83.4 (25+ shares)
Next Ex Dividend: 11/12/20
Last Discussed: Item # 1.A. Added 1 DUK at $81.69; 1 at $79.25 (9/19/20 Post); Item # 1.J. Pared DUK-Sold 2 at $91.81 and Bought 1 at $84.3; 1 at $82.78; 1 at $80.64; 1 at $79.63; 1 at $78.6 (7/3/2020 Post); Item # 1.H. Added 1 DUK at $65.7 (5/16/20 Post)
Purchase Restriction: Each subsequent purchase, other than through dividend reinvestment, must lower my average cost per share. Consideration will be given to selling highest cost shares profitably. Purchases have occurred recently with a price decline below $82.
Profit Snapshot: +$14.73
New Average Cost Per Share: $80.49
Yield at AC = 4.8%
P. Pared PEG (Vanguard Taxable)-Sold 1 at $55.86 (highest cost lot):
Quote: Public Service Enterprise Group Inc. (PEG)
Public Service Enterprise Group Inc - Home
Profit Snapshot: +$.78
Last Substantive Buy Discussion (Vanguard taxable): Item # 1.B. (9/19/20 Post)
Investment Category: Bond Substitute
Dividend: Quarterly at $.49 per share ($1.96 annually)
Last Ex Dividend Date: 9/8/20
New Average Cost Per Share = $52.8
Yield at AC = 3.71%
Last Earnings Report (9/30/20): This report was released yesterday.
GAAP E.P.S. $1.14 ($574M) vs. $.79
Non-GAAP Operating E.P.S. $.96 ($488M) vs. $.98
PSEG Announces 2020 Third Quarter Results
Purchase Restriction: Each subsequent purchase must reduce my average cost per share. I am not reinvesting the dividend in this account.
Q. Pared PEG (Fidelity Taxable)-Sold 2 at $56.25; 1 at $58.06; 3 at $60.28 (highest cost lots):
Profit Snapshot: $23.39
Purchase Restriction: Each subsequent purchase, other than through dividend reinvestment, must be at the lowest price in the chain. I am reinvesting the dividend in this account.
R. Pared 2 PEG (Schwab Taxable Account)-Sold 2 at $55.77 (highest cost lots):
Profit Snapshot: $2.23
Yield at AC = 3.8%
Purchase Restriction: Each subsequent purchase, other than through dividend reinvestment, must reduce my average cost per year. I am reinvesting the dividend in this account.
S. Pared EVRG (Schwab Taxable Account)- Sold 2 (highest cost lots):
Quote: Evergy Inc. (EVRG)
Investor Overview | Evergy, Inc.
EVRG Analyst Estimates | MarketWatch
Profit Snapshot: $1.6
New Average Cost This Account: $49.81
Yield at New Average Cost Per Share = 4.06%
Purchase Restriction this account: Each subsequent purchase, other than through dividend reinvestment, must be at the lowest price in the chain which is currently at $48.90.
2. Non-Cumulative Equity Preferred Stocks:
A. Started CCNEP (Fidelity Taxable)-Bought 5 at $25.3:
Quote: CNB Financial Corp. 7.125% Preferred Series A Stock
Security: Non-cumulative equity preferred stock issued by the bank holding company CNB Financial Corp. (CCNE)
Current Yield at $25.3 = 7.04%
Par Value:$25
Dividends: Paid quarterly, non-cumulative and qualified.
Dividend Stopper Clause: Yes (see bottom of page S-8 and top of S-9)
This clause enforces the preferred shareholder's superior claim to cash compared only to the common shareholder. An elimination of the preferred stock dividend can only occur when the company first eliminates its cash common share dividend and thereafter avoids using cash to buyback its common stock. For a non-cumulative preferred stock, the owners have no right to ever receive the omitted dividend payments. Once the common and preferred share cash dividends are eliminated, the preferred shareholders only right is to start receiving dividends again when and if the company restores any common stock cash dividend.
The norm is for bank holding companies to issue non-cumulative preferred stocks, while REITs (equity and MREITs) and many other companies issue cumulative preferred stock.
Issuer Optional Redemption: At par value + accrued and unpaid dividends on or after 9/1/2025
Maturity: None
B. Started CCNEP (Schwab Taxable)-Bought 5 at $25.28:
See Item # 2.A. above. I also own this security in 1 Roth IRA account.
3. REIT Cumulative Equity Preferred Stocks:
A. Sold 10 VNOPRM at $25.34:
Quote: Vornado Realty Trust 5.25% Cumulative Preferred Series M
Profit Snapshot: $72.21 (11 shares)
Investment category: Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks, a subcategory of Equity REIT Common and Preferred Stock Basket Strategy
Security: Prospectus
Dividends: Quarterly, cumulative and non-qualified as a pass through entity
Last Ex Dividend Date: 9/14/20 (owned as of )
VNOPRM Trading Profits = $158.54
4. Exchange Traded Bonds:
A. Added 10 HTFA at $24.9; 5 at $24.75; 5 at $24.5:
Quote: Horizon Technology Finance Corp. 6.25% Notes due 09/15/22
Closing Price 10/30: HTFA $25.09 +$0.14 +0.56%
I discussed this purchase in a 10/23/20 comment.
Last Discussed here: Item # 4.A. Bought 10 HTFA at $24.14 (6/20/20 Post)
Investment Category: Exchange Traded Baby Bonds, a subcategory of Exchange Traded Bonds
Security: Senior unsecured bond, junior in the capital structure to senior secured debt and senior to junior bonds and equity capital (common and preferred stocks)
Issuer: The BDC Horizon Technology Finance Corp. Overview
Par Value: $25
Average Cost per share this Account: $24.55 (30 shares)
Current Yield at AC = 6.36%
Next Ex Interest Date: 11/30/20
Maturity Date: 9/15/22
Issuer Optional Redemption: At par value + accrued and unpaid interest on or after 9/15/19
I also own this security in 1 Roth IRA account (10 shares)
Disclaimer: I am not a financial advisor but simply an individual investor who has been managing my own money since I was a teenager. In this post, I am acting solely as a financial journalist focusing on my own investments. The information contained in this post is not intended to be a complete description or summary of all available data relevant to making an investment decision. Instead, I am merely expressing some of the reasons underlying the purchase or sell of securities. Nothing in this post is intended to constitute investment or legal advice or a recommendation to buy or to sell. All investors need to perform their own due diligence before making any financial decision which requires at a minimum reading original source material available at the SEC and elsewhere. A failure to perform due diligence only increases what I call "error creep". Stocks, Bonds & Politics: ERROR CREEP and the INVESTING PROCESS Each investor needs to assess a potential investment taking into account their personal risk tolerances, goals and situational risks. I can only make that kind of assessment for myself and family members.
