New purchases due to rebalancing of portfolio

My girlfriend and me purchased a new house this month and as a result we both decided to take part of the value from our stock portfolio’s as we tend to don’t like to have high fixed costs in a mortgage.

As a result a sold some positions and also did some extra sales to buy new stock to keep a proper sector allocation.

5 new companies were added to my portfolio

Münich RE (MUV2.DE)

Münich RE is a German reinsurance company. Current yield is around 4,3%. Dividend is paid only once per year.

I purchased 10 shares in Münich RE and this should result in €98 per year in dividend income.

Tencent (NNND)

With Tencent I increase my allocation to China and the Technology sector. Tencent is a Chinese conglomerate with many different activities. Tencent is the world biggest video gaming company, but also big in social media in China with WeChat.

A minus of Tencent is that the company is difficult to comprehend as they have hundreds of minority shares in other companies.

I purchased 40 shares on the Frankfurt stock exchange. The dividend yied of Tencent is currently 0,26% so my dividend income will only increase by $5,60.

LEG Immobilien (LEG.DE)

With LEG Immobilien I add one more German company to my portfolio. LEG Immobilien is an real estate investor focussing on residential properties. LEG is owning over 130.000 residential objects in Germany.

I already own various REIT’s, but none focussing on housing. Where often the dividend of real estate investors is often higher than their EPS, this is not the case for LEG.

German companies are often conservative in their payout ratio and this also applies to LEG Immobilien. Current yield is 3,0% with a payout-ratio of 25%.

I purchased 17 shares LEG Immobilien resulting in €61,20 extra dividend income per year.

AvalonBay Communities (AVB)

With AvalonBay Communities I add a second investor in residential properties to my portfolio, but this time with exposure to the American market.

Yield of AvalonBay is currently 4,0%. As a result of the 14 shares I expect to receive $89,04 in dividend per year from AvalonBay Communities.

Gilead Sciences (GILD)

Gilead Sciences is already for a long time on my watchlist. I’m waiting for a long time in a attractive price to start a position. I like the position Gilead sciences has in the HIV market.

From an investors perspective this market is very attractive as HIV is a chronical disease and a customer will normally be a customar for live.

I purchased 30 shares Gilead Sciences which will increase my yearly estimated income with $81,60

Purchase 800 shares Aegon (AGN)

My May 202o purchase consisted out of 800 shares of the insurance group Aegon at a price of €2,453. As Aegon suspended their dividend it’s maybe a strange addition to my dividend growth portfolio. Aegon suspended their dividend just as many other European financials based on a request of the European Central Bank to keep liquidity within financial institutions while waiting to see what the impact of Covid-19 would be.

I base my purchase for a big part on the historic dividend of Aegon:

The graph above shows that the dividend of Aegon was fast above €0,20 after the financial crisis. I consider it realistic that Aegon will already start paying a dividend in the 2nd part of this year.

Based on a dividend between €0,20 – €0,31 the dividend yield based on my purchase price could be between 8% – 13%. As Aegon is normally has a payout of 50% the actual yield could be much higher as the retained profits will normally result in higher stock prices.

I understand that I maybe need to have some patience before dividend will be paid again close to historic levels, but based on the current share price in combination with historic dividends I’m happy to add some more stocks of Aegon to my portfolio.

Purchase 18 shares Simon Property Group

In April I purchased 18 shares Simon Property Group against a price including costs of $60,30.

Stock price of Simon Property Group is this year well over 60% down as a result of SPG closing all of their USA based malls due to Covid-19.

Based on the purchase price of $60,30 the yield is 13,9%, but I consider it realistic that due to the lack of rental income SPG will decide to skip payments this year.

Nevertheless I add to my current position as I still believe strongly in the future prospects of the shopping centers owned by Simon Property Group. Although I can also imagine it will take some years to totally recover from the Covid-19.

Based on current dividend I increase my yearly estimated dividend income with $151,20, but as I said I won’t be surprised if the dividend will be cut or skipped the comming year.

Purchase 31 aandelen EPR Properties

Last week I purchased 31 stocks EPR Properties for $29,21 including costs. With this purchase I double my position in EPR Properties.

The stock is down over 70% versus it’s 52 weeks high as tennants of EPR Properties are almost totally closed due to Corona virus. These worries are totally justified as the tennants are having none or close to none income as long as their venues are closed.

EPR Properties announced an $150 million share buy-back as they consider the value of their stock to be way to low. At the moment there seems to be 2 opinions about EPR Properties at the moment: 1 group is considering EPR Properties basically dead as all their tennants are out of money. The second group is seeing short term problems for tennants, but that at some point business will be (close to) usuall and that the price is not reflecting this.

I also consider the price to low despite short term problems and purchased 31 shares. With this purchase my estimated dividend income will increase by $55,08 if the dividend is maintained.

This is a big “if” in the current market, but nevertheless I double my position in this company.

Purchase 51 shares PacWest Bancorp

Today I purchased 51 shares PacWest Bancorp (PACW) at a price of $35,22. PacWest Bancrop is a regional bank holding company mainly active in California. PacWest has over $26 billion in assets and is the holding company for Pacific Western Bank.

PacWest Bancorp is currently paying a dividend of $2,40 per year which results in a dividend yield of 6,8%.

As part of my targets for 2020 I also formulated 6 guidelines which I use regarding new investments. New investments must follow at least 4 out of these 6 targets:

Yield > 2,5%Y6,81%
5YR average dividend growth > 10%N4,66%
Payout < 65%Y61,50%
PE ratio < 20Y9,0
ROE > 10%N9,60%
Current price vs. 52 week high < 85%J84,60%

The dividend growth I basically one of the most import lines on the list with guidelines above, but as the current yield is high this stock still scores high on my watchlist.

The estimated dividend income from PacWest Bancorp the next 10 years is beating the expected income from other stocks on my watchlist with a higher average dividend growth rate. Only PNC Financial is getting close in this time frame, but as I use an average 5 year growth rate of 20% for PNC so it’s questionable if this growth rate can be maintained over a time frame of 10 years.

With the purchase of PacWest Bancorp I add $122,40 to my yearly estimated dividend income.

Balancing Legal & General PLC and Purchase Averaging Down Taubman Centers

Today I sold 280 out of the 650 shares Legal & General I owned. This is balance this position in my portfolio as the weight of this position got relatively big due to recent price increases.

I purchased my 650 shares Legal & General Plc at the end of August for a price of GBX 219,60. I now sold part of my position for GBX 318,50. This is an increase of 45%. GBP/EUR exchange rate resulted in another 9% profit.

When I started this position the yield of Legal & General Plc was 7,57%. Against the current stock price the yield is 5,83%. For me a reason to balance this position back to it’s original value.

By selling 280 shares my yearly estimated dividend income decreases by GBP 46,90 / €56,10.

With the proceeds from the sold Legal & General Plc shares I doubled my position in Taubman Centers by purchasing 35 shares at a price of $29,98.

Where I was very lucky in the timing of my Legal & General purchase, my timing of buying Taubman Centers was simply unlucky. End July I purchased 35 shares with an average purchase price of $40,78. Today i doubled my position against a 26,5% lower price.

As a result of doubling down the average purchase price of my position in Taubman of 70 shares declined from $40,78 to $35,38.

By adding 35 shares Taubman my yearly estimated dividend income based on the current dividend will increase by $94,50 / €84,82.

Purchase 36 shares Delta Airlines

Last week I purchased 36 shares Delta Airlines at a price of $56,42. I finished this transaction by selling 26 shares of the ETF VanEck AEX. VanEck AEX is an ETF investing in the AEX index which is composed of Dutch companies.

I already have positions in ASML Holding, Unilever, Shell, ING, DSM, Ahold, Unibail-Rodamco-Westfield and Aegon and these companies are over 60% of the AEX index. I decided to sell my last ETF and use the proceeds to initiate a position in Delta Airlines.

By closing my position in VanEck AEX my yearly dividend income will decrease by €52,78. This will be offset my $58,03/€52,75 dividend income from Delta Airlines.

Delta Airlines is currently paying a quarterly dividend of $0,403. Based on my purchase price the yield on cost is 2,86%.

Purchase 540 shares Royal BAM Group

Last week I purchased 540 shares of Dutch smallcap Royal BAM Group for a price of €2,56. BAM is a Dutch construction company with a value below €1 billion. Stock price is down from €4,40 earlier this year as a result of lot’s of bad news on several extra charges they had to take regarding the construction of a sea lock in the Dutch city IJmuiden. This project was contracted against a fixed fee so all extra costs are taken bij Royal BAM Group and the partner in the IJmuiden sea lock joint venture Volkerwessels.

For me it feels like this is a good moment to invest in this cyclical company. Based on the current dividend of €0,14 the yield is 5,47%. Dividend is not stable as profits of a construction company are also not stable. Based on Q3 results I expect a dividend of €0,10 for next year giving a yield of 3,9%.

Last 10 years the average dividend per year of Royal BAM group was 7,9 cents including 3 years with none or just a few cents dividend. Based on the average dividend of 7,9 cent per year the current yield would be 3,1%. Over bookyear 2020+ I expect dividends in the range of €0,15 – €0,25 based on the results of this year excluding 75% of the extra write-offs booked regarding loss making projects this year.

This is a opportunity investment which will probably be a few years in my portfolio, but I don’t expect this will be a long term buy and hold position. I tend to prefer stable buy and hold positions, but this based on high valuations in the market I preferred this purchase above other companies on my watchlist.

With this purchase my yearly estimated dividend income will increase by €54.