My Monthly Portfolio Update – May 2014

I allocated extra capital in my recent purchases: Prospect Capital Corp (PSEC), American Realty Capital Properties Inc. (ARCP), Pimco Corporate & Income Opportunity Fund (PTY), iShares Mortgage Real Estate Capped ETF (REM) and Omega Healthcare Investors, Inc. (OHI) where I went really aggressive on yield and took a calculated high risk, considering the long-term horizon of my portfolio. These buys may not be appropriate for all investors who cannot tolerate short term high volatility and are not in a position to hold them when prices go down significantly. It is always recommended to do your own research, consider whether these securities fit your risk profile, help in asset diversification and most importantly serve your long-term interests, which in my case is to be financially independent in 12 years and travel around world in exotic and beautiful places 🙂

Currently, I’ve got 3 Portfolios: DRIP, HID1, HID2 and new capital is distributed across these 3 portfolios in taxable accounts so that I’ve freedom to enjoy my passive dividend income whenever it is able to cover all my expenses. I also contribute towards 401K account in order to get employer’s match and help lower taxes as well.

I started contributing a small amount towards Roth IRA so that when I’m fully retired, I can withdraw any amount without having to pay any more taxes and worry about tax implications. I’ll start tracking 2 additional Roth IRA portfolios when I start making purchases in those accounts. These 2 accounts would serve as an insurance towards government’s propensity to tax hard-working citizens and beat the crap out of them 😉 . Thanks to the ballooning budget deficit, I see all wide red ink over there and a small amount in these accounts is highly desirable, and what I call a responsible act to save our skin.

Thanks for reading. Appreciate all your support.

How did your portfolio perform in May ? Any interesting aspect of your portfolio.

12 thoughts on “My Monthly Portfolio Update – May 2014

  1. Hi PIM,

    Thanks for sharing your most recent updates with us. I have to agree with you that your portfolio and high yield stocks are definitely not for everyone and must be watched more closely than many of the “boring” stocks a lot of us already own. Still, kudos on a job well done on the income generated for the month. Keep it up! I will be updating my div income soon as well.

  2. Hi DivHut,

    Thanks for stopping by and for comments. Appreciated it very much.

    Yes, I took calculated risks in some of the securities that I bought in May to juice up yields and hopefully hasten my FI journey 🙂 But, you have to look at my overall 3 portfolios and most of them are “boring” stocks 😉 Hope it calms some nerves.

    Also, I contribute towards 401K and therefore, if I look at combined portfolios, I feel good about buying these high-yield securities. Of-course, no one knows what the market will do next week. But, as DI investors, we are inclined towards making most of market declines. Hopefully, I will be able to load more of “boring” stocks, which to me are fairly or little over-valued, while the ones I bought are “reasonably” or somewhat under-valued securities. Note that I did not buy these when they were hitting at 52 weeks high or multi-year highs.

    Best wishes and good weekend!

  3. PIM,

    Nice looking month there with lots of purchases! 🙂

    I like ARCP and OHI on that list, and own a piece of both. However, I’m also keeping REITs to less than 10% of my portfolio due to the risk and growth profiles.

    Anything on your list for June?

    Best wishes.

    1. Hi Jason,

      Yeah! I loaded on some of the real-estate securities and we are happy campers with ARCP and OHI. I fully agree with you that REITs or any one sector for that matter, needs to be less than 10% (5-10% of total portfolio).

      I’m still mulling few securities: JNJ which is richly valued and hence, my hesitation, and few others: KMI and LO. Let’s see what I pull the trigger on 🙂

      Thanks for stopping by and for your nice comments. Appreciate very much!

      Best wishes.

      1. It’s OK to be in certain sectors greater than 10%. My portfolio is very defensive and I’m about 20% consumer staples and 19% industrial. I would never be greater than 10% in REITs or MLPs or tech.

        1. Hi DivHut,

          Typically, I would like to diversify across multiple asset classes. My simple rule of thumb is 10% across 10 different asset types like Consumer staples, Consumer Discretionary, REIT, Utilities, Tech, Financials, Energy, Pharma, Industrials, Transportation, and couple more like MLPs, and BDCs that I wrote earlier.

          So, I feel comfortable having approximately 10% in 10 asset classes, there is no strict maths on numbers, but, a broad perspective how a portfolio or multiple portfolios construction can be done.

          But, hey! if you feel comfortable in owning little bit more in defensive stocks, so, be it. It’s the amount of risk that you feel comfortable taking 🙂 High rewards come with high risk as well 😉

          Best wishes and have a good weekend!

  4. I like the buys with ARCP and potentially PSEC. PSEC is definitely not a stock for everybody. Definitely has a high risk and high reward profile. But I wanted some exposure to the BDC world because PE firms are making a killing right now, and PSEC intrigued me the most.

    The way I fell upon PSEC is through work. One of my recent customers was purchased by PSEC. And as I was pouring over my customers financials, I was like, wow this company is STRONG and making a killing. And when he told me that they were owned by a PE firm, I decided to do some research and digging. After looking at other companies that PSEC invests in, I was confident that management knew what they were doing, and growth will be strong in the coming years.

    PSEC has gotten beaten up lately over ambulance chasers, S&P and Russell Indexes dropping BDC’s, and SEC’s asking them to restate their financials (management says that NAV won’t be affected, but we’ll see). But fundamentally, I like PSEC and their future. And as Warren Buffet always says, “be Greedy when others are fearful”.

    1. Hi Trevor,

      I completely agree: Be greedy when others are fearful and currently, there is a fear in buying this Business Development company (BDC) due to the reasons you elucidated so beautifully.

      However, I follow Warren Buffet’s axiom and hence, additional buy in PSEC in May. Other reason was due to its monthly payment and also having exposure of a different asset type in my Portfolios. Another BDC that I considered was MAIN but finally settled on PSEC due to higher dividends: hey! who do not love more passive dividend income 😉

      Glad to hear your perspective and adding great info for other readers as well.

      Thanks for stopping by and commenting!

      Best wishes.

    1. Hi DearDiv,

      I’m glad that you will be following my progress.

      I checked your blog and you have taken steps to earn dividend income. Small amounts become large and become stream after a while. I am proof of that. Keep it going!

      Thanks for stopping by!

      Best wishes.

  5. Now that buy of PSEC is even better. PSEC just won their appeal with the SEC; and no restatement necessary. Watch the stock go back to normal levels of 10.80-11. If you bought in May, you’re able to get in at a good entry point with a great company! And who said you can’t buy great companies right now? Glad Mr. Market’s tantrum of PSEC is over now…

    1. Totally agree Trevor! I believe that PSEC will continue to provide increasing passive dividend income for all of us shareholders.

      Best wishes.

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