Author: Andy Schornack
Disclaimer: Andy owns O and CINF in his Covestor Financial Services Model.
September 2, 2010: The market experienced a fairly large pull back during the month of August and the portfolio did experience a decline but not nearly as much as the benchmarks, the S&P 500 and XLF, and slightly more than VNQ. With the passing of August, the portfolio has experienced its first full year and I am very pleased with the results. The portfolio handily exceeded the S&P 500 and XLF over the previous 12 months, 9/30/09 – 8/31/10, and was slightly behind the VNQ for the period.
During the past month, the portfolio added positions in Realty Income Corporation (NYSE:O) and Cincinnati Financial Corporation (NASDAQ:CINF). Both companies have great dividend histories, good management, and good balance sheets. Realty Income provides monthly dividends with an annualized yield over 5% as of September 1, 2010, a history of annual increases, and stable tenant base. Cincinnati Financial Corporation has a quarterly dividend, also currently yielding over 5% as of September 1, 2010, and good potential upside with the industry underappreciated and the business experiencing historically higher catastrophe losses that should subside to historical levels.
The portfolio has a good cash position that allows for flexibility on market entry opportunities. Over the next month to two months, I will continue to revisit positions in the portfolio and may add/subtract investments with the total investments remaining ideally in the 10-15 range.
As always, the goal of the portfolio is to pursue a stable dividend income with the opportunity for capital appreciation. I look forward to the challenge of repeating the performance for the next 12 months.
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