5-Bullet Sunday

5-Bullet Sunday – #21

Ctrl C -> Ctrl V: It was a busy week again!

Enjoy this week’s edition of 5-Bullet Sunday 😎

#Noble30 #BackTest #DividendHikes #Niksen #AnnualLetter #TheNextBuffett #PeterLynch #MasterClass

5-Bullet SundayΒ is a weekly blog post with 5 topics that were on my mind this week related to Financial Independence and Dividend Growth Investing or something that just fed my curiosity. An overview of earlier posts can be foundΒ here

🌟 Noble 30 Index

The Noble 30 Index is gaining more and more traction based on the interaction and appreciation that I’m getting from readers and followers. Thank you for that πŸ™

Truth to be told, the index is keeping me currently very busy. This is also the reason why I wasn’t able to create a mid-week post (my goal), because I am collecting and analyzing a lot of data in my evenings.

It’s actually hard to automate some of the analysis that I’m doing. I found that publicly available data brokers are typically US focused and if they have some European data, then it often contains mistakes. That’s why I’m doing most of the work manually.

So what am I actually working on?

Firstly I would like to back test the Noble 30 index regarding its performance since 2006. This includes the Great Recession and would therefore give a more realistic view on its long-term performance.

Secondly I would like to be able to benchmark the index compared to standard indexes like the EuroStoxx, S&P 500, but also ETF’s that are based on European dividend stocks.

Thirdly I would like to get an understanding about its valuation over time. Many stocks are currently quite rich in valuation and spot low dividend yields. Is now a good time to accumulate those stocks or is the index currently priced very rich?

Let’s see how it goes, but I hope to be able to publish a back test somewhere in early June.

PS: if you have any particular questions about the index, please let me know. It might be interesting for everyone to get it answered and maybe it would be low effort for me to include your question in my analysis.

🌟 Dividend hikes

There were two interesting dividend increases this week:

Medtronic Plc ($MDT) announced a hike in their quarterly dividend from $0,54 to $0,58 (7,4%). This is their 43rd consecutive dividend increase and the stock currently yields 2,49%. The stock currently has a P/E of 26.7, which is a bit too much for me. I find Medtronic a great company to own, but I do have few concerns that I’m keeping a close eye on. I just wish that the share price returned to their fair value around the low/mid-seventies.

The Clorox Company ($CLX) announced a hike in their quarterly dividend from $1,06 to $1,11 (4,7%). This is their 19th consecutive dividend increase and the stock currently yields 2,24%. The stock has a P/E of 29 which is usually applicable to high-growth stocks. I find this stock too hot to even consider at this moment in time.

The week before L’Oreal ($EPA:OR) also announced to reverse the 10,4% dividend increase and rather maintain its 2019’s dividend. The stock will go ex-dividend on Friday 3 July and the dividend is 3.85 Euro (1.44% yield). L’Oreal remains a stock in the Noble 30 Index.

🌟 Doing nothing

“Lekker niksen” is a phrase often used in the Netherlands to express the time spend on doing nothing or at least without a purpose. It has a positive meaning, because people often get relaxed and recharged as a result.

Lately I had no the time to do exactly that. My life is so busy right now. Initially I thought that the shelter-in-place situation would result in more time spend with the family and an opportunity to just relax and do-nothing.

Oh boy, did I got that wrong! My days are busier than they’ve ever been. I am surprised by that, so I did some analysis this week and I came to the following observations:

  • Home schooling has partially shifted the responsibility back from the school to the parent
  • Self-cooking instead of getting food in the restaurant at work
  • More cleaning at home, because we spend more time here
  • Entertaining the kids, because they are often bored. They can’t play with their friends right now
  • More virtual meetings at work -> back-2-back meetings -> no time for breaks. Commuting time got replaced by attending meetings. I’m generally mentally more tired after work.
  • More time spend analyzing stocks due to market volatility and the opportunities that it generates.
  • I started blogging in January. This doesn’t relate to the pandemic itself though.

This is quite a list! To be honest, there’s not a lot that I’m doing less since the start of the shelter-in-place. Maybe less sporting, less bike-trips, etc… Things that generally relaxed me.

Sometimes I just long back to my high-school times (early nineties).

There was no internet or mobile phone yet at the time. I typically got home at 3 PM and had to wait for dinner at 5 PM. If there were no kids on the street, then this effectively meant killing my time by putting the TV on and watching the A-team, MacGyver or something equivalent. I remember feeling truly bored at the time, but I can tell you that I really wouldn’t mind having some of those afternoons again πŸ˜‰

No obligations, no stress, just “niksen”.

It’s clear that I’ve got to do something here and it will be my goal for the upcoming few weeks. The stock market in America is closed tomorrow, so I will dedicate few hours to “niksen” in the evening just to get a bit of that feeling back again.

🌟 Recommended read

This week I am recommending Social Capital’s annual shareholder letter. Frequent visitors of this blog know that I’m quite a fan of Chamath Palihapitiya and in my opinion there is a high probability that we will know him as the new “Buffett” by 2050.

What I particularly like about his annual letter is the fact that he puts the current economical and political climate in a historical context with strong reminiscences to 150 years ago.

The last few years seem very much akin to the beginning of the end of our modern Gilded Age and the beginning of a new Progressive Era.

Chamath Palihapitiya (2019 annual letter)

His ability to explain current market circumstances in layman’s terms is very rare these days. I also find him very funny. In this year’s annual letter he also explains the current low-interest environment in computer language:

Having said that, I believe it’s time very well invested to read his annual shareholder letter πŸ’ͺ

🌟 Recommended video

A classic video this time, but I would definitely recommend watching it if you never saw it before. I consider this a master-class on stock investing.

If you could not explain to a 10-year old in two minutes or less on why you own a stock. Then you shouldn’t own it. That I think is true for about 80% of people that own stocks

Peter Lynch

That was it for 5-Bullet Sunday, edition #21

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Have a good remainder of the Sunday!

Yours Truly,

European Dividend Growth Investor

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