5-Bullet Sunday

5-Bullet Sunday #55

What a lovely weather it is over here in Central Europe. Winter has finally started and we have seen quite some snow over the last few days. My kids are also really loving it and they are playing outside non-stop.

They have spend the first few days quite some time on sleighing down the hills and today we have decided to build a small igloo. I’m already looking forward to it, because I love building things!

And another thing that I continue to build is my dividend growth portfolio. The snowball really started rolling and my first dividends for the new year came in already. Did you receive your first dividends as well?

In the meantime the world keeps turning and there was enough to include again into this week’s 5-bullet Sunday.

Enjoy the read!


Content created this week:


5-Bullet Sunday 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 found here


🌟 The return of the energy sector?

Oil & Gas companies from the energy sector are seeing a massive surge in the first few weeks of this year. All of my portfolio positions saw massive gains already:

  • Exxon Mobil +17.53%
  • Royal Dutch Shell +14.89%
  • Chevron +10.43%
  • BHP Group +10.06%

While in 2020 the Energy sector was by far the most underperforming sector (-33%) in the stock market and for a third year in a row:

Is this how a sector rotation looks like at the start of a new year? Big money managers trying to look for value and pump it up to make a quick buck?

Let’s hope that this is a more fundamental correction, because the Oil & Gas sector can use some of that to sustain their cashflow dividend coverage.

Also, I wouldn’t mind a further price increase either while I’m finishing my analysis on ExxonMobil, because I’m seriously considering to sell my whole position after the most recent whistleblower rumors.

In the meanwhile I have bought a put option with an expiry date in the midst of February. This gives me some to make up my mind while being protected for a sever price reaction.

Stay tuned on this one!

🌟 Recent purchase

I bought another 25 shares in Realty Income ($O) this week. I really started to appreciate this monthly dividend paying company during these covid-19 times. They are exposed to a few sectors which are having very rough times right now, but during these times you just learn which companies are very well managed.

Just look at their top 20 tenants:

They are from many different sectors and their largest single tenant is Walgreens. Many companies in this list are high quality companies with very defensive characteristics. Therefore it is no surprise that they have been consistently collecting more than 93% of rents from their tenants in the last 3 months:

So why did I actually buy additional shares this week?

The reason for that was this week’s dip in their share price after the company announced the completion of issuing new shares to support further property investments. This is nothing to worry about from a share dilution point of view, because Realty Income does this more often. It is often a cheaper way to fund property investments than borrowing money from financial institutions.

Hence, I used this opportunity to further increase my position in the company.

🌟Password forgotten, ouch

I think we all know those moments when we are struggling to remind our password and trying to get access to for instance our mobile phone. Luckily in such cases we can still count on our mobile operator to provide us with a PUK-code.

This was different though in the past, because the PUK-code was only provided with your physical device. You would really be screwed if you lost that very important code, because it would not allow you to open your phone anymore after several wrong password attempts.

But hey, such problem would have cost us a couple of hundred Euros and we would overcome that somehow.

But what if I told you that you have only 2 password attempts left to unlock 220 Million USD in assets? There exists no fail-save after that anymore and it would be forever lost if you enter twice the wrong password. What would you do?

Well, if you know the answer, then please submit it to Stefan Thomas. He lost a small piece of paper on which he had stored his password that gives access to a small encrypted hard drive (IronKey). This hard drive contains the private keys to his coin wallet which holds 7002 private bitcoins.

The value of that wallet has surged to approximately 220 USD and he has only 2 out of 10 password attempts left.

Let’s check-in with Thomas Stefan in a few years from now to check his mental health. The poor guy must have gone nuts by then.

🌟 Recommended Reads

Budgets are Sexy wrote a nice article about 2 investment mistakes that made him smarter. One is related to investing in the stock market and the other one about investing in Real Estate. I always appreciate such kind of posts, because they make me reflect on my own journey and my own mistakes. #Food4Thought

Mad Fientist wrote a nice article about goal setting. I’m still in the process of goal setting for 2021 so this article came in very timely. He’s making a case for mastery over goal setting and it resonates a lot with me. Not sure yet if I’m ready to implement it, but I will start tinkering a bit with it.

My buddy Engineer My Freedom has done a pretty amazing job with creating his automated stock analysis template. You need to sign-up for it to download, but I think it’s worth it. In this blog article he explains you how to use it and how to read the results.

🌟 Recommended Video

I believe that intelligent investors should always educate themselves with both the bull-thesis and the bear-thesis when making an investment decision. Being aware of the other opinions makes you an informed investor, which is in my opinion the first step in becoming an intelligent investor 😉

This is why I’m sharing the below video with you, because pensioncraft has published an excellent video about ARK and the risks associated to it. He uses facts and investment logic which is unfortunately not always the case when watching some of the content from big YouTube accounts.

Having said that, I think it’s important to watch this video when you own some shares in one of the ARK ETF’s. Are the positions in ARK’s ETF’s increasing due to their increasing earnings performance or due to the fact that ARK has so much money to invest that it single-handedly can push up stock prices with double-digit returns?


That’s it for the this week! I hope that you enjoyed this week’s 5-Bullet Sunday 🙏

As always, have a lovely week ahead!

Yours Truly,

European Dividend Growth Investor


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Disclaimer

I’m not a certified financial planner/advisor nor a certified financial analyst nor an economist nor a CPA nor an accountant nor a lawyer. I’m not a finance professional through formal education. I’m a person who believes and takes pride in a sense of freedom, satisfaction, fulfillment and empowerment that I get from being financially competent and being conscious managing my personal money. The contents on this blog are for informational and entertainment purposes only and does not constitute financial, accounting, or legal advice. I can’t promise that the information shared on my blog is appropriate for you or anyone else. By reading this blog, you agree to hold me harmless from any ramifications, financial or otherwise, that occur to you as a result of acting on information provided on this blog.

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It's my desire to retire early via Dividend Growth Investing as a passive income stream. This is not easy and especially when living in Europe. That's why I started this blog and share my journey: to give you a European perspective.

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Krisz
Krisz
3 months ago

Hi EDGI,

First of all, I really appreciate your effort to share your experience and investment strategies, keep up with this useful job! Everybody is so focused on the US market, it is good to see someone with focus on Europe.

Can I ask which brokerage you use that gives you access to american options?

Regards,
Krisz

GEORGIOS MANG
GEORGIOS MANG
3 months ago

Hi Edgi,

Thank you for your work.

I was wondering if in your investment decisions you take into account taxes.

For example I would rather invest in Diageo or Unilever rather than to Nestle.

The Swiss keep 40% of the dividend as taxes while in the UK the tax is 0% on dividends. This would make a huge difference over the year, due to the compounding effect, if you keep re-investing the dividends. 

For this reason I tend to overweight dividend champions from the UK (Halma, Sage, Croda,.) or from the Netherlands (15% tax).

What do you thing?

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