Here’s What I’m Doing To Beat The Stock Market 💰

September 05, 2022

My portfolio is becoming a lean, mean, dividend machine.

Dr. Dividend's Financial Freedom Newsletter

September 5, 2022

by Dr. Dividend

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Market Overview

After showing some signs of strength earlier in the month, we’ve just closed out August with our third straight red week. After many people thought inflation had peaked, Fed Chairman Jerome Powell warned of continued rate hikes. Inflation has not declined significantly and is still running at 40 year highs. That may spell trouble for the market long term, but I’m looking for opportunities in this sea of red. As much as the market has contracted in this red 2022, the current S&P 500 P/E ratio is 19.83x, higher than its historical average of 16x. This implies the market has more room to fall and more discounts will likely be out there for us long term investors to grab. I’ve got a few names on my radar that I’ll be talking about a little later on. For now, let’s check in on my portfolio.

The Portfolio

My portfolio consists of 32 long positions spread out over 10 of the 11 main sectors. My 5 biggest positions are in SPY, Apple, Home Depot, Starbucks, and Microsoft in that order.

At the time of writing, my portfolio has made gains in 13 of my 32 positions. You can check out my winners and losers below:

Dividend Income

Throughout August I received $76.78 in dividends from 10 companies, here’s how it broke down:

QUALIFIED DIVIDEND (BX) - $6.51

QUALIFIED DIVIDEND (DE) - $2.26

QUALIFIED DIVIDEND (AAPL) - $6.22

QUALIFIED DIVIDEND (COST) - $0.90

QUALIFIED DIVIDEND (ABBV) - $14.22

QUALIFIED DIVIDEND (O) - $3.81

QUALIFIED DIVIDEND (PG) - $5.52

QUALIFIED DIVIDEND (CAT) - $7.27

QUALIFIED DIVIDEND (SBUX) - $14.81

ORDINARY DIVIDEND (ABR) - $14.26

TOTAL- $76.78

My biggest contributors in August were SBUX with $14.81 paid , ABR with $14.26 paid, and ABBV with $14.22 paid this quarter.

Dividend Raises

Dividend King Altria (MO) came through nicely with a 4.4% increase, its 53rd consecutive annual raise. Although its not outpacing inflation, it is nice to get a decent raise especially after the disaster that the JUUL investment has been. Altria is as steady as they come and I love that they still raised the dividend amidst the year they’ve had.

What did I buy?

Since my last update I opened 4 new positions, one with Costco (COST), Alphabet (GOOG), Deere & Co. (DE), and ASML (ASML). Costco has proven this year that its a force to be reckoned with. It does not care about your definition of a recession, its held steady this year and benefits from this inflationary environment. Customers flock there everyday for their ultra low prices and if Costco was ever in a pinch, I believe it could raise membership prices with little membership cancellations.

Costco’s store design intrigues me and helped formulate my investment thesis. I did a breakdown on it which you can read here:

As far as Google, what else is there to say? The company is a Free Cash Flow giant with enough cash on hand to buy the country of Ecuador. They have 9 apps with over 1 billion users and every time I say I travelled to a new place, my dad looks it up on Google Earth. I did more DD on Google but I probably could’ve stopped there.

As for Deere & Co., I added them not only for their machinery business, but for their sneaky-strong AI & Robotics business. They’re quietly collecting data on the best times to plant crops, how to plant them, when to harvest, and so much more. They’re selling autonomous tractors which is perfect for a critical industry like farming that has an aging, declining workforce. I did some deep DD on their business which you can read here:

For a breakdown of their AI and Robotics, check this thread out:

My last new company I added to my portfolio is ASML holdings. They create machines that make semiconductors. My favorite writer Trung Phan broke down the company extremely well in a quick read here:

What did I sell?

Throughout August I sold Cash Secured Puts on SOFI. The first time I sold a Delta .30 Covered Call on SOFI, the contract expired in the money and my shares were called away. As an options seller, you need to have a plan for if your contract ends in the money. I always hold at least 10 additional shares that I can sell to raise funds, or hold onto if the stock goes on a run.

Cash secured puts allow you as the seller to buy 100 shares of a stock at a price you determine. If the price of the stock is at or below your strike price by the time the option expires, you will have to buy 100 shares at the agreed upon price.

Why use a cash secured put strategy?

If you plan on accumulating 100 or more shares of a stock, why not get paid for it? Just like when you receive a premium after selling a covered call, you receive a premium when you sell a cash secured put too!

I also reduced my overall size in AAPL. Apple was near all time highs recently and in this macroeconomic environment I really don’t understand why. As you know, I’ve been buying up shares of SPY and their biggest holding is AAPL. I trimmed some of my individual shares of AAPL because I don’t want to be extremely exposed to just one company if the market starts to tank. I still hold a position, but I had to take some off the table for my risk profile.

What am I looking to add?

In the next month, I am looking to add to my SPY position first and foremost. I’ve created a goal of having 100 shares of SPY by this time next year. I’m looking forward to selling Covered Calls on SPY 3 times per week and generate income to buy more shares of individual companies I like, as well as save for other endeavors outside of investing. With a Delta .20 strategy, I expect to make $240/wk selling covered calls on SPY, and annually I’d make $12,480/yr.

I’m also itching to add to my Costco position. I’m targeting a $395 price point to load up and at that point it’ll be under its 5 year average P/E of 36x. I’ve examined the company’s balance sheet, income summary and business model and I love what they do. It’s hard to wait for a good buying opportunity but in investing, patience pays. If you’d like to know more about Costco, I wrote a newsletter issue examining them a couple weeks ago and a short thread you can read about them here:

I’d also like to add to mu UNH position. In a relatively bloody year in the market, UNH has held its own with YTD gains of 2.8%. Healthcare & Health Insurance is not something that’ll go away anytime soon, and UNH has primed itself to be at the forefront of healthcare. It’s the largest health insurer in the US, has built a network of prescriptions and health data, and has steadily increased its dividend by 23.97% CAGR in the last 10 years.

Other News

I began mining Bitcoin recently and I make roughly 1,200 sats ($0.25) per day. I believe in Bitcoin as a store of value, a viable medium for transactions, and an incredible decentralized monetary system. This investment falls under my “swing for the fences” category but if I’m right about Bitcoin the upside is MASSIVE. Nations are adopting it as currency and it has the potential to permeate different markets as we move to a more global, digitized world. Bitcoin could be used to settle transactions across different currencies, among other things. While Cathie Wood has caught a lot of flack recently (rightfully so), I find her Bitcoin use cases rather spot on. I feel as though the percentages of market share is a bit inflated but the use cases remain intact. Check them out for yourself:

I also have been adding to my Fundrise account, where I hold shares of Private Real Estate. Fundrise has shown 21 consecutive positive quarters for their investors and has beaten the market thus far in 2022. I will be allocating 14% of my pay to Fundrise weekly as a hedge against the market. Check out Fundrise’s performance below:

If you’re interested, you can sign up below using my affiliate link at no cost to you 👇

With Fundrise, you can invest in a low-cost, diversified portfolio of institutional-quality real estate. We combine state-of-the-art technology with in-house expertise to reduce fees and maximize your long-term return potential.

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Final Thoughts

August was an exciting month for me!

I’m stalking Costco, United Healthcare and ASML Holdings for additional shares. I’d like to load up on COST at $395, UNH at $477 and under, and add to ASML at $465. Time will tell if I get those opportunities.

As always, I’m watching CPI data and I’m looking at consumer sentiment, oil prices, unemployment, and credit spending. These metrics help me gauge if a recession is coming. I’m not a fortune teller, I don’t have a crystal ball, but I can try to get ahead of a potential recession and start planning now.

I wish you all a green September full of dividends!

Which stock are you most excited to add in September? Hit me up on Twitter, let’s chat!

If you liked this newsletter be sure to share it on Twitter and tell your friends! This newsletter takes a lot of effort to write and I appreciate any feedback and tips. Also, follow me on Twitter!

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