2019 was another successful year. Our “Income via Growth” strategy finished the year up 51.6%, “Income Equity” added over 28% (and yields 5.9%), and our “Alternative Fixed Income” strategy currently yields an impressive 7.5% (with relatively very low risk). We’re also kicking off 2020 by adding a “Buy Under” price for every position in every portfolio to help readers monitor positions more closely and more easily.
To get right to it, here is the performance for each of our strategies.
Income via Growth Monthly Performance History:
Income Equity Monthly Performance History:
Important to note, the Income Equity portfolio’s goal is high income and long-term price appreciation. And critically important, we are not “chasing” insane risk high-yield investments, just to get the portfolio’s aggregate yield higher. To put up the powerful long-term returns that this strategy has, while simultaneously yielding 3x times higher than the yield of the S&P 500 is impressive, and we’re proud of this strong track record. We’re also looking forward to continuing strong returns and high income in 2020 and beyond.
Alternative Fixed Income Monthly Performance History:
The Alternative Fixed Income strategy is designed to deliver high yield with low market risk, and that is exactly what it has been doing. It was launched in mid-2019, and it delivered a healthy total return, as you can see in the table above. The strategy is comprised of Fixed Income Closed-End Funds (CEFs) and preferred stocks. The fact that the strategy put up over a 7% total return in less than half a year, is impressive, it means the strategy is working as designed, and we look forward to delivering continuing strong performance in 2020 and beyond.
Holdings and New “Buy Under” Prices:
The following tables show our current holdings, and the new “Buy Under” prices. The “Buy Under” prices are new and they are a “work-in-progress” so please have some patience with us as we work the kinks out of this new presentation format. A downloadable Excel spreadsheet of these holdings tables is available here:
Please note all data in the tables is as of Friday’s close (3-Jan-2020), except for December Returns. Also, the downloadable spreadsheet includes our Watchlist “The Contenders” for each strategy.
Regarding the “Buy Under” prices, again, these are a “work in progress,” and there will likely be updates in the coming weeks as we work to get these right. For reference, these are subjective “buy under” prices. We essentially picked prices at which we’d be comfortable buying the shares given our analysis of each position. Remember, we are long-term investors, and we believe many of these positions have significant long-term price appreciation potential, even beyond the “buy under” prices we’ve listed, in many cases. We also “reality checked” these prices using the average analyst price targets by Wall Street analysts, using data from FactSet.
Noteworthy Holdings:
We want to draw your attention to a few of our holdings in particular:
Nvidia (NVDA) and Skyworks (SWKS): These are two semiconductor chip makers that we wrote about in great detail at the start of 2019. Our thesis was simply that they were dramatically undervalued then, and we expected very big gains in 2019—and that’s exactly what we got. They are up 85% and 99%, respectively, over the last year. We liked Nvidia better a year ago, and we still do. We believe both of these stocks have continued significant price appreciation. Just know, they have volatility to them (and we’ve already experience in the last 18 months), and that’s why we hold them in our long-term “Income via Growth” strategy.
Tsakos Energy Navigatin (TNP) and (TNP.PE): According to FactSet, the average price target for TNP by the 3 Wall Street analysts covering the stock is $6.53, suggesting the shares have 68% upside! They raised the price targets as shipping rates surged (to the benefit of shippers like Tsakos) in October, and then again when Tsakos announced stronger than expected revenues in November. We currently own both the common shares (TNP, for the price appreciation potential) and the preferred shares (TNP.PE for the very large dividend).
Municipal Bond CEFs: You’ll note we currently own 2 muni bond CEFs in our Alternative Fixed Income strategy (MMD) and (NAD). We own them for their big yields, which are very safe, and the yields are magnified considering that is tax free income (remember don’t hold them in a tax qualified account like an IRA because it nullifies the tax benefit). We like both MMD and NAD, but are considering other options as you can see in this recent report.
Roku (ROKU): You’ll notice Roku on our Watchlist for the Income via Growth strategy (if you download the holding spreadsheet that includes the Watchlist). Roku basically solves the challenges of advertising in the streaming televison world, and the opportunity is huge. We’re giving some serious thought to adding shares.
Procter & Gamble (PG): You’ll notice P&G is only rated a “Hold” on our holdings list. We bought this one several years ago when the yield was near an all time high. However, now the yield is significantly lower as the company has successfully implemented its streamlining strategy whereby they dumped a bunch of less profitably brands in recnet years to increase profit margins. We still like P&G, but believe the upside potential is now less dramatic considering its already up dramatically in recent years.
The Bottom Line:
Your investment portfolio belongs to you, and it’s up to you to decide what works best, for you. We’re just here to help, by providing analysis and ideas. Our philosophy is that disciplined, long-term, low-cost investing has proven to be a winning strategy over and over again throughout history. We are pleased with our growing track record of powerful long-term price gains and income, but we are not resting on our laurels. We’re excited and fired-up to keep working hard in 2020.