Catherine Delahaye It has been quite a while since my last post (an April 2023 Portfolio Update ) and I wanted to check back in with an update on my portfolio and my status here on Seeking Alpha. I’ve been a dividend growth investor for a number of years, and have enjoyed the low-turnover, diversified approach to running my book. I’ve been focused on dividend income in the hope that I’d be able to live off of it one day.
That is still my central goal, to live off my portfolio, but the last year has changed how I looked at how to arrive at that goal. Some major life events over the last 15 months: My family welcomed our second child My job got significantly more time consuming I left said job I got a new job with more free time but still quite time consuming Given limited time due to previous items, I’m left between deciding whether to run, write, read or manage my portfolio Managing one’s portfolio is divided into two separate buckets: Maintenance Idea generation Left with a dwindling amount of time, I had to reprioritize my life around the things that I (first) need to do and (second) want to do. Obviously, family time and work are the top two, so the remaining time has to be allocated between my other passions of reading, running, writing, and managing my portfolio.
It’s not difficult to see why Seeking Alpha initially fell to the backburner. The reasons I loved writing on Seeking Alpha (forming my thoughts, holding myself accountable, crowdsourcing ideas, engaging with the community) are all still true, but the time it took just fell down the priority list as I much prefer to run (added benefits of reducing stress, keeping me in shape, and channeling ambition into large races) and read (fiction, nonfiction, news, etc.).
I still did some nightly writing in my investment journal (not as much as I would have liked) because I still view the ability to write about one's portfolio and process essential to the wellbeing of the investor. Joan Didion put it best: I write entirely to find out what I'm thinking, what I'm looking at, what I see and what it means. Besides my lack of writing, the biggest impact on the above priority list has been my portfolio.
Why I generally agree that high quality names need little monitoring, the amount of actual “high quality” names is a much shorter list than people realize. Companies like EL, which has long been considered a high quality name, needed significant monitoring. The time spent on one’s portfolio is divided into maintenance and idea generation.
Maintenance involves reading all earnings reports, earnings presentations, press releases, 10-Ks, 10-Qs, research of anyone you follow, industry research, along with all the above for competitors, and listening to all company presentations. Idea generation involves a lot of reading and screeners (if you’re into that). Given the time spent on the above, I want to spend more time on maintenance and I want to know my companies very well.
You simply cannot do that with 50+ names. Honestly, it’s hard to do that for 15+ names if you don’t have a job with a ton of free time or one that allows for company research. Given I failed to meet both criteria, it was time to cut down on the names of my portfolio.
And as someone who really enjoys the monitoring process of a portfolio, it was important that I kept that aspect as it's something I really enjoy doing. I love queueing up an earnings call or presentation for a run. That's why I do this.
I now own 26 companies, and I’ll generally be trying to keep the portfolio to less than 30 companies. I’ve gotten as low as 15 when significantly pruning, but realized it was just too little. I know my temperament requires me to own some small starter positions.
I don’t really get to know a company unless I own some. I’m more willing to buy a 0.5% weighting once I have enough information and won’t think twice about selling it if things change.
Some astute readers (or anyone who can flip between tabs) will see I’ve sold some high quality companies, not because I don’t like them, but either because I had exposure, I did not want to keep following them, lack of belief in the sector, or I had another security I liked more. The majority of my retail names were sold as I’m generally not bullish on the sector outside of AMZN , COST and WMT , and AMZN has capital allocation concerns while COST and WMT are at nosebleed valuations. I do have small starter positions in ROST and TJX as that segment of retail seems significantly more recession resistant.
Energy names were a fantastic ride from late 2020 and I was happy to part with them. There is no future without fossil fuels. I don’t love owning stocks with significant commodity exposure.
When I was loading up on other names in downturns, I didn’t think twice about selling my energy names. All healthcare was removed from the portfolio. I just find it a tough space to evaluate.
I even sold pick and shovel players like TMO and DHR which, at the end of the day, I really didn’t understand the underlying businesses. I say all of this not to provide an excuse for my absence, but to instead acknowledge that life changes and I’ve needed to adapt. That meant less writing, culling the portfolio, and being more realistic about the running challenges I undergo.
Unless portfolio management is your full time job, these trade-offs occur as life changes. Turning to my current portfolio, there is a strong focus on dividend paying companies. Only two companies fit into my non-dividend growers categories: CELH and HESAY.
CELH is just a bet on a growing market. It’s significantly more volatile than the other companies I own, which I’m fine with. It’s a small position in a brand I think will do quite well over the next 5 years.
The other company is HESAY, which is a best in class luxury company. While I will receive a yearly dividend, I don’t anticipate this growing at a typical clip like I do with most American companies. The growth may be lumpy, which is fine.
I think it is a long-term winner and am happy to own some shares. My largest positions are typically the companies I have the most long-term faith in. I believe companies like the rating agencies (MCO and SPGI), railroads (CP and CNI), and the payment rails (AXP, V and MA) will be around for multiple decades and, most importantly, largely in the same form.
They are probably my highest conviction names, which is why all of them are in my top 10 companies by ownership. In addition, I really enjoy owning a large portion of an entire market. In probably my best article on Seeking Alpha ( My Top Ten ) I discussed my philosophy of portfolio management as grouping stocks in an industry into a "single" security.
It helps me gain conviction as I'm not required to pick the best in class. Since I'm already doing a lot of maintenance on competitors, it doesn't actually add any more work to own these names. So, the 26 companies I own is far less in my mind when you consider how much overlap there is for Semi Cap ( AMAT , KLAC and LRCX ), HVAC ( CARR and TT ), C-stores ( MUSA and CASY ), discount stores (TJX and ROST), banks ( C and BAC ) rating agencies, payment networks, and railroads.
Company Ticker Allocation Core Dividend Growth 51.02% Moody’s MCO 11.27% Canadian Pacific CP 7.
77% Canadian National CNI 7.59% S&P Global SPGI 7.46% Microsoft MSFT 7.
26% Citigroup C 3.64% Bank of America BAC 3.39% Carrier Global CARR 1.
05% Trane Technologies TT 1.03% Ross Stores ROST 0.56% High Dividend Growth 37.
11% Meta Platforms META 8.46% Visa V 6.12% Mastercard MA 5.
69% American Express AXP 4.51% Old Dominion Freight ODFL 2.74% Costco COST 2.
55% GE Aerospace GE 1.98% Casey’s General Stores CASY 0.92% Lam Research LRCX 0.
92% Applied Materials AMAT 0.92% KLA Corporation KLAC 0.91% Murphy USA MUSA 0.
77% TJX Companies TJX 0.61% High Yield 3.27% Philip Morris International PM 3.
27% Non-Dividend 3.50% Celsius Holdings CELH 3.50% Other Bets 1.
23% Hermes OTCPK:HESAY 1.23% Cash & Equivalents 3.87% Click to enlarge Conclusion Going forward, I have no clue how often I will write.
I can foresee myself dropping in every few months with updates similar to what I have above if there is an interest there. Feel free to drop some feedback on whether you liked my Top Ten or Watchlist articles. I really loved the few months I diligently wrote here on SA.
At that point in my life, I needed this for all of the reasons I described above. Editor's Note: This article discusses one or more securities that do not trade on a major U.S.
exchange. Please be aware of the risks associated with these stocks. Analyst’s Disclosure: I/we have a beneficial long position in the shares of AMAT, AXP, C, CARR, BAC, CASY, CELH, CNI, COST, CP, GE, HESAY, KLAC, LRCX, MA, MCO, META, MSFT, MUSA, ODFL, PM, ROST, SPGI, TJX, TT, V either through stock ownership, options, or other derivatives.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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