HomeInvestmentsUndervalued Dividend Portfolio Update For January 2018

Undervalued Dividend Portfolio Update For January 2018

To say it has been a crazy freaking month would be an understatement and we are only 11 days deep! As an additional way of funding this account, I sell puts and January was an amazing month (outlined below), but I quickly learned some important lessons about maintenance requirements.  As of the writing of this post (and hopefully it doesn’t age well) this account, well every account, is down hard.  But let’s not focus on the bad for now, let’s talk about the moves made in January.

My January 2018 Undervalued Dividend Growth Purchase

After screening the dividend champion list for possibly undervalued stocks I ended up with the following watch list,

  • Aflac – AFL
  • Chesapeake Financial – CPKF
  • Computer Services – CSVI
  • NACCO Industries – NC
  • Target – TGT
  • Weyco Group – WEYS

But with the start of the new year I wanted to add something new and probably something a tad ‘riskier’ in terms of market cap since I just took that restriction away.  So that eliminated AFL and TGT (which I just bought some more AFL and just got out of my TGT legacy puts I sold).  That left me with CPKF, CSVI, NC and WEYS.  I eliminated CPKF because my current portfolio is pretty heavy financials (with positions in CFR and CTBI).  So down to CSVI, NC and WEYS.

First stock I looked at was NACCO:

Woah, look at that drop! I did some digging and it had to do with a sale of one of their businesses.  I decided against doing further research to determine whether this was a good thing or a bad thing unless it was a last resort (i.e. the other 2 were not good purchases)

The next one I looked at was CSVI I immediately saw how thinly it was traded.  The average volume was 3,150 shares/day.  I don’t know enough about the company to deal with that kind of lack of liquidity.

That left me with WEYS vs NC. I immediately liked WEYS when I read the description

Weyco Group, Inc. is engaged in the design and distribution of footwear. The Company designs and markets footwear for men, women and children. The Company operates through two segments: the North American wholesale segment (wholesale) and the North American retail segment (retail). The Company also has other wholesale and retail businesses overseas, which include its businesses in Australia, South Africa and Asia Pacific (collectively known as Florsheim Australia), and its wholesale and retail businesses in Europe (Florsheim Europe). Its products consist of leather dress shoes and casual footwear composed of man-made materials or leather. In addition, the Company offers outdoor boots, shoes and sandals. As of December 31, 2016, the Company’s shoes were marketed throughout the United States and Canada in over 10,000 shoe, clothing and department stores. As of December 31, 2016, the retail segment consisted of 13 Company-operated stores and an Internet business in the United States.

Then I went to the Wikipedia page

The company focuses on two business segments in North America: wholesale and retail. The business entails mid-priced leather dress shoes; synthetic and leather casual footwear; outdoor boots, shoes, and sandals. Its wholesale customers are footwear, department, and specialty stores primarily in the United States and Canada. As of June 2015, it had 16 company-owned retail stores in the United States in addition to an internet business. For 2014, the company posted overall net sales of $320.5 million of which $243.4 million came from wholesale in North America and $23.3 million from North American retail

Emphasis is mine – I have been into the idea lately that even if amazon is destroying retail businesses there are still brands that they sell at a wholesale level.

The date of purchasing my first position in WEYCO

  • P/E – 20.06 vs 20.20
  • Payout Ratio – 54%
  • ROE 8.39 vs 7.58%
  • P/B – 1.67 vs 1.76

Not a lot of wiggle room when it comes to margin of safety (when compared to industry averages) but I like the qualitative description above so, I opened up with a single lot purchase ($500) at 16 shares at $31.75.

My Dividend Income for January 2018

It was a pretty quiet month for dividends:

  • CB – $3.55
  • BEN – $5.18
  • CTBI – $14.89
  • PPL – $6.11

$29.73 in total.

My Put Option Income for January 2018

I absolutely killed it this month! I don’t think I’ll be able to keep up this type of output/income month in and month out.  Hell, 8 days into February and even the slightest hint of a bear market and I took a tumble.  Had I been a tad less aggressive at the end of January I probably could have a made a killing the past few days instead of just trying to keep my head of water.

My Put Option Income totaled $1,101.86! I am extremely proud of that number as it is active investing on my part and gives me hope that I could maybe one day have a system in place that could provide that type of income month in and month out.



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