The dividend basket has had a difficult year in 2023. While I have reached my target wrt dividend payout, the basket has major losses (realized or unrealized) in 2023. Dividend/distribution cuts from PDT, IEP, GOGL, RA among others have also hurt. OTOH, positive payout surprises from TRMD, CLCO & FRO have helped offset some of the damage. QCOM has helped offset on the capital gains side.
Although I shared some thoughts in another thread earlier this month, I have been thinking about the issue for a longer period. Subject to possible revisions, a couple of items need to be there
- Need to have a core set of ideas. Sure, IEP, RA & AY disappointed this year. But that doesn’t mean a core idea is a mistake. QCOM & FLNG are proof that there is a place for core positions
- Manage expectations for shipping ideas in the basket. I partly did that this year by reducing dividend expectations for the dry bulk ideas in 2023. I plan to do something similar for the tanker picks in 2024.
- Need to have flexibility. An example of this in 2023 is NAT & GSL. Maybe VZ a little too.
So, the core ideas for 2024 are AY, IEP, FLNG & QCOM
Though I have a small Golar LNG (GLNG) position in my taxable ac, I don’t consider it a dividend basket idea. I guess, if one asked me “why not?”, my answer would be
- Position too small
- GLNG just restarted the dividend in 2023
Since I am looking forward, both items can be addressed for 2024. I just have to increase my GLNG stake in 2024, and anticipate that GLNG will be financially stronger in 2024. I mean, the company should (eventually) start to recognize the revenue stream from FLNG Gimi. That will be a huge help in helping diversify the revenue base. Like QCOM in 2023, an improved outlook for GLNG could help support a better PPS.
Normally, at the start of a New Year, there is at least an inkling of a list. In the worst case, I will just grab 10 - 20 names from a prior watchlist and start with those names. In 2024, not so much. If it is a watchlist, then it just needs to be a bunch of names - not necessarily a deep dive into the names. Ok, on the dividend side – UWM Holdings (UWMC). Google quotes seem to mess their PPS – SOFI.
Have a line item entry “Other” for those odd-ball dividend payments that occur in the DRIP ac. I give the line an annual target, and in 2024, the target was reached in the first week of the year!
How? Brazilian Beer Bet i.e. ABEV annual dividend accrued in the first week of the year. The problem with a Brazilian dividend paying holding is there isn’t an easy way to reclaim Brazilian withholding. For me, ABEV’s dividend is secondary. The bet usually pays off bigger.
This past week, a holding I no longer own i.e. UWMC, paid its dividend. So that also ends up in the line entry “Other”. Although not planned that way, UWMC’s exit was because it exceeded expectations so quickly. Ironically, that’s my criteria for an ABEV sell - reaching a target price. So two bosom buddies in the “other” category.
In search-for-dividend ideas: Will likely toss EQNR in the watchlist. Just to keep an eye on it.
Hmm? The reason I started this thread makes sense today with a strong correlation to why I think I started it back in late Dec 2023. But, for threads I initiate, there is some type of frequency associated with it. Single subject threads go for as long as there is interest. Monthly threads focus on a month.
This thread? No clue. no recollection of having a frequency tied to it. It makes some sense that it would be worth revisiting. at least mid-year. Anything else is just a bonus. So that makes this a bonus post!
Awrighty, the deets. Though there were two smaller transactions - small gain from INSW trim, and a larger gain from GSL transaction. But, growing the basket has been the overall focus. This has been accomplished via adding to existing positions. Or, in a special case, multiple small transactions to make Dorian LPG (LPG) a formal position. I also decided to include the Covered Call ETF, QYLD, in the basket in 2024. Trending nicely in 2024 so far. On the flip side, the two largest holdings - AY and FLNG have not been behaving well to start the year. The latter just announced its Q4 2023 results and maintained their dividend. Lots of LNG tankers deliver in 2024, but FLNG are reasonably well hedged with 50 tanker-years of contract coverage across 12 of 13 owned vessels, plus interest rate hedges on a majority of its bank debt.
And … well, I wait for basket holding to announce their end-of-2023 results. That will likely inform me of any major changes I may need (or be forced) to make