1Q 2021 Performance Review: Dividend Stock Portfolio

1Q 2021 Performance Review of Best2invest.net’s Dividend Stocks Portfolio.

Before the close of last year, I laid out the following list of the best dividend-yielding stocks for 2021, with prices and dividend yields as of December 27, 2020:

SymbolStockDec. 27, 2020 Price2020 DivDiv Yield
APAboitiz Power Corp26.751.184.4%
CPGCentury Properties Group, Inc.0.4600.01262.7%
GLOGlobe Telecom, Inc.2.010.00107.995.4%
GMA7GMA Network, Inc.5.990.305.0%
MERManila Electric Company282.6015.095.3%
MPIMetro Pacific Investments Corp.
SCCSemirara Mining & Power Corp14.381.258.7%
TELPLDT, Inc.1,350.0077.005.7%
2021 Best Dividend Stocks (Initial List)

I later revised the list by replacing CPG with FLI (Filinvest Land, Inc.) as the latter is much bigger than the former in terms of market capitalization, more liquid, and gives better dividend. MPI was also replaced by DMC to provide the portfolio higher theoretical returns in terms of dividends. FLI and DMC were not included in the initial list of best dividend-yielding stocks as these were near their fair values at that time. Eventually dividend yield was chosen over market valuation.

So to put on record, my dividend-yielding stock portfolio gave a return of 3.8% from December 27, 2020 to March 31, 2021, beating all my pre-identified benchmarks.

B2i (Best to Invest)

After putting in the amendments, the final list was then published in the main menu of this website and is now known as the Best Dividend Stocks, viz:

SymbolStockDec. 27, 2020 Price2020 DivDiv Yield
APAboitiz Power Corp26.751.184.4%
DMCDMCI Holdings, Inc.5.900.488.1%
FLIFilinvest Land, Inc.1.140.06485.7%
GLOGlobe Telecom, Inc.2.010.00107.995.4%
GMA7GMA Network, Inc.5.990.305.0%
MERManila Electric Company282.6015.095.3%
SCCSemirara Mining & Power Corp14.381.258.7%
TELPLDT, Inc.1,350.0077.005.7%
2021 Best Dividend Stocks (Final List)

1Q 2021 Theoretical Portfolio Performance

After 3 months of pandemic-wrecked businesses and trades, we will assess how a theoretical portfolio of all the above names would have fared as compared to some known benchmarks.

In such a portfolio, we will assume that the investor is a buy-and-hold type. In other words, we would like to know how the portfolio fared in the first quarter of 2021 if the eight stocks comprising it were all bought at the close of trade on December 27, 2020 and were not traded at any time. It is further assumed that the stocks were all bought in equal weights, say each worth P100,000, for a total investment of P800,000.

Below are the details of this portfolio using Best2Invest’s Stock Portfolio Tracker.

1Q2021, performance, table
1Q 2021 Performance of Best Dividend Stocks Portfolio (Theoretical)

From the worksheet above, you would see that the portfolio would have gained P16,758,59 out of the P800,000 capital. That’s 2.1% for the quarter or 8.4% per year when annualized. Not bad, don’t you think? Well, let’s see how some benchmarks performed.

We’ll use the Unit Investment Trust Funds with the best performance among the three banks that we cover.

Benchmark1Q 2021 YTD Gain/(Loss) PercentBest Div Stocks
1Q 2021 % Gain/(Loss)
Portfolio Outperformed Benchmark by
BDO Peso Money Market Fund (UITF)0.2%2.1%1.9%
BPI Premium Bond Fund (UITF)0.0%2.1%2.1%
MBT Metro Equity Fund (UITF)-7.8%2.1%9.9%
First Metro ETF-8.4%2.1%10.5%
PSE Index-9.8%2.1%11.9%

The relatively outstanding performance of our portfolio was mainly attributed to GMA7, the price of which recently went up dramatically after the company announced an extra-ordinarily hefty P1.35 dividend per share. The stock was trading at P7.48 before the announcement.

Let’s assume that the dividend announcement did not happen and that GMA7 closed the quarter at P7.48. If we input this price to the worksheet, we’ll get something like:

So, without the surprise dividend declaration, our theoretical portfolio would have ended 1Q2021 at -0.8%, still beating most of our benchmarks. Only the Peso Money Market UITF and the Peso Bond UITF outperformed our stock dividend portfolio in this scenario although the “alpha” or the outperformance isn’t that significant.

1Q 2021 Actual Portfolio Performance

To show that I put my money where my mouth is, I am posting here my actual quarter-end portfolio for dividend-yielding stocks but I would use a factor (any number from 0.1 to 10) to multiply my account values with so I could conceal how rich (or poor) I am. LOL.

You would notice that my portfolio consisted only of 4 out of the 8 names in the list. That is because I am not a passive, buy-and-hold investor; rather I actively monitor my portfolio and trade as necessary. Between December 27, 2020 and March 31, 2021, there were 25 buy-and-sell transactions that I made involving the 8 best dividend stocks. All eight stocks started with the same weight of about P70,000 each; at the end of 1st Quarter, only 4 names remained.

Responding to the Times

The recent surge in the number of Covid cases in the country, along with high inflation and the delayed roll-out of the vaccines all point to one thing: delayed economic recovery. With a bleak economic outlook, it is just right to reduce stock holdings as stock prices correlate with investor sentiments.

The first to go in my portfolio was GLO. I let it go too soon that I did not catch the cash dividend of P27.00 paid out ex-February 19. The reason for jettisoning this name was its lethargic price trend, amid the entry of DITO Telecommunity in the telecom arena.

GLO’s market share is expected to be eaten up by DITO more than DITO would affect TEL. TEL has more landlines than GLO and DITO is about wireless telecom. TEL is thus preferred over GLO.

Next I had to give up was DMC, followed by SCC, because of poor earnings performance. Surprisingly though, SCC announced a cash dividend of P1.25 with an ex-date of April 7, 2021. SCC’s price surged from about P12 to more than P13 after the cash dividend disclosure. Again, I would not be able to catch the cash dividend because of the high price.

However, the price of DMC did not react immediately with the SCC cash dividend disclosure. I took the opportunity to buy the DMC at P5.05 for a short-term trade, knowing it would soon announce its own cash dividend at a yield as good as SCC. True to my expectation, DMC announced a cash dividend of P0.46 with an ex-date of April 12, 2021. I sold DMC when it hit P5.69 because of high valuation.

But why sell DMC when it is about to give the cash dividend? Well, I expect the price of DMC to decline by the cash dividend amount (P0.46) on the ex-date. I expect the market to sell it off because of valuation concerns.

The last to go was FLI. I acutally bought FLI in October 2020 when it was selling only around P0.90 and held on to it until it hit P1.10 in January. I later made a couple of buy-and sell transactions on the name and eventually gave up when the omen of bad things to come appeared in the horizon. I am referring to the Covid surge and the delayed vaccine rollout that could wreak havoc on properties and other industries.

What remain in the portfolio now are defensive ones that proved resilient during the height of the pandemic last year. These are: AP, GMA7, MER, and TEL.

GMA7: The Rose Among the Thorns

I initially bought 14,000 shares of GMA7 on October 16, 2020 at P5.05 apiece and added 6,000 shares more when prices hit P5.90. By December 27, 2020, GMA7’s price was at 5.99.

The reason I included GMA7 in the list of best dividend stocks is because of the upcoming elections in 2022. That’s also the reason why I averaged up and refused to perform re-balancing on the stock. Media is a boon prior to and during elections and prospects are much better considering that ABS is limping out of competition.

Even with a strong will to retain the 20,000 shares of GMA7, I decided on March 30, 2021 to let go of the 12,000 shares (effectively doing a rebalance) when the price hits my trailing stop price of P8.75 (the middle of the long candlestick of the previous day).

So to put on record, my dividend-yielding stock portfolio gave a return of 3.8% from December 27, 2020 to March 31, 2021, beating all my pre-identified benchmarks.

Lessons Learned

The biggest lessons I learned so far are as follows:

The trend is your friend. It is not just the trend that a particular stock is tracking; it is neither just the trend of the index. It is also the trend of the economy that is worth watching and acting on accordingly.

Active investing might be better than passive investing. The numbers are there indicating so but we cannot just jump into a conclusion; we need more data, and repeatable results, to prove it. But even if active investing is better than passive investing, it is not always a good strategy as it based on the premise that one has the time and knowledge to actively manage his portfolio.

It pays to be a skeptic. It’s out of the review scope but it is worth mentioning or logging it here. Based on my observations, when stock analysts say that the index would go in a certain direction, it surprisingly takes a different path. One has thus to take their advice with a salt of grain. Their research are useful but should not be completely relied on.

Just like my words – which readers like you should not just depend on… Caveat Emptor.