Dividend Engine is Going Strong
While bear markets are uncomfortable they do not necessarily cause real harm unless one sells at the bottom. In fact, they actually present opportunity to increase one’s income. The S&P is crashing, REITs are crashing and the 2CHYP portfolio is down along with them. However, our income has increased.
- As of 9/30/18, 2CHYP’s annual dividend income was $9637.
- As of 12/21/18, 2CHYP’s annual dividend income is $10926
This is the dividend engine. How does it work?
Just as in any other market, there is a dispersion in the performance of individual stocks. By selling those that have appreciated we have been able to harvest proceeds which we immediately put to work in some of the quality REITs that have been sold off the most. At the freshly low prices, these REITs are trading at extremely high yields, allowing us to capture a larger dividend stream without sacrificing quality.
JCAP and MPW are well-run companies that somehow managed to evade the market downdraft. They made great sources of capital. GOOD and GNL are also strong companies with among the most predictable cashflows one can find, but they got killed in the market downdraft.
By simply swapping out of the issues trading at higher prices, we were able to capitalize on the market selloff and scoop up these stocks at a blended dividend yield of about 9%.
Market crashes are not a problem. They are a catalyst for growing our dividend income. Stock prices may fall more in the coming weeks as tax loss selling continues, but this does not concern us. As long as fundamentals are strong, which they seem to be, we feel comfortable remaining fully invested and repositioning opportunistically.