Editor's note: Originally published on July 8, 2014
by Simon Lack
Recently the Financial Times noted that the number of U.S. companies raising their dividends had hit the highest level since 1979. Much research has been done on the merits of companies that pay out a large percentage of their profits in dividends (high payout ratio) and those that retain most of their earnings so as to reinvest in their business. Payout ratios have been falling steadily for decades and currently the FT notes that S&P500 companies pay out only 36% of their profits. However, share buybacks have increased over that period so one can't conclude that the total cash returned to shareholders as a percentage of profits has fallen.
Buybacks are a more efficient way of returning cash because they create a return (through a reduced share count and therefore a higher stock price) without forcing each investor to
The "Buy-The-Dip' High-Yield" (BTDHY) portfolio is designed to be relatively active, buying the dips on high-yield securities in order to enhance total return. In a previous article in this series, I presented the rationale for choosing the different asset classes of the portfolio: REITs, mREITs, BDCs, MLPs, high-yield bonds and others (including CEFs).
This article details the H1 2014 performance of the BTDHY portfolio. Furthermore, the performance of the BTDHY is compared with the underlying indexes and the outlook of the portfolio for the near future is presented.
Portfolio on January 1st 2014
The inception of the portfolio was on January 1st 2014. The stock names, tickers, number of shares, cost basis and value of the stocks are presented below. The price is not shown since it is the same as the cost basis (as the portfolio was incepted at the same time). The stocks are categorized by asset