Welcome to a new episode of my Dividend Diary on the TEV Blog. Here, I report the development of a cash flow-oriented investment approach that focuses on generating a passive income through dividends. Against this background, the goal is not to outperform the market but to put food on the table through a regular income via dividends.
With the Dividend Diary, I document how a cash-flow investment approach can be part of well-balanced wealth management. To keep things simple, I have built three pillars:
- Active income.
- Passive income.
Dividends fall into the last two categories. They are passive because they provide a cash flow without me having to go to work. Additionally, they are an essential pillar for the conversion since they can be reinvested to generate even more income in the future. That is the Theory. Now let’s get down to practice.
My monthly dividend income in July:
This month, my cash-flow approach generated the following income through dividends:
- Automatic Data Processing (5.10 EUR)
- Kimberly Clark (19.90 EUR)
- Publicis (24.25 EUR)
- Iron Mountain (12.79 EUR)
- Merck & Co. (8.12 EUR)
- GlaxoSmithKline (14.03 EUR)
- Altria (17.25 EUR)
- Realty Income (3.09 EUR)
- Leggett & Platt (10.25 EUR)
- Simon Property Group (5.30 EUR)
- Cisco (9.55 EUR)
The total dividend income in July (after taxes) was: EUR 116.40/appr. 138 USD
Dividend income check
I am happy with July. Income was about 10 percent higher than in July 2020. Since last year’s growth was particularly strong at about 170 percent, it is clear that I cannot maintain such growth rates year after year. My cash flow approach is about the long-term development of monthly income. So looking at the big picture, things are evolving pretty well.
In addition, I have already generated almost as much cash flow as I did in the whole of last year. Last year, I generated the complete 2019 income only at the beginning of September.
In the coming months, I expect to continue to exceed the previous year’s figures. The high increase in the value of the EUR last year should no longer have a distorting effect. In addition, my investments will provide one or the other cash flow increase.
Stocks I sold in July
I sold some shares in July:
- Siemens Energy (4 shares)
- Unibail-Rodamco-Westfield (4 shares)
- Tanger Factory REIT (41 shares)
- Tencent (20 shares)
Below you will find a few reasons why I decided to sell these shares and why I sell stocks from time to time.
Yes, I had only 4 Siemens Energie shares. So not much. The shares were added to my portfolio when Siemens Energie was spun off from its former parent company Siemens. The company consists of Siemen’s former Gas and Power business and holds a 67 percent share of Siemens Gamesa.
Simens Energy is a company with prospects that aren’t that bad. Green energy, complex plants, service contracts, all these are great buzzwords. Nevertheless, the numbers, the business story, and its execution never really convinced me.
From my perspective, it’s fair to say that Siemens has rather spun off a problem child here. The share price development was correspondingly unsatisfactory. The company also does not pay a dividend. So what am I supposed to do with this guff? Yep, get rid of it…
Unibail-Rodamco-Westfield and I are probably a misunderstanding. I am convinced of the concept of large malls. Their tenants will change, but I think malls as real estate will always be places of people’s interaction.
Then the pandemic came along, and the company’s balance sheet doesn’t look healthy with a debt/EBITDA of x15.6 and its rising cost of debt. Due to massive cash burn, management has slashed the dividend to an extreme and keeps thinking about massive capital increases. That would reduce my stake in the company. In short, my investment story no longer holds, and I was wrong when I bought the company. So out of my sight with the shares.
Tanger has gained a bit in the slipstream of the meme stocks as it was also shorted heavily. Simon Property, another REIT, on the other hand, is still chasing its pre-Corona share price. And here is the point: I don’t quite understand this discrepancy.
So here I was. I had book gains of 30 percent plus dividends and felt that was due to luck rather than operational excellence of Tanger’s business. Hence, I used that situation of fortune and took the chips off the table.
With Tencent, I was up around 30 percent, even despite the current discussions about China. At the same time, however, I invest in an emerging markets ETF which has lost value over the past few weeks due to a large number of Chinese companies as well. Tencent, for example, is also represented quite prominently with 4 percent.
I will therefore realize the profit and shift the capital to the ETF in August. By this, I can diversify my capital and reduce my holdings at the same time. That makes it easier for me to buy more shares if there are further broader setbacks due to China’s regulation approaches.
The emerging markets ETF also pays a higher dividend than Tencent (plus, it distributes the dividends in November, i.e., I will receive cash this year).
Stock purchases in July
In July, I bought more shares of great companies so that the dividends will continue to rise in the future:
- Allianz (4 shares)
- TeamViewer (20 shares)
In the following, I will briefly explain why I bought these companies. Please do not expect a fundamental analysis. I will only mention some aspects per company that might be of interest to the readers. Maybe you will find inspiration for your investment. In case you disagree, feel free to write your opinion about my purchases in the comments.
Please keep in mind that this is only a non-representative sample of my overall asset management.
Last month it was Munich Re. This time I have increased my Allianz holding. There is not much to explain here. I took advantage of a setback. A classic buy the dip purchase.
While writing this article, I asked myself why I list TeamViewer in the cash flow report. Because actually, the company is one of my holdings in growth companies (by the way, I also bought 100 ServiceWare shares in July).
That’s probably because I see TeamViewer as an anchor investment of my leading portfolio, even though it doesn’t pay dividends. Well, and there’s no harm in listing it here.
Regardless, there’s not much to say that I haven’t already written elsewhere. The market didn’t like TeamViewer’s preliminary quarterly figures and then sent the stock on another downward slide. At times, the share price lost 15 percent in one day. I, on the other hand, thought the numbers were okay. Period. If you want to read more, I have taken a closer look at the numbers in a Seeking Alpha article (link). You can also find more thoughts on TeamViewer in the November ’20, August ’20, February ’21, March ’21, April ’21, May ‘21 reports.
I bought my first Pfizer shares only in April ’21 as I wanted to invest a bit more in the pharmaceutical sector. It is still impressive how Pfizer, together with BioNtech, has probably produced the most superior vaccine against the Coronavirus.
The current situation is not getting any worse for Pfizer. It looks like the vaccine will continue to take the benchmark, and there will be equally strong demand for it. That should give Pfizer some tailwind to get the actual business back on the growth track.
In addition, Pfizer is not historically overvalued with an adjusted P/E of under 14. The dividend yield of over 3 percent is also in line with the historical average, unlike many other companies.
Watchlist for August
There will be some additional share purchases next month. As you may know, I am relatively flexible when it comes to new investments. Either I buy new positions, or I increase my shares in existing investments.
The following companies are on my watchlist in particular:
- Microsoft (MSFT)
- Digital Turbine (APPS)
- Intel (INTC)
- Salesforce (CRM)
- Mayr-Melnhof Karton AG
- SAP (SAP)
If you look at my report from last month, you will likely see that none of the companies I bought were on my watchlist. Why is that? Is the watchlist nonsense, and in the end, I only do what I want anyway? Yeah, a little bit. I don’t have a fixed system for my stock purchases, and that’s one thing I have to consider changing.
However, I have an extensive overview of many companies that I look at from time to time. The watchlist companies are primarily companies that I have currently examined particularly carefully, where substantial changes are imminent or which are in my focus for other reasons.
These companies are present to me in some form, which is why I put them on the list and perhaps monitor them a little more closely than other companies. But it often happens that I invest in different companies when it seems convenient at that moment.
I have just found your blog and read most of your posts. I was courious to find your full portfolio structure, but anyway I found many interesting investment ideas. So thanks a lot for the blog, it’s useful.
I have a question for you regarding TeamViewer, since I see you live in Germany, home of BaFin overseen fraudsters at Wirecard and more recently Adler Group.
Do you think TeamViewer is a money siphoning scheme ? I just listened the audio recording of their ad hoc meeting with analysts on lowering financial expectations and the CEO and CFO did not seem professional individuals at all, like being very distracted and looking for hope in sponsorship money thrown into Manchester United and F1 advertising contracts.
This amateurish impression of the leadership made me research more and I found out that the CEO was a big boss at Permira (partner actually) and Permira is the largest shareholder. What raises alarm flags for me is that the CEO got 71 million EUR in annual pay after moving from Permira to TeamViewer, which is a huge amount by any standards: https://newsrnd.com/news/2021-03-31-71-million-euros-salary–teamviewer-boss-makes-dax-board-members-look-old.SkezmBTbHO.html
The CFO also has a similar outrageous pay compared to other companies, but smaller than the CEO.
So I see it that the guys controlling Permira sold most of their shares in IPO, but not before placing some important people at Permira in charge at TeamViewer and awarding them with multi year contracts, effectively ripping of shareholders of most company’s profits for some years, until they get somehow fired.
I have bought recently some TeamViewer shares (currently about -15% overall performance), but would like to ask you if you were also aware of these facts and if you still trust the company now. For me this looks like defrauding investors, but I would like your advice as well, since I am considering buying more stock to improve my average cost. But definitely I would not like to just sponsor salaries of bad managers who only care about taking as much pay as possible before they get overthrown (Overall, the CEO Oliver Steil has a salary of almost 71.7 million euros for 2020, CFO Stefan Gaiser at least just over 36 million euros).
Thank you again for your blog, it helps me a lot with ideas on how to invest.
thanks for the comment. I don’t think that TeamViewer is such a scheme, to be honest. Management is highly invested and holds a lot of shares.
There is also an interesting discussion under one of my TeamViewer articles on Seeking Alpha
Plus: This is what I wrote to another reader and it might apply to your question as well:
I think I will write a few more words in the October update. For now, I am enjoying my stay in Dubai.
I will probably do the same with TMV, be more cautious before deciding to buy more.
Thanks for your answer and enjoy Dubai !