Things are moving in the right direction right now.
Once again, I’m seeing certain stocks take the lead, basically the standard long-term performers in my portfolio and across the markets.
The latest quarterly results from Alphabet and Microsoft were a striking reminder of just how well these companies continue to grow. Despite the increasingly tough year-over-year comparisons (the larger the revenue base, the harder it is to find someone who wants to pay for your service), they’re still managing to boost revenue.
I was especially impressed by Alphabet. Revenue from Google Search grew even faster than in the previous quarter. Does that really look like a dying business? Yep, I’m happy with my decision to buy Alphabet stock back in May.
Alongside the standout names in my portfolio, which also include Broadcom, ADP, Snap-on, Williams-Sonoma, and Europe’s insurance giants, there are a few laggards that have barely moved for years.
Johnson & Johnson is one example. Amdocs is another. I’ve also been disappointed with Merck & Co., and don’t even get me started on Pfizer. I can’t wrap my head around how a company that earned billions over billions from COVID-19 has failed to build a meaningful drug pipeline. These are exactly the kinds of stocks that have underperformed both in share price appreciation and dividend growth.
My investment horizon is long-term, but I still find myself tempted from time to time to cut these underperformers.
Yes, they tend to be less volatile during downturns than tech stocks. But I’ve lived through quite a few crises by now, and my experience has been that growth-focused tech names, despite deeper drawdowns, rebound much faster and, over the long term, deliver far better performance. Just compare the NASDAQ 100 to the S&P 500.
That’s why I’m sticking with the strategy I refined a few years ago: I will continue to trim stocks that (i) haven’t met my expectations for at least two to three years and (ii) lack a clear, compelling business case for future growth.
My monthly income with dividends in July:
- Active income.
- Passive income.
- Conversion.
Dividends fall into the last two categories. They are passive because they provide a cash flow without me going to work. Additionally, they are an essential pillar for 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.
This month, my cash-flow approach generated the following income through dividends:
So overall:
- the total monthly income with dividends in July (after taxes) was: € 432.50 / appr. $ 501.68
- compared to last year, the dividend growth was excellent (+ 60 percent YoY),
- ⌀ monthly dividend income (ttm): € 691.10 / appr. $ 798
- ⌀ monthly dividend income (ttm) compared to the previous month: + 2 percent.
The rest of the article is accessible on my Substack. It contains an overview of the stocks I purchased in June, as well as a deep dive into my portfolio performance.
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