More and more this endeavor has become one of portfolio management rather than income. Don’t get me wrong – income is still wildly important, but the need to preserve capital grows as the portfolio grows. And because of that, I’m really feeling the need to pay attention to the assets I have in my portfolio.
Right now, I’m going to hold on to everything, but there are a few concerning issues with three of the assets I own. Well, perhaps a bit more due to the expense ratios of some of the funds I hold (like SPHD and PEY) as well as the questionable sustainability of CEFs like GOF. But as I shift toward a portfolio of companies that have a history of growth and raising their dividends, it’s important to pay attention to the news.
I’m watching PSEC, SLG, and ADM very closely. PSEC has a history of declining share price. And while the dividend seems sustainable, and considering they could benefit from a reduction in interest rates, I have to think that investing any further and eroding capital could be a bad thing if they ever do cut the dividend.
Secondly, I’m watching SLG. SLG has cut dividends two years in a row now. However, they have genuine, hard assets as they’re a real estate company. Those assets are likely worth more than the current stock price and as interest rates have stopped rising the stock has gone up considerably. Interest rates going down would also affect this stock, but I do have to consider that this stock may not be conducive to an income portfolio.
Lastly, some news came out about ADM. I’m not heavily invested, but I really did think this would be a boring, slow-going, growth stock. It is not. They have put their CFO on leave and their is an on-going SEC probe.
I am going to stay invested, but I will not be adding to these positions. This could be the wrong approach if, say, interest rates go down rapidly or the SEC probe finds no issues with ADM, but preservation of capital is important and I can focus on assets that have no issues while waiting to see how these situations play out.