Category: Investing

October 2021 Passive Income Report

Posted on November 7, 2021 in Investing

Boum! With October in the books, just two months to go to complete an amazing year.

So, time for my monthly update where I share my cash inflows on my stock holdings plus peer to peer investments plus additional passive cash income. I will also share my latest stock buys.

Let’s first right dive into the numbers.

A cool 25 % Passive Income Jump Year over Year.

Last year, October showed CHF 578 or approximatively USD 630 in passive income, so there is a pretty nice uptick this October to Swiss francs (CHF) 725 resp. almost USD 800.

For the whole year, we’ve targeted USD 15’000 in Passive Income and over the last ten months, USD 12’500 have been collected. So, around 17 % still to go in the last two months to hit our annual goal!

Cash flows from dividends have been particularily strong in October.

British soft drink maker Ag Barr has resumed shareholder distributions which had been cancelled last year amid the pandemic.

British car insurer Admiral even made a special dividend in addition to the regular shareholder distribution and mining business South32 (a spin-off of BHP Ltd.) paid out significantly more than last year (USD 7 versus USD 1).

There have been some changes in terms of dividend payment dates, for instance last year in October I received the distribution from Porsche Automobil SE which this year has been made in July. This change on the other hand has been more than offset by a very strong dividend by British insurer Aviva, which boosted its shareholder payout quite nicely (last year, it paid me around USD 136 in September on this year in October USD 180).

Whenever possible, I try to reinvest dividends into the same business and in the case of Aviva it really shows the strenth of the compound effect.

The same by the way in the case of British alcohol giant Diageo (Guiness Beer, Vodka Smirnoff, Johnny Walker etc.).

Interest income streams from Peer to Peer Investments via platforms such as Mintos, Bondora, EvoEstate, Twino and Iuvo have been quite robust but significantly lower than last year, as I withdrew almost two thirds of my P2P investments over the last 18 months to invest heavily into tech stocks which had paid off quite nicely so far.

My stock investments are near all time high and I keep adding

October has shown an amazing stock bull run and both, my Dividend Portfolio as well as my Tech Share Holdings are near all time high.

Our dividend stock portfolio as well as tech holding portfolio plus our P2P and Crowdlending investments and Crypto positions are well over USD 500’0000.

Following positions have been particularily strong in October, pushing overall performance higher:

A strong boost also came from tech business such as Cloudflare, Shopify, Etsy, Microsoft etc. (see here company snapshots on my tech holdings).

But of course, as always, there has also been some very severe underperformer, like Peloton for instance which has litterally see its stock price cut in two amid weaker growth dynamics. The position however is rather a small one, for instance in Peloton I had invested “just” USD 500, in contrast in the case of my Nestlé or LVMH for instance we are talking about a market value of over USD 20’000 and over USD 15’000.

Cloudflare has been remarkable. I’ve put around USD 2’000 into that company and that position now has a market value of almost USD 11’000.

Despite the market having been heading from All time High to All Time High, I added quite significantly in October as I saw prices temporarily coming down quite a bit on some businesses.

I invested almost USD 14’000 in October

You can find here my article on my investments in Geberit, Schindler, Emmi, Ems Chemie and Eckert & Ziegler in the total amount of roughly USD 8’000.

But I didn’t stop there and added following positons to my tech portfolio:

  • USD 2’200 in Dutch semiconductor business ASML and
  • USD 3’000 in Latin American e-commerce and fintech company MercadoLibre

ASML Holding N.V.  manufactures the machines that are used in the production of computer chips. In these machines. ASML controls about 90% of this market, having a significant role in the semiconductor industry, and its top customers include the world’s top companies like Taiwan Semiconductor Manufacturing, Intel and Samsung.

MercadoLibre is an Argentine company operating online marketplaces dedicated to e-commerce and onine online auctions. MercadoLibre not only has the largest online commerce ecosystem but also the largest payments system in in the region with Mercado Pago.

What I wanted to do was further strengthening my exposure to e-commerce and fintech (I already hold stocks in Amazon, Shopify, Etsy, PayPal, Square etc.) by adding MercadoLibre shares.

And as the chip sector is crucial for so many electronic products, it made a lot of sense to me not only to have a stake in NVIDIA but also in ASML.

What about you, fellow reader, how was your October in terms of Pasive Income? Did you made some investments recently? Thanks for sharing your thoughts in the commentary section below.

Disclaimer
You are responsible for your own investment and financial decisions. This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action

Campari Group a hidden stock gem

Posted on October 23, 2021 in Investing

2020 was the year when I made significant changes to my investment portfolio.

I almost invested USD 70’000 into company stocks, mostly to build up a strong Tech Portfolio which since then contributed strongly to my overall performance.

But in 2020 I also invested in dividend paying shares

  • in the insurance sector (Swiss Re, Swisslife, Allianz, Admiral),
  • in oil and gas producers and mining companies (British Petroleum, Fresnillo etc.) and
  • I put money into my favorite sector Consumer Staples by investing in strong businesses like British producer of premium drink mixers Fevertree, Swiss chocolate maker Berry Callebaut and last but not least in Italian spirits maker Campari Group.

Campari Group is one of my favorite alcohol company position in my stock portfolio, along with Pernod Ricard, Diageo and Heineken.

In this article I want to give you some information on Campari Group, which due to its relatively small side is not necessarily on the radar of investors.

Business Snapshot

Davide Campari-Milano N.V. (Campari Group) is an Italian company which is active since 1860 in the branded beverage industry.

The company produces spirits, wines and also soft drinks.

Certainly, the most known products in its brand portfolio is Campari Bitter, an alcoholic liqueur.

But over decades, the Campari Group extended its product range with over 50 brands, including

  • Aperol
  • Appleton
  • Cinzano
  • SKYY Vodka
  • Forty Creek Whisky
  • etc.

Compared to its larger rivals such as Diageo (Johnny Walker, Vodka Smirnoff, Baileys etc.) and Pernod Ricard (Havana Club Rum, Absolut Vodka etc.), we have with the Campari Group a sweet niche-player with annual profits that compare favorably with Brown-Forman of around EUR 1 Bn. resp. USD 1.2 Bn.

But Campari Group is more evenly diversified over its 50 brands and has an astounding global reach for such a small company.

US competitor Brown-Forman for instance has over 40 brands but is highly focused on its two flagship brands Jack Daniels and Forrester. Brown-Forman’s annual net sales are in a range of USD 3.5 Billion and an operative income of above USD 1 Bn.

With sales of roughly USD 14 Bn and an operating income of roughly USD 2.5 Bn, British giant Diageo is much larger than Brown-Forman and Campari Group.

But Diageo also has lower operating margins than Campari Group or Brown-Forman. Diageo has a different product portfolio and another strategic approach with a strong focus also on beer brands (such as Guiness beer) which have lower margins than spirits.

Campari Group came out of the pandemic stronger than ever

Looking at the stock price dynamics, it is obvious what an exceptional wealth creating factor Davide Campari stock must have been for its long term oriented shareholders.

Campari Group has been on the stock exchange for 20 years and has increased its market capitalisation 15 times to EUR 13 billion which means that we are speaking here about returns of 16 % since the company IPO. Now, that is a significant outperformance of industry peers such as Brown-Forman and Diageo etc.

During the pandemic in 2020, Campari Group worked hard strengthening its competitive position, having an eye on cost discipline and on deleveraging while at the same time ensuring future growth mainly through bolt-on acquisitions.

For instance in June 2020 Campari Group acquired a 49 % interest in Tannico, a leading e-commerce platform for wines and premium spirits in Italy. The investment amounted to around EUR 24 Mio. and is an interesting move given the fact that the world was in lockdown amid the COVID-19 pandemic and most businesses focused on preserving cash to survive. Not so Campari Group. Also in June 2020, the company acquired French Champagne Lallier for over EUR 48 Mio.

In February 2020, before the pandemic hit, Campari Group had already acquired the Baron Philippe de Rothschild France Distribution S.A. for EUR 60.

What’s also interesting, is that amid heavy investments to grow the business, Campari Group also managed to cut debts.

The first half 2021 results highlights show how nicely Campari Group recovered from the pandemic.

Quote:
• “Strong business momentum confirmed, driven by the consumption bounce back in the on-premise channel
upon its gradual reopening in Q2, sustained home consumption driving the off-premise channel, and a favourable comparison base.
• Reported net sales of €1,000.8 million, +37.1% organic growth vs. the first half of 2020 (+30.2% on a reported basis), and +22.3% organic growth vs. the first half of 2019.
• EBIT adjusted of €223.2 million, +88.7% organic change, +640 basis points accretion (+33.3%, +190 bps margin accretion vs. the first half of 2019).
• Group net profit adjusted of €156.8 million, up +101.9% excluding the net positive adjustments of €2.8 million.
• Net financial debt of €1,064.8 million as of June 30th, 2021, down €39.0 million vs. €1,103.8 million as of December 31st, 2020. Recurring free cash flow at €141.6 million, up +117.7% vs. H1 2020 and +64.2% vs. H1 2019.”

Now, Campari Group is not a dividend aristocrat such as Brown-Forman with a more than 25 years long streak of rising dividends. And given the fact that Campari Group stocks almost always trade at a market premium (most of the time over 35 Price Earning Ratio), investors have to be prepared to enter into a modest starting yield of around 1 to 1.5 %.

Campari Group held its dividend payout stable through the pandemic. The company has been paying out dividends since 2001 and there has not been an increase every year. But still, over the years the dividend has grown by 120 % over the last 20 years. Campari clearly gives the preference to growth and acquisitons.

Campari Group has a healthy dividend payout ratio which has been in a range of around 30 % on average since 2001.

As a fast growing niche player, Campari Group has plenty of opportunities to increase its top- and bottom line over time which should find its reflection in attractive dividend growth over time.

Disclaimer
You are responsible for your own investment and financial decisions. This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

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October 2021 Crypto Portfolio Update

Posted on October 9, 2021 in Investing

Having been a Dividend Growth Investor since 2009 with a strong focus on acquiring high quality income generating assets, it took me quite a while to take a stake in Crypto Currencies.

Taking exposure to Cryptos is not investing per se. It’s a combination of speculating but also a way of participating in the underlying technologies and applications.

As a long term oriented investor I want to be positioned for the future. I want to have a stake in winning businesses and technologies.

That’s why I also started my Tech Portfolio back in 2020. My Dividend Portfolio is set to generate around USD 15’000 in passive income and my Tech Portfolio not only brings dynamic and growth to my overall investments, but I am also positioned in the future dividend payers. For instance, I wouldn’t be too surprised to see Alphabet pay out dividends in the not so distant future.

Cryptos are still at a very early stage. And there are fantastic opportunities, so I consider it as less risky to invest a few thousand USD to have some exposure instead of remaining completely at the sideline.

So, I have “skin in the game” in the amount of around USD 4’000, invested in following Cryptos:

  • Bitcoin
  • Ethereum
  • Cardano
  • Ripple

You can find here some background information on the specific Cryptos and the underlying technology and applications:

Currently, I have roughly USD 4’750 in these four Crypto Positions (Bitcoin, Ethereum, Cardano, Ripple).

If you put that amount into context to our other investments:

  • Our Dividend Stock Portfolio plus Tech Portfolio have currently a market value of around USD 500’000.
  • Our Peer to Peer Lending Positons make up for around USD 15’0000 and
  • we have roughly USD 35’000 invested into corporate bonds.

So, our Crypto Portfolio represents less than 1 % of our total invested capital (around half a million USD).

As of writing this blogpost, my Crypto Portfolio shows a book gain of around 28 % resp. USD 750.

From May to October, my Crypto Portfolio fluctuated a lot:

Clearly, Cryptos are extremely volatile and there is inherently a significant speculative element which you have always to bear in mind when taking a stake in that kind of asset.

On the other hand, Bitcoin, Ethereum, Cardano and Ripple are connected to very interesting applications and technologies which have huge potential to completely transform our economy and the way we interact. That’s the main reason I want to have a stake in them.

What about you? Are you invested in Cryptos as well? Have you made any moves lately?

Thanks for sharing in the commentary section below.

Disclaimer
You are responsible for your own investment and financial decisions. This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

Investing USD 8’000 in October 2021

Posted on October 5, 2021 in Investing

For long term oriented dividend growth investors in the accumulation phase, bull markets really are a double edged sword. On one side, it’s great to see the book values of share positions grow and of course this is a significant factor in the wealth accumulation process. On the other side, acquiring income generating assets is tough when they get more and more expensive.

September 2021 showed some welcome price pressure on international stock markets and after a few days of red stock market days, I decided to pull the trigger and put the amount of roughly Swiss francs 8’000 (CHF; 1 CHF = USD 1.1) to work by investing into following businesses (see in brackets the invested amounts):

  • Geberit (CHF 1’377)
  • Schindler (CHF 1’928)
  • Emmi (CHF 1’960)
  • Ems Chemie (CHF 1’783)
  • Eckert & Ziegler (CHF 953)

Geberit is a Swiss multinational group which is specialized in manufacturing and supplying sanitary parts and related systems. Geberit has an incredible economic moat on the back of a strong brand giving the company with pricing power. I particularily like the very strong financials with very low debts (debt-equity ratio of around 0.40).

Schindler is another Swiss “hidden stock gem” with an amazing international presence. The group manufactures escalators, moving walkways and elevators around the world. The business model is attractive with high ROI and benefitting of global megatrends (population growth). Like its peers Otis, Kone and Thyssen, we see as well with Schindler an attractive element: recurring income as escalators and elevators need regular services once they are installed.

Emmi is a Swiss milk processor and dairy products business. It’s a rather small company compared for instance with Danone, but I know that company quite well which operates in my home-market Switzerland.

With already some chemical business exposure through investments in BASF, Covestro, Victrex etc., I hesitated some time buying stocks of Swiss specialty chemical player Ems Chemie. But as we have here such a high quality business and with the stock price having been falling so nicely in September, I just couldn’t pass on this buying opportunity.

Eckert & Ziegler has been on my personal watchlist for some time. The company is one of the world’s largest providers of isotope technology for medical, scientific and industrial use. The core businesses of the group are cancer therapy, industrial radiometry and nuclear-medical imaging.

For 2021, I target USD 15’000 in total passive income and these five new stock holding positions having been added in October will strengthen my Dividend Portfolio further and increase my forward dividend income by around USD 200.

It’s just great getting paid each month with dividends and giving my income a nice boost.

What about you, fellow reader, did you buy some stocks recently?

Disclaimer

You are responsible for your own investment and financial decisions. This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

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USD 1’400 September 2021 Passive Income

Posted on October 1, 2021 in Investing

With the third quarter 2021 in the books, let’s have a brief look at the September Passive Income Update:

  • Swiss francs 1’460 (CHF 1 = USD 1.1) versus CHF 1’200 in September 2020 , an increase of 21 % Year over Year (YoY).
  • In the past nine months, over CHF 10’600 resp. USD 11’700 have been collected in passive income which represents a 78 % achievement rate with regard to our 2021 USD 15’000 goal.
  • The past nine month cummulative passive income is already 12 % higher than the one for the whole 2020.
  • Last year, mining giant GLENCORE had cut the dividend but has now resumed its shareholder distributions. Anglo-Australian peers Rio Tinto and BHP group significantly hiked their dividends compared to the previous year, contributing to the nice uptick on a YoY basis
  • Royal Dutch Shell increased its dividend by 38 % compared to the previous quarter, but still some way below the amount it paid aout before the pandemic. Royal Dutch Shell has been in my portfolio since 2009 and returned almost 90 % of the purchase amount I paid back then in dividends. But clearly, investing in high yield stocks can by tricky.
  • British Petroleum (BP) increased its dividend by 4 % which is a welcome boost, after the company haved its shareholder payouts in 2020. BP plans to maintain its dividend growth rate in a range of 4 % per year until 2025.
  • Insurer Legal & General increased distributions by 5.1 % and its peer Aviva by 37 %. Aviva however will made its payout in October whereas last year the the second semester payout was made in September. So, without these dividend date changes there would even be a higher September passive income.
  • British bank HSBC giant resumed its dividend payments in the third quarter, after having stopped shareholder distributions amid the COVID-19 pandemic.
  • Microsoft hiked its dividend by over 10 %. Its not a strong dividend contributor but has provided my Tech Portfolio with a nice growth element and a very nice book gain (Microsoft shares bought in 2020 for around USD 2’000 have now a market value of over USD 3’000).
  • NVIDIA pays me just around 10 cents quarterly dividend, but this position is an excellent growth contributor with a lot of potential in the future. I bought one share months ago for less than USD 500 and after the stock split I am sitting on 5 shares with a market value of over USD 1’000, a nice double of my investment.
  • Our dividend stock portfolio as well as the tech holding portfolio are near an all time high due to substantial book gains. The combined market value stands at around USD 460’000 in company shares. Adding our Peer to Peer and Crowdlending investments (Bondora, Mintos, Iuvo, Twino, Evoestate, Crowdestate) and some corporate bond positions as well as my Crypto Portfolio, we have around half a million invested in various assets classes.

What about you, fellow reader, how was your September in terms of Passive Income?

Disclaimer

You are responsible for your own investment and financial decisions. This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.