Just be aware that Rio Tinto (as well as any other mining company) are most often only profitable as long as they do not have to clean up their mess behind. There is a regulation risk which is hanging over each mine and which is hard to predict.
3 Likes
Unfortunately, you are not wrong. The environmental impact of the mines can not be denied. However, today (to the best of my knowledge) there is no clean way of extracting minerals from the ground. I personally prefer to have mining companies which have to report their practices in reports and allow at least some inside. The alternative would be illegal mining or state owned companies which do not need to be transparent.
1 Like
Thanks @Your_Full_Name for your feedback. To be honest I have chosen RIO after some classes in the university of my major in resource management. The main reason is that RIO has the former De Bore incorporated which is leading the diamonds business. As there are increasing demands for diamonds for industry applications. Only afterwards I understood the stock dividend etc. It’s not a technical analysis but I liked the idea of having the diamond business covered even if I would assume that the overall impact to the revenues are neglectable.
Thanks for sharing the EPD stock, beside the interesting points including stock dividend etc. I do not really like Gas and Oil stocks. While I know that we need Oil and Gas also in the future for several things beside fuel and heating I strongly hope that we will reduce the use of Oil and Gas significantly and way more than for minerals as covered by RIO.
However, I will start reading about EPD thanks for the tip.
2022 is coming to an end and I thought I’d provide an update here for those interested.
Stockpicking portfolio now contains over 100 securities. I added about 20 companies since my initial post and sadly had to sell a few in December (because they’re publicly traded U.S. limited partnerships, e.g. EPD, which starting next year you basically can’t reasonably own anymore as a non US citizen).
Yield on cost is 5% and the TWR for this year so far is about 3.5% (CAGR since inception in June 2019 is about 24%).
Since inception the stockpicking portfolio has mostly tracked the S&P 500 on a compounded return basis, but this year – funnily enough right around since the market peaked – it has left the S&P 500 somewhat in the dust.
My picks mentioned in the March 2022 post all went lower. 
I still believe in the businesses though, so I stuck to the plan and kept averaging down and added to the positions until they became full (full position = dividend return reaches 2k USD per year).
The 5 March picks are part of about 25 positions which are in the red since I started buying them. The rest are green. I don’t believe I’ll be able to maintain this ratio and will over time maybe consider selling insanely overrated positions instead of holding them forever as initially planned. One current deterrant from selling are Swissquote’s insane transaction fees.*
For giggles … well, actually, more as proof that diversification works:
- my best position (OLN) is up over 400%
- my worst position (LNC) is down over 40%
Feel free to comment, but if you’re a fundamental index only person, thanks for clicking into this, please enjoy your time elsewhere.
* Maybe this will solve itself if Swissquote wants to charge me on my portfolio on a percentage basis instead of the flat cap – I’ll then surely transfer to IB.
7 Likes
Would you mind sharing your 100 selections to give us an overview? I checked on OLN and it seems very interesting indeed. However, I wonder how do get these companies? I would like to add to my satellite strategy some „basic material“ stocks which do some core products one step up in the supply chain than pure mining companies. I have added SQM for the lithium carbonate (hexagonal structure) but would be interested in some polymer manufacture or similar with a long history
2 Likes
Sure. You’ll find the entire stockpicking portfolio here.
On OLN:
I have to admit it ended up in my portfolio kind of by accident and I probably wouldn’t buy it anymore with my nowaday approach to picking stocks.
I picked it at the time (March 31 2020) because it was analyzed in a webinar I attended that day and the company and its valuation looked attractive then. I’m keeping it in my portfolio because my yield on cost is over 7% and I can live with that.
I probably wouldn’t pick it anymore because they haven’t raised their dividend in over 20 years and their BB+ S&P credit rating is below investment grade.
I find Basic Materials companies difficult to pick for my portfolio because of my preference for stable (and ideally growing) dividends. Basic Materials tend to be cyclical and the dividends often follow that pattern (as I learned e.g. with CMP).
The only one I like within my portfolio and that I’ve recently added to is LYB.
From a pure valuation point of view (ignoring the steadiness of the dividend) many Basic Materials companies look interesting, however, including SQM that you mention.
1 Like
Very interesting.
一二三四五六七八九十
2 Likes
Hi!
I’m on LOGN and UBXN
I lost a lot on UBS in 2008 
I lost everything on ALADO.
I won a lot on LIFE (even with 33% taxation from Israel!?)
Good luck for 2023!
1 Like
Thanks a lot for being so transparent 
. I see some of my stocks in the list as well as several very interesting possibilities. I will research them a little bit and most likely add some to my portfolio (as always as Satellites with the ETF core)
Just out of curiosity, why did you opt in for Tobacco? I looked closely at imperial brands in the past which I thought to be interesting as they are big in cigars and provide stock dividends (as you mentioned above).
However, I think Tobacco will be in decline because of the health trend in the future. Beside that maybe Tobacco stock will be banned for funds etc. do you not have such concerns?
1 Like
Tobacco companies have been among the best dividend-paying stocks for a long time.
Don’t let yourself bemisled by regulation and media coverage in some rich, health-conscious „Western“ European countries like Switzerland. The numbers of smokers globally has probably just reached all-time high - and thankfully more and more young teens are taking up smoking in many countries.
That‘s why we‘re in a stockpicking thread, mind you.
2 Likes
Totally agreed with @San_Francisco.
Also, it’s been said for literally decades that Tobacco will be in decline because of “the health trend in the future” … 
Despite the evergreen doomy outlook these companies have been growing earnings as steadily as Johnson & Johnson. Here’s for example Altria’s Adjusted Operating Earnings since 2001 (orange line represents 15x EPS, which is an appropriate multiple given Altria’s growth):
At the danger of jinxing it with market gods, I over the next 3-5 years am actually expecting double digit annualized returns from Altria. Meanwhile, I will get paid a 9.37% yield on cost while waiting.
If I had the guts to follow Buffett and Munger’s (non-) diversification advice and had a concentrated portfolio of only 10 or 20 stocks, Altria would be one of them. Alas, I’m a risk averse chicken and my Altria position is full - otherwise I would add at these levels.
I now work part time in a boutique asset management company that is introducing ESG as a metric as we speak. Allow me to let you in on the dark secret of ESG: it’s a total scam.
Don’t get me wrong: in spirit and direction, I kind of agree; in its implementation for asset management, it’s pure bullshit.
Did you know that FTX (the crypto exchange that recently went bankrupt) had a better FactSet* Governance (G as in ESG) rating than Exxon Mobile? Me neither.
From a more constructive angle: I view ESG as an opportunity to generate more alpha for myself as I am not bound by self-inflicted return reducing wounds like banning great businesses because of ESG.
* FactSet is one of the large independent financial data providers.
5 Likes
Not investment advice:
Cheers, happy to serve as a potential inspiration… to be clear I wouldn’t use my list as a seed for potential buys of yours without considering valulation amongst many other criteria which sounds like what you are planning to do?
Anyway, please don’t just add them to your portfolio just because they look interesting (doesn’t sound like you were going to, just making sure).
Valuation is BTW among my top criteria for deciding whether I should add a new company or expand an existing position.
I think that these days and in the future even more the world will be smaller with more equality and less diversity and hence I believe that Tobacco is not a future sector. I have actually been in an interview for a position at a Tobacco manufacturer (for a head of quality position so no idea about the business as such) and this manufacture is changing completely to non smoking devices. I really think that this is not the future. But also true that this trend maybe takes several decades so if the return is good why not.
I think the problem could be that if the big funds do not buy the stocks anymore the lower demand will be noted in lower stock prices, this fear of not getting branded as irresponsible is quite big and will potentially lead to actions that are not rational.
Just my 2cents
1 Like
So…? It could create a one-off demand shock. If big funds aren’t buying the stock anymore, does that doesn’t mean the company will be any less profitable. Basically gives us a discount on a great stock, doesn‘t it?
And given how steadily profitable and how high the dividend yields are - especially in the tobacco industry - there’s a good downside protection from dividends alone. I mean, the stock price just isn’t going to halve and thereby dividend yield to double from like 5 to 10 per cent.
2 Likes
That is also true, just believing that with the current connected world any trend will be implemented faster. However thanks to @Your_Full_Name and @San_Francisco you gave my great imputs on reconsider Tobacco stocks. As mentioned I applied at British American Tobacco and thought that they have an interesting approach from a scientific standpoint but I don’t think they make a lot of money on it, I will therefore look at Altira and IMP to see what is their approach and outlook.
@Your_Full_Name I will for sure make my own research before buying any stock and at the end it will always be my responsibility to add a stock based on recommendations (and still thanks so much for sharing your knowledge)
When I look out for stocks I use swissquote‘s advanced search function to filter for P/E ratio, volume and Dividend ratio. However, I love your charts with dividends increase. Which search/analysis engine do you use to analyze/find stocks?
As mentioned before, my research consists of reviews of the earnings, forecast but most of it is purely if their products make sense for me, to connect with my stocks. I would love to have a more data based decision making but I lack the tools for that (and partially also the lack of time).
Just to complete below my list of stocks which are currently in my portfolio:
MRK
BMY
BION
RIO
HBMN
0241.HK (alibaba health)
OHI
NESN
SQM
It’s a bit healthcare heavy (MRK and BMY are company stocks which I have not sold)
Thanks to all for the great discussions and a happy and successful new year.
PS: I fully agree on the ESG that it’s a scam, however this is what I mean with not being rational if Mr. Market gets irrational on some stupid things I may run out of money before it gets rational again 
3 Likes
For screening I mostly use finviz which includes a nice screener. However, in practice I probably get most inspirations for looking more closely at a company via these sources:
- a bunch of authors on Seeking Alpha
- companies discussed by Chuck Carnevale on his FASTgraphs YouTube channel
- companies discussed in the Inner Circle of investor Nils Gajowiy. Some of these companies are also discussed on his Zahltagsstrategie YouTube channel
For actual analysis I use the FASTgraphs tool (they offer a free portfolio with about a dozen stocks if you want to take a look without paying up). I look at P/E (or Free Cash Flow for REITs), dividend yield, dividend history (dividend growth &. persistency, how long have they raised, did they ever cut, etc), are they below or at most at fair value compared to the appropriate multiple, credit rating, debt, various analyst forecasts regarding earnings and a bunch of other things.
Lastly, I’ll look at company presentations and their latest SEC 10-K filing.
E.g. NSA, my most recent new REIT portfolio addition (on Friday Dec 30 2022, no less :-)) was first discussed in Gajowiy’s Inner Circle in late November. He also mentions the company in his YouTube portfolio update in mid December. I finally felt comfortable with buying the company last week.
Likewise!
4 Likes
FWIW:
Swissquote started displaying ESG scores a little while ago. Altria (MO) has a rating of 88 (out of 100) and is the 8th highest ESG rated company in my portfolio. The highest rated company in my portfolio with a score of 94: BTI …
I thus don’t think these companies will soon be booted from any funds.
My worst rated companies with a score of 12: LAND, a farmland REIT, and BIPC, a company owning a globally diversified portfolio of high-quality infrastructure assets.
Both rate way worse than, say, Lockheed Martin (LMT), maker of fighter jets and cluster bombs, scoring 71 on the ESG ladder.
Thanks for sharing, your portfolio is very inspiring. In terms of transport/shipping sector I saw you don’t have DSX. Have a look at their recent dividend payout, it’s quite impressive… It is also one company I might consider stockpicking when I have to much “fun” money laying around.
2 Likes
Thanks for mentioning Diana Shipping.
This microcap looks interesting, appears undervalued, and the dividend yield looks tempting.
However, I personally don’t have the stomach to own it because the dividend history looks terrible.
Looking at more recent years and forecasts two years out they do seem to be on a good trajectory for growing operating cash flow, though.
I’d just personally prefer a more steady track record of paying dividends.
Admittedly, I own a shipping company as well: Ship Finance Lease (SFL). 
They focus on oil & gas transportation which is probably a good business to be in right now.
Their dividends were also cut (but not suspended) until recently, but it looks like their cash flow is growing.
Their prospect looks stable and it looks like they’ll have stable earnings over the next couple of years. What I also like is that analysts have been revising up their earning estimates for SFL.
We’ll see. It’s not my highest conviction call, but I feel they’ll generate stable income. The company has a substantial portfolio of owned and partially owned vessels employed on long term fixed charters with a weighted average tenor of close to 7 years, which should generate the cash flow to pay those dividends.
1 Like
Thank you for your insight, very interesting and learnfull. I also like your strategy very much which seems to be to search for the stocks with most stable/constant high yield revenue over a longer period of time. It is quite exciting and tempting but the work behind must be huge, especially that you have a wide selection of such stocks. I was wondering how much % of your portfolio you dedicate to this stockpicking strategy?
2 Likes