Tag Archives: ABR

My Current Investment Positions

I am fairly pleased with my current portfolio since I developed my own investment strategy. My investment activity is still not as accelerated as I’d want it to be but slow and steady is good. I got rid of all but one of the first stocks I bought before I really knew what I was doing and have been focusing my effort on investing in dividend stocks.

I have been investing at least $200/month. I wish it could be more but reality is a bitch. Reality is what we normal people have to deal with regardless of what the so-called “investment experts” on the internet say.

But so far, my portfolio as increased 13.51%. My holdings:

$ABR
$ACRE
$KO
$O
$OBLN
$T
$VDE
$VNQ
$VYM

I’m also looking to diversify my portfolio a bit more by buying some bond EFT’s (i.e. either $VTIP or $VTEB). Also, with the current pandemic it might be good to invest in a pharma company. But which one? I might look to buy some $VHT, an ETF that invests in pharma companies within the Healthcare sector.

When Do I Sell?

I haven’t been investing for that long of a time. I’ve acquired a few company stocks and ETF’s. But my sales have been few. Right now I’m looking for sell all of my Obalon (OBLN) stock because it is one of the first ones that I bought when I was first starting out. At that time I really didn’t have a clear idea of what I wanted to do. I didn’t have a strategy. I bought Obalon and and a couple of others because they were companies that were in the healthcare industry. That was it. None of them paid any dividends and there wasn’t any real growth with them.
After developing my own investment strategy I decided that the money I had invested in those companies could be better used with other investments. I sold the others at a bit of a profit but held Obalon because it was trading under what I paid for it. I decided to wait to see if the price would come back.

When I first started investing I opened an investment account with Robinhood. When I did that I received a free stock for Lyft. I decided to hold that one for a little while. When I was given that share of stock the price was around $42/share. It also wasn’t paying any dividends. I held that stock for a little while and the price dropped down to the low $30’s per share. The stock fluctuated in that neighborhood for a while. I finally decided to sell my share and put the money to better use.

Now I have developed my own investment strategy and I feel confident that I know more than I did when I first started. I now invest in dividend stocks. If a company doesn’t pay dividends then I don’t have a real interest in investing my money with them. Am I missing out on windfall returns? Maybe. But I’m also missing out on catastrophic losses. I’m at an age when I can ill afford to lose money because I don’t have as much time to recover from major losses. Also, if I am going to be investing in a company for the long term then I want to get paid for my time that I am waiting for the stock to grow, thus the dividend payout. The dividend payout is the company’s payment to me for being patient and sticking it out with them.

So, based on all of the above when do I sell my stock? I will only consider selling my stock when either of the two conditions below are met:
1. The company drastically cuts their dividend payout 2 times or more in a row.
2. The stock price increases 200%+.

So far I’ve been lucky in that none of my investments have had their dividend payouts cut. But I will tolerate 1 such payout cut but if they go to 2 in a row, they’re history.

Value or Dividends

The one question that I had to ask myself was I going to invest my money into stocks that were going to increase in value (price/share) over time or stocks that would be paying a specific amount per share.

Investing for value is by far the more riskier process. You can’t always tell if a stock’s price will go up or down. Take for example the 2 shares of Obalon (OBLN) that I bought back in 2019 before I really had a grasp of what I was doing. I had just signed up with Robinhood and I had $5 burning a hole in my pocket. At that time I bought 2 shares at $1.89/share and I bought 5 shares of Guardian Health Sciences (GHSI) for $0.206/share. I bought those shares because, at that time, I was focused on the Health sector and thought that investing in anything Health industry related was a smart investment. As I learned more I ended up changing my investment strategy (which I didn’t know it was a strategy then). A couple of month’s later I sold the Guardian stocks for $0.55/share. The Obalon share price had dropped down to below $0.80/share and hasn’t moved up over $1. I have a standing sell order to rid them at $2.20/share (about a 20% increase over what I paid for them). At this time, I’m not looking to lose money.

At the time I signed up with Robinhood I received a free (no cost to me) share of Lyft (LYFT). When I got it the share price was in the $40 range. I didn’t know anything about the business model for the company nor what their plans were. So, I just held on to the share and started doing some research about what was going on with Lyft. One of the things I learned was due to the lockdown because of the Corvid-19 neither Lyft or its competitor, Uber, were going to be going great guns in price. I also learned due to the restricted revenue due to the virus, revenue wasn’t planning on growing. Additionally, in all of the years that Lyft has been in business it has never paid any dividends and was not planning to do so in the near future. I ended up selling it for $29/share. I didn’t pay anything for it but I didn’t maximize the gain I could have gotten. I determined that value investing was not for me.

So, where did this leave me? It left me looking into dividend investing, where I invest in stocks that pay high dividends on a consistent basis. This is where Seeking Alpha and Finviz came in handy. I used Finviz’s Screener feature to identify companies/funds that were paying out high yield dividends. The criteria I used was:

  1. High Dividend Yield greater than 5%.
  2. The share price must be less than $20/share (I’m not overly rich).
  3. They have been paying dividends for many years and their dividend growth is on the positive side.

The logic for these is to be able to get the largest return I could and to be able to buy the maximum amount of shares (because dividends pay per share) with the limited funds. That’s not to say I am not invested in higher priced funds, but that’s for another post at a future time.

Based on the above criteria I identified 2 stocks; Arbor Realty Trust, Inc (ABR) and Ares Commercial Real Estate Corporation (ACRE). I then researched these stocks further on Seeking Alpha. They both fit with what I was looking for, were well within my comfort zone regarding risk, etc. I will use the dividend from these socks to reinvest into the same companies. At some point I will be looking to take the dividends instead of reinvesting but that will be a few years in the future.