FFJ Portfolio – December 2020 Report

This is my December 2020 FFJ Portfolio report. The portfolio was created in January 2017 for the purpose of demonstrating how investing in high quality companies with competitive advantages and with a record of consistently increasing dividends can assist investors in reaching their long-term financial goals without the need to speculate or to chase dividend yield.

I think we might be hard pressed to say that 2020 was not an 'interesting' year from an investment perspective.

In March we witnessed a sharp broad market pullback which presented investors with an opportunity to acquire shares in high quality companies at reasonable valuations. Unfortunately, many took the opportunity to take up 'day trading'....who needs casinos when you can safely gamble from the comfort of your own home during the COVID-19 pandemic?

Fast forward a few months and market conditions were remarkably similar to the dot.com days. Don't worry if the company has no/marginal revenue, is hemorrhaging cash, has little chance of becoming profitable in the foreseeable future, or is just an outright fraud! Take a position and make sure you unload it to a 'greater fool'.

Share Purchases in December 2020

I do not pay a great deal of attention to 'broad market' conditions because I do not invest in the 'broad market'. My primary focus is to invest in high quality companies and the vast majority of my existing holdings fit that bill. As a result, my current game plan is to increase my exposure to existing holdings as opposed to initiating new positions. In fact, at the end of this recent article I indicated:

'Warren Buffett, one of the greatest investors of all time, has stated on multiple occasions that 'an investor should act as though he had a lifetime decision card with just twenty punches on it.' This is a bit extreme so let's suppose this number is expanded to 30 - 35.'

In this August article I listed my top 30 holdings. While the rankings have changed slightly since mid-August, I am trying to restrict the total number of companies in which I have invested as I typically review all 10-Ks, most 10-Qs, and try to stay abreast of major developments. To be invested in more than 30 - 35 companies would occupy far too much of my time.

Having said this, following my analysis of Tyson Foods, Inc. (TSN), I did initiate a new position in December.

The only other purchases I made during the month using 'new' money were to existing positions in Enbridge Inc. (ENB.to) and Lockheed Martin Corporation (LMT); I disclosed these purchases in articles which can be accessed here.

FFJ Portfolio Holdings and Dividend Income

The holdings within the FFJ Portfolio’s ‘Core’ and ‘Side’ accounts can be found here.

In addition to the dividend income generated from the holdings within the FFJ Portfolio (the dividend income reports can be accessed here), I received dividend income from the companies reflected below. The companies reflected in bold and italics are holdings in which I have exposure within the FFJ Portfolio AND in undisclosed accounts. The companies not in bold and italics are held solely in accounts for which I do not disclose details.

The dividend income received from these companies was reinvested to acquire additional shares so as to...generate more dividend income (wash, rinse, repeat).

  • Enbridge (ENB.to)
  • Church & Dwight (CHD)
  • Johnson & Johnson (JNJ)
  • Microsoft (MSFT)
  • Exxon Mobil (XOM)
  • Otis Worldwide (OTIS)
  • 3M (MMM)
  • McDonald's (MCD)
  • Raytheon Technologies (RTX)
  • FedEx (FDX)
  • Brookfield Asset Management (BAM-a.to)
  • Becton Dickinson (BDX)
  • Intact Financial (IFC)
  • Visa (V)
  • United Parcel Service (UPS)
  • Emerson Electric (EMR)
  • Hershey (HSY)
  • Coca-Cola (KO)
  • CDK Global (CDK)

In my November report I made the following 2021 FFJ Portfolio dividend income projections:

  • Core Accounts – CDN ~$17,600 and USD ~$23,500
  • Side Accounts – CDN ~$24,200 and USD ~$17,000

Upon closer analysis I think I underestimated the projected dividend income. I will not, however, revise my targets at this stage but will reevaluate the situation as the year progresses.

Final Thoughts

My 'final thoughts' are pretty much the same as expressed in my November article. It is certainly possible the euphoric market conditions witnessed in recent months could persist indefinitely. I am, however, cautiously optimistic the 'bizarre' political situation in the US will play out in such a way that we might experience considerable market turbulence which will translate into more reasonable valuations.

Stay safe. Stay focused.

I wish you much success on your journey to financial freedom!

Note: Thanks for reading this article. Please send any feedback, corrections, or questions to [email protected].

Disclaimer: I have no knowledge of your individual circumstances and am not providing individualized advice or recommendations. I encourage you not to make any investment decision without conducting your own research and due diligence. You should also consult your financial advisor about your specific situation.

I wrote this article myself and it expresses my own opinions. I am not receiving compensation for it and have no business relationship with any company whose stock is mentioned in this article.