Unethical Investing
from 09/01/2024, by uni — 8m read
I just received my first paycheck from this semester's software engineering co-op and immediately invested half into my portfolio. It's been over a year since I started building this portfolio. According to Robinhood, I bought my first stock on April 20th, 2023. Today, I achieved my goal of earning an annual dividend of $365, or a dollar a day!
PS D:\website\uniyxnet> & C:/Users/uni/AppData/Local/Programs/Python/Python310/python.exe d:/dividends.py
Ticker Shares Price Equity Yield Yearly Dividend
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VTI 13.00 $278.38 $3618.94 1.34 % $48.49
SCHD 21.00 $84.53 $1775.13 3.43 % $60.89
SCHG 26.00 $101.63 $2642.38 0.42 % $11.10
JEPQ 35.00 $54.08 $1892.80 9.16 % $173.38
XOM 12.50 $117.94 $1474.25 3.22 % $47.47
WM 5.03 $212.04 $1066.56 1.43 % $15.25
AAPL 4.00 $229.00 $916.00 0.44 % $4.03
NVDA 10.00 $119.37 $1193.70 0.03 % $0.36
RTX 5.00 $123.34 $616.70 2.06 % $12.70
ABBV 2.02 $196.31 $396.55 3.18 % $12.61
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Total Equity: $15593.01
Total Estimated Yearly Dividend: $386.28
I'd describe my current portfolio as a dividend growth portfolio with a focus on technology. The backbone of my portfolio consists of three ETFs:
In hindsight, I think I made a mistake by focusing heavily on dividends rather than growth when I first started. Ideally, I should either consolidate SCHD and SCHG into VTI or maintain an equal split between the two. As it stands, there seems to be too much overlap in holding all three, but I'm no expert. Nonetheless, the portfolio has performed well over the past year, and seeing those dividends roll in always feels rewarding.
JEPQ (JPMorgan Nasdaq Equity Premium Income ETF) is an interesting fund. It generates income by selling covered calls on the NASDAQ 100 index and typically offers about a 10% annual dividend. One perk of JEPQ is its monthly dividend payments instead of quarterly, which are always nice to see.
A quirky goal I set for myself was to accumulate enough JEPQ shares to generate enough dividends to buy back an entire share each month. At current rates, that would require 127 shares, totaling nearly $7,000. While this isn't a serious strategy, it's an arbitrary milestone I aim to achieve someday. Ideally, JEPQ is suited for those with a retirement account and significant capital to leverage the fund's dividends.
XOM (Exxon Mobil) was an easy pick for me. Oil isn't going away anytime soon, at least not in my lifetime. Fossil fuels remain more investable than renewables at this point, which face more roadblocks compared to oil and gas companies. Our energy demands won't wait for renewable technologies to catch up. "The future is plastics," after all. I'm supportive of renewables, but they're still a long way from overtaking this fossil fuel powerhouse.
WM (Waste Management) is essentially the other side of the coin for XOM, managing the waste and recycling of the plastics they produce. Trash and recycling are societal constants; they'll never disappear. Plus, WM operates in an oligopoly and is heavily state-sponsored. What's not to love?
AAPL (Apple) is always a buy. I've not always been Apple's biggest fan, but I've come around since they ended their contract with Intel. Apple Silicon is remarkable and arguably refocused the company's attention on computing. Warren Buffett, known for historically avoiding tech stocks, made an exception for Apple. Unlike other tech companies, Apple has managed to build a cult-like following with extremely loyal customers.
NVDA (Nvidia) has been the stock market's strongest performer. The question everyone is asking, however, is: how much higher can it go? I don't have a specific price target, but I'm confident it will continue to climb. Nvidia consistently produces the strongest graphics cards on the market and is a dominant player in AI, selling the "shovels" in this modern gold rush.
Moreover, Nvidia knows it controls the market, which sometimes leads to questionable business practices. There's a reason EVGA severed ties with them. On the other hand, AMD appears to be the more "ethical" company, offering open-source options and greater accessibility for researchers.
RTX (RTX Corporation) is a defense powerhouse and will likely remain so for decades. There's no specific reason for choosing RTX over other defense companies, but just read the contracts on the Defense Department's website. Is it morally dubious to invest in defense companies? Probably, but it's not like they're excluded from major ETFs (although "Green ETFs" do exist). For now, we've yet to find a way to ensure national security without weapons.
ABBV (AbbVie Inc) is a biomedical company known for its blockbuster drug, Humira. Recently, the company has had to reinvent itself since the Humira patent expired. With several biosimilars entering the market, AbbVie has been seeking new revenue streams. They have other immunosuppressants like Skyrizi and Rinvoq and have even ventured into cancer drug research. Known for evergreening, AbbVie's leadership has made it clear, albeit indirectly, that shareholders are their top priority, right after the patients they serve.
I'll admit that I have some questionable ethics when it comes to investing, but the returns speak for themselves. There's no such thing as an ethical capitalist - it just doesn't exist. If I have to invest "unethically" to make some money as the little guy, I don't feel particularly guilty, depending on the circumstances.
I'm looking to add more so-called "sin stocks" to my portfolio soon. The obvious choices would be big tobacco:
All three companies are adept at generating steady revenue and adapting to market changes, such as transitioning to smokeless tobacco, electronic vapes, and even cannabis. I detest tobacco, and whenever someone smokes near me, I find solace in the fact that I'm making a bit of money off them - suddenly, the annoyance becomes a bit more tolerable. I'm still researching which one of the three I should invest in, though.
NVO (Novo Nordisk) is another potential addition. For lack of a better phrase, they've "cured" obesity. Their semaglutide drug, Ozempic, has been prescribed widely, and its benefits might outweigh its side effects, given obesity's many complications - heart disease, liver and kidney failure, and more. These weight-loss drugs are even being researched as a possible treatment for alcoholism. If the buzz around these miracle drugs continues, I might have to swap out ABBV for NVO.
COST (Costco) is another stock I've had my eye on, but I keep missing the right time to buy. Every time I think it's peaked, it climbs even higher. I recently sold my single share to consolidate into VTI, but if you've ever been inside a Costco, you know how amazing they are - consistently high-quality products sold in bulk. However, its current valuation is incredibly high, almost like a tech company. I'll likely buy back in once I'm content with my ETF holdings, as it will probably keep rising. A stock split would be nice, too.