Stock Of The Month: AGNC

First off, I bought a little more Netflix (NLFX) last month to get my cost basis down, as CEO Reed Hastings continues his quest to become the most notorious business school case study subject ever...it's down even more since I bought. While I love Netflix the service, I'd advise to follow NFLX the stock at your own peril.

Now on to the proper Stock Of The Month.

This June, I couldn't decide between two REITs, so I decided buy half of both and see if one would do better. Chimera (CIM) was the loser, sinking 29% since. The winner, down only 5%, is:

American Capital Agency (AGNC)

Positives:
Gargantuan 21% dividend yield, at a sustainable 75% payout ratio.
Healthy profit and operating margins (93%).

Negatives:
Low insider (0.04%) and institutional (17.20%) holdings suggest a prevailing lack of confidence.
Usual caveats of a housing/financial stock.


Here's my current portfolio. As always, I believe in all of these stocks - until I sell them.

Apple (AAPL) 14.34%
Baidu (BIDU) 10.61%
Google (GOOG) 8.03%
Southern Copper (SCCO) 6.35%
Intuitive Surgical (ISRG) 4.94%
Annaly Capital Management (NLY) 4.94%
Ace Limited (ACE) 4.28%
Hugoton Royalty Trust (HGT) 3.71%
BP Prudhoe Bay Royalty Trust (BPT) 3.61%
American Software (AMSWA) 3.49%
American Capital Agency (AGNC) 3.36%
Apache (APA) 3.06%
Kinder Morgan Energy Partners (KMP) 2.73%
McDonald's (MCD) 2.71%
Intel (INTC) 2.69%
Vodafone (VOD) 2.59%
Blackstone (BX) 2.49%
Prospect Capital (PSEC) 2.28%
DuPont (DD) 2.17%
BreitBurn Energy Partners (BBEP) 1.87%
The Distressed (ERTS, ESI, JSDA, LZB, MSI, PCS, RVR, WFC) 1.71%
F5 Networks (FFIV) 1.67%
Under Armour (UA) 1.64%
Tesla Motors (TSLA) 1.56%
Chimera Investment (CIM) 1.37%
Netflix (NFLX) 1.31%

Stocks Of The Month: TSLA, KMP

I was going to have just one stock of the month, but since I seem to enjoy portfolio churn so much, there are two.

Gone is Cherokee (CHKE), due to a declining dividend and stock price; as well as both Motorola Mobility (MMI) and STEC (STEC), due to being insignificant holdings percentage-wise.

In their place are a speculative and a dividend stock respectively...

Tesla Motors (TSLA)

Positives:

Pure play on the long-term trend of automobiles transitioning from gasoline to electric power.

Super-cool cars (they manufacture and sell their own brand) and technology (they supply powertrains for Daimler and Toyota).

Negatives:

Horrible fundamentals across the board (negative earnings, margins, cash flows, etc., etc.)

Kinder Morgan Energy Partners (KMP)

Positives:

High dividend yield (6.6%) and a nearly 20-year history of increasing dividend payments.

Steady, positive cash flows.

Negatives:

Revenues (+3%) and earnings (-36%) not very good.

Here's my current portfolio. As always, I believe in all of these stocks - until I sell them.

Apple (AAPL) 13.09%

Baidu (BIDU) 11.55%

Google (GOOG) 8.20%

Southern Copper (SCCO) 7.16%

Annaly Capital Management (NLY) 5.33%

Intuitive Surgical (ISRG) 4.60%

Ace Limited (ACE) 4.36%

Apache (APA) 3.95%

American Software (AMSWA) 3.67%

BP Prudhoe Bay Royalty Trust (BPT) 3.57%

Hugoton Royalty Trust (HGT) 3.57%

Blackstone (BX) 2.68%

Kinder Morgan Energy Partners (KMP) 2.52%

Vodafone (VOD) 2.52%

McDonald's (MCD) 2.46%

Intel (INTC) 2.38%

DuPont (DD) 2.37%

Prospect Capital (PSEC) 2.26%

BreitBurn Energy Partners (BBEP) 1.97%

The Distressed (ERTS, ESI, JSDA, LZB, MSI, PCS, RVR, WFC) 1.83%

American Capital Agency (AGNC) 1.76%

F5 Networks (FFIV) 1.70%

Chimera Investment (CIM) 1.50%

Under Armour (UA) 1.49%

Tesla Motors (TSLA) 1.44%

Netflix (NFLX) 1.18%

Farewell To DOM

I've owned Dominion Resources Black Warrior Trust (DOM) since November 2007. It was my Stock Of The Month just 2 months ago. But in a first half of 2011 that has been mostly foul-ups, bloopers, and blunders, I sold it all on Friday after it hit an all-time low closing price on Thursday. I had set a triggered sell when I last bought it, thinking it would never actually be needed. As DOM sunk lower and lower in recent weeks, I still thought it would bounce back. It didn't - the capital losses were overwhelming the dividend, and I had to admit defeat and move on.

Fortunately, DOM was still around 5.5% of my portfolio, so I had a great opportunity to fill some long-standing orders:

• Bought enough Baidu (BIDU) to get back to where I was before, thereby (as best as is possible) undoing my worst stock sale ever;
• Bought enough Intuitive Surgical (ISRG) to get back to where I was before as well; and
• Used the remainder to buy Google (GOOG). I'd like to say that I got in before their fantastic last-quarter results were announced and the stock jumped 13%, but of course, I didn't.

Those are, as the reader might notice, three non-dividend-paying stocks. I feel that the chance to scratch some items off my to-do list outweighed the need to immediately replace DOM with a similar stock. I do have a few large dividend-paying candidates in mind though, and will be buying them as part of my normal monthly investments going forward.