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My 3 Biggest Stock Holdings

By Matt Frankel – Apr 4, 2017 at 8:27AM

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Here are the top holdings in my own portfolio, and why I own each one.

In the interest of transparency, every stock owned by myself (or any other writer for The Motley Fool) is publicly available information -- you can find a full list of my stocks on my profile page here. However, the list doesn't tell you anything about the size of the positions. For example, I own Fitbit (FIT) stock, but I consider it to be a highly speculative investment, and therefore it makes up less than 1% of my portfolio.

On the other hand, there are some stocks I have much more substantial amounts of money invested in. So, here are my three largest holdings as of April 1, 2017, and a little background on why I invested so much in each.

Stock quotes on a big screen.

Image source: Getty Images.

1. Bank of America (9% of my portfolio)

While I love Bank of America (BAC 1.35%) as an investment, even after the stock has roughly doubled in price over the past year, I must say that I never intended for the banking giant to be the top stock in my portfolio. Bank of America became my number one stock investment by accident.

In February 2016, the stock market took a sudden dip, and the banking sector got hit worse than most. After some research, I decided to add some Bank of America shares to my position. In a nutshell, the stock was trading at a price-to-book valuation not seen since late 2012, despite having made tremendous improvements to its business since that time. At the time of my investment, shares were trading for just under $12.

BAC Price to Book Value Chart

BAC Price to Book Value data by YCharts

Well, fast forward a little over a year, and the combination of excellent overall market performance and the election of a certain business-friendly president has caused Bank of America to nearly double from where I bought it. So, a stock that was intended to represent about 5% of my portfolio now makes up much more of it. I may end up doing some rebalancing and selling a portion of my position, but I think Bank of America could still rally more if the president's promise to lower regulations and boost the economy actually happen.

2. Apple (6% of my portfolio)

What's not to like about Apple (AAPL 1.48%)? The company has several competitive advantages that should keep it a high-profit market leader for decades to come, including its brand name which has become synonymous with high-quality consumer electronics, and the pricing power that comes with it.

Additionally, Apple has a "stickiness" quality, creating an ecosystem that its loyal customers don't often abandon. For example, when an iPhone user (who also has an iPad and iMac) needs to upgrade their phone, they generally don't even compare the newest iPhone with competing models from Samsung and LG.

In addition, Apple is still pretty cheap, even with the stock at a record high. The P/E multiple of 17.2 times TTM earnings may not sound like anything too special, but when you back out Apple's $246 billion cash hoard, the multiple drops to a much more attractive 11.7.

3. Realty Income Corporation (6% of my portfolio)

I write about Realty Income (O 0.98%) about once a week, so it's no secret that it's one of my favorite stocks. This real estate investment trust (REIT) focuses on freestanding retail properties (think drug stores, dollar stores, warehouse clubs, and drug stores, just to name a few).

Realty Income's business model is all about creating predictability and stability. Most of the company's tenants are recession-resistant, e-commerce-resistant, or both, and many (such as dollar stores) actually tend to do better when the economy goes sour. In addition, tenants are on long-term "net" leases, which require them to pay variable costs of property ownership such as taxes, insurance, and maintenance. All Realty Income does is get a tenant in place and enjoy a worry-free income stream for years.

This business model is why I love Realty Income -- it grows its rental income stream consistently, which results in a steadily growing stream of monthly dividend payments, as well as excellent stock price performance. As of this writing, Realty Income pays a 4.3% dividend yield, and has produced 16.9% annualized total returns since its 1994 NYSE listing, a fantastic level of performance to sustain for more than two decades.

Matthew Frankel owns shares of Apple, Bank of America, Fitbit, and Realty Income. The Motley Fool owns shares of and recommends Apple and Fitbit. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool has a disclosure policy.

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