Thursday, September 24, 2015

Changes to my portfolio over the last couple months

Whenever I make a new purchase for my portfolio I feel it's only fair to get a post written giving all of the juicy details.  Normally I try to get the posts out as quickly as possible but there was way too much going on in my personal life over the past two months that I just didn't have the time.  So I want to update you all on some of the changes made to my portfolio.  I want to be as transparent as possible with my journey to reach financial independence through dividend growth investing. Being open about the moves I make allows for better discussion with all of you and helps spread ideas around as well as letting me create my own "investing journal" to chronicle why I purchased a company in the first place and that way I can revisit if something changes and make the decision on whether to continue owning the company or not.

Let's start off with the fun one.  On August, 20th I purchased 12 shares of the dividend growth gold standard, Johnson & Johnson (JNJ) (Full Analysis Here).  I purchased 12 shares of JNJ for $99.07 per share.  After commission my per share cost basis for this lot comes to $99.48.  Based on the current quarterly dividend of $0.75 these shares will carry a YOC of 3.02% and provide $36 in annual dividends prior to any future increases or reinvestment.  This also pushed my position in Johnson & Johnson up across the $200 annual dividends level making them the 8th company of my portfolio to cross that mark.  Sadly this purchase came just a couple days before the markets decided to really go haywire.

If you happened to notice this purchase was smaller than my usual purchase size.  That's because I recently started a second brokerage account with TradeKing.  The commissions at TradeKing are only $4.95 (Affiliate link) for stock purchases which means I can invest smaller dollar amounts to keep at my target "expense ratio" of 0.50% or less.  Going forward I will be including all purchases within either of my portfolio's into just one portfolio on my FI Portfolio page.

Unfortunately, the good news from this post is pretty much done as I only have sales to report.  Whenever I make purchases for my portfolio my planned holding period is decades but for the next two positions I went ahead and closed them.  I didn't close either of them for operational results though and plan to repurchase one of them this year barring capital availability, but we needed to raise capital to help cover costs associated with losing our son because our cash savings had taken a hit.  The easiest place to raise said capital was through my portfolio.

First to go was National Oilwell Varco (NOV).  On August 10th I closed my position in NOV by selling the 51.9607 shares I owned for $40.3701 per share.  After commission my proceeds from the sale was $2,089.93.  Considering I had invested $3,070.13 in the position this was pretty disheartening.  That's a 31.6% loss over my holding period; I had made two large purchases for my position one in November of 2014 and another in March of this year and two dividend payouts were reinvested.  This led to a decline in my forward dividends of $95.62.

I was already considering harvesting some losses for tax purposes prior to my need to raise some cash so the NOV sale made sense.  Ideally I would have purchased shares to "replace" my current position first and then wait 30 days before selling the original shares, but capital constraints didn't allow that at this time.  Luckily though I don't see many short term catalysts, except for war, that will lead to a drastic improvement in the price of oil and thus the companies related to the exploration and production so I'm pretty sure I still have plenty of time to execute the cash raising and tax loss strategy.

The other position that I closed out was Baxalta (BXLT).  I acquired the shares on July 1st and owned 39 shares.  I sold my shares for $35.0201 per share.  After commission the proceeds from this sale amounted to $1,357.80.  Since my cost basis on the position was $1,153.08 this represents a 17.8% gain.  Much better than the NOV position but nothing spectacular.

Like the NOV position it's not necessarily because of operational results but rather I needed cash.  Since I acquired the shares via Baxter's (BAX) spinoff of Baxalta I wasn't necessarily attached to the position.  I was pretty disappointed when the new dividends were announced and combined they didn't even amount to the same that the pre-spinoff Baxter was paying.  Baxalta announced a $0.07 quarterly dividend which amounted to just a 1.0% YOC for my position.  Given that analysts are only forecasting 3.7% annual earnings growth for the next five years dividend growth would have to come via payout ratio expansion.  Frankly, there's better opportunities in the biotech space with better growth prospects.  I lost $10.92 in forward dividends.

All told my forward 12-month dividends declined by $70.54.  However, thanks to dividend increases and some reinvestment my forward dividends have started to recoup some of their losses.  Currently my forward 12-month dividends sit at $5,977.88.  Including the $58.31 from my Loyal3 portfolio brings my total taxable accounts forward dividends to $6,036.19

What companies have you been buying?  Have you made any sales to clean up your portfolio?

Image courtesy of Stuart Miles on


  1. Replies
    1. FV,

      I'm slowly building that number up. Next up would be PG, BP, or XOM (assuming BP or XOM don't cut their dividend, I don't think XOM will but BP might be forced to).

      Thanks for stopping by!

  2. Wow, you don't really read much about sales among our DGI community but I guess it's for good reason. Sure that was a tough loss on NOV but I guess that money is better put to use elsewhere. Energy is still a tricky industry which is why I never held one energy stock in my long term DGI portfolio. I just don't like the volatility in the sector. I'm more comfortable holding cyclical names lke CAT, EMR, DOV and others and watch their price swoon only to have me add more and wait for better times ahead. At least this post did share a solid buy with JNJ. This is why we spread our "bets." Thanks for sharing and look forward to seeing where you deploy your capital.

    1. DivHut,

      My plan wasn't to sell either but I needed to raise cash. $14k in unexpected expenses in one month will do that to you. These were probably two of the weaker holdings in my portfolio and I'm contemplating adding BAX to the list of sales too. I'm hoping to add more to the industrial names as well specifically EMR and ETN and maybe some more MMM. I'm hoping to finally take a deep look at DOV over the next couple of weeks as well. My plan is to add NOV back into my portfolio in the future and luckily I should have plenty of time because short of a war starting I don't see oil moving too much higher for a while. Would love to see it back in the $50-60 range though.

      Thanks for stopping by!