Monday, April 4, 2016

Is It Time To Take Profits From Verizon Communications?


The U.S. telecommunications or "telco" industry is largely a duopoly with the two major players being AT&T (NYSE:T) and Verizon Communications (NYSE:VZ). The telco sector has typically been a safe haven of sorts for investors due to the stable nature of the companies and of course the high current yield.

Verizon has long been a favorite for dividend growth investors for that very reason. With an 11 year dividend growth streak and plenty more to come, Verizon has earned the title of Dividend Contender

Since initiating a position in Verizon just over 2 years ago I've been more than happy with the results. I've received over 7% of my investment back in cold hard cash and generated over a 9% rate of return. Even better is the two dividend increases that have grown my income by 6.6% at a time when cumulative inflation, according to US Inflation Calculator, has amounted to just 0.2%.

However, after reaching an intraday low of $43.79 on January 20 Verizon Communications share price has since increased over 23% to Friday's closing price of $54.02. The rapid share price appreciation has led me to question whether I should consider taking some profits.

Continue reading the article on Seeking Alpha.


2 comments:

  1. There are several holdings in my portfolio that I am pondering this exact thing. Huge run up on some stocks. Specifically for me, PM, T, CSCO and AAPL. All in 20%+ gain positions after buying less than a few months ago. Only reason I'm struggling with it is because it goes against my DGI principles, at the same time though, incredible run up.

    Decisions, decisions!

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    Replies
    1. DKC,

      I completely understand your feelings right now. Making the decision to sell a DG stalwart is difficult. If it's a matter of a quick price run up or valuation then I always like to rerun the numbers in case there's something I missed. For many of my holdings the value would have to move well into overvalued territory. Say JNJ trading up to 30x TTM eps but I'm not seeing this play out for most of my holdings. If I feel that I bought the shares at a good long term value then I typically just hold and would need gross overvaluation to actually sell. Which Realty Income is very nearly getting to that point even though I love the company.

      Thanks for stopping by!

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