Portfolio Thoughts (July 2017)

I’m always thinking about how I can improve the dividend portfolio.  Certainly adding new positions or adding to existing ones is an improvement!

However, when that’s not possible, I look over the portfolio and decide if there are any adjustments I’d like to make.

As the portfolio currently stands, I’m looking to sell about 100 shares of AL, or 1/4 of the position.  The main reason is that it’s currently the largest position in the portfolio and the sale would bring its size down to a comparable level of the other largest positions at approximately $11K-$12K.  I would be inclined to sell above $41.  A recent run-up in price has brought it close to this mark.

On the small end of the position spectrum is SBUX.  I’d like to add about 50 shares, essentially doubling the size of this position.  This would allow SBUX to deliver $100/yr in dividend income, usually the minimum I like to see for any of the portfolio holdings.  I’d consider adding these shares now, but would prefer to see the price drop to about $55 before buying.

My largest REIT holding is OHI, and I’d like to sell 50 shares at $35+.  This position is a tad larger than I originally planned.  It got that way when I purchased 50 shares at $29.14 last November in a move to average down my share price.  I like the yield on this REIT, but the ordinary income tax treatment REITs get in taxable accounts makes me prefer to keep the position smaller.

We’ll see what transpires here in the near future.  Perhaps I’ll be able to execute one or more of these portfolio changes.

‘Til next time…


4 thoughts on “Portfolio Thoughts (July 2017)

  1. It’s a never ending process “tinkering” and adjusting ones portfolio, especially if you are a long term holder of stocks as things can change drastically over time. Stock prices can fall or rise a lot, mergers can occur, whole sectors can fall in and out of favor. The bottom line is that you have to be comfortable with your holdings and allocations. Thanks for sharing some of your thoughts about your larger positions and smaller.

    1. Thanks for commenting, DivHut. Yes, definitely a process, but certainly one I enjoy. I look forward to sharing more thoughts moving forward.

  2. Here are a few suggestions:

    If you are worried about taxes on REITs, you can invest in REITs using tax advantage accounts such as an IRA or Roth IRA or even a HSA. Think about tax implications before investing rather than after. I learned this lesson years ago after investing in MLPs and having to deal with their K-1s in a taxable account.

    A better way to balance an allocation is to add to smaller allocations. I prefer this method over selling higher allocation positions as it is an overall positive change from tax, dividend growth, and transnational perspective.

    I would say, almost 90% of the time, I’ve regretted selling a position in a good dividend paying stock just because it was overweight in my portfolio.

    Mr. ATM

    1. All good suggestions, Mr. ATM.
      I agree that the REITs are better suited for a tax advantaged accounts. Over time I may end up transitioning the REITs out of the portfolio – we’ll see.
      I would imagine that you’ll see me add to smaller positions more often than reducing larger positions.
      I don’t think I’ll regret the partial sale of VFC, but your comment is a good one. I appreciate you sharing your experience.

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