My Portfolio has experienced a couple of stock departures over the past few days, so I wanted to briefly pass along some details.

Each sale was rather different.  The sale of D.R. Horton (DHI) came as a result of a written covered call option that was assigned to me.  Meanwhile, the sale of Cardinal Health (CAH) came after 3 years of poor performance.

 

DHI

I first acquired residential homebuilder DHI last October as the result of an assigned cash-secured put option I wrote.  I thought enough of the company when I wrote the put option that I told myself if it was assigned, I’d add the company to my dividend Portfolio, which I did.  DHI had some good growth prospects, but was low on yield, despite posting some strong dividend growth numbers beginning in 2015.

DHI performed well for the months I owned it, well enough that I decided to write the covered call and potentially exit my position with a decent profit should the shares continue to climb.

I wrote the call option back in early June with a strike price at $47 and an expiration date of 8/16/19.  At the time, the stock was trading a bit south of $45.  The 72 days to expiration on the option was one of the longer ones I’ve had.

As the weeks passed, DHI stayed below my $47 strike price until the beginning of August.  Then, in the two weeks leading to expiration, the stock crossed above and below my strike price a few times.  Even the day prior to expiration, the option was trading below my strike price.  I could have closed the option (retaining my DHI shares) by giving up some of my premium, but decided to let DHI go instead.

With the recent market volatility, several stocks from my watchlist were looking attractive, and I thought I’d rather re-deploy the DHI proceeds into other stocks.

On 8/16/19, I sold 100 shares at $47.00/sh. due to the option assignment.  The option premium of $1.40/sh. is added to that as well, so the sale price effectively ended up being $48.40/sh.  After accounting for the $0.10 SEC fee, my sale total was $4,839.90.

Since I had 101.117 shares of DHI, the option sale left me with 1.117 shares.  Due to this small share count, I subsequently sold these remaining shares the next trading day at $48.43/sh. for a total of $54.10.

So, all totaled, selling the entire DHI position netted $4,894.00 in proceeds.  Also, with the sale, I realized a short-term capital gain of $750.81.

This sale results in a reduction of $60.67 in annual forward dividend income.

I could see myself owning DHI again should an opportunity arise in the future.

 

CAH

Where do I begin with CAH?  This stock has been on a downward slide for close to 4.5 years.  I hopped on the CAH train 3 years ago in August 2016.  Thus, I haven’t been subjected to the entire slide.  However, 3 years was enough for me.

After my initial purchase in 2016, I made 3 additional purchases between August 2017 and June 2018, averaging down each time.  At the end of last year, after nearly 2.5 years of company struggles, I sold nearly half my position in order to reduce my exposure.  The shares saw a nice recovery to start 2019, only to give it all back, and then some.  All the while, the market was logging gains of 15% or so year-to-date.

In addition, the dividend growth for CAH has nearly stalled.  Dividend growth 2 years ago was 9%, last year it was 3%, and this year it is 1%.  With CAH being one of my smaller positions and not showing any signs of recovery in an uncertain environment, I decided to sell my remaining stake and re-allocate my investment.

On 8/19/19, I sold all 77.488 shares at $43.50/sh, for a total of $3,370.66 after my $0.07 SEC fee.

With the sale, I realized a long-term capital loss of $1,195.10 and a short-term capital loss of $15.87.

This sale results in a reduction of $149.12 in annual forward dividend income.

I plan to keep some of the proceeds in the Healthcare sector by turning to a company from my watchlist.

 

So, immediately after these sales, my Portfolio dropped from 47 to 45 positions, but it didn’t take long to change again, as I started re-deploying my cash proceeds.  However, you’ll have to wait a few days to hear about where the money went.  So, hold tight for now, and I’ll be back later in the week with some purchase details in a follow-up post.  Until then…

 

I know there are many DGI portfolios with CAH out there.  How are you feeling about CAH these days?  Do you have plans to hold tight, average down, or might you be contemplating an exit?  Any stocks in your portfolio that might be on the chopping block?