Hi Everybody.  I’m back with a brief update on some recent transactions, just to get you up-to-speed on my latest Portfolio moves.  My transactions consisted of 1 sale and 2 buys.

With the sale, I continued to trim an existing position.  I then reallocated the sale proceeds into one existing Portfolio stock, and one new Portfolio stock.

As I mentioned in my 2021 Portfolio Goals post, I was going to try and lighten up on my Industrial holdings a bit, and I did that here.

I also mentioned possibly executing some strategic stock swaps in an effort to boost my forward dividend income.  This was one of the ways I could help myself reach my forward dividend income goal, even if I wasn’t investing new capital.  Again, I accomplished that with these 3 transactions.

So, let’s dive into the details…

 

Air Lease (AL)

I did a trim of AL last month.  At that time, I sold 10 shares, and used those proceeds to initiate a position in Merck & Co. (MRK).

This time around, I sold a much larger chuck of the Industrial firm.  However, AL still retains a top half position in my Portfolio after the trim.

The sale moves me in the direction of reducing my Industrial holdings some more, which is a 2021 goal.  It wasn’t a drastic move though.

On 1/26/21, I sold 75 shares at $42.6442/sh. (about 23.4% of my position).  After the SEC fee, the sale proceeds were $3,198.25.

At that sales price, shares of AL yielded 1.50%.  This is 0.87% lower than my current average Portfolio yield.

Once again, I sold my most expensive shares.  In this case, I sold shares that I purchased way back on 12/13/2013, at $31.01/sh.   The sale resulted in a long-term capital gain of $872.50.

The sale also resulted in a reduction in annual forward dividend income of $48.00, but as you’ll see, I recouped this, and then some.

After the trim, I still hold 245.684 shares of AL, and it dropped to the 21st largest position in my Portfolio, behind Nexstar Media Group (NXST), but ahead of 3M Co. (MMM).

 

Merck & Co. (MRK)

So, I took about half of my AL sale proceeds and continued to build my MRK position.

I only initiated my position in MRK last month, but this is already my 3rd purchase of the stock.  Thanks to this particular purchase, MRK is no longer my smallest Portfolio position.

My first two MRK purchases were 5 shares each, but this one was noticeably bigger.  Merck’s stock price has been hovering around my average cost basis, and was actually a bit lower than my cost basis when I made this purchase.  Thus, I got to average down a bit.

With MRK being in the Healthcare sector I was able to boost my allocation there.  Healthcare is a sector that has a slightly smaller weighting in my Portfolio than I’d like.  This purchase also helps my Portfolio get a bit more defensive.

On 1/26/21, I purchased 20 shares of MRK at $80.409/sh., for a total of $1,608.18.  My MRK position has now grown to 30.039 shares.

The stock yielded 3.23% at my purchase price.  This is roughly 0.86% above my current average Portfolio yield.

This purchase resulted in the addition of $52.00 in annual forward dividend income.

With this additional purchase, MRK is now the 47th largest position in my Portfolio, trailing Microsoft (MSFT), but leading Iron Mountain (IRM).

 

Lockheed Martin (LMT)

The other half of my AL sale proceeds went into establishing a new Portfolio position in LMT.

LMT is a well-known aerospace and defense company.  It joins General Dynamics (GD) in my Portfolio from that same industry.

Given that LMT is also an Industrial stock, the sector weighting reduction I obtained from the AL sale doesn’t end up being as significant.  However, that’s fine by me, as I get to diversify some by adding LMT, and it’s still a net reduction in my Industrials sector weighting.

I’d been watching LMT for a few weeks as it continued to drift lower.  With the decent price drop that followed their earnings release, I decided to initiate a starter position.

On 1/26/21, I purchased 5 shares of LMT at $335.00/sh, for a total of $1,675.00.

The stock yielded 3.10% at my purchase price (approximately 0.73% above my current Portfolio average).

Like the MRK purchase, this purchase also resulted in the addition of $52.00 in annual forward dividend income.

As noted, LMT is a new Portfolio position… my 51st overall.  It’s also my 8th Industrials stock in my Portfolio, tying the number of Information Technology and Healthcare holdings I have.

LMT starts as the 2nd smallest position in my Portfolio, just ahead of Amgen (AMGN), but behind Sysco (SYY).

I’ll look to build my LMT position over the coming months.  If the price stays at the current level, I imagine that will be easy to do.

 

As I usually do with new holdings, let’s take a quick look at the dividend growth history dating back to 2000…

 

 

As you can see, LMT has a terrific dividend growth history.  LMT was posting double-digit dividend growth every year from 2003 to 2017, until finally slowing down a bit here in recent years.  Still, increases in the high single-digit area are fine by me.

LMT’s payout ratio is roughly 40% based on this year’s earnings estimate of ~$26/share.  This payout ratio allows for plenty of room for future dividend raises.

After last September’s dividend increase, LMT now has 18 consecutive years of dividend raises.

 

Summary

This week I made a trio of buy/sell transactions.  I trimmed my AL position some, and used the proceeds to buy more MRK, and initiate a position in LMT.

As a result, my Industrials weighting got a bit lighter, while my Healthcare weighting bumped up a bit.

All totaled, the 3 transactions saw me realize a small net investment into my Portfolio of $84.93.  Yet, I boosted my annual forward dividend income by relatively hefty $56.00.

With the AL sale, I recorded a long-term capital gain of $872.50, too.

Thanks to my new LMT position, the number of stocks in my Portfolio rose to 51.

 

Have you added any new portfolio positions in this opening month of 2021?  Or are you focused on building out existing portfolio positions?  Please share in the comments!