Hey!  Look at this… back-to-back Transaction posts.  I mentioned in my last post that I had some unfinished business.  Well, I took care of that this week, and thus I now have more transactions to report.

My Portfolio is going through a few changes.  Nothing big, mind you.  Both the last set of transactions and this one have really just been a re-shaping of the Portfolio.

This time around I have 6 transactions to cover.  The first was a complete sale, eliminating a Portfolio position.  I then used those proceeds (and some cash) to make several buys – 5 in total, involving 4 different stocks.

Two of my five purchases established new Portfolio positions… in a sector that I didn’t have any representation in before.  Meanwhile, the other 3 buys were additions to a couple of existing Portfolio stocks, moving them closer to being average-sized positions – still more work to do here though.

Let’s check out all the activity…

 

TCF Financial (TCF)

A couple of weeks ago I trimmed my TCF (regional bank) position at $42.65/share.   At that time, I mentioned the possibility of exiting my remaining position due to my thought that the company would be dealing with integration in the coming years (thanks to the pending merger with Huntington Bancshares), as opposed to focusing on growth.

As it turned out, over the course of the past two weeks, the share price shot up to $48/share… so I took the money and ran.  Technically, I didn’t run anywhere 🙂 , but I did use the proceeds to make some purchases and help reshape my Portfolio (more on that shortly).

On 2/25/21, I sold all 106.457 shares at $48.00/sh.  After the SEC fee, the sale proceeds were $5,109.91.

At that sales price, shares of TCF yielded 2.92%, or about 0.49% higher than my current average Portfolio yield of 2.43%.

The sale resulted in a short-term capital gain of $410.02, and a long-term capital gain of $741.58.

The sale also resulted in a $149.04 reduction in annual forward dividend income.

My Portfolio’s number of holdings dropped to 50 as a result of selling all my TCF shares.

 

With my TCF sale complete, my buying began, and it started with a couple of stocks in a previously barren sector within my Portfolio… Utilities.

 

NextEra Energy (NEE)

This first Utility stock is one I’ve been looking to establish a position in for a while, but it kept running higher in price.

Granted, even with the recent pullback (from 52-week highs), the shares still look significantly overvalued.  However, I decided to dip my toes into the water and begin a position.

NEE is an electric utility headquartered in Juno Beach, Florida.  The company was founded nearly a century ago in 1925.  The company was formerly known as Florida Power & Light (FPL) before changing their name to NextEra Energy in 2010, as we know them today.  FPL is now the principal subsidiary of NEE.

I’ve typically shied away from Utility stocks due to their low EPS growth and low dividend growth.  The higher yields weren’t enough to entice me.

Well, NEE seems to be the opposite of that average Utility stock description.  NEE has been growing earnings at about an 8% clip over the past 13 years.  Dividend growth has been even better (as you’ll see below).  The yield is well below that of other Utility stocks as well.

On 2/25/21, I purchased 15 shares of NEE at $73.25/sh, for a total of $1,098.75.  The stock yielded 2.10% at my purchase price (about 0.33% below my current Portfolio average).

This purchase resulted in the addition of $23.10 in annual forward dividend income.

Note that I made my purchase on the ex-dividend date.  Thus, I don’t expect to see my first NEE dividend until June.

After the TCF sale knocked my Portfolio stock total down to 50, this NEE buy brought it right back to 51.  It’s the first Utility stock to grace my Portfolio since I sold SCANA Corp. (SCG) a few months prior to their merger with Dominion Energy (D), back in June 2018.

NEE starts as the smallest position in my Portfolio, tied with another stock I just added on the same day (see next stock below).

I’ll look to build my NEE position if the price continues to drop over the coming months.

 

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

 

 

There’s plenty to like here!  Double-digit dividend growth over all 4 reporting periods shown.  This is very impressive for any stock, let alone a Utility.

NEE raised their dividend 10% about 2 weeks ago, and now has 26 consecutive years of dividend raises (a Dividend Aristocrat!).

The payout ratio is a very reasonable 60% based on earnings for the year just completed.  Ample room exists for future dividend raises.

 

Pinnacle West Capital (PNW)

Now that I opened the door on Utility stocks with NEE, I added a 2nd one at the same time in PNW – another Utility I’d been watching.

PNW is an electric utility based in Arizona.  The company was incorporated in 1985 and is headquartered in Phoenix.

PNW has come down in price in recent weeks as well.  It’s growth and yield is more representative of Utility stocks, and it should provide a nice balance with NEE in my Portfolio.

Earnings growth for PNW has been about 6.5% over the past 14 years, with dividend growth trending up a bit in recent years to roughly a 6% level.

On 2/25/21, I purchased 15 shares of PNW at $73.25/sh, for a total of $1,098.75.  Wow, identical to my NEE purchase!

The stock yielded 4.53% at my purchase price (2.1% above my current Portfolio average).

This purchase resulted in the addition of $49.80 in annual forward dividend income… a nice boost.

This new addition brings my Portfolio’s stock total to 52.  PNW starts as the smallest position in my Portfolio, tied with NEE (as noted earlier).

I’ll try to find opportunities to add to this position over time, allowing it to have a more substantial contribution to my Portfolio.  This position would have to grow about 10x to reach an average level in my Portfolio.

With the addition of a couple of Utility stocks to my Portfolio, I can cross off one of my 2021 goals.  Progress!

 

Once again, for a new stock, let’s take a quick look at the dividend growth history dating back to 2000…

 

 

Not quite the same track record that we saw from NEE, but not too shabby for PNW.

After some stagnant dividend growth during the Great Recession and the years that followed, growth started picking up and it now seems to be leveling off around the 6% mark.  I’ll take that.

The last raise from PNW came last October, when they raised a little over 6%.

PNW’s streak of consecutive annual raises is not nearly as strong as we saw from NEE, but its streak can reach 10 years with a raise later this year.

Compared to NEE, the payout ratio for PNW is a bit higher at 65% (based on earnings for the year just completed).  Future dividend raises can be expected.

 

Amgen (AMGN)

Healthcare stocks seem to be one of the better places to find bargains these days, as several stocks within this sector are on my radar.

In addition, Healthcare is one of the Defensive sectors.  So, along with my Utility purchases covered above, my Portfolio has become a little safer (from a sector perspective).

What I like about AMGN is its double-digit earnings growth, and dividend growth, over the past decade.  Throw in a 3%+ yield and I’m a happy guy.  Earnings growth should be more modest in the near-term at about 7%, but I find that acceptable.

I initiated a position in AMGN last November with the purchase of 6 shares.  The stock has traded in a rather narrow range over the past 3 months, allowing me to build my position here.

On 2/25/21, I purchased another 6 shares of AMGN at $229.00/sh, for a total of $1,374.00.  The stock yielded 3.07% at my purchase price (about 0.64% above my current Portfolio average).

This purchase resulted in the addition of $42.24 in annual forward dividend income.

With this additional purchase, AMGN is now the 46th largest position in my Portfolio (out of 52), barely trailing Omega Healthcare Investors (OHI), but leading Microsoft (MSFT).

I’ll continue watching for opportunities to build this position.  My AMGN position would have to grow 4x to become an average Portfolio position.

 

Lockheed Martin (LMT)

I’m actually looking to trim my Industrials holdings, as it’s one of my overweight sectors.  However, LMT is a position I recently established and want to build at current levels.  I’ll figure out a way to trim my Industrials as the year goes along.

I started my LMT position late last month and now I’m already adding to it.  This position was started with the intent to grow it over time, and I’m not wasting any time in doing so.

Like AMGN, LMT has recorded double-digit (12%) earnings growth over the past decade.  In the next few years, earnings growth is projected to be in the 6%-7% range.

Dividend growth is a not quite that high, but it’s in the high single-digits.

LMT also sports a yield over 3%, so that boosts my Portfolio yield ever so slightly.

On 2/25/21, I purchased another 6 total shares of LMT in two different lots of 3.  First, I purchased 3 shares at $345.00/sh, for a total of $1,035.00.  I followed that up later on the same day with another purchase of 3 shares at $342.00/share, for a total of $1,026.00.  The average per share cost was $343.50.  The blended yield for the purchases was 3.03% (about 0.60% above my current Portfolio average).

These two purchases resulted in the addition of $62.40 in annual forward dividend income.

Both purchases were done just before the ex-dividend date, so I should receive the March dividend for these shares.

With these additional purchases, LMT becomes the 44th largest position in my Portfolio, right behind W.P. Carey (WPC), but handily ahead of Omega Healthcare Investors (OHI).

After Friday’s decline to around $330, I may try to find a way to add more to this position.  My LMT position would have to grow 3x to become an average Portfolio position.

 

Summary

This past Thursday I made 6 Portfolio transactions.  I sold the remainder of my TCF position, then used the proceeds (and a little cash) to establish two new positions in the Utility sector (NEE & PNW), and add to a couple of my smaller existing positions (AMGN & LMT).

All totaled, the 6 transactions saw me make a net investment of $522.59 into my Portfolio.  Also, my forward dividend income increased by $28.50.

With the TCF sale, I recorded a short-term capital gain of $410.02, and a long-term capital gain of $741.58, or $1,151.60 all totaled.

With one stock departure and two stock arrivals, the number of stocks now in my Portfolio rose to 52.

I suspect my transaction level will decline moving forward, but you never now.  Either way, I’ll be back to report on what transpires.

 

What sectors seem to have some relatively attractive stock prices to you?  What stocks have you purchased or sold in February?  Please share in the comments!