As I mentioned in my last post just a couple of days ago, I had more transactions this week that I needed to share.

In this latest update, there’s one sale and three buys to share.  My Portfolio continues to undergo some change, but it’s small relative to the Portfolio’s overall size.

With my sale, I closed out a position that I’ve been trimming aggressively over the past month.  I’ll provide the reasoning for this in just a bit.

The sale proceeds were then used to bolster three smaller, existing positions, each of which appear to be trading at attractive valuations.

In the end, I didn’t reinvest all the sale proceeds, yet I still managed to increase my forward dividend income.  This was mainly due to each of purchased stocks having a much higher yield than the stock I sold.

Let’s check out the transaction details and see how I changed my Portfolio…

 

Air Lease (AL)

There’s no more selling AL after this.  That’s because this sale eliminated the stock from my Portfolio.

During 2021, and especially over the past month or so, I’ve been trimming this position primarily due to its ‘Very Unsafe’ Dividend Safety Score from Simply Safe Dividends.

Of course, there were other reasons, too.  Looking at the company financials, one can see negative free cash flow, an outstanding share count that is slightly growing, decreasing operating margins, smaller returns on equity and invested capital, as well as net debt and interest coverage numbers that are respectively above and below preferred levels.  Whew… sounds like significant headwinds to me.

In addition, as I’ve reported in my Performance Check posts, AL’s performance for my Portfolio has been lagging.  It’s been consistently near the bottom of my performance rankings with annualized returns of 6%-9%.  Normally, that would acceptable, but given the strong price performance of the stock market since 2013 (when I initiated a position in AL), I expected a little more.

Since AL has always had a lower yield (around 1.5%), what I looked for from AL was strong price appreciation and fast dividend growth.  As just noted, the strong price appreciation hadn’t materialized, and unfortunately dividend growth has been slowing the past couple of years too, even though it’s still pretty good.  AL is slated to potentially announce a dividend raise in November, but given the financial numbers I mentioned above, I expect more muted dividend growth, if any at all.

On 9/14/21, I sold all remaining 122.424 shares at $38.75/sh.  After the SEC fee, the sale proceeds were $4,743.91.

At my sale price, shares of AL yielded 1.65%, which is noticeably lower than my current average Portfolio yield of 2.36%.

The sale resulted in a long-term capital gain of $1,309.79, and a short-term capital loss of $5.40.  The sale also resulted in a $78.35 reduction in annual forward dividend income.

I sold this batch of AL shortly after its ex-dividend date, so I’ll be collecting one last AL dividend payment in October.

Over the years, the performance of my AL shares provided a 6.79% annualized return rate.  Again, not bad, but I should be able to do better elsewhere.

 

Now let’s find out how I invested the majority of the AL sale proceeds…

 

Omnicom Group (OMC)

The largest chunk of the AL sale proceeds were invested in OMC as I continued to build out one of my newest positions.

This was my 3rd add-on purchase of OMC since I established a position back in early August.

My initial purchase and first two follow-on purchases were all 15 shares each, but I bumped up my purchase share count this time around.

On 9/14/21, I purchased 30 shares of OMC @ $72.099/sh., for a total of $2,162.97.  The stock yielded 3.88% at the time of my purchase (about 1.64x my current Portfolio average).

This trimmed my overall cost basis just a bit, making it $72.19/share.  The purchase resulted in the addition of $84.00 in annual forward dividend income.

I now own 75 shares of OMC.  The position has now grown to the 40th largest position in my Portfolio (out of 53 stocks), ahead of Realty Income (O), but behind Altria Group (MO).

Should OMC drift lower in price from current levels, I’ll consider adding more shares.

 

Bristol-Myers Squibb (BMY)

BMY got the next biggest chunk of the AL sale proceeds.  This is another relatively new position that I’m working to expand.

This was my 2nd add-on purchase of BMY since I initiated a position.  In this case, it’s a position I started in late June.

Along with several other Healthcare names, BMY looks attractively priced these days.  Its price has dropped well over 10% in the past month, after it had a chance to breakout of the $50-$70 price range it’s been stuck in for the multiple years.

On 9/14/21, I purchased 23 shares of BMY @ $62.075, for a total of $1,427.73.  The stock yielded 3.16% at the time of my purchase (or 0.80 percentage points above my current Portfolio average).

My overall cost basis dropped to $65.04/share.  The purchase resulted in the addition of $45.08 in annual forward dividend income.

My BMY position swelled to 70.122 shares.  It’s expanding quite nicely, but has more room to grow in my mind.

BMY is now the 45th largest position (moving up 4 spots since my last purchase).  My BMY position sits just below The Walt Disney Co. (DIS) and comfortably ahead of fellow Healthcare name Amgen (AMGN).

Adding more BMY is a strong possibility, especially if it continues to trade at current levels, or dip further.

 

Lockheed Martin (LMT)

My last two LMT additions were single-share purchases.  I continued with that trend this time around, too.

LMT has drifted lower since May, falling over 10% in that time.  I’ve been buying those single shares during this period.

I suspect I will continue to do this if the price keeps pulling back.

On 9/14/21, I purchased 1 share of LMT @ $344.00.  The stock yielded 3.02% at the time of my purchase (or 0.66 percentage points above my current Portfolio average).

My overall cost basis crept up ever so slightly to $343.57/share.  The purchase resulted in the addition of another $10.40 in annual forward dividend income.

My LMT position moves up to 14.155 shares.  LMT is now the 42nd largest position by value in my Portfolio (moving up 1 spot).  LMT is sandwiched in between O and Hormel Foods (HRL), sitting below O by a decent amount, and barely above HRL.

While I’m not necessarily looking to add to my Industrial sector holdings given that I’m overweight there, I’ll still look to add LMT shares should the price continue to sink.

 

Summary

I recorded a few more Portfolio transactions this past week that I didn’t cover in my last Recent Transactions post.

First, I sold the last of my AL shares, eliminating the stock with the worst Dividend Safety Score I had.

The sale proceeds were mostly reinvested.  I added to 3 existing positions in an effort to take advantage of current prices, as well as make the stocks a more significant part of my Portfolio.

I invested the most in OMC, with a decent amount directed into BMY as well.  LMT only garnered a single-share investment.  All these stocks sport current yields over 3%, allowing me to recoup all the lost dividend income from the AL sale without having to reinvest all the proceeds.  I’m holding onto the remaining sale proceeds and looking for another purchase candidate.

The 4 transactions resulted in a net withdrawal of $809.21 from my Portfolio.  However, thanks to the higher yields of the replacement stocks, I increased my annual forward dividend income by $61.13.

With the AL sale, I recorded a long-term capital gain of $1,309.79 and a short-term capital loss of $5.40.

The number of stocks in my Portfolio dropped to 53 after eliminating my AL position.

 

Are you finding more value in the market after our relatively minor September pull back?  Is it enough for your purchase activity to tick higher?  I look forward to your comments!