I’ve got one last Portfolio transaction report for 2021.  Here it is.

I’ve been quiet in December with regard to stock trades, but that changed this week as I wanted to make a few Portfolio adjustments prior to the new year.  In addition, I needed to invest enough new capital to ensure I hit my investment goal for the year.

With a group of 4 trades I did the following…

• I trimmed a position that’s been struggling to perform during the time I’ve held it.  With the sale proceeds I did the next two things…
• I added to what was my smallest Portfolio position &
• Kept most of the money in biotech by continuing to build out a position started a little over a year ago
• Lastly, I invested some new capital into another biotech stock that I’ve only had in my Portfolio for about 6 months

Factoring in all the transactions, I made a net investment and got a small bump in my forward dividend income… just as you might expect.

I’m sure you’d like to see more details, right?  Let’s get to it.

 

Gilead Sciences (GILD)

GILD has essentially traded in the $60 to $80 range for the past 5 years.  It’s easily one of the worst-performing stocks in my Portfolio.

Still, I do have a positive return while holding the stock (primarily due to the dividend), but I’ve been disappointed with the price performance for quite some time.

With next year’s earnings shaping up to be negative, and most likely another year of muted dividend growth coming, I’d rather put some of this investment to work elsewhere.

On 12/27/21, I sold 25 shares at $72.61/sh., or about 22.8% of my position.  The sale proceeds were $1,815.24 after the 1-cent SEC fee.

The shares I sold were from a lot I bought in Dec. 2016, which I purchased at practically the same price as I just sold at.  With this trim I had a long-term capital gain of $0.24!

At my sale price, shares of GILD yielded 3.91%, which is 1.68% above my current Portfolio yield of 2.23%.

The sale also resulted in a $71.00 reduction in annual forward dividend income.  I hate to see the income go, but I replaced it in short order… keep reading.

My GILD share count dropped to 84.583 shares.  GILD is now the 40th largest position in my Portfolio of 55 stocks.  This puts it just behind Amgen (AMGN) and ahead of Altria Group (MO).

 

Pinnacle West Capital (PNW)

Shortly after initiating a position in PNW this past February, the stock price moved up and I held off on further share purchases to build out the position.

In Q4 of this year, the company got negative news from Arizona regulators, reducing its allowed profitability.  This dropped the stock price and brought into question the safety of the dividend.  Since then, PNW has provided information regarding how they planned to support and grow the dividend given their updated earnings projections.

For the next 3-4 years, dividend growth will probably be held around the 2% level while the expected earnings range comes in at 5%-7%.  Following this plan will allow the dividend payout ratio to return to the company’s 65% to 75% target range over time.  In the meantime, PNW will most likely file more rate cases with regulators, looking for relief.

Anyway, with the price decline, I decided to add a few shares and bolster my position, as I’m taking a long-term view on the stock.  The share addition is enough to have PNW no longer be my smallest position.

On 12/27/21, I purchased 10 shares of PNW @ $68.9977/sh., for a total of $689.98.  The stock yielded 4.93% at the time of my purchase (easily over twice my current Portfolio yield).

The purchase resulted in the addition of $34.00 in annual forward dividend income thanks to that high yield.

My PNW position has now grown to 25.508 shares.  My cost basis dropped to $71.62/share.

I’ll consider adding more PNW shares should the price drop again into the low $60s.  However, share additions won’t be plentiful given the projected low dividend growth over the next few years and the expected reset of earnings in 2022.

PNW has moved up to become my 4th smallest position now.  The stock sits well behind Amdocs Ltd. (DOX), but comfortably ahead of National Retail Properties (NNN).

 

Amgen (AMGN)

With the remainder of the GILD sale proceeds (after using some of it to buy the PNW shares), I continued to build out my AMGN position.

I decided to keep the majority of the GILD money in another biotech holding.  I expect AMGN to provide better price performance and dividend growth than GILD, but we’ll see how it plays out.

On 12/28/21, I purchased 5 more shares of AMGN @ $225.6303/sh., for a total of $1,128.15.  The stock yielded 3.44% at the time of my purchase (1.21 percentage points better than my current Portfolio average).

The purchase boosted my annual forward dividend income by $38.80.  Combined with the PNW purchase, this recouped all the lost dividend income from the GILD trim.

This is now my 6th AMGN purchase in 2021.  My AMGN position has now climbed to 27.375 shares.

While this purchase raised my AMGN cost basis a bit, to $221.72/share, I think the shares are undervalued at the current level, so I moved forward with the addition.  Unfortunately, I wasn’t ready to buy AMGN early in December when the stock traded under $200.

AMGN became the 39th largest position in my Portfolio… slightly bigger than my GILD position now.  Just ahead of AMGN in my Portfolio value rankings is Omnicom Group (OMC).

 

Bristol-Myers Squibb (BMY)

As the end of the year drew closer, I knew I needed to invest a little cash in order to hit my new capital investment goal for 2021.

Looking around my Portfolio for an undervalued stock candidate that I wanted to see grow in size led me to BMY.

I’ve been adding to both AMGN and BMY this year, and after boosting the size of my AMGN position it only made sense to increase my BMY position as well.

Arguably, BMY is more undervalued than AMGN right now.  Thus, adding a few more shares didn’t require much internal debate for me.

On 12/28/21, I purchased 9 shares of BMY @ $62.315/sh., for a total of $560.84.  The stock yielded 3.47% at the time of my purchase (1.24 percentage points above my current Portfolio average).

In the case of BMY, the purchase lowered my cost basis a bit, to $64.23/share.  The purchase also increased my annual forward dividend income by $19.44.

As was the case with AMGN, BMY was noticeably less expensive at the beginning of the month (around $56), but I wasn’t prepared to buy then.  Still, I find the current price favorable.

I now own 89.795 shares of BMY.  Reaching at least 100 shares is in my sights.

With respect to Portfolio value, BMY is currently the 43rd largest position in my Portfolio (now out of the Bottom 10!).  BMY is sandwiched between Realty Income (O) and Hormel Foods (HRL).

 

Summary

I made 4 more Portfolio transactions this past week.  This will most likely close out my trading activity for 2021.

Trading started with a trim of GILD, which has been a chronic under-performer in my Portfolio.

I used the sale proceeds to add some shares of utility PNW, but the majority was directed into fellow biotech AMGN.  These two additions were enough replace the lost dividend income from the GILD trim.

Lastly, I rounded up some new investment capital and added some shares of BMY.  This ensured that I met my new capital investment goal for 2021 ($10K).

FYI… The dividend safety (per Simply Safe Dividends) of my purchased stocks was equal to or better than that of my trim, GILD.

The four transactions resulted in a net investment of $563.72 into my Portfolio.  Meanwhile, my annual forward dividend income got a boost of $21.24.

Since I sold my GILD shares at essentially the same price as I bought them years ago, I only recorded a long-term capital gain of $0.24.

With my sale being only a trim, and my purchases all being additions to existing Portfolio holdings, the number of stocks in my Portfolio remained at 55.

 

Have you made any portfolio adjustments in the past week or two in an effort to get your portfolio set heading into 2022?  I look forward to your comments!