Alright, I’m way behind on getting this post out.  I made a few Portfolio transactions the week before last and I want to share the details.

Usually, I try to post about any moves I made within a week, but that time has passed.  So, in an effort to catch up, here I am, posting now.

While the overall investment wasn’t too significant, the number of transactions was – I made 5 different moves… 1 sale and 4 purchases.

One stock exited my Portfolio and two new ones entered.  Oh boy, new stocks… always exciting.

So let’s get to it… here are all the details of my recent transactions.

 

W.P. Carey (WPC)

Poor dividend growth was ultimately what drove me to exit this position.  I’ve owned WPC since 2015, but couldn’t stand another lackluster dividend raise.

I actually exited my position before WPC offered its first quarterly dividend raise of the year just this past week (0.19%).  This supported my decision to move on from WPC.

My investment in WPC wasn’t a bad one as my annualized return was 8.78% over the life of my investment.  This is an acceptable return, but most of this return came from the dividend (i.e. not much in capital appreciation) with the majority of those dividends subject to ordinary income tax due to WPC being a REIT.

On 3/2/22, I sold all 40.607 shares at $78.60/share.  The sale proceeds were $3,191.69, after the SEC fee.

At my sale price, shares of WPC yielded 5.35% (one of my higher-yielding Portfolio stocks), which is over 2x my current Portfolio yield of 2.56%.

I realized a long-term capital gain of $659.30.  The sale also resulted in a $171.36 reduction in annual forward dividend income, which wasn’t easy to replace.

The number of stocks in my Portfolio dropped to 54 after WPC was removed.

With WPC no longer in my Portfolio, I set out to divide the sales proceeds between two other REITs, as I prefer to have smaller positions when it comes to higher-yielding stocks.

 

STORE Capital (STOR)

The first stock I initiated a position in with the WPC sale proceeds was STOR.

Like WPC, STOR is a net-lease REIT.  It acquires and manages Single Tenant Operational Real Estate, which explains the company name.

The portfolio for STOR consists of more than 2,800 properties across the United States, valued at over $10 billion.  The company is headquartered in Scottsdale, AZ.

STOR was founded in 2011 and went public in 2014.  Berkshire Hathaway invested in the company in 2017 and is nearly a 10% owner of STOR.

On 3/3/22, I initiated my STOR position by purchasing 50 shares at $30.20/sh, for a total of $1,510.00.  The stock yielded 5.10% at my purchase price, essentially twice that of my overall Portfolio.

This purchase added $77.00 to my annual forward dividend income.  This recouped about 45% of the dividend income lost in the WPC sale.

STOR starts as the 4th smallest position in my Portfolio, behind utility Pinnacle West Capital (PNW) and just ahead of another new REIT which I’ll talk about shortly.

 

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

 

 

STOR only started paying a dividend late in 2014 (last quarter only).  Since then, dividend growth has consistently averaged around 6%.

The dividend growth streak for STOR currently stands at 7 years after its last raise of nearly 7% in Sept., 2021.

The adjusted FFO payout ratio is 73%, which is low for a REIT.  The free cash flow payout ratio is a bit lower at 69%.  Room exists to keep raising the dividend at the current pace in the short-term.

The addition of STOR to my Portfolio brings the number of stocks in it to 55.

 

VICI Properties (VICI)

The second stock I initiated a position in with the WPC sale proceeds was VICI.

VICI is a gaming REIT, headquartered in New York, NY.  It was created in 2017 when casino operator Caesars Entertainment spun off a portion of its real estate assets during its bankruptcy proceedings.

VICI focuses on being a landlord while its tenants pay for property maintenance, taxes and insurance.

Heavily concentrated in Las Vegas, NV, nearly half of the rent VICI collects comes from properties along the Las Vegas strip.  In addition, 90% of its rent comes from just 3 casino operators.

Thus, this concentration is a risk to be mindful of with my investment.

On 3/3/22, I initiated my VICI position by purchasing 53 shares at $28.435/sh, for a total of $1,507.06.  The stock yielded 5.06% at my purchase price… very similar to that of STOR.

This purchase added $76.32 to my annual forward dividend income.  This recouped another 45% of the dividend income lost in the WPC sale.

VICI starts as the 3rd smallest position in my Portfolio, just behind STOR, and ahead of utility NextEra Energy (NEE).

 

Again, since this is a new holding, let’s take a quick look at its dividend growth history…

 

 

VICI started paying a dividend in 2018, shortly after its creation.  Dividend growth has been good, in the upper-single digits.  I’m hoping that continues.

The dividend growth streak for VICI has made it to 3 years.  Its last dividend raise was just over 9% in August, 2021.

VICI’s adjusted FFO payout ratio is 76%.  Its free cash flow payout ratio jumped to 87% in 2021 after being in the low-to-mid 70% range in its previous years.

The addition of VICI brings my number of Portfolio stocks to 56.  It also becomes the 6th REIT in my Portfolio.

 

JPMorgan Chase & Co. (JPM)

With more work to do to recoup the remainder of the lost income from my WPC sale, I added a few more shares of JPM.

Back in January, I added a single share of JPM at $146.  With further price weakness since then, I decided to add again.

On 3/3/22, I purchased 3 more shares of JPM @ $137.9898/sh., for a total of $413.97.  The stock yielded 2.90% at the time of my purchase (a few tenths of a percent above of my overall Portfolio yield).

The purchase boosted my annual forward dividend income by $12.00.

My JPM position has now risen to 74.961 shares, raising my JPM cost basis by roughly a dollar and a half, to $106.62/share.

JPM is now under $130 as I write this, so I may be inclined to keep adding to my position… stay tuned.

JPM is currently the 25th largest position in my Portfolio.  The position is slightly behind that of Gentex (GNTX), but ahead of Texas Instruments (TXN).

 

Merck & Co. (MRK)

Lastly, I added a few shares of MRK.  It was in 2021, at the tail end of July, that I last purchased some MRK shares.

The vast majority of my MRK position was established in the first half of 2021, with prices at roughly the same level.

With the dividend yield north of 3.5%, dividend safety about as good as it gets, and dividend growth in the mid-to-upper single digits over recent 1-yr, 3-yr and 5-yr periods, how could I not add to my position?

On 3/3/22, I purchased 4 shares of MRK @ $76.75/sh., for a total of $307.00.  The stock yielded 3.60% at the time of my purchase (roughly 1% higher than my overall Portfolio yield).

The purchase increased my annual forward dividend income by $11.04.

My MRK position has grown to 117.303 shares.  The purchase drove up my cost basis just a bit, to $74.22/share.

I’d like to add further to my MRK position so that its dividend provides $100+ each quarter.  My latest purchase put my quarterly MRK dividend over $80.

MRK is currently the 27th largest position in my Portfolio.  This position is behind that of TXN, but safely in front of my one with Comcast (CMCSA).

 

Summary

My Portfolio experienced a total of 5 transactions during the first week of March.  I sold one stock and purchased four others.

The lone sale led to WPC exiting my Portfolio, while two of the four purchases resulted in a couple of new Portfolio holdings in REITs STOR and VICI.  The WPC sale proceeds were essentially divided equally between STOR and VICI.

With the new REITs having slightly lower yields, they didn’t make up all the WPC dividend income.  So, I invested a little cash, too.  I added shares of JPM and MRK to account for the remainder of the dividend income loss, plus a little extra.

When all was said and done, the five transactions resulted in a net investment of $546.33 into my Portfolio.  My annual forward dividend income rose by an underwhelming $5.00 – still, it’s an increase!

I recorded a long-term capital gain of $659.30 from the WPC trim, too.

After removing WPC from my Portfolio, but adding STOR and VICI, the number of stocks in my Portfolio climbed to 56.

 

What stocks have been entering or exiting your portfolio lately?  Do you own any of the stocks involved in my transaction list?  I look forward to your comments!