I made a handful of Portfolio transactions last Thursday that now need detailing. Six different stocks were involved!
I sold one stock, eliminating it from my Portfolio, Poor performance over an extended time frame, coupled with dwindling dividend growth, led me to say goodbye to the stock.
Nearly all the sale proceeds were then reinvested into five existing Portfolio stocks. In most cases I built up some of my smaller Portfolio positions.
My forward dividend income was no worse for wear, as I was able to recoup the lost dividend income with those subsequent purchases.
Let’s get to the transaction details…
Gilead Sciences (GILD)
For several years now GILD has struggled to find a growth driver after their super-successful run with Sovaldi to treat the hepatitis C virus.
With the stock trading sideways or slowly drifting down over the past 5 years, and the dividend growth waning, I decided to remove GILD from my Portfolio.
I’ve added several other Healthcare stocks to my Portfolio over the past half decade that I like more, so at this point having one less Healthcare stock is a good thing, especially since my Healthcare sector weighting was leaning overweight.
On 10/6/22, I sold all 88.686 shares at $65.15/share. The sale proceeds were $5,777.76, after the $0.13 SEC fee.
At my sale price, shares of GILD yielded 4.48%. This yield is more than 1.4% above my current Portfolio yield of 3.04%.
I realized a long-term capital loss of $612.75 and a short-term capital loss of $0.29.
The sale also resulted in a reduction of $258.96 in annual forward dividend income.
GILD was a position that I started back in 2014. I made multiple buy and sell transactions over the years since.
When my run with GILD was over, I ended up with a 2.58% annualized total return. The $1,788.24 I collected in dividends was offset by $280.64 in capital losses.
What did I do with the sale proceeds? Let’s find out…
Pinnacle West Capital (PNW)
With rising interest rates impacting stock prices in the Utilities and REIT sectors, PNW came onto my radar in September.
I’d been looking to add to this small holding ever since I initiated my position back in February, 2021. I did lower my cost basis once with a small add-on purchase in December of 2021, but that purchase didn’t really impact the size of my holding.
With a chance to grow my position more significantly and lower my cost basis again with this most recent price decline, I committed some of the GILD sale proceeds to adding some PNW shares.
The purchase also helped bolster my Utilities sector weighting, which was approaching an underweight designation within my Portfolio.
On 10/6/22, I bought 35 shares of PNW at $63.42/share, for a total of $2,219.70. This was more than a 132% increase in the size of my position.
The stock yielded 5.36% at my purchase price, which is easily more than 2% higher than my current Portfolio average. It’s also close to 1% higher than the yield provided by GILD.
I now own 61.392 shares of PNW. My cost basis was lowered to $66.98/share.
My annual forward dividend income increased by $119.00 thanks to the PNW purchase. This recouped 46% of the lost dividend income from the GILD sale.
PNW now ranks as my 42nd largest Portfolio position out of 59 stocks. It’s broken out of my bottom 10, where it has resided since my initial purchase. In my Portfolio ranks, PNW sits well behind Eastman Chemical (EMN), and just ahead of fellow Utility stock OGE Energy (OGE).
VF Corp (VFC)
Now here’s a stock that’s been getting absolutely crushed in 2022. VFC closed 2021 with a share price of $73.22.
It’s decline is now approaching 60% for the year and the stock hasn’t traded so low in over a decade. I’m totally surprised that the stock price has fallen this far, but I’ve come to expect the unexpected anymore.
I’m willing to take a small bet that VFC will eventually recover. Analysts project double-digit earnings gains in the next couple of years after this year’s earnings close out in March 2023. An earnings rebound should help the stock.
On 10/6/22, I bought 10 shares of VFC at $30.49/share, for a total of $304.90. This was a 10.9% increase in the size of my position.
The stock yielded 6.56% at my purchase price… more than double my current Portfolio average. It was also 2% better than GILD’s yield.
I now possess 101.774 shares of VFC, putting me over the 100 share mark and allowing me to write a covered call option, if desired. My cost basis dropped to $51.55/share. I’m well underwater with VFC.
My annual forward dividend income went up $20.00 as a result of the VFC purchase.
VFC stands as my 11st smallest Portfolio position, as this minor purchase will not make up for the monster fall in my rankings due to its price decline. VFC is nestled in between Microsoft (MSFT) and Verizon Communications (VZ) in my Portfolio rankings.
Visa (V)
I’ve been adding to my V position in 2-share chunks during the past year. As the price continues to fall I plan to keep up with that practice.
I started this process back in November of last year. I’ve added two other times since then as well. Each time I bought at a lower price.
V is another stock that I’m looking to build up to 100 shares so these small adds are working well for me.
On 10/6/22, I bought another 2 shares of V at $186.8585/share, for a total of $373.72. This was only a 2.23% increase in the size of my position, as V is one of my larger positions.
The stock yielded 0.80% at my purchase price, which is only about 30% of my average Portfolio yield. V is my lowest-yielding Portfolio stock if I don’t count the 0% I get from The Walt Disney Co. (DIS) and their currently suspended dividend.
My V share total climbed to 91.563 after the purchase. My cost basis increased to $82.22/share as a result. As you can probably gather from that cost basis, my V investment has been a good one.
Due to the low yield V has, and my small purchase size, my annual forward dividend income only went up $3.00.
As for its Portfolio rank, V currently sits in my Top 10… just barely. It’s a precarious hold on #10 as several other stocks vie for that spot on a regular basis. V is currently sandwiched in between Union Pacific (UNP) and Johnson & Johnson (JNJ) in that #10 spot.
National Retail Properties (NNN)
Similar to PNW, there was another Portfolio stock that needed to get bigger – NNN. My desire to enhance my NNN position grew once I learned my STORE Capital (STOR) position (a fellow REIT) would be eliminated early next year (due to STOR’s acquisition and the pending cash buyout of shareholders).
After initiating my NNN position in September, 2021, I was able to make one small follow-on addition in January, 2022, but nothing since.
NNN had dropped below the $40 level earlier this year, but I wasn’t able/prepared to add at that time. I’d prioritized other stocks.
With NNN falling south of $40 again, the time looked right to build up this position a bit and bolster my triple-net lease REIT holdings.
On 10/6/22, I bought 35 shares of NNN at $39.15/share, for a total of $1,370.25. This increased my position by 77.9%… a nice jump.
The stock yielded 5.62% at my purchase price, which is better than 2.5% above my average Portfolio yield.
With this purchase, I have now accumulated a total of 79.924 NNN shares. My cost basis also decreased to $42.11/share.
My annual forward dividend income rose by a healthy $77.00 due to the NNN purchase.
NNN rose up my Portfolio ranks due to the purchase, settling as my 14th smallest position after occupying a place in my bottom 10 since I established the position. NNN is a bit smaller than my Amdocs Ltd. (DOX) position, but is comfortably bigger than my VICI Properties (VICI) holding (which also grew in size, as you’ll see below).
VICI Properties (VICI)
Sticking in the REIT sector, I also added some VICI shares. Again this was another small position that I chose to build up.
In this case, however, my purchase raised my cost basis. That’s not something I usually do either, especially for a newer stock.
However, I like the dividend growth offered by VICI (which is strong for a REIT) and I wanted to take advantage of its recent dip in price.
I initiated my VICI position back in March and that was my only VICI purchase… until now.
On 10/6/22, I bought 46 shares of VICI at $31/share, for a total of $1,426.00. This boosted my VICI position by 83.7%… fairly close to a double-up.
The stock yielded 5.03% at my purchase price… essentially 2% higher than my current Portfolio average. Out of my 5 purchases, this was my 4th with a yield north of 5%.
I have now built up my VICI position to 100.969 shares. Reaching the 100-share level allows for covered call writing with this position, too.
My cost basis moved higher with this purchase… reaching $29.64/share.
My annual forward dividend income increased by $71.76 with this VICI addition. All the lost dividend income from the GILD sale was recouped (and then some) after this final purchase of the group.
VICI currently ranks as my 13th smallest Portfolio position. Thus, it too has removed itself from my bottom 10. VICI slightly trails NNN in my Portfolio rankings, but is just ahead of MSFT.
Summary
I kicked off October with some Portfolio moves. I made one stock sale and five stock purchases.
The sale eliminated my entire GILD position and had me using the proceeds to bolster many smaller positions within my Portfolio.
My purchases included PNW (Utilities), VFC (Consumer Discretionary), V (Information Technology), and NNN & VICI (REITs).
I invested over $2.2K into PNW, while investing north of $1.4K into VICI and $1.3K into NNN. My V and VFC buys were significantly smaller, coming in less than $400 each.
Four of my five stock purchases sport a yield above 5%, while the yield for V is less than 1%.
Accounting for all the transactions, I made a net withdrawal of $83.19 from my Portfolio. However, my annual forward dividend income actually increased by $31.80.
I also realized a long-term capital loss of $612.75, and a short-term capital loss of $0.29, as a result of the GILD sale.
With GILD no longer a part of my Portfolio, and all my purchases being existing Portfolio stocks, the number of stocks in my Portfolio slipped to 59.
Having you recently been adding any of these five stocks I purchased? Which stock feels like the best addition to you? I look forward to your comments!