It had been a while since I made some Portfolio transactions, but the drought is over.  I’ve got four transactions to cover after a mini flurry of activity this week.

This time around I made one sale and then reinvested those sale proceeds into three existing Portfolio stocks.

With the sale I eliminated a poorly-performing stock from my Portfolio.  Not only was its price performance alarming, but I had to suffer through a pair of 2023 dividend cuts as well.

On the purchase side, I added to three of my smaller Portfolio holdings in an effort to make these stocks a more significant part of my Portfolio.

As a result of all the moves, I was able to increase my forward dividend income a bit, too.

Let’s get to it…  Here are the details for my four transactions this week.

 

V.F. Corp. (VFC)

I owned VFC for quite a while… 8 years.  For the first 4 years, performance was rather good.  I had an 18.64% annualized return with VFC.

The next two years, returns were around -12% each year… not good, but certainly not concerning.  These years coincided with the start of the pandemic and plenty of companies were trying to work through the challenging environment.

However, things really turned bad in 2022.  Rising inventories resulting from soft consumer demand in the face of high inflation and rising interest rates put a strain on the business.  The payout ratio rose with lower cash flow failing to cover the dividend.  Concerns over a dividend cut were present.  My return for VFC was almost -60% that year.

This year, my return is very close to -30%.  Add in a dividend cut of 41.18% in February, followed by another one of 70% in October, and nothing seemed to be going right.

I’ve considered holding and waiting for an earnings recovery, but I’m not sure a recovery is coming, at least not in the short-term.  I also think the dividend will take years to return to previous levels.  So, I decided to sell and use the proceeds to invest in stocks that I have more confidence in.  I’ll take advantage of the capital loss for tax purposes, too.

On 12/22/23, I sold all 109.132 shares at $18.605/share.  The sale proceeds were $2,030.38, after the $0.02 SEC fee.

At my sale price, shares of VFC yielded 1.93%.  When you consider this is what remained after two hefty dividend cuts, you can imagine how high the yield got.  This sub-2% yield is below my current Portfolio yield of 2.75%.

I realized a long-term capital loss of $3,367.52 and a short-term capital loss of $5.00.  The sale also resulted in a $39.29 reduction in annual forward dividend income.

This is 4th stock I’ve eliminated from my Portfolio in 2023, joining fellow losers 3M Co. (MMM), Medical Properties Trust (MPW) and Walgreens Boots Alliance (WBA).

Since my initial VFC purchase way back in Dec. 2015 until this final sale, I calculate my annualized return for VFC to be -8.53%.  Not pretty at all, but not my worst investment either.

Let’s see what I did with the VFC sale proceeds…

 

NextEra Energy (NEE)

I’ve been building out my NEE position over the course of 2023 as the price has come down.  I’ve purchased each lot at successively lower prices.  This is my 6th NEE add during the year.

While NEE briefly dipped below $50 at the end of October, I was not opportunistic enough to purchase then.  However, I’ve found the current price to still be reasonable, especially since it’s lower than any price I’ve paid to date.

On 12/22/23, I bought 20 shares of NEE at $59.8975/sh, for a total of $1,197.95.  The stock yielded 3.12% at my purchase price, which is 0.37 percentage points better than my overall Portfolio yield of 2.75%.

I boosted my NEE share total by just about 30% with this purchase.  I now own a total of 86.862 shares of NEE.  The purchase added $37.40 to my annual forward dividend income, which just about recouped the income lost in the VFC sale.

With the purchase, NEE has become my largest Utility position, surpassing Pinnacle West Capital (PNW).  Yet, NEE is still in the bottom third of my Portfolio with regard to position size.  It’s currently the 43rd largest position in my Portfolio of 59 stocks.  The stock sits between a couple of Healthcare stocks in Bristol-Myers Squibb (BMY) and Medtronic (MDT).

I’m probably good with the size of NEE within my Portfolio, but should the price drop below its current level I’ll consider adding a bit more.

 

Cummins (CMI)

I added to my CMI position a couple of months ago just below $220.  While I was hoping to purchase more below that level, I didn’t really get the opportunity.  So, I asked myself if I would be OK with the current price, and I was… at least for a small addition.

I believe CMI to be slightly undervalued at the current level.  Since it’s a position I wish to see grow within my Portfolio due to its small size, using some of the VFC sale proceeds to increase my CMI position was a fairly easy call.

On 12/22/23, I bought 2 shares of CMI at $237.00/sh, for a total of $474.00.  The stock yielded 2.84% at my purchase price, which is slightly higher than my current Portfolio yield.

My CMI share total increased by 14.8% with this purchase.  That’s 15.519 shares of CMI that I now own.  My annual forward dividend income rose by $13.44 with the buy.

Prior to this purchase, CMI was my smallest Industrials stock, but that’s no longer the case.  That title now belongs to FedEx (FDX) after its decline this week.

Despite the buy, CMI is still my 9th smallest position.  It trails Hormel Foods (HRL), but is slightly ahead of FDX.

I’d be happy to continue buying more of CMI at the same or lower prices.

 

McCormick & Co. (MKC)

Now for the last stock I bought with some of those VFC sale proceeds.  This was an add to my smallest position of the three… MKC, a stock in the Consumer Staples sector.

MKC is a stock that always seems overvalued.  However, the stock is currently as inexpensive (based on P/E ratio) as it’s been over the past 6 years.

I bought some shares back in October just under $67.  In the days/weeks that followed, shares slipped below $60, but I wasn’t able to add more at the time.  The price has since rebounded a bit along with the stock market.

With my position being so small, even the stock’s 7.69% dividend raise last month didn’t have much of an impact on my Portfolio.  That’s something I wish to correct should MKC continue delivering solid raises.  The only way to do that is to have a larger position.

On 12/22/23, I bought 6 shares of MKC at $68.00/sh, for a total of $408.00.  The stock yielded 2.47% at my purchase price, which is 0.27 percentage points below my current Portfolio yield.

My MKC share total expanded by nearly 16.8% with this purchase.  I now own a total of 41.737 MKC shares.  The purchase boosted my annual forward dividend income by $10.08.

By purchasing this handful of shares, MKC leapfrogged a couple of stocks in my Portfolio rankings.  However, MKC is still the 4th smallest position in my Portfolio.  It sits a good distance behind UGI Corp. (UGI), but is slightly ahead of The Walt Disney Co. (DIS).

I’m not done adding to MKC.  However, I’d like to acquire additional shares below $65 if I can.

 

Summary

After a silent November on the transaction front, I got off the schneid in December, albeit late in the month.

I made four total transactions, all on the same day… 1 sale and 3 purchases.

I started by eliminating VFC from my Portfolio.  Two dividend cuts on top of lousy stock price performance was the final straw.

The sale proceeds were then used to add to three existing positions that I wanted to see grow: NEE, CMI & MKC.  Over half of the VFC sale proceeds went into NEE.

Accounting for all the transactions, I was able to enhance my forward dividend income a bit, which I always like to see.  Consider this a stock swap that worked in my favor.  Not only did my forward dividend income increase, but my overall dividend safety improved as well.

The quartet of transactions resulted in a net investment of $49.57 into my Portfolio.  My annual forward dividend income rose, increasing by $21.63.

I recorded a long-term capital loss of $3,367.52 and a short-term capital loss of $5.00 with the VFC sale.  The losses will be used to offset some gains during tax season.

With VFC being purged from my Portfolio, but the three purchases being of existing holdings, the number of stocks in my Portfolio declined by one to 59.

 

Have you eliminated any stocks from your portfolio in 2023?  If so, what led to your decision?  Are you still a VFC owner and looking for a recovery?  I look forward to your comments!