Just when I thought I was done with transactions in February, I fit in one more cluster of moves.  Since it was so late in the month, I’m just getting around to sharing the details now.

The majority of the transactions stemmed from the first move, the sale (which eliminated the stock from my Portfolio).  I then set about replacing the lost dividend income while boosting five of my smaller Portfolio positions.

You’ll recall that I am looking to either eliminate my smallest positions, or increase them in size to the point that they have at least a 1% weighting within my Portfolio.

I doubt I’ll get this transformation done entirely in 2024, but this continues the work I started early this year.

There’s lots to cover, so let’s not waste any more time.  Here are the details for my latest set of Portfolio transactions.

 

Best Buy (BBY)

I haven’t held BBY for very long.  I initiated my position in Sept. 2022, and added just once to that position about 2 months later.

BBY had seen some amazing earnings and dividend growth from 2015 through 2022 and I hoped it could continue… it didn’t.

The past two years, earnings have dropped about 36% total.  Unfortunately, dividend growth has been fading, too.  This got me to take a closer look at the company’s performance.

While debt is under control and interest coverage is very manageable, and return on equity and invested capital remain healthy, margins are getting squeezed with the sales and earnings slowdown.  The dividend payout ratio has risen above preferred levels now, too, and the company hit the brakes on dividend growth.

The day before earnings were slated to be announced last week, I decided to pull the plug, capture my gains, and avoid any potential earnings/outlook disappointment.

As it turns out, earnings were OK, and the stock popped the next day.  However, the company’s outlook was cautious and those gains were lost (and then some) over the next few trading days.  A meager 2.17% dividend raise was announced as well, confirming my suspicions that dividend growth was going to be limited for a while.

On 2/28/24, I sold all 53.056 shares at $79.75/share.  The sale proceeds were $4,231.19 after the $0.03 SEC fee.

At my sale price, shares of BBY yielded 4.61%.  This yield is nearly 2 percentage points above my current Portfolio yield of 2.68%.

With this sale, I realized a long-term capital gain of $586.85 and a short-term capital gain of $10.89.  The sale also resulted in a $195.25 reduction in annual forward dividend income.

Since my initial BBY purchase back in Sept. 2022 until this final sale, I calculate my annualized return for BBY to be 17.12%.  I was happy to secure a gain given the deteriorating performance that BBY booked while I held the stock.

Should BBY get revenue and earnings growing again in the next 12-18 months, I’d be open to buying again, but for now I don’t like their near-term prospects and prefer to be on the sidelines.

While I would have liked to find a replacement for BBY in the Consumer Discretionary sector, I didn’t like my current options there.  For now, the goal was simply to replace the lost dividend income while boosting a handful of smaller Portfolio positions, regardless of sector.

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

 

Amdocs Ltd. (DOX)

I’ve been looking for a chance to add to my initial DOX position opened back in late 2021, but the stock usually trades with a higher valuation.  With DOX looking fairly valued to me at current levels, I decided to make that addition.  A bonus for me… DOX resides in the Information Technology sector, a place where I’m always looking to increase my weighting.

On 2/29/24, I bought 10 shares of DOX at $90.69/share, for a total of $906.90.  The stock yielded 2.11% at my purchase price, which is 0.57 percentage points below my overall Portfolio yield.

My DOX position grew by 25% with this purchase.  I now own a total of 50 shares.  The purchase added $19.16 to my annual forward dividend income… less than 1/10th of what I lost in the BBY sale.

Due to this addition, my DOX cost basis rose by more than $3.74/share to settle at $75.74/share.

DOX became my 12th smallest Portfolio position.  The stock sits behind Cummins (CMI) in my rankings, but is ahead of UGI Corp. (UGI).

The door is open for further additions to my DOX position, especially at prices south of $90.

 

UGI Corp. (UGI)

UGI is currently undergoing an internal strategic review.  The focus is the possible divestiture of its non-regulated propane business (AmeriGas).  While earnings would be more stable and predictable without the propane business, investors worry that without the revenue/earnings the propane business provides, UGI’s payout ratio would be elevated and the company might reduce the dividend to compensate.  UGI’s stock price has been depressed until some clarity comes.

Earnings growth in the near-term is muted at best.  But, I get a 6%+ dividend yield while I wait.  If the strategic review turns out well, I would eventually expect the stock price to rebound, too.

I’ve only owned UGI for about 7 months, and this is my first addition since I established my position.

On 2/29/24, I bought 45 shares of UGI at $24.42/share, for a total of $1,098.90.  The stock yielded 6.13% at my purchase price, easily more than double my current Portfolio yield.  This yield is also well above the stock’s 5-year average yield of 3.64%.

My UGI share total increased by nearly 33% with this purchase, and my share total now stands at 182.236 shares.  My annual forward dividend income rose by $67.50 with the buy.

This purchase resulted in my cost basis rising by $0.41/share, to $23.19/share.

My UGI position grew enough to allow the stock to escape my Bottom 10 (value rankings)… barely.  UGI is now my 11th smallest position, right behind DOX, and just ahead of fellow Utilities stock Pinnacle West Capital (PNW).

I won’t be looking to add further to UGI in the short-term.

 

VICI Properties (VICI)

This was my 3rd smallest Portfolio position prior to this latest buy.  I initiated my VICI position about 2 years ago, and have added once since that time.  The stock has basically traded sideways since I’ve owned it and near-term earnings estimates suggest declining earnings growth is coming.  Right now I’m willing to be patient and reinvest its dividend that’s north of 5.5%.

On 2/29/24, I bought 30 shares of VICI at $29.90/share, for a total of $897.  The stock yielded 5.55% at my purchase price, which is a little more than double my current Portfolio yield.

My VICI share total was boosted by nearly 27.9% with this purchase.  I now own a total of 137.641 shares.  The purchase boosted my annual forward dividend income by $49.80.

My cost basis in VICI rose by a mere $0.03/share.  It now stands at $29.76/share.

VICI jumped 4 spots in my rankings and is now my 7th smallest holding.  It’s also no longer my smallest REIT either, as it surpassed NNN REIT (NNN) – returning the favor from a couple of months ago.

I’m going to hold my VICI position for now and see how things play out.  I’ll either add again eventually (in order to make VICI a bigger part of my Portfolio), or I’ll send VICI packing.

 

Medtronic (MDT)

Here’s another stock that’s looking fairly valued to me.  Prior to this purchase, MDT was my smallest Healthcare holding, but that’s no longer the case.  I like the idea of boosting my medical devices exposure, and MDT is slated to return to positive earnings growth with the fiscal year starting next month.

On 2/29/24, I bought 5 shares of MDT at $83.55/share, for a total of $417.75.  The stock yielded 3.30% at my purchase price, 0.62 percentage points higher than my overall Portfolio yield.

My MDT position got bigger by 7.95% with this purchase.  My MDT share total rose to 67.908 shares.  This buy added $13.80 to my annual forward dividend income.

My cost basis in MDT declined a bit with the buy, dropping $0.13/share to finish at $85.10/share.

MDT had the largest existing position of the group of stocks I added to.  MDT is now my 18th smallest Portfolio position.  The stock just trails Accenture (ACN), but has a decent lead over NextEra Energy (NEE) in my rankings.

I can easily see MDT growing further in my Portfolio.  I’ll look to add more shares in the near-term should the price fall into the upper $70s.

 

OGE Energy (OGE)

Here’s another Utilities stock within my Portfolio that’s getting an addition (like UGI).  Utilities are lagging other market sectors in performance once again in 2024, so finding values there are not surprising.  However, I’d only call OGE fairly valued today.

I initiated my OGE position back in April of 2021, so I’m coming up on 3 years of ownership.  I added to my OGE position 3 weeks after I got in, but nothing since then… until now.

On 2/29/24, I bought 30 shares of OGE at $32.99/share, for a total of $989.70.  The stock yielded 5.07% at my purchase price, about 0.25 percentage points shy of double my current Portfolio yield.  This yield is also about about half a percentage point above the stock’s 5-year average yield of 4.58%.

My OGE share total climbed by 26.4% with this purchase, and it now stands at 143.629 shares.  My annual forward dividend income increased by $50.18 as a result of the buy.

This purchase lowered my OGE cost basis by a measly $0.02/share, to $33.08/share.

OGE has become my 14th smallest holding, jumping 4 spots with my buy.  The stock is a good bit behind Bristol-Myers Squibb (BMY) in my value rankings, but is just above Cummins (CMI).

I don’t foresee adding to OGE again in the near-term.  If I add in my Utilities sector again, it will most likely be NEE.

 

Summary

I finished the month of February with a flurry of activity.  This capped off an active month overall.

My BBY sale (which eliminated the stock from my Portfolio) kicked off a set of buys designed to replace the lost dividend income, all the while boosting the size of some of my smallest Portfolio positions.

Before I was done reinvesting those BBY sale proceeds, I’d added to 5 existing Portfolio positions, including DOX, VICI, MDT and a couple of Utilities in UGI & OGE.

The buys were fairly equal from an investment dollar perspective, except for the one in MDT, which was a bit less than half the size of the others.

Despite there being 6 total transactions, there was a net investment of only $79.06 into my Portfolio.  My annual forward dividend income increased by just $5.19.

I recorded a long-term capital gain of $586.85 and a short-term capital gain of $10.89 with the BBY sale.  I ended my BBY investment with a 17.12% annualized return over 17 months.

With BBY being eliminated from my Portfolio, and the five buys being existing holdings, the number of stocks in my Portfolio fell by one to 58.

 

Do you own BBY?  What about any of the 5 stocks I bought… do you have a favorite from the group?  I look forward to your comments!