Hello! I’ve got a handful of Portfolio transactions that I made in the first half of July that I’d like to cover.
The moves started with a sale… one that I mentioned I was looking to execute in my last transactions post. I basically sold some shares that I recently bought.
I then proceeded to invest those sale proceeds into a three existing Portfolio holdings. However, I didn’t invest all the sale proceeds, so expect more buying to come. I spread out the investment I did make across a few different holdings. All the stocks have been performing poorly in recent months, which led to more attractive prices than they’ve had in the past.
When all the moves were complete, I effectively made a Portfolio withdrawal, recorded a short-term capital gain, and decreased my forward dividend income.
Here come all the transaction details…
Broadcom (AVGO)
In my last transactions post, I noted that I bought back two AVGO shares that I’d recently sold since the stock dipped noticeably in price in just a few days. I was hoping for a stock price bounce-back that would allow me to net a small profit on those shares. As it turned out, AVGO continued to trade lower after that, dropping another $100/share.
Thus, it appeared I was a tad early in my re-purchase. However, about a week later the share price recovered, and I was able to sell as planned, netting a small profit.
Of course, the share price continued to rally after my sale, so I missed out on some additional gains. In any case, this just goes to show how difficult it can be to time a stock, or the market, as neither my buyback or the eventual sale had optimal timing.
On 7/3/24, I sold 2 shares of AVGO at $1,690/share, for a total of $3,380. The sale proceeds totaled $3,379.91 after the $0.09 SEC fee.
At my sale price, AVGO yielded 1.24%. This yield is less than half my current Portfolio yield of 2.65%.
The size of my AVGO position was reduced by 5.72% with the sale. However, AVGO easily remained my largest position.
With this sale, I realized a short-term capital gain of $19.91. I held the shares for less than 2 weeks.
Since I unloaded my most expensive AVGO shares, the cost basis for my remaining shares dropped by a sizable $79.69/share, to $287.26/share.
The sale also brought a $42 reduction in my annual forward dividend income.
Nike (NKE)
With my Best Buy (BBY) and Whirlpool (WHR) sales earlier in 2024, the Consumer Discretionary sector in my Portfolio had become a bit light. Couple this will the under-performance of a pair of my remaining holdings in this sector in NKE and Starbucks (SBUX), and I’m now underweight the sector.
So, I’ve been looking to add to my Consumer Discretionary holdings in an effort to enhance the sector weighting. I started with NKE.
NKE was punished with its most recent earnings release in late June after revenue guidance disappointed analysts and investors. The stock suffered a 20% price haircut as a result. I suspect it will be a year or two before NKE can recover, but I still believe in the long-term outlook.
On 7/8/24, I purchased 5 shares of NKE at $73.226/share, for a total of $366.13. The stock yielded 2.02% at my purchase price. This is below my overall Portfolio yield, but is the highest yield for NKE in the past 20+ years.
This was my first purchase of NKE since late 2017. This NKE buy was also done at the lowest P/E ratio (~19) compared to any of my previous buys.
The purchase increased my NKE share total by 3.66%… a fairly minor addition. I now own a total of 141.536 NKE shares.
The purchase added $7.40 to my annual forward dividend income. This starts to put a dent in the dividend income I gave up with the AVGO sale.
With the addition, my NKE cost basis increased $0.49/share to $59.69/share.
NKE used to be a Top 5 holding of mine back in mid-to-late 2021, but it’s tumbled from that lofty perch. Even after this addition, it’s now only my 25th largest holding, sitting between Starbucks (SBUX) and Amgen (AMGN). NKE trades at less than half its price from two years ago.
NKE is the smallest of my Consumer Discretionary holdings, with SBUX being slightly bigger, and Lowe’s Companies (LOW) being much bigger… about double the size of NKE.
I’ll target another NKE addition in the short-term if the stock trades below $70.
Starbucks (SBUX)
Staying in the Consumer Discretionary sector, I have another stock that’s fallen on turbulent times… SBUX. The stock is still trying to gain its footing after a significant drop back on the 1st day of May. I added some shares on that day, too. It was my last SBUX purchase prior to this one.
Like NKE, I also believe in SBUX in the long-term and thus view its current stock price as a potential opportunity to add more shares. I don’t view the stock as being undervalued at the current level, but if the company can stabilize in the short-term and continue growing thereafter, then I believe this will end up looking like a good purchase. Time will tell.
On 7/8/24, I bought 5 shares of SBUX at $74.80/share, for a total of $374.00. The stock yielded 3.05% at my purchase price. This yield is 0.4 percentage points above that of my overall Portfolio yield.
This addition increased my SBUX share total by 3.39%. It was another small addition to an existing Portfolio holding. I now own a total of 152.364 shares of SBUX.
The purchase added $11.40 to my annual forward dividend income. At this point, I still haven’t recouped the dividend income from the AVGO sale, but I’m getting close to half way.
My SBUX cost basis increased $0.36/share to $64.14/share with this purchase.
After this addition, SBUX is now my 24th largest holding, sitting between Texas Instruments (TXN) and NKE.
I’m open to adding more SBUX in the short-term, too. A drop below $70 would probably induce another buy.
The Walt Disney Co. (DIS)
To round out my collection of purchases, I added to what was my smallest Portfolio holding… DIS.
DIS has had a wild ride down, and up, and down again since the start of the pandemic in early 2020. I wouldn’t say things are back to normal at the company just yet, but they seem to be moving in the right direction. I believe DIS recently turned a profit with its direct-to-consumer streaming services (first time ever if I’m not mistaken). In addition, growth at the theme parks has returned and the company is expanding there. DIS also appears to have a box office hit on its hands with ‘Inside Out 2’.
I’m somewhat underweight in the Communication Services sector where DIS exists. So, the DIS buy accomplishes two things: adding weight in Communication Services, and pushing DIS closer to having a 0.5% Portfolio weight… a short-term goal on the way to getting a 1% weight in my Portfolio.
On 7/11/24, I bought 5 shares of DIS at $96.486/share, for a total of $482.43. The stock yielded 0.93% at my purchase price… a yield 65% smaller than my overall Portfolio yield.
This addition did boost my DIS share total by 16.61% though. I now own a total of 35.1 shares of DIS.
The purchase added only $4.50 to my annual forward dividend income due to the low yield for DIS. This extra income, added to that from the NKE and SBUX purchases, has recovered over half of the reduction from the AVGO sale.
With the purchase, my DIS cost basis increased $0.62/share to $92.77/share.
DIS moved up one spot in my Portfolio rankings, escaping the last spot by surpassing McCormick & Co. (MKC) to become my 2nd smallest holding. NNN REIT (NNN) is the next stock for DIS to try and chase down.
I’m still planning to commit more capital to build out my DIS position. I’ll target a dip below $93 for now.
Summary
I was busy in the first half of July, fine tuning my Portfolio positions. I cut loose the AVGO shares that I bought for a potential quick profit.
Then I followed that up with some small share purchases of three existing Portfolio stocks: NKE, SBUX and DIS. The three investments were roughly equal, but DIS did get a bit more than the other stocks. I still have the majority of the AVGO sale proceeds left to invest.
I haven’t recouped all the forward dividend income that I lost from the AVGO sale, but I did manage to get back more than half of it. I expect that by the time I reinvest the remaining sale proceeds that it will be a net gain with regard to forward dividend income.
The transactions resulted in a net withdrawal of $2,157.35 from my Portfolio since I have yet to reinvest everything from the AVGO sale. Also, my annual forward dividend income decreased by $18.70.
I recorded a short-term capital gain of $19.91 after selling the two AVGO shares.
The number of stocks in my Portfolio remained at 57.
Have you purchased NKE, SBUX or DIS in recent weeks? Which of the three might interest you the most at current levels? I look forward to your comments!