I’ve been busy in the first half of February making Portfolio transactions. I posted about the first couple of moves earlier this week. Now I’m back to share more.
I had a total of 3 transactions this past week. All the stocks involved were from the Information Technology sector. The moves were comprised of a trim and two purchases, one of which brought a new stock into my Portfolio. Exciting!
I started by trimming my largest Portfolio holding, then using the proceeds to invest in a new holding. Lastly, I made the smallest of additions to one of my tech holdings that needs to become a larger position. Unfortunately, this is difficult to do given that the stock appears to always trade at a premium.
When all was said and done I made a net investment, and the Information Technology weighting for my Portfolio got a bit larger. However, my forward dividend income took a small hit.
What follows are more details for my latest Portfolio transactions…
Broadcom (AVGO)
Thanks to a stellar 2024, AVGO was 9.98% of my Portfolio weighting at the end of the year. While a pull back in January reduced its Portfolio weighting to 8.21%, AVGO was still well over the 5% weighting I prefer to keep for each of my Portfolio stocks.
In an effort to pare back my allocation to AVGO and bring more balance to my Portfolio (at least a tad), I decided to sell some shares. The fact that the stock looks to be trading at a rich valuation offered some motivation to trim as well.
On 2/10/25, I sold 30 shares at $235.00/share. The sale proceeds were $7,049.80 after the $0.20 SEC fee.
At my sale price, shares of AVGO yielded exactly 1%. This is well below half my current Portfolio yield of 2.64%.
I sold a share lot that I bought just prior to the start of the pandemic (back on 1/27/20) at $30.89/share. There was some serious capital appreciation on these!
With this sale, I realized a long-term capital gain of $6,123.10. However, the sale also resulted in a $70.80 reduction in annual forward dividend income.
About 9% of my AVGO position was sold. I still have 301.354 shares of AVGO which have a cost basis of $29.56/share. Lots of unrealized capital gains are waiting for me here, too. Needless to say, AVGO is still a huge part of my Portfolio, despite this trim. In fact, AVGO currently has an 8.62% weighting within my Portfolio after a rise in its stock price since the beginning of the month.
With the AVGO sale proceeds, I stayed in the Information Technology sector. I initiated a position in a stock that sports a better valuation, and offers some better dividend safety…
Intuit (INTU)
INTU is a fairly young company, only incorporated in 1984. It offers a range of financial tools (software) to help people manage money and taxes. Some of its products (which you may be familiar with) include QuickBooks for managing business finances, payroll, and payments. It also has Mailchimp for marketing, TurboTax for tax prep, and Credit Karma which provides personalized credit and financial insights.
This stock has been on my watchlist before… and as recently as last month. This is primarily because the company offers some impressive financial metrics.
I was intrigued when the stock price dropped below $600/share. At this price, the valuation has me interested in establishing a position. Knowing I could trim my AVGO position and put the sale proceeds into INTU allowed me to move forward with the transactions.
I like the earnings and dividend growth that analysts forecast for INTU. Both are mid-teens percentages. The yield offered by the stock is quite low though. However, dividend growth has been awesome, as you’ll soon see.
On 2/10/25, I established my INTU position by purchasing 12 shares at $587.74/share, for a total of $7,052.88. The stock yielded 0.71% at my purchase price, which is lower than the yield on AVGO, and not even one-third the current yield of my Portfolio.
The purchase added $49.92 to my annual forward dividend income. This fell short of the amount I gave up in the AVGO trim. My first dividend payment from INTU will arrive in April.
INTU entered my Portfolio with a decent 0.86% weighting. This put the stock as my 40th largest position out of 58 holdings. I’d like to see INTU have a weighting above 1% eventually.
INTU is now my 9th Information Technology holding. The stock currently trails Eastman Chemical (EMN) in my Portfolio rankings, but it is ahead of fellow tech holding Accenture (ACN).
As I normally do with a new holding, let’s take a quick look at its dividend growth history dating back to 2000…
INTU started paying a dividend in 2011. Dividend growth has been very strong since then, topping 12% every year.
Its dividend growth rates over each of the reporting periods has been in the mid-teens… very impressive. INTU is currently on a 13-year dividend growth streak.
Also, INTU has a ‘Very Safe’ dividend safety score (98 out of 99) from Simply Safe Dividends. This suggests that a dividend cut is highly unlikely.
If earnings growth continues to be a percentage in the mid-teens, dividend growth should follow. Strong dividend growth would more than compensate for the currently low yield.
Microsoft (MSFT)
Here’s a stock that always seems to be overvalued. I bought ‘overvalued’ MSFT shares in the past and have done quite well with them. However, one day buying overvalued shares will come back to bite me.
I last bought MSFT (a couple of shares) back in September of 2023, so it’s been well over a year. I bought those shares at $310.49. The price is currently trading about $100/share higher than that. Most of that price gain was tacked on in late 2023. Over 2024, MSFT basically traded sideways… in the $400-$450 range.
Waiting for MSFT to obtain a fair valuation could take a while. So, in order to keep my position growing, I’m adding a share or two occasionally. This way I don’t add too many ‘pricey’ shares at once.
On 2/12/25, I bought a single share of MSFT at $408.84. The stock yielded 0.81% at my purchase price, which is a bit less than one-third of my current Portfolio yield. This yield is also slightly below MSFT’s 5-year average yield of 0.87%.
My MSFT share total rose by 5.4% with this purchase, and my share total now stands at 19.538 shares. My annual forward dividend income increased by just $3.32 with the share addition.
This purchase jacked up my cost basis fairly significantly, by $10.85/share, to $207.71/share.
MSFT climbed a couple of spots in my Portfolio rankings thanks to my purchase. It became my 31st largest position. MSFT is barely behind NextEra Energy (NEE), but has a decent lead on Comcast (CMCSA).
Adding more MSFT shares to my Portfolio is of interest to me. In the near-term, I’ll look to add another share below $390.
Summary
I’ve continued being active with regard to making Portfolio moves in the first half of February. This past week I recorded another set of transactions. My 3 moves were all in the Information Technology sector.
The sale I made was a trim of my largest holding, Broadcom (AVGO). With AVGO representing what I consider to be a large portion of my Portfolio, and with the stock looking overvalued currently, I decided to reduce the size of my position a bit. I took the sale proceeds and introduced a new stock, Intuit (INTU) into my Portfolio. INTU has what appears to be a much better valuation, so making the replacement felt timely…. we’ll see. I also added a single share of Microsoft (MSFT) in order to keep that position growing.
The transactions resulted in a net investment into my Portfolio of $411.92. However, my forward dividend income decreased by $17.56 due to the yields of INTU and MSFT being lower than that of AVGO.
With the AVGO sale, I realized a long-term capital gain of $6,123.10. Considering I only invested $926.70 to acquire the shares, my 5-year investment was a major success.
With INTU joining my Portfolio, the number of holdings in my Portfolio rose by one to 58.
Do you have any single-stock positions that comprise more than 5% of your portfolio? What do you do with such holdings? Let’em run, or trim them to ensure their position doesn’t get too large? I look forward to your comments!