Lock
in gains and move the capital to higher yielding stocks.
In
this post I write about the 2011 Dividend Machine Portfolio.
The 2011 portfolio has done well by all my
measures.
Several
stocks have appreciated significantly and their yields are less than I require
for income that comes from stocks. These
are obviously good stocks but I would not buy them today if I used only my
Dividend Machine criteria. Now it is
time to determine what to do with the winners…Buy, Sell, Hold, Hedge with a
call?
Buy,
Sell, Hold or Hedge with a call.
Let’s
cut to the chase. Listed below and in
the table below are the stocks from the 2011 Dividend Machine Portfolio that I
would buy, sell or hold. The stocks I
analyzed have a gain of 60% and a yield of less than 3%. I have not included any “spin off” stocks
such as ABBV or PSX.
Sell ATO due to an anemic
dividend growth rate of 3.28%. With a
yield of 2.82% you need to supplement your income by about 1% per year by
selling covered calls. ATO calls are
available but not plentiful. These two
income facts justify a sell on ATO.
Sell CAG anemic yield,
anemic dividend growth and no calls to make up the difference. Take your gains.
Hold ITW, dividend growth
is good at 5.13%. Yield is weak at 2.1%
but calls are available to boost that yield.
ITW is a hold.
Hold MSA, good dividend
growth at 5.6% but not stellar. No calls
to make up for 2.48% dividend yield.
Hold but watch the dividend growth.
Hold
NOC,
No calls to make up for a really weak dividend of 1.85% yet you cannot ignore a
dividend growth of 14.04%. NOC is a hold
Hold
RPM
no calls to make up for a yield of 2.22% the marginal dividend increases over
five years of 5.36% make RPM a tepid hold.
Follow the dividend increases.
Hold
TRV
this stock is a solid hold. Calls are
available to augment the 2.30% yield but the dividend appreciation rate of
13.88% make TRV as solid hold. You
would have to invest in another stock that grows your income by nearly 14% per
year to make it worthwhile to take gains.
Sell
UTMD. This is an overpriced stock with a low yield,
a low dividend growth rate, and no calls.
Take the money.
Hold
WSO
is a hold it has no calls and yield is 2.18% but in a tax move, WSO pre-paid
five years of dividends so the yield should continue to improve as the 6.9%
dividend growth rate suggests.
My Buy Sell and Hold
stocks are in the table below.
TheMoneyMadam
