The value of the port has declined from $169,931 to $169,179 or about -0.4%.
Two stocks have reduced their dividend: INTC and VFC. HCSG has eliminated the dividend entirely.
The annual dividend expected for the port has decreased from $10,312 originally to $9,041 now.
I’m thinking that it might be wise to make some changes to the port. Perhaps, selling HCSG, VFC and INTC and look for greener pastures. What do you think?
Thanks for posting your dividend portfolios. I definitely agree with selling HCGS, VFC, and INTC. The thesis has clearly changed especially for a high yield dividend portfolio. I would suggest CWH as a possible new addition.
Camping World might be a good choice but with a current yield of 9% and a payout ratio over a 100% and given the cyclical nature of RVing business, I opted to go with something more in line with my original selection criteria. Here’s the details of the transactions.
SELLS
Price
Invested
SELL
Cash
Ticker
Shares
Paid
Amount
PRICE
Received
HCSG
827
$12.09
$9,998
$14.20
$11,743
VFC
334
$29.91
$9,990
$18.05
$6,029
INTC
388
$25.77
$9,999
$29.00
$11,252
Total
$29,987
$29,024
I think it’s noteworthy that the 3 sells only resulted in a relatively small capital loss of $963. Both HCSG and INTC are trading at price above the purchase price.
Rich said, " I must say the high yield space is very difficult to avoid cuts."
I completely agree. I quit buying (and even holding) high yield stocks many years ago for this and other reasons. If you follow a high yield stock long enough, even when there is no dividend cut, you will find that the total return is almost always less than the lower yield, higher growth stocks. And more importantly, if you can hold the lower yield, higher growth stocks for at least 5 years before needing to harvest the dividends for retirement income (in most cases) I find that the same dollars invested actually buy more dividend income 5 or more years in the future.
That is why I try to avoid them. I used David Fish’s Dividend Champions for a long time. People tried to maintain it after he died but it kind of fell apart.
Now there are a bunch of sites that carry-on the task in varying forms.
The one high-yield I have kept for a long time is Annaly Capital (NLY). It has be bouncing around since the 2007-2010 hiccup. I have cycled through highs, selling, and lows, buying. The position normally shows from -20% to +20% on the broker screen. It really needs a steadier interest rate environment.
The basic framework I’ve used since day 1 for selecting dividend stocks is that I demand (with only a few exceptions) a current yield of 3.0% and a reasonable expectation the dividend will grow by 6 to 8% or more over time. The thinking (hope) is that inflation will never exceed that growth rate over long periods of time. So, most years my income will grow faster than my expenses. My retirement plan is based on that 3% income yield.
My port has exhibited some cuts - I think everyone has. But, those have been when I ventured into the high yield space, low growth arena (think T, VZ) or those that business deteriorated and I did not get a good sense about how bad things were getting (VFC).
It’s often helpful in stock picking to apply probabilities to situations. For the High Yield Port, out of a total of 21 names, 4 have seriously cut their dividends. That’s nearly a 20% probability of a cut over a time frame of less than a year and during a fairly strong economy. What happens when things get bad? What happens over the life of the port? What happens after inflation?
It’s hard for me to see a High Yield approach working out over long periods of time unless someone is a much better stock picker than I.
I suppose it could be useful if someone really drilled into each company, watching for any weak point and trying to get a sell in before the actual event. But, I believe a working crystal ball might be required.
I use 2.5% yield generally for my dividend core. Once I own them, I pay less attention to yield and more on growth of stock price and dividend.
Like CAT recently started climbing again after a pullback (and small purchase) and the yield is 2.23%. I am Ok with that.
As I may have mentioned, I really track the bottom line, total cash flow, for my dividend/interest investments which is at 221% of our needs. I try to keep it at 150% or higher. Each night, part of my “Fool Stats” report is this:
It keeps me focused on the bottom line with a quick break-out by type of investment. It also provides a quick look at impact if I choose to sell something. The money market investment is fairly new and nor meant to be permanent. I know how selling it would affect our cash flow, 9.5% drop.
