My recent sell of Sony (SNE) has given me $793 of capital to reinvest into companies that are paying dividends. 100% of my portfolio consists of stocks that pay dividends. The only growth stock I would consider buying is BRK.B but for now all of my stocks pay dividends. After over half a century of paying out dividends to shareholders, Sony decided to cut their dividend. This was a huge red flag and I had no choice but to sell here. The bad news is I had a capital loss of $160 due to the sell, but the good news is I have decided to quickly put that money back to work. I have decided to buy into companies that I feel will be long term dividend payers. I was focused on higher paying dividend stocks with good P/E ratios so that I know my money is being invested properly this time around. The criteria for my new picks were stocks that had a higher dividend yield than 2.5% and a lower than 19 P/E.
Company
|
Amount
Invested
|
Share
Price
|
Dividend
Yield
|
P/E
|
Annual
Dividends
|
Years
of Dividend Increase
|
Kraft
(KRFT)
|
$200
|
$56.37
|
3.73%
|
13.98
|
$7.45
|
0
|
McDonald’s
(MCD)
|
$150
|
$94.70
|
3.59%
|
17.16
|
$6.34
|
38
|
Kellogg’s
(K)
|
$150
|
$61.75
|
3.17%
|
12.14
|
$4.76
|
9
|
Unilever
(UL)
|
$100
|
$42.00
|
3.60%
|
18.46
|
$3.66
|
4
|
Wal-Mart
(WMT)
|
$100
|
$76.49
|
2.51%
|
16
|
$2.51
|
39
|
Microsoft
(MSFT)
|
$50
|
$46.41
|
2.67%
|
17.64
|
$1.34
|
11
|
Dr.
Pepper Snapple Group (DPS)
|
$50
|
$64.05
|
2.56%
|
17.67
|
$1.28
|
4
|
Total Invested
|
$800
|
$27.34
|
My recent sell of Sony did net me a loss of $160 but let’s
take a look at the pros of why I made the decision to sell in the first place.
·
I was able to diversify my new capital into 7
companies that are currently paying dividends on a quarterly basis.
·
Since I used Loyal3 I was able to take advantage
of the credit card benefit of 1.5% cash back. This gave me an extra $12 of free
money right from the start.
·
I created a mini portfolio consisting of stocks
that had a less than 19 P/E and higher than 2.5% dividend yield.
·
I can now add an additional $27.34 of forward
dividend income with my new investment vs. the $0 of dividend income I would be
getting from Sony if I would have kept it.
·
With the exception of Kraft, my new investments
have over 4 years of dividend increases.
·
Piece of mind!
What do you think of
my recent decision? Would you have done anything different?
Mongrel,
ReplyDeleteAll I have to say is = you are adding to your foundation stocks. Those companies you just purchased are incredible, pay dividends and increase them annually. I see the overall yield you just bought into = 3.4%, nice work! I bet they will bear more fruit than Sony would ever do for you down the line. Congrats again and keep it up.
-Lanny
Lanny,
DeleteThanks for the encouragement and that 3.4% annual yield on my investment is better than the 0% I would be getting from Sony. I am hoping my new investments will outperform Sony if I would have kept it.
These are all solid core companies you have added to your portfolio from the Sony sell. I think it's a good diversification into solid dividend paying companies and you can build off of those positions. A dividend cut should not be the only reason to sell a stock though. If you still believe in the company/industry etc. you should hold on to it. If however, there is a fundamental change in the business/industry then your move to sell was correct. I held and added to my position when GE, IR, and WFC all cut their dividends back in ~2009 but I still believed in all their businesses/industry and happy I did not sell after a dividend cut. Just food for thought and that it's not always black/white that when a company cuts a dividend it means you should sell.
ReplyDeleteDivHut,
DeleteI absolutely agree with your comments and there was more than just the recent dividend cut that was alarming. Sony has been all over the place and I just don't understand the company anymore. There attempt to get a piece of the mobile market is a joke at best. I do think they will turn the business around but this could take years. So essentially I could have waited a few years to break even on my investment. Only time will tell.
Nice adds here to the portfolio! The snowball is really getting big for you over in Loyal3! I am happy to be investing there as well and will be posting about my September purchases here shortly.
ReplyDeleteW2R,
DeleteI can't wait to see what your buys will be. My Loyal3 portfolio is starting to produce a decent amount of dividends. I'll be posting my dividend income soon. Thanks for stopping by.
nice purchases! Although I probably would wait until Sony would recover losses.
ReplyDeleteThat was actually my original plan but I was getting very impatient. I would be surprised if they could get back to $20/share soon. I guess you never know, but Sony seems to have lost some innovation.
DeleteAll very strong purchases and it's great to add all of these companies into your portfolio. Loyal3 is a very good way to build up your portfolio. I'm building my son's portfolio in a similar way as well.
ReplyDeleteTawcan,
DeleteI find myself using Loyal3 more than Sharebuilder these days. The cash back savings on all purchases makes it a win, win situation. September was a nice month of dividend payments from Loyal3. The snowball is finally rolling.
Very nice stocks there DM. I wish I could buy partial stocks as well.
ReplyDeleteThese stocks all look very strong. Keep up the good work!
Best wishes, DfS
Thanks DFS,
DeleteI agree these companies are all great long term picks. I'm focused on building a good foundation for my portfolio at Loyal3.
Although it's always painful to sell, especially at a loss, I would have done the exact same thing. I do like how you've turned it into a positive and bought such good companies all around. Don't think you'll ever regret any of those purchases!
ReplyDeleteDD,
DeleteThanks for the encouragement. I don't think I will regret my decision unless all of these companies tank. lol. The best part is I am collecting an extra $27.34 in dividends now on sn annual basis.
Great purchases there, gotta love Loyal3 for these small purchases. If I made the same purchases at my broker it would have cost me $70. :-(
ReplyDeleteCD,
DeleteAre you able to use Loyal3 as a new broker? Can't ho wrong with small purchases into quality companies.
When I first saw the link, I thought you were buying Sony. I was wondering what you knew that I did not. Well, I see you sold Sony. Probably a good move and the stocks you replaced it with are going to be much more profitable in the long run. Consumer electronics is a peculiar thing. What is state ofart one day is garbage the next. Unless you are flexible and able to change quickly and stay relevant in the market, the next new gadget will crush you. Good job with the new stocks.
ReplyDeletekeep cranking,
Robert the DividendDreamer
DD,
ReplyDeleteI totally agree that I made the right move as well. I believe my return on investment will be much greater now than if I kept my money stagnant in Sony. I am think of doing a side by side compaison of the performance of mybold investment vs. my new investment. I can accomplish this in Google Docs if I have spare time this week. But I basically want to see which investment outperforms the other. It would be interesting to see which would see a gain of 10% first. I would then see if my decision was the correct one. I am always looking to better my ROI so if I think the diverse 7 stocks of quality paying blue chips that pay dividends should outperform Sony by a wide margin. But I am no psychic, so I want to let the numbers prove me right.