Close, but not quite there yet! I am getting closer to catching but from my summer blogging break, so let’s keep on moving along.
August was a big month of trading for me as I diversified some of my positions to better set my dividend growth portfolio up for some better performance going forward. While I ultimately envision holding roughly 30-40 positions in my dividend growth portfolio, my goal is to gain some additional exposure to companies with wide moats, defensible positions, and good value at the time of acquisition. Once I am able to add some additional capital on a regular basis, the actual sector allocation and relative weights will become much more important.
This diversification process started in July when I sold roughly half of my Prospect Capital (PSEC) position and invested the proceeds in Digital Realty Trust (DLR). You can see some of the details of that trade in my July passive income update.
Sold Intel Corporation (INTC):
Moving forward to August, my first move was to exit my Intel Corporation (INTC) position. The main reason I exited this position was the lack of dividend increase by management. The main goal of a dividend growth portfolio is to hold companies that are regularly and consistently increasing their dividend payments. I completely exited my INTC position and have limited my technology holdings to Cisco directly and DLR indirectly. This sale cost me $118.06 in forward twelve-month dividends.
Purchased Omega Healthcare Investors (OHI):
With approximately half of the proceeds from the sale of INTC, I invested the proceeds into two different companies. The first, Omega Healthcare Investors (OHI) is a real estate investment trust (REIT) that focuses on owning skilled nursing facilities. Given the aging population and growing need for these services, I think OHI has a tremendous amount of long-term upside and a reasonable price. I purchased 47 shares of OHI for $1,427.64, giving me a cost basis of $30.38 per share. Given the dividend rate at the time of purchase of $0.47 per share, this purchase increased my forward twelve-month dividends by $88.36 and gave me a yield on cost of 6.19%.
Purchased Tal International Group (TAL):
Utilizing the second half of the INTC sale proceeds, I made an investment with Tal International Group (TAL). TAL is an intermodal container finance company, purchasing, leasing, and selling containers. These are the containers we’ve all seen on the backs of semi-trucks, container ships, and rail cars. TAL was appealing to me given the rising dividends, solid valuation, and great entry yield. I purchased 34 shares of TAL for $1,411.53, giving me a cost basis of $41.52 per share. Given the dividend rate at the time of purchase of $0.68 per share, this purchased increased my forward twelve-month dividends by $92.48 and gave me a yield on cost of 6.55%.
Sold Cisco Systems (CSCO):
Later in August, I wanted to continue my diversification in my dividend growth portfolio, and took advantage of capturing some gains from CSCO, while reducing my technology exposure slightly. I still believe CSCO will remain in my portfolio for the long-term, but desired to trim the position back. As such, I sold 50 shares of CSCO, roughly half of my position. This sale cost me $34.00 in forward twelve-month dividends.
Purchased American Realty Capital Properties (ARCP):
Reinvesting the proceeds from my sale of half of my CSCO position, I opened a position in another REIT, American Realty Capital Properties (ARCP). ARCP is a rapidly growing, triple-net lease commercial property investment company. Over the course of an 18-month period, ARCP has gone from a small REIT and by the middle of 2014 will be the largest in the industry, surpassing Realty Income (O), the industry leader. With strong prospects, active management team, and the potential for strong dividend growth, ARCP ticked several boxes for me. A bonus is the monthly dividend payments allowing for additional compounding from the more frequent payouts. I purchased 94 shares of ARCP for $1,222.24, giving me a cost basis of $13.00 per share. Given the dividend rate at the time of purchase of $0.07583 per share, this purchase increased my forward twelve-month dividends by $85.54 and gave me a yield on cost of 7.00%.
August Trade Summary
Heck of a busy month for me, with the subtraction of one position, the reduction of another, and the addition of three other positions. Overall, if you net the various increases and decreases in the forward twelve-month dividends, it resulted in a net increase of $114.32, bringing my total, prior to August dividend payments, to $1,103.71. Feels good to be back above the $1,000 dollar mark, and I don’t think I’ll dip below again. My portfolio now sits at a cost basis of $20,130.55 and an overall yield on cost of 5.48%.
Thanks for indulging me in going over and documenting my August trades as I continue to catch up from my blogging hiatus this past summer. I am getting closer to getting caught up completely and seeing how close I’ll come to my revised 2013 goals. Should be a fun tracking the last third of the year!