I decided to clear out some stocks at the end of this year; all are (very) minor positions acquired through corporate takeovers. Read on to see which stocks didn’t make the grade.
Since the position was so small ($13), I didn’t immediately sell, but I decided to sell this month due to the general decline in the commodities market. I’m still keeping BBL for the long-term. The brokerage commission is nearly half the value of the share.
Like South32, Halyard health is too new to pay any dividends and while I could wait for some future time when it might start paying; I’d rather sell and move on. I’m still holding onto KMB as part of my portfolio.
I acquired 3 Albermarle (ALB) shares when they acquired Rockwood Holdings (ROC), along with a cash component for each ROC share. The company is also a dividend contender with 21 years of dividend growth with around 2% yield at current prices.
I want to reduce the weighting of the basic materials sector going forward and since I only held a small amount of the stock, I decided to sell and received $136 in return. This leaves BBL, DOW, APD and BMS in the Basic Materials sector in my portfolio.
There shouldn’t be much relief on my taxes from these sales; the amounts involved aren’t significant enough. But typically loses when you sell investments can be offset again any capital gains if you’ve not bought the same (or similar) investment 30 days either side of the sale.
One of the problems with long-term holdings of individual stocks is that companies can be bought, merged or split up. This happened to three companies out of the 44 stocks that I owned in the space of about three years. Depending on the circumstances the dividend may even be reduced or cut.
Next year it’s a similar story. DOW, EMR and PFE have all announced significant changes this year which should be realized next year; DOW will be merging with DuPont and plans to split into three companies eventually; EMR will be spinning off its Network Power division and PFE is merging with Allergan.
Of those three, the DOW merger is possibly more concerning from a dividend standpoint; DOW only has a 6-year history and DuPoint only 3; so is there a strong incentive to maintain higher dividends going forward?
The PFE merger gives the company access to offshore cash reserves which could be used to return shareholder value in the form of higher dividends. And EMR prides itself on its dividend increase history so I’m also more confident that the dividend will increase, if only a little, as a result of spinning off a less profitable part of the company.
So we’ll see what happens next year, but I remain content to continue relying more on the Vanguard High Dividend Yield Index (VHDYX) fund over individual stocks for my dividend income.
Quote of the Day
We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.