I sold two more stocks today as I continue to re-align my Income Fund. Read on for more details.
I decided to adjust my investment strategy after comparing the performance of my stock selections to a dividend income fund. Over time I’ll limit my individual stock holdings to about 10% of the total value of my Income Fund. As a longer term goal I’ll be reducing the number of individual stocks to less than 10; the dividend income funds take care of diversification and I will concentrate on larger individual positions in a smaller set of companies that I like. I’ll also be limiting them to US-based stocks as all international stocks will be represented by a index fund.
I’ve not yet determined the shortlist of companies I’ll keep or invest in, but I’ve identified a couple that I no longer want to hold.
Both are good companies to hold on to though and I’m not selling because of any identified weakness in the companies. Their stock price just about regained their cost basis this week and so I decided to sell as part of my portfolio realignment. The holdings are fairly small in size which was another factor in my decision.
With a £47B market cap, Diageo plc (DEO) is the world’s largest producer of alcoholic spirits with some famous brands including Smirnoff (vodka), Johnnie Walker (scotch whiskey), Baileys (liqueur) and Guinness (stout). It was formed in 1997 from a merger between Guinness and Grand Metropolitan, and for a period of time the company owned Pillsbury and Burger King. It reports in 5 regions: North America (47% FY15 Profit), Western Europe (27%), Asia Pacific (9%), Latin America (10%) and Africa / Eastern Europe (11%).
Diageo plc is a UK listed company with the symbol DGE in the UK – the US ADR is listed on the NYSE with the symbol DEO. The company has a 6-year US dividend history which has been affected by exchange rates; in the UK it is a 27-Year Dividend Champion with the enviable history shown below.
I originally bought 1.7489 shares of Diageo in April last year and an additional 7 shares a couple of months ago in January this year, for a total cost basis of $955.67. I received dividends for $3.74 while holding the stock and after the $7 trading fee I received $930.67. This is a loss of 2.2% mostly from the trading commission.
WPP plc (LSE:WPP) was originally founded in 1971 as a manufacturer of wire shopping baskets before being acquired by Martin Sorrell who transformed the company. Today they’re the world’s largest advertising company at £20B and a 22-year UK Dividend Contender. In the US they trade as an ADR with the symbol WPPGY and have a 6-year dividend growth.
I bought 1.352 shares of WPPGY in February 2015 and another 1.352 shares in March 2015. The small quantities resulted from a Sharebuilder automatic purchase program that I was using at the time to periodically invest. My total cost basis was $250 and I received $7.24 in dividends and $239.94 from the sale after the $7 trading fee for a net loss of $3.
What I’m buying
I’m exchanging the proceeds into additional shares of the Vanguard International High Dividend Yield Index Fund (VIHAX) which follows the FTSE All-World (ex-US) High Dividend Yield index. This is just in time for the fund’s dividend declaration later this week on the 17th.
This is a new fund and the portfolio holding information is not yet fully published. As of 2/29 the fund currently holds 725 dividend paying stocks taken from Developed Markets (Canada 7%, Europe 60%, Pacific 18%) and Emerging Markets (14.5%). The top-ten holdings are
- Nestle SA
- Roche Holding AG
- Novartis AG
- HSBC Holdings plc
- British American Tobacco plc
- Royal Dutch Shell plc
- GlaxoSmithKline plc
- Total SA
- BP plc
Quote of the Day
Life is 10% what happens to you and 90% how you react to it.