May stock purchases (and a sale)

May stock purchasesI bought some shares in May after a long time of not purchasing any. Here’s a summary of my May stock purchases plus the stock that I sold at the same time.

As part of my general simplification strategy in my portfolio, I aim to hold around 10% of the portfolio in individual stocks. I also favor holding fewer individual stocks for easier management. I can rely on the 428 companies in VHDYX and 931 companies in VIHAX to provide diversification since those two funds make up the bulk of my portfolio.

I reduced the target allocation of individual stocks in my portfolio down to 10% a couple of years ago. I’m still slightly above that target with a 12% allocation at the moment. Since the investments are in taxable there’s no point to immediately rebalance since selling incurs capital gains. So I usually rebalance by adding to the other asset classes instead of selling stocks.

Buying stocks moves my allocation needle the ‘wrong’ way however. So I’m quite reluctant to buy new individual stocks at this time. In this case, I sold one holding and bought more of an existing holding. And I threw in a small second purchase just for ‘fun’.

So let’s take a look and see if any method lies behind my madness.

Sold: Verizon (VZ)

I sold 14.7137 shares of VZ on May 1st for a total of $671.06 after a $6.95 commission. The cost basis was $725 resulting in a capital loss of $53.94.

Since I’ve owned VZ shares from October 2014, they’ve paid a total of $78.01 in dividends which was invested in other companies. So overall there was a small gain in this investment of $24.07, ignoring taxes.

My reasons for selling

  1. Yahoo. Emotional reasons here but I don’t like Yahoo, and I’m not sure how this acquisition will help contribute to VZ’s long term success. Yahoo’s email service is horrible and I’ve stopped using it. The only good service of theirs is Yahoo Finance and even that has changed for the worse of late.
  2. Between VZ and AT&T, I prefer AT&T – both companies are trying to re-invent themselves, but T’s acquisitions look better to me.
  3. Simplification. I own individual shares in both AT&T (T) and VZ. Since my main holding VHDYX holds both, I would rather concentrate my individual shares in one of those companies.
  4. This is a small position of less than $1,000.

Reasons not to sell

  1. I can’t predict the future and Yahoo may well turn out to be a great investment.

I’m not selling VZ because the financials / fundamentals look bad. Once again, my decision to sell this stock centers around a desire to focus my individual shares in only a few companies and to let the mutual funds do the heavy lifting of diversification.

Finviz predicts a 2.5% EPS growth for VZ over the next five years, with a 5.5% growth forecast at Morningstar. How accurate these forecasts are remains to be seen of course.

Despite the sale, I still own a small amount of VZ indirectly as they’re a large part of VHDYX, comprising about 2% of the fund. This equates to about $3,163 based on the number of VHDYX shares I own.

Bought: AT&T (T)

I exchanged the $671 worth of VZ shares by buying 18 shares of T for a total of $716.42 on May 1st. This includes a $2 commission at my Vanguard brokerage.

My reasons for buying

  1. Reasonably valued with a P/E of 19 at the time of purchase.
  2. Long-term dividend payer with a good ratio of payouts to free cash flow (73% for FY16)
  3. Wireless connectivity is set for future growth with the introduction of 5G technologies and more devices being connected.

Five-year growth forecasts for T range from 7.25% at Finviz to 5.5% at Morningstar. Who knows how accurate they are but AT&T has been diversifying by acquiring Time Warner along with previous additions of DirecTV. Their rollout of subscription service DirecTV Now was less than stellar and really needs DVR to become a great offering. But the new service shows they’re adjusting to disruption in the traditional cable market caused by Hulu and Amazon’s streaming services.

Bought: Delta (DAL)

I bought 5 shares of DAL shares at $48.73 on May 8th for a total $245.65. This includes a $2 commission at my Vanguard brokerage.

It’s been a while since I owned DAL – I sold DAL back in 2014 because I don’t think the airline industry is well suited for dividend growth investing. I still don’t. But I don’t really consider myself a dividend growth investor now, so I’m not limited by that restriction. Of course I sold the previous shares for around $35 a share so I would have done better just to keep holding them.

For more discussion on Delta please take a look at the Dividend Diplomats’ Delta stock analysis article. This was posted after my purchase but it’s worth a read.

My reasons for buying

  1. Reasonably valued with a P/E of 9 at the time of purchase.
  2. I believe the company is well-managed and operates at a good margin compared to competitors United and American Airlines.
  3. They have lots of positive reviews at Glassdoor which speaks well to company management and culture.
  4. I spend a fair amount on Delta each year in travel to the UK, am happy with their services and I like to own (parts of) companies I use frequently.

Reasons I shouldn’t buy

  1. Low dividend yield < 2% below my minimum dividend yield target.
  2. The airline industry is very competitive with low cost carriers disrupting the more traditional larger carriers.

Five-year growth forecasts for DAL range from 4% at Finviz to 2.3% at Morningstar.

I decided to put a little money into DAL as a ‘fun’ purchase since I use their services a fair amount. I’ll likely add more as and when I have some spare money, but it’s not a priority.


With these transactions, I remain at 30 individual stocks in my portfolio for a total of around $43,809. This is 12% of my Income Fund. The new stocks purchased were a very small percentage of the total value and won’t have much impact on overall allocation.

The transactions also consolidate more assets at Vanguard and reduce my holdings at Capital One.

Quote of the Day

I think it all comes down to motivation. If you really want to do something, you will work hard for it.

12 thoughts on “May stock purchases (and a sale)”

  1. Appreciate the update. There’s always a reason to buy any stock and a reason to sell it. You can make an argument either way. It all comes down to your personal preference and tolerance for risk. I don’t hold any of the names you mention though I know that both T and VZ are very popular among our dividend investing peers. Between those two funds you hold you pretty much have everything under the sun covered so buying or selling an individual stock or two shouldn’t have that much of a long term impact. Stay invested!

    1. Hi DivHut,
      Thanks for your insight as always! These transactions are a very small percentage of the overall portfolio as you mention. There’s really no financial basis for many of my stock sales in the last year; it’s really all about consolidating and simplifying my portfolio. I’m trying to do that in a way to avoid lots of taxes however so it’s a slow process.
      Best wishes,

  2. Ciao DL,
    I actually added VZ to reach the 100 pieces needed to start selling covered calls, I like this company and they have a good advantage on competition when it comes to new technologies (5G being one of them). Having said that I understand the rationale to have less holdings, that’s a target that I too have in mind and never seem to be able to get… As to Delta, I am not a great fan of airline companies, but if I took the plunge and bought some Delta would be one of the candidates. As DH is saying here above it’s important to stay invested, now that leaving cash out of the market returns mostly 0 it’s the only solution against inflation and tax erosion…
    ciao ciao

    1. Hi Stal,
      Congrats on getting to the 100 share stage – I hope the calls will help boost your income even higher. There’s certainly nothing wrong with VZ, they are the number one carrier in the US for a reason. Most of the reasons I had for selling them are emotional than financial. But I prefer to hold just one of the two and I picked T. Maybe it’s the wrong one but I doubt it’ll make much difference considering the weighting in my portfolio.
      I agree on your comments about being fully invested. I’m currently down to around 0.6% cash in my portfolio. If there’s a significant market correction I could rebalance using the bonds in my portfolio.
      Best wishes,

    1. Thanks Dan 🙂 Time will certainly tell but I probably won’t be listening. We’ll see though!
      Congrats on your record June results!
      Best wishes,

  3. I own about 75 shares of VZ myself and am less than pleased by it’s overall performance since I purchased it. It’s a relatively small part of my holdings and I still like telecom as they are the backbone of so much of the internet of all things that I don’t want to not be exposed to it. I do think they are taking an interesting approach to matching T in their holdings and I’m hoping that it pays off, but like you I don’t like the Yahoo move. The company is broken and has been for years. Hopefully they can turn them around, but I have my doubts.

    1. Hi Duncan,
      VZ will probably absorb Yahoo without much fuss. Perhaps they will be more aggressive in shutting down side projects that don’t generate money and keep the parts they like (search / ads etc). I agree with you about telecom going forward. Certainly with the internet of things and 5G it’s clear that wireless will pay a big part in the future and VZ are well positioned with that. I’m just content with experiencing that growth as part of my fund holdings rather than individual stocks.
      Thank you for your comment 🙂
      Best wishes,

    1. Hi IH,
      Yes I’d definitely like to buy more but I’m limiting my individual stock holdings. An extra 125 shares is great though and will help you with your option writing. The 5% yield is nice too although I think it comes at the cost of low capital growth.
      Best wishes,

    1. Hi DFG,
      Yes there’s no reason not to hold both. I’m just trying to reduce the number of stocks I hold so the sale was more for that reason.
      Best wishes,

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