Caterpillar (NYSE:CAT) has been on my "sell radar" for a while. It is no doubt a high quality company, with a long history and record of prospering through good times and surviving the worst of times. However it is in a very cyclical industry and it is going through perhaps its toughest stretch in its history.
With a retirement portfolio, one of my main goals is consistent dividend growth so cyclicals don't make very good long term buy and holds. (They are good however for capital gains if you are lucky enough to buy them at their lows and selling them when things are good; i.e., speculation.)
With that said, since I purchased CAT near its recent lows (not low enough however) I was hoping to hold it a while longer. I did mention that a catalyst for selling it would be if its payout ratio goes above 100%. Well, CAT's payout ratio has been over that for a few months, and I just don't see that trend reversing any time soon. With that, I made the decision over the weekend to sell it. I'll wait for better prices for "high DGR" candidates in my watch list to enter.
- Sold 400 shares of CAT; loss of 2.4% without accounting for dividends.
Edit: My order to add GBAB was partially filled, so...
- Bought 270 shares of GBAB in taxable account
Disclosure: I am/we are long GBAB.