Building Income - Selling Apple

Summary

• Why I sold Apple, the abridged version.
• Transactions.
• Impact on dividends.

Selling Apple (AAPL)

On December 22 I sold 140 shares of AAPL, roughly 10% of what I owned. I sold to balance out my being a little too enthusiastic with tax loss sales earlier in 2020 - I could take profits or carry over a large loss. I decided to take profits.

I chose AAPL as my stock to sell for a combination of 3 reasons. 1) It was my largest position, about 15% of my portfolio 2) It only had a .62% yield and 3) (I suspect this is the most important) its dividend increases in 2019 and 2020 were disappointing to me, particularly for a company with its cash flows.

I won't rehash all of that again. For more details - and links to other articles - see my post from December 24: Trimming Apple and Some Buys.

After buying Lockheed-Martin (LMT) on Monday, January 11, I decided to calculate the impact of the AAPL sale on my dividend income. I thought the result was worth a post.

The Transactions

These are my transactions from December 22 through January 11. Dividends came in during this period and were used for buys but they were only about 20% of what I received for AAPL.

• 12/22/20 - Sold 140 shares Apple (AAPL) at $132.00
• 12/22/20 - Bought 35 shares General Dynamics (GD) at $146.50
• 12/23/20 - Bought 120 shares Altria Group (MO) at $42.78
• 12/24/20 - Bought 65 shares Pinnacle West (PNW) at $77.00
• 1/4/21 - Bought 22 shares AbbVie (ABBV) at $106.15
• 1/4/21 - Bought 20 shares Oklahoma Gas and Electric (OGE) at $31.80
• 1/4/21 - Bought 40 shares Verizon Wireless (VZ) at $58.98
• 1/4/21 - Bought 10 shares Excel Energy (XEL) at $66.37
• 1/4/21 - Bought 24 shares Exxon-Mobil (XOM) at $41.64
• 1/11/21 - Bought 5 shares LMT at $335.00.

You'll notice some smaller buys in early January. This was because all of the January 4 transactions were in my Roth which both has smaller purchase sizes - I consider about $3500 a full buy in it - due to the overall account size and because my previous OGE, XEL and XOM buys were all after selling RICs I was down on. So I nibbled on them to get to a normal size. Of course now VZ and ABBV are smaller than usual but I'll take care of that as I continue selling Regulated Investment Companies.

Dividend Impact

I think the easiest way to show this is with a table.

Company	Shares Sold	Shares Bought	Annual Dividend per share	Income Lost	Income Gained
AAPL	140		$.82	$114.80
ABBV		22	$5.20		$114.40
GD		35	$4.40		$154.00
LMT		5	$10.40		$52.00
MO		120	$3.44		$412.80
OGE		20	1.61		$32.20
PNW		65	$3.32		$215.80
VZ		40	$2.51		$100.40
XEL		10	$1.72		$17.20
XOM		24	$3.48		$83.52
Total				$114.80	$1,182.32
Net Impact on Income	$1,067.52

Some of the cash for the buys came from accrued dividends, maybe 20% of the total. I'm not going to adjust for this but even taking it into account, selling AAPL to buy higher yielding companies had a significant impact on my dividend income.

The average yield of my purchases was 4.94%. I was a little surprised by this. Yes, MO and XOM are very high right now but GD, LMT and XEL were bought near or below 3%.

Conclusion

I'm not going to say that I made a bunch of great buys. I like them but who knows? But I gained nearly 3% in additional annual income and I made progress toward my goal of having enough income to live on - and live well - by January 1, 2023. 

I have no intention of making this a regular strategy. My motivation was the tax situation I created with my earlier transactions, something I will try to avoid in the future. But I'd be lying if I said I was disappointed with the end result. 

Happy Investing Everyone!

I am long: AAPL, ABBV, ADM, AOS, ARCC, BBY, CVS, DUK, GD, GILD, GOOGL, IRM, ITW, JNJ, LMT, LYB, MO, MSFT, MSM, NEE, NEWT, NRZ, OGE, OHI, PFE, PM, PNW, SKT, T, TWO, UNH, VZ, WSM, XEL, XOM.