- Why I sold Apple, the abridged version.
- 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.
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.
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|
|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%.
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.
Analyst's Disclosure: I am/we are long Everything listed at the end of the post.
I am not a professional investor and do not offer investing advice. I have a college degree in Animal Science and used to train horses for a living. Would you really want to tell a loved one you invested based on something an ex-horse trainer/animal scientist wrote? I didn't think so. Please perform your own due diligence when making investing decisions.
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