Wednesday, December 7, 2016

GS exchanged for JNJ --- DJIA 19500 (WOW)


Today I sold my GS position and initiated a position in JNJ.




  • GS:  12.05 shares @ $235.04 --- Yield  1.11%
  • JNJ:  27 shares @ $110.62 --- Yield  2.89%

Total new capital invested is only $168.84, but will raise my net yearly dividends will increase by $55.07 since the difference in yields is so large between the two companies.

Rational:

I bought GS a few months back at $141 and a 2% yield and it is now almost $100 a share higher with a 1.1% yield. It has been a while since I have sold a position and really didn't want to. I must admit seeing a 63% in a just a few months combined with a 1% yield made the decision much easier.

Also I have been trying to create a more traditional DGI portfolio and JNJ fits within with that strategy much better than GS. I am closely watching massive gains in M, MET, and GM as well. These companies are some of my biggest gainers in recent months and I may slowly drop them as well and look for other DG companies. I will most likely keep GM because of its high yield and strong earnings growth.

JNJ is not cheap, but is cheaper. It may get even cheaper which is fine with me. 3% and 7-10% yearly dividend growth is awesome! 

Forward dividends are $5100.

DEFY MEDIOCRITY


16 comments:

  1. I wish I bought more JNJ a few years ago when it was below $100. Have been looking to add more but just can't quite pull the buy trigger at this price level.

    ReplyDelete
    Replies
    1. Tawcan,

      JNJ below $100 is definite a deal. It seems like there are only a handful of times each year that it gets to that level. Earlier this year was certainly a good example of that!

      MDP

      Delete
  2. Been eyeing some of these types of transactions recently as well. GM, ETN & DOW are among the ones I'm looking at possibly dropping. Huge quick run ups. There are better deals.

    ReplyDelete
    Replies
    1. DKC,

      It's so difficult to pull the trigger on something on a major run, because unlike cyclicals you might not get to buy it back at lower levels. I could easily see GS hitting $300 even though 4 months ago it look destined to fall below $100.

      GM hitting $37 this morning is really scary and I am tempted to drop it as well. I made a post a few month ago about dropping PFE when it was around $36 and I didn't. Now it is $30. Live and learn.

      MDP

      Delete
  3. bought some at the 110 levels as well not cheap but we might not see these levels again if it goes to the 100s ill be backing up the truck big time as that never happens often with this stock.

    ReplyDelete
    Replies
    1. Alex Gregory,

      We are so on the same page! Good luck and I will be right behind you if it happens!

      MDP

      Delete
  4. Yeah, Wow! who would have thought! Like I said many times before, you time the market just right, regardless what situation you were into last year that made you liquidate, but boy!! I truly admire it! :)

    Now, I have 70% of my 401K in the S&P, I'm looking to pull completely out to be in cash position, I don't believe this rally will stay on forever though. It's like too quiet... making me a bit nervous. I know the S&P will balance itself out and eventually will beat the active traders, but man!! I seen my account gained $80K in the past year, it's a bit surreal.

    ReplyDelete
    Replies
    1. vivianne,

      Your words are too kind! I do time the market wrong though I can assure you of that! Just look a couple of years ago at some of my energy purchase (ESV in particular). I was lucky last year that I held on to many energy positions and have gotten close to even on most of them.

      I also feel fortunate to have gone on a strong buying spree in Jan and Feb and got some serious bargain. I did sell early on many of them however. The Brexit vote is what motivated me to buy GS and I am lucky it paid off.

      My 401k has surged as well, but I keep as 65/35 stock bond balance and plan on sticking with that until I die! :-)

      MDP

      Delete
  5. MDP -

    GREAT SWAP in my mind, especially if you are a dividend growth investor. I think it makes perfect sense to replace that yield with a yield from JNJ, especially with the dividend growth history that JNj has over GS, it is way far from superior. Congrats my man and thanks for sharing. Keep killing it.

    -Lanny

    ReplyDelete
    Replies
    1. Lanny,

      Thanks, bud! I am certainly grateful for the GS appreciation, but I like the stability and income potential from JNJ better. Hopefully we see it fall back into the 90s.

      MDP

      Delete
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    ReplyDelete
  7. I cannot believe that GIS has had that appreciation. I haven't been following them closely. I like the move based on the yield and the growth rate. You didn't make a move just to make a move. You took advantage of some appreciate and moved it into one of the best dividend growth stocks outs there. Great move. That's what I'm talking about right there.

    Bert

    ReplyDelete
    Replies
    1. Bert,

      The financial have been going crazy lately and I already have a large position in WFC so I decided to just ring up the profit in GS and buy into a falling JNJ stock. There is nothing wrong with holding GS and it may continue to appreciate it. I was just leveling out my portfolio a bit and refocusing on the dividend strategy.

      I may sell out of FLO and MET soon as well. AFL has been stagnant over the last 6 months while MET has surged 35%. Met's yield has gone from 4% to around 2.75% which is close to AFLs yield. I believe the dividend growth will be better with AFL going forward.

      MDP

      Delete
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