Tuesday, July 12, 2016

Thinking about dumping PFE...






Originally when I bought the 300 shares back in March I was looking to get the portfolio jump started in a big way. Buying a high yielding Dow component always interests me and seeing Pfizer trading around $29 and yielding 4% seemed like a no brainer. The current yield is now around 3.3%

I honestly thought the stock would flounder in the high 20s to low 30s throughout the year. Collecting $360 in dividends is very cool, but now that my capital gain has exceeded $2000 in less than 4 months I am getting an itchy trigger finger.

I recently purchased 100 shares of ABT last month and 25 shares of GILD, so combined with my 300 shares of PFE I am a bit heavy in this sector. PFE has now exceed XOM as my largest position.

Maybe I'll just cut the positions in half and buy something else. I have an open $32.00 M call that would yield me close to 5% and the stock price is in the mid 35s.  This would allow me to lock in some profit and increase my yearly dividends.

The struggle to make this sell decision is bigger than expected...

DEFY MEDIOCRITY

13 comments:

  1. Hey Div Pipeiline,

    I too bought PFE around 29. I also bought AGN thinking the merger would occur and I'd get a huge arbitrage spread. PFE has worked out, AGN I'm still in the red. I would hold PFE a little longer though. Should be worth around $38.

    Take care!

    Passive Income Dude

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    1. PID,

      Thanks for stopping by and commenting. PFE would definitely be stretched at $38, but that is what current market conditions seem be supporting. I think I'll probably hold a bit longer.

      MDP

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  2. MDP,

    Tough position, but also depends on your goal with the stock. Great appreciation there; is a solid increase coming to boot? What if they had a 10% increase and the yield sprouted to 3.6-3.7%? Any thoughts there? The battle..haha

    -Lanny

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    1. Lanny,

      Yeah PFE is tough company to figure out. This is not a company that I would have expected to appreciate 25 % in 3 years let alone 4 months. I think most of my capital gain is simply a bounce back from an extreme sell off. I will hold steady for a while longer. Maybe the raise you are talking about will come to fruition.

      MDP

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    2. MDP,

      I'd agree - I think a sell off more than likely occurred. They are always in the hunt to acquire an entity, which hasn't really happened over the last year - though they keep bustling. I know the raise is quite a ways away, and earnings will be announced shortly. Any further thoughts to it?

      -Lanny

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  3. MDP, I find selling much harder than buying.... It's Hard to say - does it meet your sell criteria? i.e. the one you had checklisted when you bought the shares?
    D4s

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    1. Div Son,

      I really thought this company would remain depressed for a while and I would attracted to the dividend. The rather quick capital gain is somewhat unexpected. While I had no check list, per se, $33 makes my trigger finger a bit itchy. I am still holding steady for now.

      MDP

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  4. With the heat of the market right now, selling might be a good idea. Maybe sell for the gain, then sell puts back at your $29 strike price for a couple of months until things cool down.

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    1. IH,

      A lot of frustration has been had waiting for "expected pullbacks" over the last few years. You are correct though and while it may only happen 2-3 weeks per year, they do show themselves. Early January and more recently the Brexit have been good opportunities to put cash to work. With the election imminent, I think we may get a few more chance to take our shots.

      I might sell a 100 or 150 shares and capture at least part of the gain.

      MDP

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    2. MDP,

      Guess you could sell the gain. Tough part is - short term capital gain - would you have a lot to pay with that or anything to offset??

      -Lanny

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    3. Lanny,

      I do have some ESV losses :-( that could offset the gains. I may go ahead and roll the dice by selling now and then hoping for a pullback and buy again. I've done that with GM, Shell, and HCP a couple times already.

      MDP

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  5. I am thinking to sell PFE, but I just checked charts again today it still looks like this stock has some room to go up... as usual I am being slow on sell decision.

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    1. HHWG,

      Yeah the stock is super strong right now. They better hurry up and announce another acquisition soon or it will hit $40. :-)

      MDP

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