It's always a sad day when one has to let go of an investment. Every stock I purchase into I intend to stick with for the long haul. Today I had to say goodbye to an investment I only recently purchased about 4 months ago. Today I sold 48 shares of Wells Fargo for a price of $2,184.43. This sale of WFC will affect my annual dividend income stream as a negative return of $72.96 per year. The cost basis on this purchase was $2,299 so I walked away from this investment with a net lose of $115. I did however receive $26.64 In dividends. So that does help with some of the lose. Although I did sell this investment for a net lose, I will be able to take advantage of some tax lose harvesting that will help offset some of the money I have received in dividend income this year.
The main reason that led me to sell my position in Wells Fargo was the current scandal that has been brought attention to the public. The company would give out bonuses and incentives to employees that were able to get a high amount of customers to sign up for extra features and accounts that the bank offered to its customers. Obviously this caused some corruption within the company and employees were creating fake accounts for customers without their approval. To make matters worse, the company was then charging these accounts maintenance fees.
I can't stand by as an investor and believe that it took this long for the bank to find out that this was happening. To amplify the situation the company said they were going to discontinue the bonuses for signing customers up but not till next year. It should have been done immediately and the company should have apologized for the actions of the employees.
Big banks already face a lot of scrutiny and this definitely doesn't help when the second largest bank in terms of market value has something like this happen to them.
Hind sigh is 20/20 and I wish I would have sold out the minute I heard about this scandal as the price of the stock was at a very nice $52 a share. I would have been able to walk away with some nice investment profit. It has been a great lesson learned because I wasn't to sure how this was going to affect the bank in the long run but as I found out more details, I really thought it out and decided that I would not wait out the position any longer. I'm glad I was able to get out with most of my investment intact.
Today was an action packed day and I made more trades then I typically do. I split my capital and picked up two companies that were not on my watch list for this month. I really wanted to diversify my holdings more and grow my portfolio.
I was able to pick up two new positions today that I'm feeling super confident about. I really wanted to maintain the diversity I had in different market sectors and chose to add ABBV and RY to my holdings. I also Added DUK to my holdings at the beginning of this week and was going to be writing that article today but it just happened that this was one of the most action packed weeks I've had in awhile.
Since I had so many buys this week I'm going to simply break down the financials of both companies and the stats I used to determine my purchases.
I'll start with AbbVie Inc.
Although I now own two companies within the drug manufacturing sector Abbvie Inc focuses on more of the bio-pharmaceuticals and small drugs. Johnson and Johnson is also partnered with Abbvie Inc so both of these stocks will grow in unison and help each other out as time goes by.
From a dividend perspective, the companies yield sits at a nice 3.6% The annual payout is $2.28 with a healthy ratio of 47.4% and and EPS of $4.81. P/E is at 18.26 and the company as maintained it's dividend growth for the past 43 years. All of these factors add up to make one healthy spot to ensure dividends are maintained and grown throughout the course of my portfolio. This purchase adds $38.76 towards my total annual dividend income.
I was finally able to pick up a position in the utility sector. Duke Energy is an electric company in North Carolina. I really had a hard time choosing between DUK and CNP. The ultimate reason I chose DUK is because the amount of free cash flow this company has maintained which is trickier for utilities to do and I would also like to one day move to North Carolina! CNP has had some rough spots in terms of Free Cash flow for the past few quarters. Some stats that really make me love this company are a 4.3% Dividend Yield, $3.42 annual payout. The payout ratio is a little higher at 74.5% but this is actually lower for a utility. EPS is at $4.59 with a P/E of 20.75. This company has been growing dividends for 9 years straight now. With this purchase I add $41.04 to my annual dividend income.
Last but not least I wanted to maintain my diversity in the banking sector and chose to take a position in
Royal Bank of Canada
Yes, I purchased shares of a banking company not within our country. Our banks better take notes on how this bank is doing things. No bank in America even came close to the stats of this bank. Wells Fargo was always my favorite major bank until this recent scandal broke out. This is the largest bank in Canada and continues to have great performance year over year. They have recently been focusing on their dividend growth year over year which excites me as they already have a pretty healthy yield for the financial sector of 4.06% and $2.48 per year. They have an amazing payout ratio of 47.7% with plenty of room to grow. EPS is at a whopping $5.20 with a dividend growth history of only 4 years. This investment will add $44.64 towards my annual income.
I'm super excited for these purchases and feel no regret with the recent sale of WFC. I have almost accomplished one goal I had set more myself which was to be diversified into 10 different companies. I now sit at 9 with my new additions. I have also grown my Annual dividend income by $51.48 with these new purchases which now puts me at $668.24 per year! Every purchase and dividend increase puts me one step closer to breaking the Annual income milestone of $1,000!!
Hopefully everyone elses month is turning out great! Has anyone made any great purchases this months?
Long: ABBV, RY and DUK
Author Kevin Dolan
At the time of writting this article I did not own any shares of WFC
This image is from the portfolio of "Stuart Miles"