I've finally started to liquidate my position in Ford and I did it just in time. It's sad for me to get rid of this company because Ford has had a position in my portfolio right from the beginning of my account creation.
The company has a solid track record, they have been around for 100 plus years, it offers and amazing yield and a very modest payout ratio from which they had room to continue to grow their dividend. I had high hopes for the company until they announced the beginning of this year that they were going to be keeping the dividend inline with the previous year. I was super disappointed and confused why the company would make this decision and wipe 7 years of paying increased dividends right off the records.
Ford could have been a dividend challenger in no time and I believe if they would have announced an increase for the 8th year the markets would have been a little kinder do them because it would have symbolized confidence.
Fords dividend is still above 5% and their payout ratio is at a great level. I know this company will continue to payout dividends for awhile but I know that I need to reallocate my funds soon as no one can guess what Ford will choose to payout quarter to quarter.
The whole reason I've chosen dividend investing is due to the certainty and security I feel while passively investing my money. Since Ford no longer offers a predictable dividend, I have been forced to shop other places I can park my cash so it can continue to earn increased dividends for years to come.
Fords yield of 5.4% is sure hard to match but I decided to sell 100 shares of Ford and purchase 30 shares of AT&T. Selling Ford hurt my dividend Income by $60 Annually. However, I was able to swap this out for T and still be at a modest amount of $58.80. Taking a $1.20 hit isn't to hard for me considering T has less doom and gloom around it and they have a 32 year dividend increase spree rocking.
My annual expected dividend income is now at $1,538 per year and it's only getting better thanks to this swap. T is now the largest held position in my portfolio and I'm just about topped off for now. This company offers amazing stability and a great dividend yield but I know I will need to start diversifying my money among st more dividend growth stocks. As they say, you don't want to have to many eggs in one basket.
This will be one of the hardest diversification for me to take however. I want to keep my expected annual dividend income as close to where I'm at currently without taking to much of a hit. unfortunately most dividend aristocrats have a lot lower of a yield then Fords. I'm going to be on the hunt for some great new names and I may even swap some of my Ford stock for a dividend champion if I can find the right company. If anyone has any good suggestions let me know in the comments below.
My T trade has already been working out incredibly well for me as since I purchased in I have seen an appreciation of 5.6% in just a few days thanks to the Stellar quarterly results that were just released last week. Sadly I didn't purchase in time to receive the Ex dividends but I'm locked in for the future.