Well the start to this year, as far as the broader US stock markets go have been nothing short of amazing. It is hard to tell if this is a Trump business optimism rally or if fundamentals are improving just that much, but it is likely a jacked up combination of both.
My main goal as a long-term dividend investor is to buy and hold for long periods of time. This is typically the most cost effective strategy of stock investing when things like taxes and fees are taken into account. However, when I feel a company begins to fall far outside my investment range, I re-evaluate.
Yesterday I re-evaluated and cut my Philip Morris (PM) position in half.
Initial Purchase Info:
Company Name: Philip Morris International
Purchase Date: September 9, 2015
Purchase Price with Fee: $79.11
Shares Transacted: 15
Total Investment: $1,186.71
Sale Price: $106.48
Sale Proceeds with Fees: $1,589.21
Realized Gain: $402.50
Dividends Received During Holding Period: $92.40
Total Return: $494.90 or 41.7%
I held this stock for a little less than a year and a half and was able to get about a 42%. As you may note, 18.7% of my dollar return was from the dividends, so that should pretty clearly indicate how important dividends are to investments such as this.
Dividend Stacker Dividend Facts:
What Account? Brokerage Account
Previous Forward 12-Month Dividend: $409.89
Dividends Lost Due to Sale: -$62.40
Account New Forward 12-Month Dividend Total: $347.49
I am not exactly a fan of Philip Morris as a company, I do not believe strongly in their products offered. In addition, as a dividend stock, they provide a high & steady yield, but they have not grown their dividend in any significant manner recently and have a relatively high 87% payout ratio.
With the recent run-up in the share price since the start of the year, I have decided to get rid of half my position for the time being. If the stock continues up further, I may consider disposing of the position all together. However, if PM retraces back below $100 again, I may be interested in re-initiating the position.
With the cumulative trading fees of $7.99 (sale) & $7.95 (repurchase) and taxes on my gains (~$60.38) it would not make any sense for me to buy 15 shares again unless the share price fell below $100.86. If I were to repurchase above that I will have just wasting my time and money.
I’ll be continuing to evaluate some positions as this frothy market hangs around. My Unilever position may be next after the recent explosion over rumors.
Disclosure: I am still long PM.