The Retirees Dividend Portfolio – Recent Purchases And Limit Trades

For those of you who have followed my work, this is a change I decided to make for several reasons. The articles require quite a bit of manual work to update spreadsheets and track dividends coming into the accounts. In recent years I have added more charts/graphs with the hope that it adds value for readers and provides clarity for what I am trying to do.

In the process of doing this, I have made it harder for myself to continue producing consistent articles and ensure that the quality doesn’t suffer. Here are some additional reasons for separating out trades in their own article.

1. If I have a week where no trades take place I can simply skip writing this article because there is no point in providing an update if nothing happens.
2. My articles currently talk about trades done as long as 60 days ago, for example, if I do a trade on the 1st of June but the article gets published at the end of July. Producing a separate article allows me to provide actionable trades that are more likely still within a buy/sell range after seven days.
3. My articles have gotten way too long. A busy month can result in a 4,000+ word article and that distracts from the purpose of the updates.

I would love to receive feedback in the comments about things you like, don’t like, or even ideas that I haven’t yet considered/thought of. Constructive feedback is something I truly appreciate and many of my regulars can attest to the fact that I try to follow up on these ideas whenever possible. Many of the images in my articles are the direct result of tracking that feedback.

June Articles

I have included the links for all three of John and Jane’s articles published for the month of June.

The Retirees’ Dividend Portfolio: John And Jane’s June Taxable Account Update

The Retiree’s Dividend Portfolio – Jane’s June Update: Record Dividends

The Retiree’s Dividend Portfolio – John’s June Update: Dividend Levels Approach Pre-COVID Levels

July 19th – July 28th Trades

My goal is to write these articles weekly (again, only if there is account activity worth discussing) so that I can keep them reasonably short.

Jane’s Traditional IRA

International Business Machines Corporation (IBM)

IBM represents a good buying opportunity when the dividend yield rises above 5%. IBM’s recent dividend increases no longer make it a major dividend growth company, so the yield has pushed higher in recent years as the market reprices the potential of the stock. I think the company represents a modest value after its acquisition of Redhat (RHT), which appears to have provided some levers that should allow the company to reverse its declining revenue that has plagued the stock for over a decade. We have trimmed the IBM position over the last year by eliminating shares with a $140+ cost basis, so we see under $130/share as a decent entry point. Additional purchases would need to see the cost per share closer to $120/share.

Digital Realty Trust, Inc. (DLR)

DLR has long been a favorite of the portfolio, and it wasn’t that long ago that it was hitting record highs (in January 2022 it reached $178.22/share). Now that the stock has dropped to its 52-week-low, we have added more shares as the yield pushed above 4% (this is something that barely happened during COVID so you can understand that this is not a common occurrence). Even though it has only been a week, the stock price jumped considerably and is approaching my sell range. DLR is one of those stocks we have no plans to divest from entirely, but we have had great success buying and selling shares. We have a full position in DLR, but if shares drop below $120/share we would consider adding more. The stock remains a compelling buy under $130/share for dividend growth investors.

John’s Traditional IRA

CSX Corporation (CSX)

We purchased shares prior to Loop Capital’s upgrade of the stock and agree with many of the points made. We see CSX as being a solid dividend growth opportunity (averaging nearly 10% growth for the last 10 years) and this allowed us to increase the number of low-cost shares which will allow us to trim the high-cost shares (the position was initially established at $34.05/share for 75 shares). We will look to add more on any pullbacks below $30/share.

Oshkosh Corporation (OSK)

We established this position before the earnings announcement (the stock was off its highs by more than 30% so we felt like it was a reasonable entry point). The earnings report provided insight into supply chain problems and inflationary pressures. This is why we only initiated a starter position and will expect that there will be challenges moving forward that may continue to hinder the performance. Either way, I wouldn’t recommend OSK at a yield of less than 1.75% (in fact, I would wait to see if shares slip below $80/share for a yield of 1.85% before adding/establishing a position). OSK has a great business model and is responsibly run but facing challenges that will likely plague them for the next year.

John’s Roth IRA

Cohen&Steers Infrastructure Fund (UTF)

We have added 175 shares to the UTF position in 2022 alone. June and early July saw strong entry values but those have quickly dissipated with shares abruptly moving above $27/share. At these levels, we don’t expect to be adding more shares anytime soon but if they move high enough (closer to $29/share) we would look at selling some of the high-cost shares acquired over a year ago. I think UTF above a 7% yield is a reasonable entry point but with how large this position is we would be looking for closer to $25/share or a yield of 7.5%. This is a great closed-end fund that gives exposure to many critical infrastructure REITs, railroads, and utilities. Prospective investors could also look at UTG as another alternative to UTF, especially because it appears that UTF has closed the gap somewhat in recent months. We personally like the holdings of UTF better than UTG but UTG is currently offering a higher yield than UTF and also pays monthly.

Recent/Pending Limit Trades

There were no sales over the time frame this article covers, however, we have placed several limit trades in an effort to reduce our exposure to positions with high-cost shares that are above current/recent values. Typically, these types of sales occur after we have increased the number of shares but on the low-cost side. In other words, limit orders are usually focused on reducing the overall size of the position after acquiring shares at a much lower cost.

Taxable Account Pending Limit Trades

Equinix, Inc. (EQIX)

EQIX has seen its share price pop recently and the share to be sold is the highest cost share by nearly $50. Recent weakness appears to be short-lived with a recent upgrade by Oppenheimer to Outperform. We may actually add shares at the current entry point because there appears to be momentum building behind EQIX and the article 6 Myths Wrecked: Strong Buy Equinix by Colorado Wealth Management is another well-written article that really throws a wrench in the bear argument against EQIX.

Schlumberger Limited (SLB)

We bought shares of SLB during the initial phase of COVID and that allowed us to build up quite a few low-cost shares. SLB recently raised full-year revenue guidance and has seen very positive changes that include robust drilling activity and a rise in offshore drilling. Similar to EQIX, we may purchase more shares at current prices while leaving the limit trade in place.

John’s Roth IRA Pending Limit Trades

Pinnacle West Capital Corporation (PNW)

The position in PNW was established at a higher share cost of over $80/share and then immediately dropped after its request to raise rates was denied by the Arizona utility regulator. We purchased a hefty number of shares near the bottom and now that the share price is recovering we are looking to offload some of the initial shares and put cash back in reserves for future purchases.

Conclusion

Even though my goal was to provide actionable ideas, a number of the stocks in this article have seen major swings in their share prices over the course of a week. With that said there are still some opportunities for dividend investors.

Using limit trades is a great way to make sure you don’t miss selling high-cost shares when the opportunity arises. The amount of movement in some of these stocks demonstrates the importance of using limit trades if selling high-cost shares is part of your strategy.

John and Jane are long all stocks mentioned in this article.