Portfolio Optimization 2017
We are constantly looking at our watch lists and trying to figure out what will be the next stock purchase. But it is important to review your current portfolio and make sure it is doing what it needs to be doing. Every year around the fourth quarter, I look to see if there is a way to optimize my portfolio in any way. Let’s take a look at my recent buy and sell in order to accomplish this.
I have been sitting on ConocoPhillips (COP) since 2015 when I bought it. I have held it through a lot, including its dividend cut, low oil prices, the OPEC deal last December, and the recent hurricanes. These events have caused a huge fluctuation in the company/ stock since I purchased it. It just isn’t doing what I want it to do. I should have sold it back after the dividend cut, but I was still new to the dividend game and I like to think long term. There are better and safer stocks out there for the long term.
So finally, I have sold off my position of COP, about 34 shares. I decided it was the perfect time to sell since after the hurricanes, COP stock price increased for about 7 days straight. I was able to claim a small capital gain from this. The proceeds from the sell, were used to initiate a new position by buying 22 shares of Dominion Energy Inc (D). Thanks to Mr. ATM and anyone else on twitter that gave me their stock ideas last week. D just seems like the best fit for my portfolio at this time.
Its dividend history is stronger as well as the financials being safer for the long term. I don’t see oil prices staying high for long which won’t help out COP’s earnings or dividend. Yes, I know that D’s price at this time is a bit over inflated. However, I am thinking long term. In the long run, the price will even itself out along with growth. And if it does go lower, I plan to buy more to lower my cost basis.
This buy also helps sector diversification. Lowers my energy sector which was my highest sector. It was getting close to 30% because of how much money I put into oil stocks back in 2015 when the prices were at a low. I also only had one Utilities stock until now, so this new buy brings up the allocation of that sector.
Below see the changes in yield and forward dividends after the optimization.
Yield = 3.76%
Forward Annual Dividend Total = $912.52
Yield = 3.88%
Forward Annual Dividend Total = $942.92
That is a $30.40 annual dividend increase after the optimization changes as well as the added bonus of more safety for the long term.
What do you think of the optimization? Do you like the buy or sell? What would you have bought instead? Comment below.