Possible Portfolio Changes

[rnsmth]

Here is what I am pondering today.

TGT and APU. TGT on the possibility that it gets Amazoned over time, even though it does some online sales. It has strong dividend safety and growth scores (98 and 75), but sometimes it can be good to be ahead of the curve.

APU has a great yield (8.2%), and moderate dividend growth - but very nice for such a high yielder . The current cold snap seems to be helpful. A recent analyst report I read - either M* or Simply Safe Dividends - talked about a projected 2% annual decline in LPG use going forward and suggested APU could make up for this in acquisitions. It also noted that as interest rates increase, those acquisitions could become more expensive and difficult.

So, while I have not made any decisions, here is what I worked on this morning - to make the sales and acquisitions as close to income neutral as possible.

Sell all shares of TGT and APU.

Split TGT proceeds equally between T and SO.

Spilt APU proceeds equally between O and UTG

Would reduce income produced by TGT/APU by 10%. Not too bad. Now the two generate about 8% of the portfolio's dividend income.

I could go another way and buy some lower yield / higher divvy growth companies, but at the age of 65 :-)

Feel free to comment, make suggestions, etc...

[NilesMike]

Sell $80 caljs dated July 2017 for 3.20.

Collect 2 dividends. 1.20

5.7% return for 8 months if TGT is <$80 at expiration. Then do it again.

If TGT is >$80, it's called away with an additional 3.25 profit for a total return of 10% in 8 months.

Then redeploy somewhere else.

[divmenow]

Why the rush into Utilities like T, O, and SO? Those type of stocks will continue to struggle in 2017 and 2018 with interest rates rising and most of the names still need to come down to historic levels. There are better buys that pay nice dividends with have growth that will far much better next year and beyond. CVS is one name that comes to mind.

[rnsmth]

(12-18-2016, 01:22 PM)divmenow Wrote: Why the rush into Utilities like T, O, and SO? Those type of stocks will continue to struggle in 2017 and 2018 with interest rates rising and most of the names still need to come down to historic levels. There are better buys that pay nice dividends with have growth that will far much better next year and beyond. CVS is one name that comes to mind.

The short answer for this 65 year old retiree is an initial yield that is close to 80% higher than that of CVS

[EricL]

The moves look reasonable to me, especially if you are looking for reliable income.

I'm not as down on TGT as some others, but I can see the point of view regarding the Amazon effect, there's certainly some concerns there.

[ronn38]

NilesMikes advice seems very sound. I don't have TGT but I do have APU--and that divey is hard to lose. Always thought I'd rotate out of it when divey on other stocks rise (I've always DRIP'd, so even at a loss of share price, I'll not lose capital--my cost per share is $34.90).

But the options path does seem sound.

Ronn

[rayray]

I'm probably in the minority on this topic but I think Amazon taking everyone out is way overblown. Do they change the landscape? Yes, of course, but a well run company will change with the times. Target and the likes of these new outdoor type malls are exploding in my area, to the point it's almost a pain to find a good parking space. BTW, a good parking space to me is when my car has the less chance of getting dinged. Ive already parked and someone pulls right next to me and I'm driving away while my wife asks what I'm doing which I reply, "I don't like the look of that car, I can tell they don't give a rats ass if they bang their door into our door."