08-10-2014, 11:19 AM
(This post was last modified: 08-10-2014, 11:42 AM by earthtodan.)
You should listen to Kerim first because he's a far more experienced DGI than me. However I will offer some alternative thoughts to consider.
If you don't like MCD (nor do I), you should sell it, because it will always bother you. However, don't sell into fear. Wait for a better exit point.
VZ has a nice yield, but the dividend growth rate is less than 3%. Per the Chowder rule, the DGR + yield gives you a long term projected total return of about 7%. For that low growth you get yield and stability, but that makes it better for a retiree than someone with 30 years to go. For this reason I don't own any telecoms, which are "like a utility." I also don't own any of the typical utility stocks.
In general churn is bad, but on the other hand, we're on a learning curve, and as we refine our strategy we find that not all of the decisions we made in our first year were good ones. I think it's okay to make some adjustments in order to get your portfolio on the right track. For example, I bought VZ last year, but then figured out I didn't want it after all, and I used that money for better ideas. Like you I've been into this for about a year. By the way, if you have or can get to $25k, you can get 30 free trades per month from MerrillEdge, which means zero friction trading. I've been using it since February and I think it's great. This also allows you to reinvest dividends manually into the best looking opportunities instead of using DRIP.
Like Kerim said, what is your current sector allocation? That will help us recommend some adjustments. Any particular reason you're underweight industrials? There are some nice opportunities in that space right now, as several of them have just experienced a correction, and pulled the Dow down with them (ETN, UTX, PNR, ROK, PH, and to a lesser extent GE and MMM).
One thing to add: TUP has a nice yield but I wouldn't buy it, I just don't see the moat in plastic containers. Instead I would suggest trading MCD for SBUX. However I would wait for MCD to recover and SBUX to cool off. Or if you want something less richly valued, buy CVS or WAG. Personally I own CVS.
If you don't like MCD (nor do I), you should sell it, because it will always bother you. However, don't sell into fear. Wait for a better exit point.
VZ has a nice yield, but the dividend growth rate is less than 3%. Per the Chowder rule, the DGR + yield gives you a long term projected total return of about 7%. For that low growth you get yield and stability, but that makes it better for a retiree than someone with 30 years to go. For this reason I don't own any telecoms, which are "like a utility." I also don't own any of the typical utility stocks.
In general churn is bad, but on the other hand, we're on a learning curve, and as we refine our strategy we find that not all of the decisions we made in our first year were good ones. I think it's okay to make some adjustments in order to get your portfolio on the right track. For example, I bought VZ last year, but then figured out I didn't want it after all, and I used that money for better ideas. Like you I've been into this for about a year. By the way, if you have or can get to $25k, you can get 30 free trades per month from MerrillEdge, which means zero friction trading. I've been using it since February and I think it's great. This also allows you to reinvest dividends manually into the best looking opportunities instead of using DRIP.
Like Kerim said, what is your current sector allocation? That will help us recommend some adjustments. Any particular reason you're underweight industrials? There are some nice opportunities in that space right now, as several of them have just experienced a correction, and pulled the Dow down with them (ETN, UTX, PNR, ROK, PH, and to a lesser extent GE and MMM).
One thing to add: TUP has a nice yield but I wouldn't buy it, I just don't see the moat in plastic containers. Instead I would suggest trading MCD for SBUX. However I would wait for MCD to recover and SBUX to cool off. Or if you want something less richly valued, buy CVS or WAG. Personally I own CVS.