Recent Buy :: Redeploying Capital

The other day we discussed how I was going to shuffle things up a little bit and make a few tweaks to my dividend portfolio in an effort to keep my taxable account truly focused on dividend investing.

Now that the dust has settled and all of the transactions have been completed, I wanted to summarize what has been done and check whether or not I was able to track to the mock portfolio that I had modeled.

Selling Vanguard Total Stock Market Index

The first step in the process was to liquidate my holding of VTSAX that was in my taxable account. While I still hold a considerable amount of shares in my retirement accounts, I recognized that holding this in my dividend portfolio was not aligned to my goal.

Here is a summary of that transaction:

The sale of 182.08 shares in VTSAX netted $12,010.00 in capital. This change in puzzle pieces was something I had raised a few months back, and I decided to follow through now as the recent market movement had resulted in me having a small capital loss to harvest.

This change had a temporary impact of reducing my projected annual dividend income by approximately $253.00 based on their last payout.

Now it was time to redeploy that capital.

Adding to VYM Position

To kick things off, I remained in my Vanguard account and decided to level off my holding in the Vanguard High Dividend Yield ETF to a nice round number with the following purchase:

The purchase of 70 shares @ $81.70/share will add an additional $178.50 in projected annual dividend income.

With this purchase, my overall position in VYM now stands at 202.667 shares for a total of $516.80 in PADI.

Looking at the portfolio change, at this point I still had a net decrease of $74.50 in PADI; however, the remaining cash in my Vanguard account totaled $6339.99 that I then transferred over to my Fidelity account to make additional purchases.

Adding to Franklin Resources Position

I’ve had a position in Franklin Resources ($BEN) since starting my dividend portfolio, however in recent months I have favored BlackRock over Franklin Resources with new capital.

With Mr. Market being in a sour mood lately, BEN has continued to dip in price to levels below $30.00/share and with their recent announcement of a nice, juicy 13.04% dividend raise, I could not resist.

Here is a summary of my purchase:

The purchase of 41 shares @ $29.85/share will add an additional $42.64 in projected annual dividend income.

As a note, I have calculated the above based on the new post-raise dividend amount because this purchase has been made ahead of the ex-dividend date for the next payout in January. If I calculated based on the current dividend, the increase in PADI would have been $37.72.

Overall, my position now stands at 100.871 shares for a total of $104.91 in PADI.

With this purchase, the net decrease in PADI was at $31.86 with more purchases still in queue.

Adding to General Mills Position

General Mills has fallen out of favor a bit in recent months, as they have definitely struggled. Part of those struggles are a result of the massive amount of debt that they took on as part of the Blue Buffalo acquisition.

From the perspective of a dividend growth investor, they have also frozen their dividend to allow them to focus on debt reduction.

As I do believe they will resume dividend raises once the debt is more manageable, and that the long-term outlook with Blue Buffalo in their product portfolio is positive, I was willing to accept the risk and add to my position at a lower cost.

The purchase of 20 shares at $38.58/share will add an additional $39.20 in projected annual dividend income.

Overall, my position in GIS now stands at 68.022 shares for a total of $133.32 in PADI.

At this point, the portfolio changes now had a net increase of $7.34 in PADI.

Adding to Target Position

Target has been on my radar lately and I most recently added to my position back in November.

With the price continuing to decline, and my belief in the company remaining positive, I decided to add to my position again.

The purchase of 25 shares @ $65.00/share will add an additional $64.00 in projected annual dividend income.

Overall, my position in TGT now stands at 47.116 shares for a total of $120.62 in PADI and my portfolio has a net increase of $71.34 in PADI as a result of these changes.

Adding to Williams-Sonoma Position

Williams-Sonoma was one of the companies on my December dividend watch list, and with the market volatility the price was hammered down below my original target price around $52.00/share.

It is nice to get an opportunity to add shares at an additional discount, so I made the following purchase:

The purchase of 25 shares @ $49.70/share will add an additional $43.00 in projected annual dividend income.

Overall, my position in WSM now stands at 50.377 shares for a total of $86.65 in PADI and brings the net increase of my portfolio changes up to $114.34 in PADI.

Adding to Exxon Mobil Position

Rounding out the transactions was another purchase of Exxon Mobil, which I most recently added to in November. The oil industry continues to decline and as XOM was one of my more underweight positions, I am happy to nibble as the price continues to slide.

The purchase of 15 shares @ $71.85/share will add an additional $49.20 in projected annual dividend income.

Overall, my position in XOM now stands at 55.417 shares for a total of $181.77 in PADI.

With this being the last purchase made as part of this change, I was able to secure a net increase of $163.54 in PADI. In addition, there is approximately $400.00 remaining in cash that will be deployed with upcoming purchases.

Wrapping Up

The reshuffling of my portfolio was done in an attempt to align better to the goal of focusing my taxable investments entirely on dividend growth investments. While this did not involve new capital investments, I was able to boost my PADI by removing VTSAX and focusing on higher dividend yields with better average growth.

Before embarking on these changes, my mock portfolio had forecast that I would recognize an increase of $167.00 in PADI.

Through all of the transactions above, I added $416.54 in PADI but that was offset by the decrease of $253.00 from the sale of VTSAX. Therefore the net increase of $163.54 is just shy of my forecast by $3.46 total.

As mentioned, I still have approximately $400.00 in cash remaining and that means that my model was pretty darn accurate.

I redeployed $11,659.70 in capital that will generate $416.54 in dividends, which equates to roughly 3.57% dividend yield on average. Over time, that should continue to grow the dividend snowball faster than the sub-2% yield from VTSAX.

What do you think about the net result of these changes?