I Just SOLD These 3 Dividend Stocks
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By nature, dividend investing is a buy-and-hold strategy.
Those of us who follow it invest in stocks with the intent to hold them for a long period of time, allowing the power of compounding to work its magic. After all, time is a dividend investor’s greatest ally.
However, sometimes selling a stock is a necessary move, even if it goes against the grain of our usual strategy. Last week, I found myself in that exact position and ended up selling three different holdings at one time (crazy, I know).
Before diving into the stocks I sold, let me clarify one thing: these companies are not bad investments. In fact, they have all performed quite well for me.
My decision to sell had less to do with the quality of these businesses and more to do with the overall construction of my portfolio. That might seem a bit vague now, but it should hopefully make more sense as we go through the details.
Let’s start with the first stock I decided to sell: Apple (AAPL). There’s no denying that Apple is a rock-solid business, and it has been a stellar performer for me—especially lately, with an 18% increase in just the last month.
I began buying my Apple shares at the end of 2022, somewhere in the mid-$120 range. Over about a year and a half, my 6.64 shares saw tremendous gains, and I sold them on July 2nd at $219 per share, representing a total return of 70.29%.
Source: Charles Schwab | My AAPL Transactions
This begs the question: If Apple was such a strong performer, and is such a great business, why in the world would I sell it?
The main reason was the position's size in my portfolio. At its peak, Apple made up about 2.3% of my portfolio, and had appreciated to a point where I realistically wasn’t going to add any more to it.
As my portfolio continues to grow, that already small position would become even smaller in relative terms, diminishing its ability to move the needle. Because of that, I thought this was a good opportunity to lock in the gains, free up that money, and consolidate my portfolio by reinvesting in something I wanted to build a more meaningful position in.
This brings me to the next question: How did I reinvest the proceeds from selling Apple?
All that money went straight into Visa (V), and allowed me to purchase nearly 5.5 shares. This brought my total share count with Visa to 20.4 shares, and officially made it my largest individual stock position—a goal I had since I started buying into the company a few months ago.
I believe Visa is the gold standard of stocks, so I was beyond thrilled to reach this goal and see it become my largest individual holding. Not to mention, this move was a step up in the dividend department as well.
Visa not only offers a slightly higher yield but also a substantially higher dividend growth rate than Apple, boosting my immediate dividend income and creating the opportunity for more rapid dividend growth over time.
In addition to Apple, I sold two other stocks: Coca-Cola (KO) and The Southern Company (SO). These were two of the first stocks I bought when I started dividend investing, so it was kind of sad to let them go.
However, the reason for selling was similar to Apple. Both KO and SO had comparatively small weightings in my portfolio—possibly even smaller than Apple—and both had done well for me over the years.
I sold KO for a total return of 34.5% and SO for 43.7%. With the money from those sales, I was able to start a position in a company I’ve been wanting to buy for a long time: VICI Properties (VICI), which was my top dividend stock to buy in July.
VICI offers a considerably higher starting yield and a higher dividend growth rate than both KO and SO, so this move was another step up on the dividend side of things.
At the end of the day, parting ways with your positions is never easy, especially when they have served you well. Still, consolidating some of these holdings and streamlining my portfolio feels like a net positive, and here's the overall impact it had on my portfolio.
With that said, I want to hear from you: What was the last stock you sold out of, and why did you sell it? Reply to this email, or write to me here and let me know.
And a big thank you to all of the readers who responded to last week's newsletter! You can read some of the responses down below in the "Hot Takes" section. 👇
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IN MY PORTFOLIO 📈
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ICYMI 🎥
7 PAINFUL MISTAKES You’ll Make With Dividend Investing
I’ve been dividend investing for the last 4.5 years or so. In that time, I’ve learned a few tough lessons that I'm sharing with you in this video.
CAREFULLY CURATED 🔍
📺 $1.3M In Dividends Every Day - Bill Gates is one heck of a dividend investor, and this video by my friend JP dividends offers an inside look into his dividend stock portfolio that generates $1.3M passive income every day.
🎧 Inside The Income Factory - If you haven't read it, The Income Factory by Steven Bavaria is a great book on cash-flow investing. Bavaria's "Income Factory" approach focuses on higher-yielding assets like Closed-End Funds (CEFs) and Business Development Companies (BDCs), and this episode of Seeking Alpha's Investing Experts podcast offers a pretty good overview of the strategy.
📚 Retire With These 10 Dividend Aristocrats - If Robert and Sam Kovacs had to pick 10 dividend aristocrats to retire with, these would be their picks. I was stoked to see that I own 4 of them!
SINCE YOU ASKED 💬
"How do you balance investing goals with personal life/carefree spending?"
- Zero To Hero Investing | YouTube
Balancing investing and “carefree” spending is challenging, and most people struggle with it. Funny enough, Russ and I were talking about this exact thing just a few days ago.
Investors are typically on one end of the spectrum, and prefer to sacrifice spending today in order to put more money into their portfolios for the future. They have their sights set on reaching financial freedom, and many find the trade-off worthwhile, as investing itself is enjoyable.
On the flip side, people who aren’t interested in investing might focus more on the present with less regard for the future. They may be more likely to spend most (or all) of their extra money on things and experiences today, preferring to live in the moment because tomorrow isn't guaranteed.
I believe both mindsets have their merits and their place. Ideally, we should enjoy the present while being mindful of the future. Striking this balance can be tough, but I think budgeting is the key.
Personally, I automatically contribute a set amount each week into my portfolio. This amount is comfortable and sustainable for me, and then my remaining funds that don't go toward expenses are available for other spending or saving.
Fortunately, I’m not a big spender anyway—my hobbies, like lifting weights and reading, are pretty affordable. Since I don't have an inherent spending problem, and since my investments already taken care of, I don’t feel guilty about occasional indulgences whenever they do occur.
In essence, I structure my finances to have my vegetables before dessert. By knowing my monthly cash flow, I'm able to create a budget that allows for both investing and enjoying life’s pleasures.
In my experience, approaching your personal finances this way allows you to have your cake and eat it too.
Have a question? Ask me here to see it featured in an upcoming newsletter.
HOT TAKES 🔥
Last week, I asked readers which stocks they think are "mispriced opportunities" in the market right now. Here are some of the responses:
Clay said: I hold one position that could be considered undervalued, LyondellBasell (LYB). It's in a boring Materials segment, with its namesake in Olefins & Polyolefins (plastics). I like their business model, the stock has a nice dividend, but seems to trade more in-line with utilities, almost bond-like. I'd like to buy more, but I'm holding off until I can see improvement in their FCF, and further reduction in debt. I do believe that this stock will trade somewhat flat until prospects improve in Europe and China.
Matt said: I would have to go with SBUX, NKE, UNH, EPD, and LOW.
Danny said: I am researching the idea of getting in on Nike (NKE). It's cheap if it hit $69 by the September dip I’m buying you know it's going to go up by December and it comes with dividends.
Michael said: Many REITs are mispriced right now.
James said: I feel like VICI, O, UPS, and KRC are all under priced right now.
LAST WORD 👋
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It's a really positive and uplifting community where everyone shares portfolio updates, dividend income, and is down to talk dividend stocks around the clock. Everyone is there to help each other learn and grow as investors, and I think you'd gain a lot from being a part of it.
Click here to join the DRIP N' Sip Discord group. Like I said, it's totally free, and I look forward to seeing you in there!
