| | | Re: Old Folk Portfolio ... Buys and Sells
Today I sold two assets considered overvalued with very low yields. I added to assets selling at a discount to fair value with fairly high yields. I will be able to increase the income flow almost 5x what the current two positions pay. The assets being sold generate $1,384 in annual cash flow, the assets being purchased, based on position size, will generate $6,221 in annual cash flow.
AMAT and AWK are the sell candidates.
Proceeds will be added to:
ARCC - 263 shares
ARES - 77
AQN - 353
BTI - 116
BX - 47
CM - 95
HTGC - 374
JEPI - 90
MS - 65
OCSL - 720
ORCC - 378
ORI - 222
QYLD - 560
T - 484
VICI - 167
This is an income based move, long term capital gains are not the priority here so I don't mind giving that potential up. Income or cash flow growth is the priority and this move will help achieve that objective.
This person is 67 years old, the amount of cash flow or income this portfolio generates has priority at this point in his life. He's done the growth thing, now it's the income thing in retirement.
The assets being sold have a 1.61% yield with a 5 year dividend growth rate of 10.80%.
The assets being purchased have a 7.30% yield with a 5 year dividend growth rate of 5.10.
Not only am I increasing the near term income flows by almost 5x what the sold assets are generating, but with the new assets and their yield + dividend growth metric, the old assets wouldn't catch up in income generated for over 30 years. This person won't likely be around 30 more years to wait for the income to catch up.
I know some people would prefer to count on the capital gains a company like AMAT will produce at some point but for us, we prefer the certainty of income flows over the uncertainty of a certain level of capital gains. As income investors who use DGI as tool to help generate income, this move is the right move for us. (I'm making similar moves personally). |
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