Monthly Progress Update – February, 2009

And the slide continues… that’s the summary of my progress for the month of February. On the positive side, I initiated few starter positions in stocks which I had been waiting for to fall into my buy range. I have updated the excel sheet in my holding page to reflect the status as of February 28, 2009.

Portfolio Status Update

  • The total portfolio dividend cash flow was $1317 (down from $1366). This change was combination of dividend cuts (WL, GE, and AOD) and new purchases (PEP, PAYX, and TEG).
  • The portfolio’s total yield on cost dropped to 4.94% (down from 5.17%).

Purchase Actions

  • Purchased PEP with annualized dividends of $37 (2.8% of total portfolio dividends). The purchase yield was 3.48%.
  • Purchased PAYX with annualized dividends of $56 (4.3% of total portfolio dividends). The purchase yield was 5.47%.
  • Purchased TEG with annualized dividends of $68 (5.2% of total portfolio dividends). The purchase yield was 7.42%.

Selling Actions

  • In line with expectation, AOD reduced its dividends from $0.18 to $0.12 per share. One surprise element in this that management declared dividends for three months in advance. As explained here I am continuing to hold AOD.
  • I am continuing to hold GE because I still believe GE as a value stock for 10 years and beyond. My viewpoint is GE has significant strength in its business area (excluding GE Capital). I believe company is well positioned to bounce back when global growth (particularly in China and India) is back on track. My significant concern is the extremely high debt level. If global growth is not back, then company may require debt restructuring. In anticipation of the dividend cut, I had already reduced my position in GE below my asset allocation.
  • I sold my full position in WL because of cuts in dividends. After the dividend cut, WL does not meet my buying objective of dividend growth stock. The capital tied up in WL would have been an inefficient deployment to generate cash flow. I held WL for close of 24 months. In the end, my investment in WL yielded negative 5.3% including dividends. This capital was deployed in other dividend growth stock for generating cash flow.

The next progress update will be on April 1, 2009. Nope! I will not fool readers of this blog.

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