You to Know When to Hold en

• Dividend Strategy

Know When To Concord 'Em

May 26, 2018 six:51 AM ET QCOM, T, PEP, SPG, KMB, VTR, BEP, AAPL, CLX, JNJ, MMM, EPD, BCE, MSFT, PPL, NNN, TXN, XOM, PG, O, PFE, WPC, ADP, SKT, WEC, NWN, RY, CSCO, MRK, WMT 231 Comments 55 Likes

Summary

• Don't merely do something; sit in that location.
• Gleaning more than wisdom from Bob Wells.
• Revised "buy" and "trim" prices.

Know when to hold 'em

40 years ago, some lyrics by Don Schlitz became function of our folk culture when "The Gambler" was released by Kenny Rogers:

"Y'all got to know when to hold 'em, know when to fold 'em,
Know when to walk away and know when to run."

My dad enjoyed poker. When I was a teen, we occasionally hosted a Fri night "penny ante" game at our house with my teenage friends.

(Photo from Westerns Theater)

This was his way of keeping u.s. off the streets and out of trouble.

Many of those long nights ended with my mother preparing breakfast for us. I haven't played poker in many years, but it's function of my psyche.

There are some similarities between poker and investing in the stock market. Nearly of the similarities relate to the determination of "odds." Such every bit:

• What are the odds that Tanger Manufactory Outlet Centers (SKT) will be made into a dinosaur by Amazon (AMZN)? I understand the risk, but I haven't taken my SKT "chips" off the table.
• What are the odds that the Department of Justice volition prevail in its attempt to block the merger of AT&T (T) and Time Warner (TWX)? This one is more complicated than the Tanger/Amazon question because it leads to other questions, such as: "Is the Time Warner deal essential to AT&T's long-term health?" And, "If the deal goes through, will S&P lower T's credit rating to BBB?" And, "How much deviation would a BBB credit rating make?"

Perhaps the principal relevance of "The Gambler" carol past Don Schlitz/Kenny Rogers to investing is that in poker yous put chips on the table to play the hand you hold. When someone makes a bet, you tin "fold 'em," forfeiting any coin you lot've already bet on that hand, or y'all can "run across" (match) the bet, thus staying in the hand to see who wins. Or, y'all tin raise the bet, forcing others still in the hand to either see or raise your bet. Sometimes a stock market analyst will apply the gambling term "doubling downwardly" to reiterate a previous phone call or to make an additional investment in a stock.

Gleaning more than wisdom from Bob Wells

A while dorsum, my friend Bob Wells introduced me to some advantages of an equal-weight (as opposed to a market weight) ETF. For several years, I've given a greater portfolio weight to stocks with the highest credit ratings. Since almost of them are larger caps, this had the issue of tilting the portfolio toward a market weight. A few months agone, I decided to aim for an equal weighting of the 30 private equities in my retirement income portfolio. Bob and I discussed the challenges of maintaining an equal weighting and whether (and how oftentimes) does 1 rebalance.

In grooming for the required minimum distribution phase, Bob positioned his portfolio to more fully embrace a passive management approach. This has the additional virtue of making life easier for ane's heirs. Bob and I have discussed various strategies for accomplishing the "NextGen" attribute of portfolio blueprint. Ane of those conversations provided the impetus for me to include a basket of ETFs in the portfolio as a "template" for my heirs (or for me in my dotage) to shift some or all of the portfolio from individual equities to ETFs.

I always learn something from Bob Wells. In a long-overdue chat with Bob terminal week, he made a simple statement about "letting them run." Office of a commitment to passive management is a greater willingness to concur a position through market fluctuations. To "agree 'em" is to "let 'em run."

Bob expanded this a bit in his contempo annotate following a blog postal service past Chowder:

"I hold with your argument 'For those close to retirement, I'thou not fifty-fifty considering adding to companies that yield less than three%, even if that ways companies I consider to be total positions are to exist taken up in value.'

"Correct now I have these cadre positions that are below total and will need to grow on there own: PEP, MCD, KMB, DUK, GIS and PG. Three of the last 4 are in this position only because of lost of value. I failed to grow PG further over the past few years because of price and slow dividend growth."

Many of us have benefited from Bob's willingness to share his investment journey through his Seeking Alpha articles and blog posts. I of his archetype early articles from November 2012, "Retirees: It's Time To Learn More About Dividend Growth Investing," is even so a tome of timely wisdom for those investing for retirement income.

Revised "buy" and "trim" prices

As I reflected on last calendar week'southward conversation with Bob Wells, I revised my target prices for adding incremental shares and for trimming some shares. In general, I lowered the "purchase" prices and raised the "trim" prices with the intention of making less trades. I did this for three reasons:

1. The portfolio has evolved to the signal that I'm substantially content with its basic design. At that place are two qualifiers in that judgement - "essentially" and "basic." No portfolio is absolutely perfect, though I hope you have designed a portfolio that is perfect enough for yous. In short, the existing portfolio has brought us this far and I'm content to permit information technology grow organically. Of course, the market is dynamic and changes volition occur.
2. For the past eight years, I've had a part-fourth dimension job in semi-retirement. For the by iii years, I've had 2 part-time jobs. On July 1, I will give up the most time-consuming of the two. I'k now weighing the decision about when to begin the "distribution" stage by beginning to receive monthly IRA distributions. The income reduction that begins July one ways less "new" money to invest in the market. Monthly IRA distributions means less dividend income to re-invest within the IRA. To encourage less buying, I've lowered the target prices for calculation shares.
3. The third reason is psychological. Dale Roberts addressed this in his contempo article, "Saying Goodbye To Your Pay Cheque, Information technology Own't Like shooting fish in a barrel." By lowering the target buy prices, I don't feel similar I'm missing out. Lowering the buy price "raises the bar" by enervating a ameliorate purchase price. For example, a week agone my target buy price to consider adding more shares of Johnson & Johnson (JNJ) was $120.40, a 2.99% yield. JNJ has been edging toward that price. This week I "raised the bar" for JNJ by lowering the target buy price to $115.38, a 3.12% yield. To reach the new target, JNJ will need to drop 5.0% from the May 25 closing price of $121.52.

Target buy and trim prices for my 30-stock portfolio

The private equity portion of the portfolio is listed in the tabular array below. Price is the May 25 closing toll. CCC is the number of years of consecutive dividend increases per David Fish and the Canadian Dividend All Stars. Due south&P is the corporate credit rating given to the company by Standard & Poor's. Div is the annual dividend or distribution. Yield is the current yield every bit of the May 25 closing cost. %Port is each property's percent of the portfolio'due south marketplace value as of May 25. The companies are listed by rank of market value.

Belongings	Ticker	Cost	Target to Add	Target to Trim	CCC	S&P	Div	Yield	%Port
Qualcomm	QCOM	59.99	51.67	68.89	16	A	2.48	4.13%	3.23%
AT&T	T	32.52	29.03	37.38	34	BBB+	ii.00	half dozen.15%	iii.15%
PepsiCo	PEP	100.34	92.75	122.04	46	A+	3.71	3.70%	3.14%
Simon Prop	SPG	159.59	141.82	185.71	9	A	vii.80	4.89%	three.x%
Kimberly-Clark	KMB	105.55	95.24	121.21	46	A	4.00	iii.79%	iii.07%
Brookfield Renewable	BEP	31.57	29.04	35.96	9	BBB+	1.96	vi.21%	3.06%
Ventas	VTR	53.threescore	46.47	66.53	viii	BBB+	3.sixteen	v.90%	3.06%
Apple	AAPL	188.68	166.86	224.62	half dozen	AA+	2.92	1.55%	3.05%
Clorox	CLX	122.65	106.67	137.xiv	41	A-	iii.84	three.thirteen%	3.04%
Johnson & Johnson	JNJ	121.52	115.38	148.15	56	AAA	3.lx	ii.96%	3.01%
3M	MMM	199.16	181.33	241.78	sixty	AA-	5.44	2.73%	iii.00%
Enterprise Products	EPD	27.88	23.75	31.09	21	BBB+	ane.71	six.13%	3.00%
BCE Inc.	BCE	42.09	39.08	48.60	9	BBB+	ii.34	5.57%	ii.99%
Microsoft	MSFT	98.39	87.27	112.00	16	AAA	i.68	1.71%	ii.97%
PPL Corp.	PPL	27.47	26.24	33.64	17	A-	1.64	5.97%	2.96%
National Retail Prop	NNN	xl.73	37.62	46.34	28	BBB+	1.90	iv.66%	2.90%
Texas Instruments	TXN	111.58	91.01	127.xviii	14	A+	ii.48	2.22%	2.89%
Exxon	XOM	78.76	72.89	94.39	36	AA+	3.28	four.16%	2.89%
Procter & Risk	PG	74.37	71.06	92.54	62	AA-	ii.87	3.86%	2.88%
Realty Income	O	52.86	50.03	61.98	25	BBB+	2.63	4.98%	2.85%
Pfizer	PFE	35.70	34.00	41.21	8	AA	1.36	3.81%	2.85%
WP Carey	WPC	65.76	59.71	75.89	21	BBB	4.06	6.17%	2.83%
Automatic Data	ADP	130.76	110.xl	149.19	43	AA	2.76	2.11%	2.82%
Tanger	SKT	21.07	xix.31	26.92	25	BBB+	i.forty	6.64%	2.72%
WEC Energy	WEC	62.54	59.73	74.92	fifteen	A-	2.21	iii.53%	2.70%
NW Natural	NWN	59.xv	52.50	71.32	62	A+	1.89	3.20%	ii.68%
Royal Bank	RY	76.01	73.00	92.69	7	AA-	2.92	3.84%	two.62%
Cisco	CSCO	43.28	40.00	52.80	viii	AA-	1.32	3.05%	two.57%
Merck	MRK	59.11	54.86	73.xiv	vii	AA	1.92	3.25%	2.55%
Walmart	WMT	82.50	74.79	104.00	45	AA	two.08	ii.52%	2.49%

How exercise you determine a target buy price? Practise you ever trim a position? If so, how exercise yous determine a price to trim a few shares?

I welcome your opinion. Your comments enrich our give-and-take. I always learn from our Seeking Alpha conversations.

Information technology's non my intent to abet the purchase or sale of any security. My purpose is to offer ideas for stocks to report and to share a journal of my attempt to design and build a retirement portfolio that puts a priority on relative safety, a history of dividend growth and solid future prospects. Your goals and adventure tolerance may differ, and so please do your own due diligence.

If you lot are not yet a follower, I invite you to click the "Follow" button at the meridian of the page. After you lot click "Follow," you can cheque "Go Email Alerts," and y'all volition receive an email when an article is published.

This article was written past

Join MarketWatch Award Winner Kirk Spano For More than Profits & Less Risk.

I am a retired dividend investor focused on total shareholder return through a diversified equity portfolio that is designed around quality, growth and relative safety.

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Disclosure: I am/we are long JNJ, MSFT, XOM, AAPL, WMT, ADP, PFE, MRK, PG, MMM, CSCO, RY, NWN, PEP, TXN, KMB, QCOM, SPG, CLX, PPL, WEC, T, NNN, O, SKT, EPD, BEP, VTR, BCE, WPC, VTI, VEA, VWO, VYM, VYMI, VOE, VBR. I wrote this article myself, and it expresses my own opinions. I am not receiving bounty for it (other than from Seeking Alpha). I have no business organisation relationship with whatsoever company whose stock is mentioned in this commodity.

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Source: https://seekingalpha.com/article/4177425-know-when-to-hold-em

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