Portfolio Update: New Subtraction (PEP, ABT, COP, PG, NSC, MCD, and WMT; January 22, 2013)

dome

When it rains, it pours. Today was a day of even more selling, as the fire sale continued. Due to new information from my lender, I found out that I won’t be allowed to borrow money from a friend/relative to help me fund the downpayment.

Details

As a result, 100% of the downpayment funds must be under my name. They won’t accept cash either. Lending is very strict these days, especially for investment properties. So, the only way for me to meet the deadline is to liquidate more stocks. Here is what I sold today:

41 shares of PEPSICO INC (PEP) for $72.41/share
51 shares of ABBOTT LABORATORIES (ABT) for $32.66/share
29 shares of CONOCOPHILLIPS (COP) for $59.27/share
80 shares of PROCTER & GAMBLE CO (PG) for $69.87/share
100 shares of NORFOLK SOUTHERN CORP (NSC) for $66.87/share
23 shares of MCDONALDS CORP (MCD) for $92.77/share
25 shares of WAL-MART STORES INC (WMT) for $69.54/share

Today’s Total: $22,466.88

Total Cash in Brokerage Account: $39,665.76

Conclusion

The good news is that I won’t need to come up with 25% for the downpayment. The lender will accept 20%, at a slightly higher interest rate. That’s just fine with me, as I don’t want to eliminate my entire portfolio! So, I now need 20% of $290,000, or $58,000.

I am getting closer to the final target! I’ll admit, I truly hate the idea of selling stocks. It’s a painful process to go through, but I know this is something I must do for the long-term benefit.

By securing two rental properties, I should be able to generate enough cash flow each month from both properties to cover all of my own monthly rent. In other words, I’ll be able to live rent free from here on out!

Moving forward, this means I should have more disposable income to invest in dividend stocks. So, hopefully this is just a short-term setback. Once this ordeal is complete, it’s back into the dividend investing game, with full force! 😉

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Leverage: The Key to Amassing Massive WealthIntegratorThe Keichi OneMartinFI Fighter Recent comment authors
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Leigh
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Living rent-free is a pretty cool idea! I should be living mortgage-payment-free in another 4-5 years, which isn’t a bad option, but much further away than your next few months.

How many rental properties do you plan on accumulating? Just the two for now and then a primary residence after you get married?

JC @ Passive-Income-Pursuit
Guest

I sure wish we could be living rent free that quickly, but that time will eventually come. Hate to see you have to unload even more stocks, but the opportunity sounds really good and if the 2 rentals can provide enough profit to pay your rent you’ll be money ahead very shortly. Great to follow your progress on the 2nd rental purchase.

Dividend Growth Investor
Guest

After Apple pops after reporting earnings after the market closes today, you should sell it. Apple is not a dividend growth stock 😉

Brick By Brick Investing | Marvin
Guest

Ugggh I know that burns! Those are some great stocks too! Let’s thank the Dodd Frank Act for this. When we applied for our loan the loan officer was asking all these VERY personal questions and requiring all sorts of documentation that was absolutely ridiculous. After I inquired why they were doing so she informed me it was due to the Dodd Frank act to ensure I was not receiving funds from else where. This makes no sense to me! If you can provide the down payment and show rental history for the area couples with your financial portfolio that’s all that should matter.

Another reason why I believe in paying cash for a house and all other items. You don’t have to play by these idiotic rules.

Of course determination like yours could result in finding a great investment and be able to live rent free! I hope it all works out thanks for keeping us updated.

Compounding Income
Guest

Phew, that must have been difficult! Sounds like the rental property is going to be a huge win for you. Keep us updated!

Dividend Mantra
Guest

Although it must be incredibly difficult to sell so much of your stock portfolio, it sounds like you’ve worked the numbers out and this is the best for the long-term for you. The good news is that you’re so wealthy at a young age that what you sold today alone would actually be a really nice complete portfolio for someone your age.

You’re doing great. By the time you’re in your mid-30’s you’ll have two rental properties and a dividend stock portfolio worth hundreds of thousands of dollars. Great to know that’s on the horizon. Keep up the great work.

Oh, and I’m with DGI. Unloading Apple would get you a little closer to that target amount and it’s not really a dividend growth stock anyway.

Best wishes.

Martin
Guest

Fighter, I totally feel your pain. And I told you, the bank rampage would be better and I will be your driver.

For the same reason I decided to create a new account (this time opened with Scottrade) in which I am now saving for my investments and goals and which was created for that reason so I am completely OK with liquidating it if needed.

I know it is not your case, but your example made me do it for the case I will be, one day, in your shoes.

Martin
Guest

BTW, continue writing this story up, it is developing into a thriller and interesting to read it. Once you are done, post some pictures of your new property.

The Keichi One
Guest

Hi FIFighter!

Looks like your having to take a hit but in the long run this will pay off for you. It sounds like your next property is a great investment!

I’m going to actually go against the grain and say not to sell your AAPL stock. At least not until it is at a place you are comfortable selling it. I have a small position on Apple now and although it is down it’s certainly not out. Apple is a good company and I think in the long run is going to pay off big.

I do completely agree that it does have a strange place in portfolios like ours that are made of dividend growth stocks.

Integrator
Guest

Wow FI Fighter,
I’ve just been following your last couple of posts and looks like you’ve divested a large chunk of your portfolio for property!. The good news is that you can always incrementally add to your dividend growth portfolio over time. That was a solid collection of stocks that you had to sell off today.
To echo the point of some of the others above, Apple could be an interesting dividend growth stock, but its very much dependent on the company hitting the mark with consumers with its gadgets. Not to say they can”t do it, is just a very hard thing to do over a sustained period of time, consumers tend to be a fickle bunch. Technology stocks can be dividend growth stocks , but I favor those with business to business models such as IBM and Cisco, rather than something like Apple thats business to consumer.

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[…] come up with the $58,000, I was forced to liquidate the majority of my dividend stocks. As we all know, the stock market has been on fire this year, and […]

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