Portfolio Update: New Subtraction (CVX; May 14, 2015)

What I did this morning is not going to be a popular move, but since I went ahead and did it, I’m going to have to come clean and report it to everyone — I committed dividend growth investing treason by selling out of perhaps one of the best income producing stocks there is!

I sold 43 shares of Chevron (CVX) for $109.02/share. This transaction closes out my CVX position. After all fees, total proceeds came out to be $4,682.81. My cost basis was $4,393.67. This works out to be a 6.58% return in 5 months, for a profit of $289.14 before taxes.

As I’ve mentioned in the last few posts, I’m trying to be a bit more conservative with my stock investing these days. With the individual stock portfolio recently eclipsing the $100,000 marker, I started to realize that I now have a good foundation in place, and that my own preference leans heavily towards holding more cash in reserves.

Granted, I don’t have a crystal ball and can’t predict the future, but at the moment I “only” have $41,000 in my emergency fund, and I’ve already received plenty of feedback that my cash balance is insufficient. 🙁

So, I did what I felt like was in my own best interest. Just like will my sale of Caterpillar (CAT) earlier this week, my decision to liquidate shares of CVX is not an indictment of the company — CVX is a wonderful investment, and if I was still heavily focused on growing my asset base, I would keep buying and holding!

But I’ve got to do what I think is best for my own situation. It’s funny, when it comes to investing, almost everyone will say that you’ve got to invest without emotions and just stay the course; from my own experience, that’s a lot easier to say than it is to do!

In the end, we are all human beings, and we all have emotions… I don’t think that you can ever truly suppress them, and if it’s a sign of weakness, so be it — I’ll gladly give up some returns for peace of mind at night.

So, with CVX I bought in at a decent price and I sold it for some nice gains. Unfortunately, I placed a limit order and was not cognizant enough to check the record date prior to initiating the move. As such, I will miss out on the June dividend payout, unfortunately.

Where do we go from here? Most likely, I will transfer out the proceeds from both sales this week (CAT and CVX) and redistribute the cash to my emergency fund. At the time of writing, my individual stock portfolio is still sitting at ~$100,000, so I’m content with my overall asset allocation. Moving forward, I’ll keep trying to generate income from the portfolio through the means of: dividends, cash secured puts, and covered calls. Because I’m relying on options to generate additional income, I will most likely be entering and exiting out of positions, from time to time.

In general, I’m not a fan of selling assets, but like they always say, “Buy low and sell high… or at least higher!”. I’m taking some profits off the table with CVX, and if I miss out on any future runs, so be it… Then again, if oil keeps lagging and CVX encroaches ~$100/share again, I’ll have to make another move to get back in, via cash secured puts! 🙂

 

Happy Investing!

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No Nonsense Landlord
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You will never go broke by taking profits. The stock was in the green, you made money. Odds are, the S&P trounced the CVX. You would not have received as large of a dividend, but you would not have had to pay taxes. And likely no commissions in or out. IVV at Fidelity is commission free.

It’s OK to have stocks as an emergency, but realize that you might need to sell at a discount if the market has a correction or a bear bite. A HELOC is a better emergency find. It’s free and available until you need it. Just make sure you have plenty of cash flow.

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