Wal-martDuring the course of Dividend Growth investing, I have learned the market can wildly overreact to news on certain stocks, causing short-term swings and opportunities that can prove very beneficial to an investor.  Part of my investing strategy is initiating positions in reliable, dividend paying companies.  Ideally, I prefer starting positions near 52-week lows or when the share prices tumbles on negative news, as long as that news doesn’t include cuts to the dividend or lowered guidance.

I was lucky enough to initiate a position in Wal-Mart in October 2015 when shares tumbled on news of higher wages and Wal-Mart’s reporting of large investments into its e-commerce potential.  After two purchases, my averaged cost basis was $58.94.

On May 20, 2016 I sold 12 shares of Wal-Mart (WMT) at $70.09, proceeds totaling $836.10 after commission.  With proceeds from this transaction, I purchased 15 shares of Realty Income (O) for $58.98 per share, plus $4.95 commission, total cost was $889.65.

As previously mentioned, I initiated the Wal-Mart position on October 30, 2015 at $57.32 per share (not including commission) and bought again on December 1, 2015 at $58.91 per share (not including commission), leaving my cost basis at $58.94 ($707.28 basis, including commission).  I sold all shares at $70.09, total proceeds after commission was $836.10.  I realized a capital gain of $128.82 and collected 3 dividend payments totaling $17.88, the third to be paid out on the next pay date of June 6.

The total gain of $146.70 (20.7% gain) is the largest profit I’ve ever realized on a completed trade.  I’m glad I had the opportunity to immediately re-invest the proceeds into another great dividend company and keep my dividend train moving.  The cap gains alone allowed me to purchase an additional 2 shares of Realty Income, and still have funds left over.

As I mentioned in an earlier post, I previously owned and sold Realty Income during a much earlier part of its share price run-up, selling shares at $55.34 in January after purchasing in September 2015 at $47.27 a share.

Selling shares out of the New Life Portfolio is a bit gut-wrenching; however, I am thankful for the opportunity to put the proceeds to work immediately, without a stoppage in dividend income related to selling Wal-Mart.

Realty Income was down from its recent 52-week high of $64.55 on May 12th to $58.98 per share when we made our purchase on May 20th, partly due to hints of interest rate hikes (my OHI and HCP positions are getting hammered because of this!) and a recent secondary offering of its shares.  This presented a great opportunity to add this great company back into the portfolio.

This Sell/Buy transaction resulted in a boost to the Forward 12-month dividend income.  On an annual basis, the 12 shares of Wal-Mart at $0.50 added $2.00 to the monthly dividend income; the new addition of 15 shares of Realty Income, at $0.199 a month dividend, adds about $3.00 a month to our monthly income.  The difference, albeit an extra $1, increased our dividend monthly income by 3.5%.

This is a starter position in Realty Income, and we will add to it on any share dips.  I still believe Wal-Mart, as well as Realty Income is a SWAN (Sleep Well At Night) stock and I will strongly consider adding it back to the portfolio during any share price correction.

4 thoughts on “WMT-O-Sell-Buy

  1. Keith Reply

    I really enjoy your blog. I am 40 and just started to invest, outside of my TSP. It is really refreshing reading a blog that is written by everyday people.

    1. Tradeourlife Reply

      Hi Keith, thanks for stopping by, we’re glad you enjoy our little corner of the internet!

      In my humble opinion, as long as you’re breathing, it’s never too late to begin investing. There are tons of great companies to be a part of and have been paying ordinary people to do just that for decades!

      We are glad to have you and keep checking back in with us, we have a lot more coming in the future!

  2. […] Towards the end of 2015, WMT was purchased with a cost basis of about $707.  In May 2016, I sold it... tradeourlife.com/sell-buy-of-o-wfc
  3. […] This drop, however, is related to a payment from Wal-Mart during that quarter.  We recently sold Wa... tradeourlife.com/july-2016-dividend-update

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