I hate to sell any part of the Cookie Jar portfolio. I really, really do. Sometimes however, it has to be done. The name of the game is dividends and GPS recently announced their next dividend payment. Unfortunately, that new payment is the same as it has been for the last year. This means that they decided not to raise the dividend for the next year and therefore in my mind, it stops being a dividend growth stock.
Are they going to continue paying dividends? It looks like they're going to. Should that stop me from selling them when they stop growing their dividend upwards? Definitely. When you set a mission for your portfolio, you should not deviate from that mission. This is especially true when the mission has been working so well in the past. If the wheel isn't broken, don't fix it. If it is however, make sure you ditch that old wheel as soon as possible and replace it with something more reliable.
With this being said, as of this morning, GPS has been jettisoned from the Cookie Jar. I still think that GPS is a solid company. They have a great head at the helm of the ship, their numbers are pretty good, and they have a strong history. This however should only barely influence a dividend growth investor when a company like GPS decides they no longer want to raise their dividend to further support their shareholders. The mission has to be and should continue to be all about rising dividends to obtain further and further growth.
I must admit, I'm surprised that GPS cut their dividend growth short. The company as a whole has a lot more to grow from. They only had a 41.4% payout ratio and this means that they had a lot of cash left on the table to further raise their dividend. Unfortunately however, they didn't believe the same thing. I'll be sad to lose them but ultimately it had to be done. Let's move on to the wrap up of this most recent sale.
Wrap up:
Sold 21 shares of GPS (GAP Inc.) @ $28.59/share
Realized Gain by Sale: 14% gain on investment
New working capital to reinvest: $590.38
The only question left now is what I'll be throwing that freed up capital at next. Let's line em up and knock em down!
I think you made the right decision selling GPS. As a DGI investor, it's always tough to sell. I sold stock today as well.
ReplyDeleteYou're definitely right about that. Get that sick feeling having to sell something but it was definitely the time to let it go. Could I have made more on capital gains on it? Sure. That's not the name of the game though, right? We'll see if it was the right thing to do in a few months.
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