As we do occasionally, this trade alert is being shared with all subscribers, both paid and free, in order to give all of our followers a peek into what our service is about.
In fact, since there’s a lot to my investment process that is best explained interactively, we’ll schedule a live session for later this month and I’ll go over these three moves and a few others, as “teachable” examples of what my Yield At a Reasonable Price (YARP™) dividend investing approach is all about. And why it is at the center of my own semi-retirement portfolio.
I just finished developing a pair of investor tools with our subscribers in mind, and I’ll use that upcoming session to introduce and explain them. Stay tuned.
Now, on to today’s YARP portfolio trades.
TODAY’S TRADES
Sold out of PEG (1% to 0%)
Sold out of CPB (1% to 0%)
New BUY 1% TGT (0% to 1%)
Cash goes from 6% to 7%
TRADE NOTES
By selling two stocks and buying one, I get back to exactly 40 stocks in the YARP portfolio, which is my target for now. Pardon, the pun, since I just bought the stock of the same name.
PEG
If PEG were a human and not a big utility stock, it would probably tell you “I saw this coming.” I first bought it at the minimum/entry level 1% weighting back on the last day of April. II put a purple circle on the chart below, to show around where I bought it.
It proceeded to skyrocket, as apparently the chart signals I had from several stocks in that sector back then were indicating that something was going on. That “something” was a piling into this sleepy, heavily-regulated sector by investors who saw a connection to artificially intelligence (AI) usage. That was followed by the Fed starting to lower rates. Since utilities and REITs are more bond-like than the other 9 S&P sectors, they often rally when bonds do.
It happened immediately after I first launched the YARP portfolio publicly, and big price leaps like this one typically make me less inclined to add to the position. Especially with several other utilities in the portfolio at that time. I can make a case for PEG being in a nice long-term trading range, but I make a stronger case (to myself) that I don’t need more than 40 stocks at a time. So something had to go. And 2.7% yield for a utility stock is pretty low, so this one is expendable.
I do not see adding to it now, and there’s a decent chance that the utilities pop I benefitted from is a proverbial “gift” to the portfolio. I’m not greedy, so I’ll boot PEG to the watchlist (35-40 stocks I track closely but do not currently own) from the portfolio.
In so doing, I exit with a gain of 27% including a couple of dividend payments, in under 6 months. For a boring utility stock, I’ll take it. I continue to hold three other “utes” that yield 3.3%-3.7%, and are up an average of 15% from cost so far.
CPB
The “journey” with CPB, the iconic soup company, was quite different than what I described above with PEG. I also purchased this one back on 4/30 as I first formally started tracking and offering the YARP portfolio publicly. CPB is boring like a utility, but the bigger issue for me, apart from the key aspect of a mediocre chart picture, is that its profitability is toward the low end of what I allow into the portfolio.
I use Seeking Alpha quant grades as part of a broader fundamental evaluation process that fills in the gaps for me, as a longtime technician, quant and portfolio manager. A B- rating allowed CPB to enter the portfolio back in April, since I was starved for anything with a decent yield and chart in the consumer staples sector back then. I owned mostly a 1% position, but more recently had it up at 3% for a spell, which allowed me to grab more dividend yield when it went ex last quarter.
Fast forward to now, and I see opportunities I prefer to CPB, which is what happens at the lower end of my 40-stock portfolio. And, when a chart shows a potential weakening/rolling over in the chart, which I’ve circled below in white in the bottom section below.
So this one was expendable, and I exit with a gain of 4% in about 5 1/2 months. A decent annualized return, which I’m OK moving on from.
TGT
There is a lot that goes into adding a new name to the portfolio, even though I track these watchlist stocks very closely, right alongside the 40 own. TGT makes sense to me now because it is just getting to that point in the emotional cycle of investing where investors sold it off heavily (about a 60% cratering over 18 months), and it has faded just a bit from the headlines. The chart is showing me that, and also that there’s upside to nearly $200 from here if things fall into place.
TGT has a strong history of profitability, and its dividend yield, 2.8%, is toward its highest level in 5 years, apart from a brief jump 12 months ago.
I’m willing to start with a 1% position, and as the ex dividend date approaches, I’ll consider increasing it. I won’t do it for that reason alone, but more as a way to “have my cake and eat it too,” since doing so would mean I’m earning more yield and also that I think the price is heading higher. It just crossed into positive momentum territory on this chart of 3-day price periods, so that’s a good sign to me too. And TGT doesn’t report earnings until just before Thanksgiving, so hopefully that means a calmer path for a while before having to deal with that.
They sell everything at TGT, and I’m assuming that includes cake, right?
Hi Rob, appreciate all of the trades, updates and explanations in an "on-the-go" manner!!
I have a question...how much of an actionable life does one of your "actionable" (I understand that is probably a poor choice of words) suggestions (I'm trying hard to be compliant myself and not put you in a box!!) have?? I'll try to go over some real life issues I have. On 9/20 and 9/26 there was a number of purchases of a wide variety of ETF's in the CORE, some of which I purchased, some I wanted to do a further review. And even though I am a retiree I do have other things going on...and days pass into weeks...and I wondering if that actionable information THEN is still good NOW. Is it as easy as "well, ETF XYZZ is below Rob's actionable email on 9/20, it therefore is a buy" (I don't think so as you keep current on the technicals). Not certain if this is something you have thought about, but maybe doing an occasional follow-up with recent actionable events might be helpful for those of us who might want to do some additional research. Hope this comes out clear, and thank you!!