Tuesday, November 10, 2015

Changes Are Coming!

As I mentioned in my Q3-2015 quarterly review, I have some big plans for the months ahead.

I'm selling stocks I no longer believe should be in my portfolio. Last week, I sold PennyMac Mortgage Investment Trust (NYSE:PMT) because the company cut its dividend by 23%. I also sold Textainer Group Holdings Limited (NYSE:TGH) after the company cut its dividend by nearly 50%. Several additional stocks are in my crosshairs, but I'm waiting for one last dividend payment from these stocks before selling.

The other plan I alluded to concerns the holdings in my Scottrade portfolio, which used to be a mixture of speculative and dividend paying stocks. While the portfolio performed quite well for me, speculation requires much more time and attention than I can afford at this time. On the other hand, the long-term strategy of dividend growth investing requires upfront work to select candidates that trade at or below fair value, but less work afterwards.

This year, as my full-time work started demanding more of my time, I slowly transitioned my Scottrade portfolio to one holding only dividend paying stocks. While a few of the holdings are not dividend growth stocks, I'm satisfied that these stocks will contribute positively to DivGro's future growth and also help to further diversify my DivGro holdings.

In thinking about merging my Scottrade and DivGro holdings, I considered various approaches.

One option is to close out my Scottrade account and to transfer the capital to DivGro. Aside from the transaction fees, which at $7 per trade would be a costly endeavor, I have no interest in selling excellent positions, giving up dividend income, and incurring capital gains tax obligations. Besides, having portfolios at different brokerages is a form of diversification!

Another option is transferring the account from Scottrade to FolioInvesting where DivGro is hosted. I've never transferred an account from one online brokerage to another, but I know it is possible. I think it could be a costly option, though, as some brokerages charge a hefty fee to perform the necessary account maintenance (and to discourage such transfers!).

Several dividend growth investment bloggers have multiple accounts that they track separately. For example, bloggers may have a regular brokerage account, an IRA or a Roth IRA account, and a Motif Investing account. They list trades and report dividend income by account, and keep track of totals to complete the picture.

I'm opting instead to merge my Scottrade and DivGro holdings virtually. I'm already presenting different buys (of the same stock) as separate entries in my portfolio because I like to track things like yield on cost (YoC), cost basis, and annualized profit/loss accurately. So adding additional entries for my Scottrade holdings would be easy enough.

Adding a column to identify Scottrade and FolioInvesting holdings will be helpful for maintenance purposes. In fact, I already have such a column because I own some of my DivGro holdings in an IRA account. (The column is not visible in the published version, though). I take care of totaling available cash and dividend income from the different accounts behind the scenes, so to speak.

Adding my Scottrade holdings to my DivGro portfolio will take some time. I plan to write about each of these companies, report on my original investment thesis and explain why I want to hold on to my shares. I will also be sure to indicate my current fair value estimate for these stocks. Buying shares at current prices may not be appropriate!

It wouldn't make sense to label these posts as Recent Buys, because I've owned many of these stocks for a while now, in some cases for several years. In fact, some purchases even precede the founding of DivGro in January 2013, which, admittedly, is a little weird.

Looks like I've been a dividend growth investor long before I realized it, and certainly long before starting to blog about it!

Thanks for reading! What do you think of my plans to merge my Scottrade and DivGro holdings? Do you have separate accounts and do you track them separately? Please share your thoughts in the comments below.

14 comments :

  1. I have multiple accounts with multiple brokers. I combined them (virtually) through InvestmentMoats.com Google sheet. It tracks YoC as well. It was a pain manually entering data from 2002, but worth it when done. I've found that it only matters at tax time which account was used - as long as the RMD is met. Though to simplify, I try to keep all my WEC or PNY in one account rather than spread across multiple accounts. The only exception are the issues I do covered calls with. For instance SBUX is in two accounts one for investing and the other to potentially sell if called.

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    1. Thanks for writing about and sharing your portfolio tracker at InvestmentMoats.com -- it looks like quite an elaborate tracker! I've actually devised a somewhat similar scheme in that I enter transactions on one tab of a Google sheet and create summaries on another. I don't actually generate the portfolio page from the transactions tab, but my portfolio page updates automatically with daily changes in the stock price.

      I think I won't split lots of the same stock across accounts -- that would be too confusing, perhaps.

      Cheers!
      FerdiS

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  2. I have multiple accounts as well and was tired of using a spread sheet I made to track everything. I found a program called Stock Market Eye, it has helped me keep track of everything. If I make changes at work I can upload those and then download the changes at home. I am not paid to endorse the program just so you know, it just worked for me in my situation. Brought 6+ accounts together into one, while it updates real time prices.

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    1. Sounds like a great system, Mat -- thanks for sharing the information. I'm sure there are readers of my blog who might be interested. As for me, I'm OK with my current approach as it gives me the most flexibility and freedom to change things around as necessary.

      Based on past experience, I find it frustrating when I spend time learning a new system just to find that it is inflexible. I guess the fact that I graduated with a computer science degree makes me less willing to learn a system that I think I could have created myself :-)

      BTW, I'm not saying Stock Market Eye is inflexible -- I have not used it or tried it out. Endorsements of users like you makes such a system interesting to check or try out.

      Thanks for sharing!

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  3. Why don't you use Personal Capital to manage all your portfolio??

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    1. Hi Hansen -- thanks for writing. See my answer to Mat above.

      Also, for me its really about this blog and presenting my portfolio(s) in a way that may be helpful to others. With Google sheets and the googlefinance() function I can set things up once and the portfolio is updated automatically with current stock price (and other) information.

      Take care!

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  4. I think it's a good idea. For me, the simpler the better. Keep up the great work on DivGro!

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    1. Thanks, Ben! I enjoy your Sure Dividend posts a lot and have learned so much from you!

      Take care!
      FerdiS

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  5. Sounds like good changes! You made the right decision to sell those to me! Sure is better one waiting for you! ;-)

    Mike

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    1. Hi Mike -- yes, I agree that selling, although painful because there were losses involved, was the right decision to make! There are some nice additions that are coming, many of which I'm sure you would like!

      Cheers
      FerdiS

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  6. I think it's a good idea to have accounts at more than one brokerage.

    I have a rough rule of having no more than 1/3 of my bank deposits in any one bank and no more than 1/3 of the total market value of my stock portfolios at any one brokerage. I am currently not achieving this goal, but I am working towards it.

    I also have an idea about diversifying accounts between countries! No more than 1/3 of my wealth - approximately - in any one country. This might be a bit too extreme to most people.

    I am from the European Union and from a country which is in the European Monetary Union (euro currency) and I REALLY do not trust the European Monetary Union to survive the next 20 years or so.

    I don't want to keep all of my savings or all of my stocks within the Eurozone. I don't want to be the unprepared idiot running to the ATM to get my 50 EUR a day after the government has said that's the most you can get per day. I want to have accounts and credit/debit cards at and from foreign banks that are far away from the Eurozone. Doing this means I will have more work to do with tax reports and more expenses, and I will not get the lowest commissions or the best interest rates, but that's okay, as I am looking for greatly improved security. I am willing to do more work and pay a little bit more to get that better security.

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    1. Obviously I agree with you that using different brokerages is a good idea, so I'll keep it that way.

      I certainly don't have my investments spread "evenly" across multiple brokers, though. Perhaps I should work towards that now that I've decided to bring my Scottrade holdings into the DivGro fold. I have another account at Interactive Brokers, which I'm currently using mostly for Options Trading. I do have some stocks in that account, too, so in future I'll probably bring those to DivGro (virtually), too.

      Right now, I'm not diversified across country borders, though I think it is a great idea! The only way I'm diversified is through stocks that have international exposure. That's obviously not enough.

      Thanks for sharing your ideas on diversification. Like me, I'm sure there are other readers that may learn a lot from comments such as yours, or at least would start thinking about their personal situations and hopefully make a move to diversify more!

      Cheers
      FerdiS

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  7. Congrats on the consolidation. I agree, you certainly need a lot more time to watch your speculative positions. I used to hold TGH for a couple years but ended up selling. I didn't realize they cut the dividend. The typical dividend growth companies allow me to sleep easier at night. I don't mind playing with a little money in an options account, but even then I'm writing puts usually on dividend companies I own or want to own at a better price anyways.

    Good look with the transfers and DivGro holdings seems to be growing by leaps and bounds. Keep up the good work!

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    1. Thanks, AAI -- it is fun to consolidate! Just thinking about not having to track 2 separate portfolios makes me smile. I have several more stocks to transfer, including some non-traditional dividend paying stocks. First, though, I'd like to cover the stocks in my Scottrade account that are "true" dividend growth stocks.

      I'm really glad to hear from you again!

      Take care!
      FerdiS

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