Wednesday, September 28, 2016

Recent Sell: Texas Instruments Incorporated

Texas Instruments, Inc. (NASDAQ:TXN) designs, makes and sells semiconductors to electronics designers and manufacturers worldwide. The company operates mainly through two segments, Analog and Embedded Processing. It markets and sells products through a direct sales force and through distributors. TXN was founded in 1930 and is headquartered in Dallas, Texas.

I transferred shares of TXN into DivGro in December 2015. At the time, I listed several reasons for liking TXN, including the stock's yield of 2.62% and a 10-year dividend growth rate of 30%. Since then, TXN's yield has dropped to 2.19% on strong share price performance.

I'm very happy with my investment in TXN. The stock has performed very well, returning about 26% on an annualized basis in the 3 years I've owned shares. However, I've been preparing DivGro for options trading and I'm sacrificing this position for that goal.

It is really hard to say goodbye to a winner, so I'll just say good buy and move along!

Here is the 3-year price history chart of TXN that shows my buy and sell prices:


Below is an earnings and price correlated price F.A.S.T. Graphs chart for TXN over an 8-year period. The price line (black) is well above the normal P/E line (blue), indicating that TXN is trading at a premium to fair value:

Indeed, my fair value estimate of TXN is $60.16, implying a premium to fair value of about 15%. Because TXN is trading well above fair value, it turns out to be a good time to sell my shares.

Trading Summary

2013-09-16Bought: 50 shares of TXN at $40.4094 per share:$2,020.47
2013-11-18 Dividend on 50 shares at 30¢ per share: $15.00
2014-02-10 Dividend on 50 shares at 30¢ per share: $15.00
2014-05-19 Dividend on 50 shares at 30¢ per share: $15.00
2014-08-18 Dividend on 50 shares at 30¢ per share: $15.00
2014-11-17 Dividend on 50 shares at 34¢ per share: $17.00
2015-02-09 Dividend on 50 shares at 34¢ per share: $17.00
2015-05-18 Dividend on 50 shares at 34¢ per share: $17.00
2015-08-17 Dividend on 50 shares at 34¢ per share: $17.00
2015-11-16 Dividend on 50 shares at 38¢ per share: $19.00
2015-11-16Bought: 10 shares of TXN at $56.72 per share: $560.20
2016-02-08 Dividend on 50 shares at 38¢ per share: $22.80
2016-05-16 Dividend on 50 shares at 38¢ per share: $22.80
2016-08-15 Dividend on 50 shares at 38¢ per share: $22.80
2016-09-26
  Sold 60 shares of  TXN at $68.4136 per share:
$
4,104.82
Capital gain:
$
1,524.15

Dividends received:
$
215.40

Commissions/fees/taxes:
$
21.08

Net gain:
$
1,329.83

The net gain is 66.5% on the original amount invested, or 26% annualized.

Closing my TXN position removed $91.20 from DivGro's projected annual dividend income (PADI).

Thanks for reading!

4 comments :

  1. Nicely done! I like to write covered calls when I want to exit a position but to each their own.

    ReplyDelete
    Replies
    1. Good point -- except that I only owned 60 shares. In the future when I do have multiples of 100 shares, I'll remember!

      Delete
  2. I really like TXN but have to agree with you that it's well above fair value right now. Probably a good time to take some profits.

    ReplyDelete
    Replies
    1. Yup -- quite a bit above fair value... I'm happy with TXN's performance while I owned it, but I'm consolidating a bit here to boost my options trading opportunities.

      Thanks for commenting!

      Delete

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