Since November 2015, I have been transferring stocks from my portfolio at Scottrade to DivGro. Altogether, I've transferred 16 stocks and added $1,934.02 to DivGro's projected annual dividend income.
I have 3 more transfers to go, but these will be closed-end funds rather than stocks.
To recap, here are all the stocks that I've transferred from my Scottrade portfolio to DivGro:
1.
| Coca Cola (NYSE:KO) |
9.
| Texas Instruments (NASDAQ:TXN) |
2.
| Proctor & Gamble (NYSE:PG) |
10.
| Union Pacific (NYSE:UNP) |
3.
| Kimberly-Clark (NYSE:KMB) |
11.
| Gilead Sciences (NASDAQ:GILD) |
4.
| AbbView (NYSE:ABBV) |
12.
| Reynolds American (NYSE:RAI) |
5.
| Dominion Resources (NYSE:D) |
13.
| Dr Pepper Snapple (NYSE:DPS) |
6.
| W.P. Carey (NYSE:WPC) |
14.
| Ford Motor Company (NYSE:F) |
7. | Toronto-Dominion Bank (NYSE:TD) | 15. | The Walt Disney Company (NYSE:DIS) |
8. | Pfizer (NYSE:PFE) | 16. | Main Street Capital Corporation (NYSE:MAIN) |
NPM is the first closed-end fund (CEF) that I'm transferring to DivGro.
About CEFs
A CEF is a publicly traded investment company that raises capital through an initial public offering (IPO). The fund issues a fixed number of shares in the IPO, after which shares in the fund are traded on a stock exchange just like stocks.
The share price of a CEF is determined entirely by market demand, so shares can trade below, at, or above net asset value (NAV). You can look up the NAV of a CEF and so determine if the fund is trading at a discount or premium to NAV. CEF Connect is a comprehensive (and free) resource.
The assets in a CEF are professionally managed according to the fund’s investment objective and policies. The fund may invest in stocks and bonds, and it could use leverage to enhance yield.
Most CEFs distribute income on a monthly or quarterly basis, and shareholders have the option of reinvesting their dividends or receiving cash.
About NPM
Transactions
2015-12-21 | Bought: 350 shares of NPM at $14.22 per share: | $ | 4,975.64 |
2016-02-01 | Dividend on 350 shares at 7.2¢ per share: | $ | 25.20 |
Total Capital Invested | $ | 4,975.64 | |
Total Dividends Received: | $ | 25.20 |
With this transfer, DivGro's projected annual dividend income increases by $302.20.
Why NPM?
Here are some reasons I like NPM and why I decided to transfer the shares to DivGro:
- NPM is a closed-end fund that invests in municipal securities, which are exempt from federal income taxes. The tax free yield of 5.93% is equivalent to earning 9.12% in a taxable investment (for investors in the 35% federal income tax bracket).
- The fund pays monthly dividends. The dividend amount seems to be constant every month except in December, when a performance related adjustment is made. I have no expectation that dividends will grow over time. In fact, many CEFs seem to keep their dividend payments constant over several years.
- Investing in CEFs like NPM provides additional diversification. In the case of NPM, the fund has 363 holdings, mostly municipal debt or fixed-income securities.
- NPM has holdings in many states. The fund has of above average credit quality and has good trading liquidity.
- The fund has a baseline expense ratio of 0.99%, which is reasonable. Anything above 1.5% is too high.
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