Selling Three More Winners

I sold three winners recently and today I'm reporting on selling three more.

So, why am I selling stocks that are performing well and continue to pay increasing dividends? The main reason is that I'd like to trim the number of positions in DivGro and increase the size of some of my core holdings.

As mentioned earlier, I'm hoping to boost my dividend income by selling options against some of my DivGro positions. Covered call writing is a safe way to earn extra income on stocks you own. Typically, you sell one contract for every 100 shares you own and collect an option premium in return. Currently, many of my DivGro positions involve fewer than 100 shares, so by increasing those positions, I'll have more opportunities to execute options trades.

In the summaries below, I'm listing a few reasons for selling these particular stocks. I'l keep these stocks on my watch list and will consider buying them again in future, but only if they trade below fair value and comply with my other stock selection criteria.

Recent Sell: Toronto-Dominion Bank (TD)

Since first initiating a position in TD (green circle), the stock has gone way up, then way down, just to return to a level just above my original entry price.

Trading Summary

2012-08-31	Bought 42 shares of TD at $41.18 per share:	$	1,729.49
2012-11-01	Cash dividend on 42 shares:	$	13.74
2013-02-03	Cash dividend on 42 shares:	$	13.77
2013-05-01	Cash dividend on 42 shares:	$	14.33
2013-08-01	Cash dividend on 42 shares:	$	14.04
2013-11-01	Cash dividend on 42 shares:	$	14.50
2014-02-03	Cash dividend on 42 shares:	$	13.77
2014-05-01	Cash dividend on 42 shares:	$	15.30
2014-08-01	Cash dividend on 42 shares:	$	15.41
2014-11-01	Cash dividend on 42 shares:	$	14.83
2015-02-03	Cash dividend on 42 shares:	$	13.34
2015-05-01	Cash dividend on 42 shares:	$	15.03
2015-07-07	Bought 18 shares of TD at $41.44 per share:	$	745.92
2015-08-03	Cash dividend on 42 shares:	$	13.97
2015-11-02	Cash dividend on 60 shares:	$	19.80
2016-02-01	Cash dividend on 60 shares:	$	21.70
2016-05-03	Cash dividend on 60 shares:	$	26.31
2016-07-08	Sold 60  shares of  TD at $42.50 per share:	$	2,550.00
2016-08-03	Cash dividend on 60 shares:	$	25.25
	Capital gain:	$	74.59
	Dividends received:	$	265.09
	Commissions/fees/taxes:	$	32.01
	Net gain:	$	307.67

The net gain is 12.4% on the original amount invested, or 4.2% annualized.

TD is trading below fair value, so that is not the reason I'm selling the stock. (Morningstar's fair value estimate is $54, while S&P Capital has a fair value calculation of $51.80).

The reason I'm closing my position in TD is that the company's dividend is not paid in US$, so it suffers from exchange rate fluctuations.  Even though the dividend has not decreased in Canadian dollar terms, the stock has been removed from the CCC list. I use the spreadsheet accompanying the CCC list extensively when analyzing stocks, so it is pretty inconvenient that TD is not on that list.

I realize this is not a compelling reason for selling TD, but I've decided to do so anyway.

Recent Sell: W.P. Carey, Inc (WPC)

WPC is trading at just about the same level as my original entry. Along the way, though, I bought more shares at a lower base (blue circle), so overall my investment in WPC is cash positive.

Trading Summary

2014-08-14	Bought 30 shares of WPC at $68.48 per share:	$	2,054.40
2014-10-15	Cash dividend on 30 shares:	$	28.20
2015-01-15	Cash dividend on 30 shares:	$	28.50
2015-04-15	Cash dividend on 30 shares:	$	28.58
2015-07-15	Cash dividend on 30 shares:	$	28.62
2015-07-07	Bought 10 shares of WPC at $60.48 per share:	$	604.77
2015-10-15	Cash dividend on 40 shares:	$	38.20
2016-01-15	Cash dividend on 40 shares:	$	38.58
2016-04-15	Cash dividend on 40 shares:	$	38.97
2016-07-08	Sold 40 shares of WPC at $68.69 per share:	$	2,747.78
2016-07-15	Cash dividend on 40 shares:	$	39.20
	Capital gain:	$	88.61
	Dividends received:	$	268.55
	Commissions/fees:	$	21.05
	Net gain:	$	357.16

The net gain is 13.4% on the original amount invested, or 7.9% annualized.

Finbox.io has a fair value estimate of $43.70, which means the REIT is trading at a premium of over 35%. Furthermore, the stock has an S&P Credit Rating of BBB and an S&P Capital IQ Quality Ranking of B+. I don't see any Value Line ratings for WPC.

Recent Sell: Avista Corporation (AVA)

The final sell I'm reporting is AVA with its spectacular recent performance:

Trading Summary

2014-10-22	Bought 75 shares of AVA at $34.12 per share:	$	2,558.99
2014-12-15	Cash dividend on 75 shares:	$	23.81
2015-03-13	Cash dividend on 75 shares:	$	24.75
2015-06-15	Cash Dividend:	$	24.75
2015-09-15	Cash Dividend:	$	24.75
2015-12-15	Cash Dividend:	$	24.75
2016-03-15	Cash Dividend:	$	25.69
2016-06-15	Cash Dividend:	$	25.69
2016-07-08	Sold 75  shares of  AVA at $43.86 per share:	$	3,289.44
	Capital gain:	$	730.45
	Dividends received:	$	174.19
	Commissions/fees:	$	0.00
	Net gain:	$	904.64

The net gain is 35.4% on the original amount invested, or 20.7% annualized.

Finbox.io has a fair value estimate of $30.76, which means the stock is trading at a premium of about 30%. My own fair value estimate is a little higher at $37.44, but that still means a downside of about 17%. 

AVA has an S&P Credit Rating of BBB and an S&P Capital IQ Quality Ranking of A-. I don't see any Value Line ratings for AVA, but SafetyNet Pro, a dividend grading tool I'm a subscriber of, rates the stock a D, meaning there's a high risk of a dividend cut.
 
By selling TD, WPC and AVA, I'm reducing DivGro's projected annual dividend income by $364.80 to $11,030.28.
 
Thanks for reading! What do you think about these sales? What's your strategy for selling dividend growth stocks? Do you ever sell shares that are trading well above fair value, or do you "let your winners run?"