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Sunday, March 1, 2020

I Trimmed AMGN Before The Market Tanked

This year I'm looking to reposition DivGro with the view of producing annualized returns of at least 8%. To do so, I'm using the so-called Chowder Rule to select or favor stocks with favorable Chowder Numbers [CDNs].

In February, I trimmed my Procter & Gamble (PG) and Chubb (CB) positions because it looks unlikely that these stocks will produce the annualized returns I'm looking for.

I've trimmed or closed other positions in February, though I have not yet reported on these transactions. This article covers one of the sells. I'm hoping to cover the others in upcoming articles.

Why Trim AMGN?


I decided to trim my Amgen (AMGN) position but not because I think the stock won't deliver the annualized returns I'm looking for. The reason I targeted AMGN is that my position was larger than a full position and was split over two accounts. I decided to sell my AMGN shares held in one account to free up cash and to reduce my overall AMGN holding to about $10,000, which I now consider to be a full position.



AMGN Trade Summary


I first bought 15 shares of AMGN in October 2018, adding more shares in three additional batches in 2018 and 2019. The batch I sold in February is the second batch of 10 shares, bought in December 2018. The chart above shows the buy and sell points of this batch. Here is a summary of the two trades and the dividends I've received, along with a net profit analysis:

2018-12-21
Bought 10 shares of AMGN at $183.48 per share:
$
1,834.80
2019-03-08
 Dividend on 10 shares at $1.45 per share:
 $
14.50
2019-06-07
 Dividend on 10 shares at $1.45 per share:
 $
14.50
2019-09-06
 Dividend on 10 shares at $1.45 per share:
 $
14.50
2019-12-06
 Dividend on 10 shares at $1.45 per share:
 $
14.50
2020-02-11Sold 10 shares of AMGN at $227.91 per share:$2,279.12
                                               
               

Capital Gain:
$
444.32

Dividends Received:
$
58.00

Commissions/Fees/Taxes:
$
0.00
Net Gain: $502.32

I made a net gain of 27.4% on the original amount invested, which is a gain of 24.0% annualized.

Selling these shares reduced DivGro's projected annual dividend income by $64.

It was a terrible week for the US stock market. Stocks posted their worst weekly percentage drops since the financial crisis, as coronavirus fears continued to mount. I was fortunate to sell these shares at $227.91 per share. On Friday, AMGN closed at $199.73 per share!

Remaining AMGN Shares


Here is a summary of trades and dividends of the remaining 50 shares, as well as an analysis of unrealized gains:

2018-10-24
Bought 15 shares of AMGN at $195.70 per share:
$
2,935.56
2018-12-07
 Dividend on 15 shares at $1.32 per share:
 $
19.80
2019-02-20
Bought 25 shares of AMGN at $188.17 per share:
$
4,704.25
2019-03-08
 Dividend on 15 shares at $1.45 per share:
 $
21.75
2019-05-22
Bought 10 shares of AMGN at $169.65 per share:
$
1,696.50
2019-06-07
 Dividend on 40 shares at $1.45 per share:
 $
58.00
2019-09-06
 Dividend on 50 shares at $1.45 per share:
 $
72.50
2019-12-06
 Dividend on 24 shares at $1.45 per share:
 $
72.50
2020-02-28Own 50 shares of AMGN at $199.73 per share:$9,986.50
                                               
               

Unrealized Capital Gain:
$
650.19

Dividends Received:
$
244.55

Commissions/Fees/Taxes:
$
3.00
Net Unrealized Gain: $891.74

My unrealized gain is 9.6% on the original amount invested or 9% on an annualized basis. 

Concluding Remarks


AMGN is a high-quality dividend growth stock with 10 years of dividend growth and a Very Safe dividend (according to Simply Safe Dividends). AMGN has a 5-year dividend growth rate of 18.9% and a dividend yield of 3.20%. After last week's market correction, AMGN's stock price of $199.73 is 13% below my fair value estimate of $230 per share. That's an intriguing price, though I'm happy with my full AMGN position.

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