Tuesday, January 30, 2024

January 2024 Dividend Stock Purchases/Sales

As I'm writing this blog post, it's already January 22. The temperature has been trending higher to uncharacteristically warm levels again here in Central Wisconsin. The next week is expected to feature high temperatures into the low- to mid-30 degrees Fahrenheit range. Even the lows will reach into the high-20s to low-30s.

As has been the case for the last several months, I have been building up my emergency fund. Thus, I have sold some holdings and shuffled capital proceeds into what I believe are higher quality businesses. This continued in the month of January.

My lone transaction for January was the sale of all 32 of my shares of Leggett & Platt (LEG) at $25.75 each. This was a sale that I made preemptively to avoid a potential dividend cut from the company. As my Dividend Kings colleague Dividend Sensei has repeatedly pointed out with research from Hartford Funds, dividend cutters and eliminators drastically underperform dividend growers and initiators.

In a recent article, Dividend Sensei notes that the dividend is expected to consume virtually all of LEG's FCF in 2024. Worse yet, that is before considering the impact of a potentially mild recession. Not to mention that its interest coverage ratio through the first nine months of 2023 was just 4.4. If a recession were to hit, the company would be pressured by rating agencies to cut the dividend to preserve liquidity.

I haven't deployed my capital proceeds into anything new yet, but Enbridge (ENB) is my top candidate. Interested readers can check out why I want to open a position in ENB in my December article. Basically, ENB has a firmly investment-grade balance sheet, a well-covered and comparable yield to LEG, and reasonable growth prospects, all at an attractive valuation.

Concluding Thoughts:

I would like to swing from no refund ahead of my 2023 tax filing to a modest refund and increase the proportion of my tax-advantaged investments relative to total investments. To do this, I am going to keep saving in my emergency fund for the foreseeable future. I'll then open and max out an IRA with the $6,500 annual contribution limit for those under age 50.

This way, I can backload my investments for 2023. During the summer and fall, I hope to again max out my contribution for 2024. All the while, my approach should allow me to maintain an ample emergency fund.


How did you fare on capital deployment in January?

Did you sell any positions as I did with LEG? Did you open any new positions?

Thanks for your readership! I look forward to your comments below.

No comments:

Post a Comment