The YOC Metric

Every now and again I believe a reminder is in store addressing the reason and rationale for various approaches we take.  One such topic relates to Yield On Cost which can generate passion on both sides of the debate.  One side equates this metric as little more than a head fake while the other swears by its’ value.  As with most issues, the real answer lies in between.  At the very least all sides agree on the definition which per Investopedia is:

Yield on Cost (YOC) is the annual dividend rate of a security, divided by its average cost basis.

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No more Loyal3

Every now and again you wind up getting what you pay for and there’s no such thing as a free lunch.  I probably came to this realization last summer when I ensured that even my smallest holding on the Loyal3 platform had greater than a fractional share.  So the news this week of their migration to FolioFirst was no big surprise.  The issue I have with FolioFirst is the $5 monthly fee.  So transferring my holdings becomes priority one.  In fact Dividend Growth Investor lays out the options fairly succinctly in his post.

Early on, my strategy with Loyal3 was twofold:

  1. Move three horses to the platform to generate enough dividends to play with.  This was accomplished with PEP, AAPL and SBUX.
  2.  Build a group of speculative holdings (less than 1% portfolio weighting) via dividends generated by the first goal.

The free trades with Loyal3 accelerated this process.  Today I’m faced with a (slight) strategy shift.

Sells

An order was placed this morning to sell Unilever (UL) and L Brands (LB).  Unilever due to taking profits off the table and for a sense of protection from a potential single headquarter  location and the possible corresponding tax implications.  L Brands due to uncertainty with their ability to maintain comps while the malls where their stores are located appear to be imploding.  I’ll use this as a tax loss against UL and the required fractional share sales.

Transfer

My remaining Loyal3 full share holdings (YUM, YUMC, AAPL, K, SBUX, HAS, DIS, SQ, PEP, KO and AMC) will be moved … Loyal3 will not move fractionals which will need to be sold.  My goal is to have the transfer complete prior to May 1st which is the ex-div date for the next payer, Hasbro.  I can then sell any remaining fractionals, wait for YUM’s dividend to post (May 5th, went ex-div April 14th), then move any cash into my bank.

My default approach will be to consolidate the holdings into my existing brokerage account which provides the alternative to reinvest dividends.  I will, however, meet with TD Ameritrade today as they (via phone conversations) have indicated they perform OTC ‘grey market’ trades with no surcharge.  As Schwab charges a $50 surcharge, this may clinch the deal for AMTD.

So any Loyal3 strategy shifts in your future?

Update: 20 Apr 2017 – UL and LB sold, decision finalized on move of remaining to existing Schwab account.  AMTD has no set ‘grey market’ policy but will normally adjust the fee.  Lack of certainty killed this option.

My Goals for 2016

  1. Exceed the performance of the S&P 500

This has been one of my goals since 1980 and achieved 31 times.

  1. Re-establish portfolio balance per the strategy

This most likely a two year goal since my largest strides will have to take place following the completion of the PNY/DUK merger

  1. Minimize portfolio sales (ideally none)

Holdings are maintained separate from my published portfolio to supplement my income via a covered call strategy in an attempt to avoid unplanned sales. Dividend Growth Investor covers this nicely with a glaring exception: Major medical expenses.

  1. Complete the acquisition process with about 160 total stocks

Other than a handful of companies to fill a few gaps, I want to add a final round to my Regional Bank strategy

  1. Increase my Canadian holdings to 3-5% of the portfolio

No new holdings are expected, only additions to existing positions. I figure to add while the US dollar is strong with the expectation that – at some point – the situation will be reversed.

  1. Maintain my walking regimen

Weather permitting average 20 miles per week

  1. Improve blog functionality

There remain some sections that don’t work quite right

  1. Write 52 posts

We’ll find out just how much I have to say

  1. Reduce mortgage balance to 30% LTV
  2. Volunteer 50 community service hours

Motivated by Well Rounded Investor’s goals