Plug Those Portfolio Holes Before They Sink Your Ship
Have you let your losers run too far?
Ignoring important metrics can be the undoing of your portfolio. As much as you’d like, if you want to preserve your capital, you must always keep your eye on the ball and monitor developments in your portfolio companies.
Capital Preservation, by the Numbers
source: Yahoo Finance
Several months ago, Walgreens Boots Alliance (WBA) began to give off notable signals that broadcast weakening fundamentals. Earnings per share had fallen for several quarters in a row, and revenues were suffering the same fate.
Though this huge pharmacy chain had tried to stop the bleeding by merging with the U.K.’s Boots Alliance, somehow it seemed to make matters worse.
Instead of turning the ship around, it appeared to contribute to a sinking ship.
It is then, in May of this year, that we decided to stop the bleeding and sold all 1800 shares of this company in our RODAT Portfolio at $15.00 per share.
In the last several weeks, WBA’s share price has been imploding, falling to as low as $8.90 on September 3rd. This represented a price compression of 41% since we sold off all our shares. It also represented a savings (capital preservation) of $10,980.00 for each of our subscribers who mirrored our sale.
Though its current $1.00 per share dividend reflects an 11.23% dividend yield for anyone who accumulates shares at today’s price, it appears more of a value trap than a bargain at this point.
With continuing disintegration of earnings and revenues, a dividend cut looks likely as the company will be interested in preserving its own capital to shore up its balance sheet by lowering its payout to shareholders.
Bottom Line
As the economy begins to show signs of slowing, it’s more important then ever to monitor your portfolio holdings for any possible leaks springing up. Better to plug the leaks as fast as possible rather than ignoring them. Cut your losses before they have an outsized effect on your portfolio performance.
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Other articles you may find valuable reading:
This Perpetual Money Well Never Runs Dry
Stay Sane When the Markets are Going Insane
What If No One Ever Sold Even One Share of Stock?
Slave Labor is Alive and Well In the USA
Best,
the author
George Schneider
Founder and publisher
Retirement: One Dividend At A Time
Disclaimer: This article is intended to provide information to interested parties. As I have no knowledge of individual investor circumstances, goals, and/or portfolio concentration or diversification, readers are expected to complete their own due diligence before purchasing any stocks mentioned or recommended.
Disclosure: I am long all RODAT Portfolio names. The Portfolio continues to build dividend income with reliable, dependable equities which have long histories of increasing the dividend.
Copyright ©2024, George Schneider