Recent Sale


This is a tough article to write. I don’t like to sell stocks too often. I look at each stock in my portfolio as valuable branches to my dividend growth tree, ultimately providing me bountiful dividends with which to pay my expenses. Every time I cut a branch from my tree, my tree produces less dividends. However, if it’s the occasional pruning to make the tree stronger and better over the long haul, then it is a chore I must perform and ultimately will be better off for it.

This is now the seventh sale transaction since I went live with Dividend Mantra back in early 2011. Not bad for a three year period, especially seeing as how I’ve published 61 purchase transactions in this same time period. However, as long-term buy-and-monitor investor I try to keep sales to a minimum, and would prefer to never have to sell. Alas, companies are organic and they do change, and as such I have to respond to these changes in a manner that best befits me and my wealth.

I sold 100 shares of Intel Corporation (INTC) on 1/24/14 for $25.06 per share, for a total net sale of $2,498.95 after commissions.

This is the last of my position in Intel, so as such I have closed this position out and am no longer invested with the company. I talked at great length about Intel when I decided to first sell off a portion of my stake in the company back in September of last year. I probably could have just sold off the entire position back then, but I wanted to see what early 2014 would bring and see how the fourth quarter played out, which would close out Intel’s 2013 financial results.

Well, the company reported 4Q 2013 results after the bell on January 16, and with that we have a clear view of where the company went in 2013. Revenue was off -1% vs. 2012, EPS was down -11%, net income down -13% and gross margins were also showing a negative trend. However, while the fundamentals are eroding a touch and this might not bode well for the future, this isn’t why I sold. In fact, with a P/E ratio of 13, a yield of 3.6%, a payout ratio under 50%, robust cash flow, big margins and a healthy ROE the company is rather solid quantitatively-speaking and the valuation looks good. If this were another company I might actually be a buyer, but unfortunately it’s not a different company and I’ll discuss my reasoning for the sale below.

On Thursday, January 23 Intel declared a dividend of $0.225 per share. This is now the seventh quarter in a row with the same dividend. And I had to draw a line in the sand.

I’m a dividend growth investor, not a dividend constant investor. I invest in companies that predictably, and reliably, raise their dividend on an annual basis, and furthermore have a reasonably good chance at continuing to do so for the visible future. Intel did not raise its dividend in 2013, and by starting off 2014 with the same payout this was my cue to exit stage left.

I’ve talked at length lately about not just focusing on the quantitative fundamentals of a company, but instead also taking a good, hard look at the qualitative aspects of a company. I’ve been reading through Intel’s press releases and looking at investor presentations in order to figure out if they have what it takes to be a dominant force in computing for the next decade or more. Obviously, there is a fundamental shift in computing right now and the trend points to more and more people computing on mobile devices. Intel has long been a juggernaut in the PC world, but hasn’t shown an ability to be a leader in mobile processors. And when I tried to figure out whether Intel can compete and grow I had more questions than answers.

Intel CEO Brian Krzanich revealed during the earnings call that Intel plans to grow tablet volumes to 40 million units this year. That would be a fourfold improvement on where they ended in 2013, and it’s unclear whether they’ll be able to reach this goal. It appears that the company plans to buy their way into the market by way of contra revenue – paying tablet makers to cover the additional costs of using Intel’s chips (integrating additional components due to loss of functionality in using Intel’s SOCs) as well as helping to cover some of the costs of designing tablets that can use Intel’s products. This seems like a valid strategy because they’re so late to the party; Intel needs to be aggressive here. However, this will mean further drags on revenue with an unclear view on whether this will lead to long-term gains in mobile. They’ll have more units sold, but at what costs? Furthermore, there is also no clear view on improvements in smartphone chip market share as Intel is right now aggressively focusing on growth in the tablet segment.

Look, I’m no chip expert; I’m not an engineer. But when a company as big as Intel makes a serious push into something and offers to buy its way in I like their chances. However, I’m also no gambler. As a dividend growth investor I expect to be paid to wait while business improves, and I also expect that the piece of the profit pie that I’m receiving as an investor to grow so as to protect my purchasing power. And right now Intel is not delivering, which is a shame because the company has the cash flow to increase the dividend. The payout ratio on earnings is only 47% and FCF covers the dividend more than twice over. And it’s exactly because of the fact that the company has the ability to increase the dividend but insists on not doing so that I sold out of Intel to put my money to work with companies that like to reward business partners with growing payouts.

My cost basis on the 100 shares was $2,097.47 for a cost basis of $20.97 per share. I also received $96.75 in dividends from these 100 shares during my tenure of part-ownership in the company. That means my total return on the shares was 23.8%. Not bad considering all of the negative press Intel has gotten over the last few years and the fact that they didn’t raise the dividend. I’m actually a little relieved to exit the position profitably as I’m not all that keen on the tech sector as a whole, to be honest.

In conclusion, maybe Intel makes in-roads into mobile, and maybe they don’t. However, the company’s decision to not raise the dividend shows a lack of faith as well as a lack of respect for the investors. In light of that, I’ve chosen to invest elsewhere. I’ve already put the funds from the Intel to sale to work, as I decided to add some fresh capital from my day job with the funds from this sale and invested the combined sources of cash into two separate companies. I’ll be discussing those transactions over the coming days, so stay tuned!

This sale reduced my annual dividend income by $90.00.

Full Disclosure: None

How about you? Still invested in Intel? Think they’ll raise the dividend later this year? Did I make the right choice?

Thanks for reading.

Photo Credit: jannoon028/FreeDigitalPhotos.net

Edit: Added in dividend income loss to reflect reduced income from sale.

Comments

  1. says

    DM,
    I was expecting to see some more INTC selling soon. I don’t blame you. These tech managers obviously don’t see the benefit of increasing to strengthen shareholder loyalty. Dividends are not in their blood, its Silicon Valley. I own AAPL and will turn sour if they decide not to raise. Its not in their blood either, so I’m be keeping a close eye on it.
    -RBD

    • says

      RBD,

      It’s definitely rare to have a technology company show consistent behavior in growing the dividend. IBM, for example, is the exception rather than the rule. What was frustrating about Intel, in my opinion, was their failure to raise the dividend even though they’re financially able to.

      Thanks for stopping by!

      Best regards.

  2. Anonymous says

    Made the decision to sell my entire INTC stake today. I plan to split the proceeds into 3 new companies. Just starting my process within the last year we are not dealing with large numbers but you have to start somewhere. What’s the saying, “from small seeds come mighty oaks”? By taking the first $550 and putting it into PSEC I can recover my divs lost from INTC. I currently also own KO, GE, PFE, and O. I’ll be spending the better part of the day making the decision on where to put the rest, add to existing or planting more seeds for diversification’s sake. Looking at TGT, PG, MCD, XOM for the new seeds.
    Check in nearly everyday for your fantastic entries as they are a great resource to myself and I’m sure many others
    Thanks, Josh

    • says

      Anonymous,

      Glad to see we’re on the same page regarding Intel. I don’t follow PSEC, or any other BDCs, but I think you’ve got a nice watch list there. TGT in particular looks attractive right now, but it’s tough to go wrong with just about any of them.

      Best of luck!

      Take care.

    • Anonymous says

      I am leaning towards diversifying into more companies but GE and KO look really good at this point as well.
      Thanks again
      Josh

    • says

      Josh,

      I agree with GE and KO. I think both are great buys right now. GE is probably the better value right now with a higher yield to boot, but KO is about as high quality as you can get and the dividend is due for a raise here pretty soon.

      Cheers!

    • Anonymous says

      I ended up buying 56 shares of PSEC to cover the divs lost with sale of INTC and used the rest to purchase 39 shares of GE. The value was to hard to pass up, it moves my total position in GE up to 36% of total. Wanted to spread some around but the valuation was too compelling IMO. This will probably be last purchase for awhile has I have some large medical bills coming due.

  3. Anonymous says

    I recently did the same thing as I was disappointed with management. There are plenty of companies out there that raise dividends like clockwork. Do you have any ideas as to what you will use this fresh capital for?

    Dividend Prodigy

    • says

      Dividend Prodigy,

      I think a lot of dividend growth investors left Intel after this recent dividend announcement. I was actually trying to sell Intel on Thursday, but I was busy at work and didn’t get a chance to log onto my brokerage account.

      I actually already combined the proceeds from the Intel sale with about $600 in fresh capital and bought shares in two separate companies. I’ll be talking about that over the coming days!

      Best wishes.

  4. Spoonman says

    I feel you, I think you made the right decision. Since there are better buys out there, you won’t be wasting your time waiting for INTC to get its act together. I think your money will be put to work right away with companies that are actually growing now. I think INTC will eventually grow again and raise its dividend, but that may not happen for years to come. INTC probably won’t get caught flat-footed again like it did with mobile, but I need to see a clear improvement in their numbers before I believe they’ve got their mojo back.

    So relax and have fun with your next dividend stock shopping spree!

    • says

      Spoonman,

      Intel may very well get it together, and maybe the contra revenue plan works as management predicts. I would have been willing to ride my investment out and let management use the full force of Intel’s power to force their way into mobile; however, the lack of a dividend raise forced my hand. I wish Intel the best, and perhaps if they get things moving in the right direction again with dividend raises I’ll revisit the stock.

      Cheers!

  5. says

    I really appreciate articles like this as it its easy to say “buy KO” or something similar but coming to grips with selling a position that was intended to be held for life is a much more difficult decision for most investors. I can easily see why an investor might think INTC is a buy here and it may well perform very well over the next year or 5 years but you had a specific intended goal for INTC and it is not delivering so it is the right call for you to move on to find something that fits your goals more closely. Can’t wait to see what you bought. KO perhaps?

    • says

      Divi Me Up,

      I agree. It’s tough to sell a stock when you bought with the intentions of holding for decades to come. I don’t sell often, but sometimes it’s necessary. Like I said, I look at it like the occasional pruning of my dividend tree. :)

      Intel may perform well, and it’s attractively valued right now. They certainly have the power and capital to forcefully move their way into mobile, but the dividend policy as it stands now is just not aligned with my needs as a shareholder.

      You’re on the right track with KO there. I’ll be talking about the two purchases over the coming days. I’m pretty excited about both companies, so stay tuned! :)

      Best regards.

  6. Anonymous says

    I am sorry, but I cannot understand the rational behind your decision and think this is just trying to be cleverer than the market. Isn’t one of the beauties of DGI that you can buy-and-hold through all market cycles.

    IT companies such as Intel cannot do particularly well in an environment of low to now real economic growth.

    Will Intel still be around in 20 years? Are they (despite the current business climate) still paying an attractive dividend? Is the share price likely to be lower/higher in 5, 10 or 20 years from now?

    Don’t get me wrong. I think you are doing a fantastic job, I am just questionning, if such a sell decision is not against the basic theory behind DGI.

    • says

      Anon, I have to support DM here as DGI by definition is the investment in individual equities that grow their dividends on an annual basis. When a company fails to do so they have immediately fallen off the list as a qualifying company. I’m sure you are absolutely right that Intel will survive and thrive at some point in the future, but has little to do with DG investing.

    • says

      Anonymous,

      I’m certainly not smarter than the market or anyone else out there, so I’m not trying to outsmart anyone. In fact, I pointed out that I’m no chip expert or engineer and therefore maybe do not have a total grasp on Intel’s potential. However, I do know what I am – I’m a dividend GROWTH investor. If the dividend isn’t growing then I simply must look elsewhere.

      I talk a lot about companies that grow their dividends year after year after year and how difficult that is. It takes a constant focus on growing the business, making excellent choices with capital and keeping the shareholders in mind. There’s just not a lot of companies out there that can amass lengthy dividend growth streaks, but the handful that do are usually high quality companies. Intel may join these ranks one day, but seven straight quarters with the same dividend doesn’t bode well. There’s some uncertainty there, and why deal with uncertainty when I don’t have to?

      “…basic theory behind DGI.”.

      You must be aware that dividend growth investors invest in companies that continue to grow the dividend. Intel is simply not growing it right now. Maybe they will in the future. If they do, I’ll revisit the company as a potential investment.

      Best wishes.

  7. Anonymous says

    Good, well-founded sale, DM! I’m eyeing KO for my next purchase. At these prices, the risks in KO are quite moderate (if not altogether low).
    The other one I’m bouncing around is IBM. Good margin improvement, growth in the most profitable segments, divesting low-end servers, strong cash flow, well-covered dividend, hated by Wall-Street(!). Currency movements and problems in hardware seem to skew the big picture with Big Blue.

    I’m pretty sure KO is one of the two buys (the alternative being PEP).

    Regards

    Jarmo

    • says

      Jarmo,

      I also like KO right now. I’ve been lukewarm on the stock in the past, but it’s a fairly priced high quality company in a rather lofty market. Nothing wrong with that.

      IBM is also interesting. I thought about moving some of the INTC funds to IBM as that would rotate some capital back into tech, but I went with a couple companies that actually increased my dividend income. So this sale increased both the amount of my dividend income and the visibility of growth of it. I think my move was a win-win. :)

      I’ll be talking about the two purchases over the next few days.

      Cheers!

  8. says

    I’m a big fan of Buffett, but there are some areas I don’t agree with him. When he bought Intel, I never liked that move. (I have similar feelings about IBM as well, but that’s another story!). I was glad when he exited his position.

    Nothing wrong with Intel, but the nature of the business and market dynamics are too complex for the individual investor. I think there are better opportunities out there for an investor’s money!

    • says

      moneycone,

      I wonder if Buffett was actually the one behind the Intel purchase (and sale)? It was a rather small transaction, if memory serves me correct. I wonder if it was Combs or someone else behind that? Obviously, IBM is all Warren.

      Intel is quite complicated. I won’t lie and say I understand everything about the company. Same with banks. However, I have a grasp on what they’re doing, how they’re doing it and the growth potential. I think the company can still do quite well. Some people don’t like the contra revenue move, but it has the potential to work out quite well once their products start flooding the market. They’re a 500lb. gorilla, no doubt about it.

      However, it really just comes down to the growth of the dividend for me. If I was interested in static dividends I would have a whole universe of other stocks open up to me. But I’m not interested in dividends that don’t grow, and therefore by extension I’m not interested in INTC right now.

      Thanks for stopping by!

      Best regards.

  9. says

    Entirely expected given the inability to grow the dividend. I’m glad I jumped out when I did back in August. With any DG investment, I have no patience for companies not rewarding investors their shareholders after doing so for years. I think Intel would have garnished a lot of investor goodwill for at least a token increase back in the fall, and failed to do so.

    Looking forward to seeing where you’ve deployed your cash Jason!

    • says

      w2r,

      I agree. I think the company would have done a lot for its image and for shareholders by offering even a small dividend increase. If that would have happened I’d most likely still be invested. I know they target 40% of FCF for the dividend, but a small increase would not have rocked the boat. They still have plenty of cash for R&D.

      It’s a shame, because I think the company still has potential. But I must stick with my guns and invest in companies that continue to raise the dividend and are extremely likely to continue doing so. With all the talk of a rough 2014 ahead for this company I’m not sure they’ll raise the dividend at all this year.

      I deployed my INTC proceeds (along with some fresh capital) with two companies that, overall, raised my dividend income and will also likely provide me with bigger increases going forward. I’m excited to talk about it!

      Best wishes.

  10. says

    I am not with you on Intel, you can read my comment on seekingalpha. As for GE, KO and the rest those are different sectors, we need a consistently diversified portfolio for added strength do we not?

    Disclosure: I bought more GE recently on the dip and will probably hold it forever and KO is a full position in my portfolio.

    • says

      Katz,

      It’s not expected that all dividend growth investors will agree on all investments all of the time. I don’t blame you for disagreeing with me. I think Intel still has a ton of potential. However, the lack of a dividend raise was a red flag for me and so I must stay true to my beliefs.

      I think you made a great move on GE. It was extremely high on my list for the reallocation of capital from INTC. In fact, it was a real toss-up between GE and the other company I ultimately went with. The pullback on GE combined with the recent dividend increase means the yield right now is very attractive!

      Take care.

  11. says

    I’m with you on not enjoying selling stocks often but it does happen. I rarely sell stocks as well but last week I sold my 89 shares of Intel at $25.66. I took capital gains of about $300, and reinvested it in TGT. All the best.

    • says

      $25000 Dividends,

      Buying TGT and selling INTC. Sounds like a brother from another mother. :)

      Best of luck with your moves. I think you made a great choice, but I also think INTC has a lot of potential. Maybe they’ll surprise us all and raise the dividend later this year. If so, I’ll revisit them another day. For right now I’m pretty happy with what I’ve done.

      Cheers!

  12. says

    I saw a pattern a couple of times when the price goes down to $20, it’s under valued and then it reaches $25 where it’s valued and you need to see the long term growth to stick with it. At $20, their cash and position in the PC market and tablet interest makes you take a chance.

    Tech stocks are tough … I did the dance with Intel a few years back and I hold MSFT now. Bought it at $27. I prefer the software services and server environment over the hardware. Microsoft is like a utility (who doesn’t use Office in the business environment).

    • says

      PIE,

      I agree. INTC has been a very cyclical stock over the last few years, oscillating between $20 and $25 for the most part. This batch of shares was bought around $20 and sold around $25, so I guess I did well there. It wasn’t my intention, however.

      MSFT was a great move. When I initially invested in INTC a few years ago it was either it or MSFT. I ultimately chose the former but wish I would have gone with the latter. Can’t win them all!

      Best regards.

  13. Erick says

    I wouldn’t argue with your financial arguments, you definitely make a point from a dividend investor perspective.

    However, from a technological perspective, Intel more or less acknowledged they lost the mobile battle, and are now focusing on the next one: internet of things, wearables, etc … which will probably be a market 10 times as big as mobile. If they manage to become one of the top players (which should be the case considering they financial resources and technological excellence), I am ready to be patient and play them for the next 20 years.

    • says

      Erick,

      I’m not sure if they’ve given up on mobile. I think the contra revenue move is actually indicative of the fact that they’re willing to sacrifice their financial position and margins in order to gain a strong foothold in tablet market share and penetrate the market. They’re basically subsidizing the tablet manufacturers to put their chips in them. I don’t think that’s giving up, but I also don’t think it’s a bad move. However, the move may mean that in the meanwhile the financials are going to erode. It’s a long-term play for sure.

      We’ll see what happens with Intel. There’s a lot of potential, but there’s also a lot of questions. The lack of visibility on their ability to continue growing the dividend, combined with the fact that they are already not growing it, meant I simply had to exit my position. I hope they continue doing well as a company, and I wish investors in INTC much success!

      Take care.

    • says

      J.A. Saglimbeni,

      Nice choices there in tech. I’m not in a rush to expose myself to more tech. IBM is my direct play there, and it’s a small position for me. QCOM has done well, and I would have been much better off buying a piece of that company over INTC. Can’t win them all, but one doesn’t need to in order to succeed. :)

      Thanks for stopping by. I appreciate the ideas. MSFT is a great play there with movements into the cloud and the cash cow businesses they already have.

      Cheers!

    • says

      Investing Pursuits,

      You nailed it on the head there. I have a pretty clear goal as a dividend growth investor: to grow my income over and above the rate of inflation. And right now with seven straight dividend payouts that means INTC has paid me the same dividend for 21 months. That just doesn’t cut it for me. It’s no slight against the company, but I need to know my income is going to grow. If I was interested in a 3.63% yield and no growth I’d buy a 30-year Treasury – which just so happens to have the same exact yield.

      Best regards.

  14. says

    Intel is no longer performing as a dividend growth stock. Lots of potential. Lots of ifs. Lots of mights. Lots of room for a higher dividend. Yet it does not deliver. I could have overlooked a dividend freeze during the great recession, can’t use that excuse right now. I think INTC showed its true colors here.

    Text book case as to why I dislike and do not trust the technology sector. These businesses change so quickly and are difficult to understand… the exact opposite of what a dividend growth investor would want to hold for decades without end. I feel I ought to own a few token tech stocks for diversification purposes, though it’s hard to convince myself it’s is even logical.

    Best wishes!

    • says

      CI,

      I know you and I are on the same page here. Lots of potential, but also lots of questions.

      I agree with you on tech. With INTC now out of my portfolio I don’t have a lot of exposure to tech, and I’ll likely keep it that way for the foreseeable future. Certainly tech has a lot of potential for huge growth, but it’s tough to separate the long-term winners from the long-term losers. I thought INTC was a lock when I invested in them, and I thought for sure they’d kill it in mobile. The contra revenue move is them just admitting they missed the boat and they need to buy their way in. A sobering admission, but the move will probably be a great long-term play. However, it’s tough to say when the dividend will grow again. And questions like that are ones I try to avoid.

      Thanks for stopping by! I’ll be interested to see what you pick if you ever invest in a tech company again.

      Take care.

  15. Anonymous says

    I don’t sell very often Im 60 years old I still have stuff that I bought when I was 21 years old (pg) and reinvested the dividends. I think it was a good move to get rid of intc It was good while it lasted

    • says

      Anonymous,

      Thanks for the support! I appreciate the perspective of a long-term investor like yourself.

      INTC still did well as an investment for me, but ultimately I invest to hold. It’s a shame Intel didn’t continue to grow the dividend. I would have loved to continue holding.

      Best wishes.

  16. Debbie M says

    Yep, it’s scary to sell, but when a stock no longer meets your requirements (and other stocks are available that do), I think it’s the right choice.

    I’ve been thinking similar thoughts about NUE even though technically they have been raising dividends. Last year they raised them from $0.3675 per share to $0.365 (0.68%); this year they raised the dividend to 0.37 (0.6%). Ideally the stock increases beat inflation–these aren’t even close.

    • says

      Debbie M,

      I remember looking at NUE a while back, and it was pretty clear the dividend growth was slowing significantly. However, I know that’s a pretty cyclical play so it was hard to say for sure. Looks like they’re still committed to growing the dividend, which is nice, but growth that is so far below inflation isn’t really appealing at all. I’d rather have a 6% yield with no growth than a 3% yield with 1% growth.

      Cheers!

  17. says

    I think that was a good choise!
    Intel have reduce their EPS from 2011 (2,46) about 2012 (2,2) to 2013 (1,94).
    That is a decline about 21 percent.

    If they don´t increase the EPS, they don´t can increase the dividend in the future, because the payout ratio (at the moment 45%) will be to high.

    I would buy Intel, if they raise their EPS again.

    Regards
    D-S

    • says

      D-S,

      You are right. Without growth in the underlying business the dividend growth will eventually have to cease. Intel could still raise the dividend, even a little, which makes it all the more frustrating that they refuse to. On the other hand, I would never encourage a company to raise the dividend if it means that it will damage operations.

      I always look at dividend growth, or lack of, as a signal from management that business is great, or business is not great. Business is not great right now. And I’m willing to hunker down with a company during a period of difficulty if they can show that they have a clear vision and are executing on it. I can’t really say that I see Intel’s vision right now, and so far they’ve disappointed.

      I’m on to bigger and better things. :)

      Best regards.

  18. Anonymous says

    Hi Jason,

    I always wanted to take a position in INTC but never did because the McAfee purchase in 2010 never made sense to me. Then just a week ago Verizon buys Intel Media. Why is Intel in the Media business. In my opinion they should have been focusing on mobile devices after seeing how well the Iphone was doing in 2008. Intel can only make high power consuming chips which obviously don’t work well in phones for tablets. I don’t want to sound like an INTC basher because I do believe they will one day own a good piece of phone and tablet markets. I just don’t understand what management is thinking.

    • says

      Anonymous,

      I hear what you’re saying. Management has, so far, not executed very well. I wanted to give Brian a chance because he took over a company without a lot of direction in mobile. Paul O. clearly failed to see the revolution coming, and Intel didn’t turn the corner. However, after three years of having capital tied up in Intel I’ve been disappointed. It just felt like it was time to move on for me.

      Take care!

  19. says

    I also sold my INTC last year @ $24 and change, so yes, your decision to sell was brilliant! I only wish I had waited to sell at $25/26, but glad I didn’t sell right away when they froze the dividend @ $22. My decision to sell a stock is often based on dividend growth + earnings report (along with future guidance), and then I’ll look at price action for the timing of the sale.

    • says

      kolpin,

      Looks like we’re on the same page with this one! :)

      I can be a bit reactive rather than proactive when it comes to selling, but I try to give a company the benefit of the doubt. And, obviously, I’m in this for the long haul. I can deal with less than stellar performance over the course of a few years if I feel like the long-term picture still looks good. In addition, I must continue to see the dividend grow – even a little. With Intel, I just couldn’t be confident in the long-term picture and the dividend wasn’t growing. It was time to move on.

      Thanks for stopping by!

      Best wishes.

  20. says

    I still own INTC and I’m planning on keeping it. I think the performance issue is temporary. INTC just has too much muscle power to get stuck in a rut.

    I think INTC will raise its dividend later this year. Any raise this year will keep INTC’s dividend growth streak in tact, as long as it is paid out in 2014.

    As you point out, though, if INTC does raise its dividend payment, you can always revisit.

    • says

      FerdiS,

      I hope Intel manages to raise the dividend this year. The problem, in my view, is that management hasn’t been clear at all in its intentions to either raise the dividend, keep it static or anything else. The lack of clarity and communication has been extremely disappointing. I was hoping at some point they would provide some kind of information on where the dividend is going, but as far as I’m aware they’ve been quite quiet on this front.

      And while a raise would keep their streak intact, I’m also looking for growth in income that outpaces inflation. The last increase – 7.1% back in mid-2012 – doesn’t allow for that when you’re averaging it out over the last two years.

      I hope Intel pans out for you. I think they certainly have the financial might to make things work.

      Best regards!

  21. Anonymous says

    Hi DM,

    I know it is hard to make the decision to sell a stock but if the company doesn’t align with your goal, then I think you made the right decision.

    Couple of questions. What do you recommend as the best account to sign up for so I can stop posting anonymously? And what is your thoughts on Clorox? I believe they are going ex div tomorrow so the share price should pull back. I am hoping for under 88. The PE is a little high but it got a nice dividend.

    Thanks,
    Frank

    • Debbie M says

      Frank, you don’t have to sign up for an account. You can select the profile “Name/URL” under “Reply as,” type in your name, and then leave the URL blank. That’s what I do.

    • says

      Frank,

      Debbie M is correct. You don’t need a website to post with a name. I hope that helps?

      As far as Clorox, I’ve been concerned in the past about the debt load. The balance sheet leaves a lot to be desired, in my opinion. I think over time that leverage will catch up to them, but we’ll see. The product lineup is great, however. If they are able to clean up that balance sheet a bit I’d be quite interested in buying. I haven’t looked at them in a little while. I may have to revisit that idea and take another look at the balance sheet.

      Cheers.

    • Frank NY says

      Debbie M, Thanks for the help. I cant believe it is that easy.

      DM, Maybe that Burt’s Bees wasn’t a great purchased. Thanks for the reply. Maybe I will just add to my PM position.

      Frank

  22. says

    I think you made a smart move of getting rid of Intel, but I would keep it in a watch list as they seem to shift towards mobile devices and may be a winner once again. Time will show.

    • says

      Martin,

      Time will show whether they execute properly, and whether or not their current strategy is the correct one. I’m more comfortable sitting on the sidelines with Intel right now, but if they raise the dividend and get back on track I’m willing to revisit the company in the future.

      Take care.

  23. says

    I think you made a good decision too. INTC is just stuck in its own world. I have too much INTC and will be looking to sell maybe half this year. It’s tough because I’ll have to pay quite a bit of capital gain on them.
    I know some people in the mobile group and they have a lot of complaints. Intel just isn’t willing to get rid of all their legacy to start fresh. They tried to carry too much legacy stuff into mobile and it doesn’t work well that way. Anyway, I hope they turn it around too.

    • says

      Joe,

      Your perspective is particularly valuable, as you know the company a lot more than I do.

      I don’t blame you for wanting to lighten up on Intel. Even if you still believe in the company, tech changes pretty quickly. Wouldn’t be a bad idea to diversify a bit and hedge your bets.

      We’ll see how it turns out, but so far I’m not confident that Intel has what it takes to compete it the mobile space.

      Thanks for stopping by!

      Best wishes.

    • says

      Charles,

      I’m not looking at the price action with Intel at all. I think the valuation actually looks good as it is, but with eroding fundamentals and big questions regarding future growth I felt compelled to react. The lack of dividend growth was the nail in the coffin for me.

      However, that being said Intel does tend to oscillate between ~$20 and ~$25, so one would think a valid strategy might be to buy at $20ish and sell around $25.

      Cheers!

  24. says

    I certainly can’t blame you for this sell. It will be 2 years in July since INTC has declared a dividend increase. However, they do have until the end of the year to keep their streak technically. I will give them a little longer but since INTC is my largest position, I’ve started to sell calls. I plan to sell calls until there is a dividend increase or until my shares are all called away. I’m looking at CSCO or IBM as a possible replacement? CSCO has something like $9/share in cash! What are your thought on those two? The tech sector is certainly difficult for most people to invest in because these companies have so much R&D expense and have to keep innovating to increase earnings. So I understand the caution. Take care.

    • says

      AAI,

      I haven’t followed CSCO much, but I do like IBM. The low yield, however, keeps me from investing too heavily into the company. Moreover, as a tech play I’m ultimately inclined to not invest too heavily anyhow.

      It ultimately comes down to my need to be confident in a company’s ability to keep increasing dividends for decades to come, because I’ll be relying on my dividend income for that long. The visibility regarding reasonable increases in top line and bottom line growth, as well as dividend growth, is just not as clear with many tech companies (IBM included) as it might be with many other companies in different sectors (especially consumer stocks and energy).

      I know you’ve got a lot to think about with a big position in Intel. In my opinion, this is the time when the company makes it or breaks it as far as growth in mobile. I don’t think they’re going to go away as a company anytime soon, but I do believe that viable growth for Intel lies in mobile, especially with the trends in PC.

      Best regards.

  25. says

    Don’t know was this a smart or not it just depends on your valuation. And your purchase price.But now just hold on to your hat and wait for a cheaper price: less than 52 week average at 20.10$. If they fall around here or below that then its a bargain. I think we need to wait for the next quarter before this happens, but currently there is a lot doubt in the air seems that everyone is waiting for a big dip. But i don’t think big company like Intel are just gonna vanish they will get bad quarters like every other company, but i think they will earn their momentum back, later this year. My tip for you is: you have a lot of money on $ look around there are some good companies traded in other currencies. diversify,diversify,diversify

    Cheers!

    • says

      investingIdiot,

      We’ll see what happens. I’m no smarter than anyone else. What happens with Intel is anyone’s guess, but the lack of a dividend raise and no communication from management whatsoever on it was just my last straw. The fundamentals have been eroding over the last few years as PC sales have declined and the company continues to spend massive amounts of money on R&D with little to show. I’ll be watching from the sidelines for now, but I do wish Intel and its investors the best of luck.

      Take care!

  26. says

    I completely understand your feelings about Intel. It was one of my first purchases last year and I didn’t really pay much attention to dividend growth at the time. I just thought it was a nice yielding stock. Watching Intel now makes me question my decision to buy Cisco. I hope they aren’t two peas in a pod. I guess I will find out soon enough.

    I am also curious on your thoughts about AFL vs. TRV. I am inclined to start accumulating both of them in my newly opened Sharebuilder account.

    • says

      Pipeline,

      It’s tough to say with Cisco. I looked at it maybe six months ago or so and was generally willing to initiate a position, but then it popped and I moved on. Since, I’ve become more and more lukewarm on tech in general. It’s just hard to forecast changes in such a fast moving industry. Toothpaste and cheeseburgers are easier to forecast than technology, that’s for sure.

      As far as TRV and AFL I think both are great companies. I don’t think you can go wrong with either. I’m a bit biased toward AFL because I own 100 shares, but I hope to own a piece of TRV at some point as well. HCC is another good looking insurance company. Unfortunately, all have had a huge run over the last year or so, so that’s something to be aware of.

      Best wishes.

  27. says

    Hello! I only started reading dividend blogs a couple months ago, and I am looking to make my first investment later this year. But, I have to say, it won’t be a tech stock. INTC or QCOM would be my top picks, since they’re the leading chip makers, and everything else grows from there. Long-term, I would be worried about software-dependent firms such as Cisco, Oracle, and to an extent, IBM, as I feel that’s an especially difficult economic moat to maintain. If somebody comes along with an open-source package with much the same functionality, that’s a real threat. Plus, I’ve seen friends beat their heads against the wall trying to learn Cisco software and attain CCNA certification, some of them even giving up. So if somebody comes along with something easier to learn, I would not be comfortable with Cisco as a long-term holding. Take, for instance, Juniper Networks’ FreeBSD-based JunOS… based on a long-standing open-source project that their engineers are contributing back to on a regular basis. That’s a software strategy I’d be much more comfortable with, except, hey, Juniper doesn’t pay a dividend!

    Out of curiosity, how many shares do you consider to be a full position size? I’m just trying to gauge how much cash I should have saved up before I start buying shares.

    • says

      Ian Stewart,

      I totally understand your hesitation regarding investing in tech. I share your perspective, and it’s a sector I shy away from more and more as time marches on.

      In regards to a full position size that changes as my portfolio grows. When my portfolio was valued at $25k I viewed $1,500 as a full position, now it’s closer to $4k or so. Ultimately, I don’t look at it like that. I simply try to make sure each transaction is around $1,400 or so and try not to overweight any one position. For instance, PM is a very large position for me right now at about 6% of my portfolio. But as my portfolio grows that position will shrink in weight as the rest of my portfolio catches up. I’m ultimately aiming for around 50 positions, with weights from 1% on the low end to 3% or so on the high end. I don’t want any one stock to be more than 5% of my portfolio, so as time goes on I’ll have to add to certain companies to bring them in line while focusing less on other companies. This is so no one company has an outsized effect on my dividend income.

      I hope this helps!

      Cheers.

  28. says

    I’ve been mulling over selling out of INTC as well. I sold a call option that expires in February and if the shares don’t get called away then I’ll decide whether I want completely sell then or write another call. INTC is definitely in the dog house but for now I’ll let the market decide if they get kicked to the curb.

    • says

      Pursuit,

      Your strategy sounds valid and reasonable to me.

      I decided to take action now, but Intel could very well surprise all of us. I anticipate no dividend growth at all in 2014 because of their FCF payout guidance, but we’ll see.

      I feel good about moving on, especially since I know I can always buy back in later.

      Best regards!

  29. says

    Hi Dividendmantra!

    I’m in the same boat as you. Like you, I was not too pleased with intel’s results in 4Q 2013 but I couldn’t sell it. I also had a position in Intel at an average price of $20.30. At my position, I still feel comfortable holding and collecting the dividend because I don’t see this company disappearing anytime soon with a few bad quarters. In addition, I strive not to have all my eggs in one basket so exposure in the technology sector maintains my portfolio diversity.

    Since you have the extra capital now, are there any dividend equities you would consider? I don’t see anything cheap enough on my radar yet. I looked at KO but I feel like it could go down a bit more before I commit (hoping below 37$)

    • says

      Young Income,

      Thanks for stopping by. You’re off to a great start for your age! Best of luck on your continued journey to FI. :)

      I’ve already put the capital from the Intel sale to work with KO and OHI. I also purchased shares in TGT earlier this month. I haven’t published the article yet, but later tonight you’ll see another post go live with my last buy of the month. Stay tuned!

      Cheers.

  30. says

    Thanks Dividend Mantra! I stumbled upon your site and other similar ones years ago and started saving towards FI haha. Looking forward to reading your article on KO and OHI!

  31. says

    Hi Divdend Mantra,

    I ended up selling my entire position in INTC yesterday to fund my purchase of KO. I would’ve kept it but I needed the extra capital to buy enough KO to begin DRIP. At these price levels I wish I had more funds to buy KO. I agree with the points you highlighted and you can’t go wrong with choosing quality! Looking forward to seeing what you buy in the future!

    Cheers!

    • says

      Young Income,

      Hey, I think you made a good choice there. Intel just has too many questions right now, while KO instead has plenty of answers. KO is definitely high quality. It’s about as blue as a blue-chip gets.

      Thanks for stopping by! Keep up the great work on your journey. :)

      Best regards.

  32. Winston says

    Dividend Mantra,

    Great work on the dividends and website, I am also pursuing FI through passive income as well. Currently, I still hold INTC but have been disappointed by its lack of dividend increases. I am planning to sell it later this year around the 26-28 range. I had initially bought in just under $20/share, so still a decent return.

    What are some technology sector dividend stocks that are good buys to consider? I have been taking a look at Cisco, and it appears that have a lot of potential dividend growth in the future? What are your thoughts?

    • says

      Winston,

      I hope you get to sell INTC around $27 or so. That would provide for a nice profit!

      I like IBM in tech, and I hold a small equity position in the company. I’ve browsed CSCO, but never taken a good, hard look at the company. It’s tough to find tech companies that are committed to regularly and reliably growing the dividend, as we found out with INTC. Will CSCO grow their dividend for the next 10 years or so? Hard to say, but they’ve been doing well over the last few years. And they have a ton of cash on the balance sheet. The valuation makes sense here, so it might not be a bad idea to take a chance. I think the biggest problem for me when it comes to tech is the changing winds in the industry and competition. I like IBM because their services are quite entrenched, but a lot of hardware and devices that CSCO sells could potentially be outdone by competition.

      Just my thoughts!

      Best wishes.

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