I decided it was time to part ways with the rest of my UNS position. At $50 UNS no longer looks attractive, plus there is very little incentive to stick around to see if the dividend increases will accelerate. The current yield dropped to 3.4%. No thanks, I will pass. Even if Mr. Market thinks this stock is worth $50, I do not. The fair value I have in mind is closer to 40. An overvalued price coupled with atrocious dividend growth made this decision easier than normal. I might be wrong about the valuation... Right or wrong, low dividend growth on a stock yielding 3.4% does not fit my strategy.
I will still follow this company, although it will get less attention now that is has been demoted to watch list status. If the dividend growth accelerates and the price drops I am not opposed to rebuilding the position. It will be interesting to see what the future holds for this company.
I held UNS in both my taxable and ROTH IRA accounts. That is why I sold in two separate transactions.
With the capital raised with the UNS sale, I purchased 33 shares of BNS. When I make portfolio changes like this, the goal is to bolster my dividend income and/or expected dividend growth with a stock that has a better valuation. I'm happy to report that BNS accomplishes all of this. #1 Immediately my passive income rises. #2 I expect higher dividend growth #3 I currently see BNS as undervalued.
It's impossible to know how changes like this will turn out or if it was the right move. I do like my odds though.
Unfortunately my 2013 Q2 income will take a small hit since BNS already paid this quarter. That's really just a small blip of less than 20 bucks. It certainly won't be on my mind 10 or 20 years from now!