I need to make this a brief post, but I went ahead and replaced ABBV with CVX today. ABBV was never meant to be a long term position for me, I knew this all along because I'm simply not comfortable with pure pharma stocks. I'm not saying Abbvie is a bad company, rather it's just not for me. Chevron, however, is one of my core stocks that I'd be comfortable holding through thick and thin. I've been meaning to acquire additional CVX shares for quite some time now. I get to kill two birds with one stone here.
Some may be wondering why I would choose to make this move only a few weeks before the new tax year. I could wait a mere 19 days before selling and then settle capital gains taxes during 2015. A very valid point. Basically I'm disappointed with myself in that I've had to sell so many positions this year. I want a clean slate for 2014 and am willing to take some bumps and bruises now in order for that to happen. I will owe approximately $225 worth of capital gains taxes for the ABBV sale, it's not the end of the world.
I lose $86.40 annual income with the loss of my Abbvie shares. I gain $100.00 annual income with 25 additional Chevron shares. CVX currently yields more than ABBV (since when? jeez!) plus I added additional capital to the purchase for good measure. That's where the income difference comes from.
Symbol: CVX
Core Position: Yes
Speculative Position: No
Expectations: Steady income; 7% annual dividend growth
Automatic Sell: Dividend cut
Consider Selling: Frozen dividend, business fundamentally changes, management becomes untrustworthy, fundamentals deteriorate, wildly over valued stock price, or position fails to meet expectations.
I hope you all enjoy your weekends. Don't take your time on this earth for granted!
Nice move! I also have my eye on Chevron at these levels. Agree with you on the selling aspect. I would hope to not sell much in 2014, although I have my eyes warily on the LINE and TOT shares I own.
ReplyDeleteI really hate selling positions too. Hopefully I'm finished transforming my portfolio, but there are a few companies I hold that may need to go. I'm dumping INTC if they don't increase the dividend soon, that one that might have to go next quarter. LINE and EIFZF are now the only speculative positions left. I can tolerate freezes there.
DeleteWe don't know what the future holds and I'm not afraid to sell stocks if I don't like what I see. On the bright side there are many companies sitting in my watch list I'd still like to own. GPC, UL, MO, GE, MDT, and BDX come to mind instantly!
About replacing one stock with another. I have heard on some many occasions theirs a time to sell a stock. Theirs countless situations when I sold out of a stock and the stock went to much much higher levels. Netflex was a 3 dollar stock a little over ten years ago. By the way you will never hear someone on CNBC or BLOOMBERG dare comment that these stocks traded below 5 dollars at one time... Apple traded for 3.56 in 1998 these stock have not had a stock split for a couple of decades go to yahoo finance and check out interactive charts you can track the stock all the way back to 1998 or before..
DeleteCI,
ReplyDeleteNice move. I sold ABBV (and ABT) earlier this year. It's had a heck of a run since then (as has the market). You've sold on the high after the dividend wasn't raised. Sounds like a very reasonable decision to me. And CVX doesn't leave investors wondering about the dividend. Better clarity, better yield and more diversified operations. Looking good!
Best wishes.
Thanks. ABBV had an amazing run, kind of surprising to me. I'm just investing in a way that makes me comfortable for the long term. No sense worrying about investments, I get enough headaches at work!
DeleteI'm not a fan of pure pharma stocks either as there's too much potential volatility as a new drug coming online or an old drug going off patent can lead to significant changes in the company's prospects. I think CVX will be a great substitute as almost every industry and every person uses the O&G and other byproducts that they develop. And that won't be changing anytime soon.
ReplyDeleteI have to agree with CVX. They'll be sending me $54 every three months, I like the sound of that! I still think Chevron offers a margin of safety here, although I would be lying if I said I'm thrilled about paying $120/share. I was hoping to grab shares a little bit cheaper. Best wishes!
DeleteI think you made a rational decision. I plan to continue holding ABBV, but I would like to buy more CVX, too. It will be interesting to see what ABBV does with its dividend in 2014.
ReplyDeleteNothing wrong with that course of action. I bet Abbvie does an increase next quarter. I never followed it that closely and to be honest I have been looking for a reason to sell it. I plan to buy more ABT next year through FRIP and hopefully monthly purchases too if the price cooperates. Happy Holidays!
DeleteCI,
ReplyDeleteCan't go wrong with CVX. I've owned it for 18 years or so. Its always been a strong buy. I'm going to hold ABBV for a while longer to see what happens. Really liked your analysis on it the other day. Want to see what they do next div announcement. Its really been on a tear this year.
-RBD
Hey how's it going?
DeleteWow that's a long time to hold Chevron, very impressive! Chevron seems to always be undervalued which is nice for those in the accumulation stage (that's me). I think going forward I might favor XOM because of position weightings though. I wouldn't rule out accumulating more CVX at a lower price.
Thanks for sharing your thoughts!
Of course over the weekend they annouce a block buster breast cancer drug.
ReplyDeleteInteresting move! I own both and I think both will do well in future. These two are a part of my 'buy and forget' stocks!
DeleteIt appears I had bad timing with this move, ABBV went up a bit today. The worst part is that I had today off from work and had time to follow the markets minute by minute if I wanted. Oh well.
DeleteMoneycone, are you concerned about Humira losing patent protection in a few years? I thought ABT was just trying to rid itself of Humira when it spun off Abbvie, but it does appear to have some promising treatments. I can't remember many days when ABBV was down, it's been on a tear this year!
Thanks for stopping by guys, I always appreciate readers who want to leave comments (positive or negative)!
I think you did a good move. I was worried about ABBV and ABT and staying out of these companies. I need to see more positive history before I go back.
ReplyDeleteThanks. I feel very confident about ABT as far as the company itself and its dividend. Plan to add next year.
DeleteCanadian court says Ecuadoreans can pursue Chevron assets
ReplyDeleteA Canadian court rules that Ecuadoreans trying to collect on a $9.5B environmental verdict against Chevron (CVX) can attempt to seize the company's assets in the country, reversing a May ruling that said CVX didn't have any assets in Canada.
The plaintiffs, residents of Ecuador's jungles, are seeking to enforce a 2011 judgment against CVX by confiscating its properties in other countries where it operates, and the court says they should have an opportunity to attempt to enforce the judgment in a court where CVX must respond to the merits.
Interesting that the saga continues, thanks for pointing that out!
DeleteThe GDP of Ecuador was only $84billion last year, I thought it was beyond ridiculous that they wanted, what,18 Billion in the last suit! Sounds like maybe Ecuador realized that number was so blatantly inflated they reduced it. The new amount still sounds fishy, so much so that I can understand why Chevron would refuse to pay something that absurd. Perhaps if Ecuador was more reasonable some good could come out of a terrible situation. I bet CVX will pay only a fraction of this suit if it ever pays anything.
I think Chevron ought to devote some resources to clean up the mess even if it was Texaco that did it. However if someone sued me for $300,000,000 in a car accident I don't think I'd have much goodwill towards them even if I was in the wrong.