Wednesday, February 19, 2014

Sold Western Union; Bought Coca-Cola

Yesterday, I received an email from my discount brokerage offering me a commission-free trade, as I had yet to make any trades in 2014. Being a buy-and-hold investor, I'm quite comfortable sitting on the sidelines for long periods of time and collecting my ever growing dividends. However, after reading about Coca-Cola's Q413 earnings miss, and given how long I've wanted to add this company to my investments, I decided to take a look to see if any of my holdings were ripe for selling.

As stated in my "goals for 2014" post, one of my focuses is to get rid of companies who have stopped increasing their dividends. For me, when management breaches investors' trust by failing to raise dividends in a regular manner, they no longer deserve my funds invested in their company. For this reason, when looking at holdings to sell that would create some liquidity in my RRSP (where I hold all US dividend growers - for tax reasons), I focused on Western Union (WU) and Intel (INTC) who had not grown dividends in the past year. I was sitting on a 40% gain in Western Union, and realized that they had failed to raise their dividends in 5-quarters (thus breaking the trend they previously set raising dividends every 3 quarters). Although I can respect the fact that they had been investing in anti money-laundering technology, and that a lot of their cash is held offshore, I simply could not forgive them for failing to raise their dividends in a regular manner.

With the proceeds of the sale of Western Union, I bought into Coca-Cola, a company I've been wanting to add to my portfolio for the past 5-years. With their 50+ year record of raising dividends, talk of another increase later this week, a dividend yield of 3% (finally!), and a P/E of 19.5X, I was happy to add this excellent company to my portfolio. The fact that Coca-Cola is a global company also makes it very attractive to me, as I see it as a play on emerging markets that will add further geographic diversification to my holdings.

They say good things come to those who wait. Today, at least for me, I feel finally adding Coca-Cola to my portfolio was well worth the wait.


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