I recently wrote a lengthy update about my portfolio and more, in which I mentioned JD Sports had announced their best results ever. So why have I taken the decision to sell my shares in this stock, if they have such great results?
Well, basically JD Sports do not really fit in with my goals. Now, I must actually clarify this because if you have read my goals page, you are probably thinking ‘what has JD Sports got to do with those goals?’. Well, technically, it doesn’t really have anything to do with my goals. However, I have methods of achieving those goals which are not documented on the page, so I thought I might explain a few of them here.
Dividends and Cashflow Management
We had a goal to earn £125 in dividends, which we will crush since we changed the way we save and invest our money – we will probably receive well over £200 from dividends this year in my NISA account. Formerly, we put our regular savings into separate pots, e.g. ‘car’ and then withdrew from them as and when we needed to, such as when the car insurance was due. However, we realised that this was very time-consuming and very inefficient, as money was coming and going at certain points during the year, and not earning much in interest.
So we decided to put the regular monthly savings pots into the stock market instead, specifically, stable, dividend-paying, and somewhat boring dividend stocks. This means that we will be able to earn the dividends and then sell shares if we need to withdraw money for an annual purchase. But we are also keeping higher balances in our current accounts to smooth out any bumps. Plus, we have our credit cards, which things like car insurance can be paid on, thus helping us to earn more interest and/or dividends until the credit card is due to be paid in 56 days’ time.
JD Sports is a dividend growing company, but it is beyond the realms of value now, since the share price has gone up so much since I bought it last year. It has appreciated more than 50% in less than a year, which quite a lot to say the least! It is a kind of mental trigger for me, that if a FTSE 350 stock appreciates that much in such a short amount of time, then it might be time to move on. The other factor influencing my sale is that JD Sports are a bit stingy with their dividend increases. I would prefer to invest in companies who are going to grow the dividend by a higher amount, especially given the fact that JD Sports just had their best year ever, and still only managed a small increase.
Which Stocks to Buy Now?
I am probably going to go for the boring National Grid and Unilever with the money from the JD Sports sale. They have both had a little volatility in their prices recently, especially for Unilever as it is down a few % since I last bought it. National Grid has been fluctuating, possibly due to the election, but it has since returned to below £9 per share, which is back into my target range.
I am generally aiming for stocks that pay 4% or more, although I do have several that don’t pay such a high dividend yield such as Unilever. I am also considering various Investment Trusts, although many of the really big ones have significant holdings in tobacco companies, which I do not want to actively invest in.
Which stocks are you planning to buy or sell this month?