Today's Stock Trades

After receiving such generous payouts from my investments in master limited partnerships, I decided to add to my investments. I sold my stake in AFLAC in my taxable account (still own the stock in my IRA), for a 39% gain and will reinvest the money in 2 MLP's. I currently own shares in Legacy Reserves L.P. (LGCY) and Ev Energy Partners L.P. (EVEP). I am dividing the money evenly between the two.

Legacy currently has a yield of 13.08% on their recent price of $16.01 per share. Ev Energy has a yield of 14.60% on their recent share price of $20.70. Both currently have sufficient earnings to continue or even increase payouts. This should help boost my dividend income on my overall portfolio, while reducing risk. With the tax advantages on payouts, it should be a good move toward building my investment portfolio.

I will be looking to take further gains on some of my other stock holdings and diverting that money to MLPs in the months ahead. My plan is to have 25% of my taxable portfolio invested in MLPs by next year.

Walmart vs Aflac

A friend of mine asked me to call his mother yesterday to help her decide whether she should sell her shares of Walmart (WMT) stock and buy more shares of Aflac (AFL) or sell shares in Lowes (LOW). Wal Mart has held up well for the first half of the year, with people turning to discount stores for shopping during the downturn in the economy. Aflac went through some tough times earlier in the year but is recovering quite nicely, and I expect that to continue through the second half of the year. Given that they are roughly 27% below their 52 week high, and Wal Mart is only a little over 14% below their 52 week high, I think Aflac has a lot more room for possible price recovery. I also think it's likely that Wal Mart could see another weak holiday season, in which case I would expect some price declines.

As for Lowes, with housing showing some signs of recovery and people who are off work doing improvement projects to their homes, I think they have room for growth as well. I personally sold all my Wal Mart stock a few years back. Even though I think holding their shares is not really a bad thing, I just don't expect to see it moving much anytime soon. I think there are a lot better places to invest your money right now.

On an unrelated subject, I was glad to see Pepsico up their offer to buy out Pepsi Bottling. I've been a long time shareholder of Pepsi Bottling and will see a decent profit from the buyout. I like the fact that shareholders have the option of all cash or all stock as long as Pepsico pays half cash and half stock total. Personally I would rather have a cash and stock combination as I think Pepsico will do well in the coming years.

AFLAC and Evaluating Dividend Sustainability

If you've read some of my previous posts, you'll know I like investing in insurance companies. Currently I am invested in AFLAC (AFL) in my IRA account and my regular stock portfolio. Although my own research had convinced me of the value of owning shares of AFLAC, it's always nice to get a second opinion.

Dividends Value.com has a great analysis of AFLAC stock, which you can read at:


http://dividendsvalue.com/3205/aflac-inc-afl-dividend-stock-analysis/


I just recently discovered this site. What a great resource for building a solid dividend portfolio of stocks! Looking forward to reading more. Also found a great table of factors to consider, when evaluating a stocks dividend sustainability, at Disciplined Approach to Investing:

http://disciplinedinvesting.blogspot.com/2009/06/evaluating-dividend-sustainability.html


One of the very first things I do, before investing in a stock, is check the sustainability of dividend payouts. It doesn't do any good to invest, only to have the dividend cut or eliminated all together.

Looking Forward To Summer

I'm looking forward to summer and to seeing whether the rally in stocks will continue. Traditionally, the old stock market wisdom is, "In May go away." Some experts were expecting to see continued run this year, as long as the recovery in the economy continues. But from what I've been seeing, it looks like a lot of buyers will be slowing down for the summer months and I'm thinking things will pick up again in August or September. So I probably won't be doing many quick trades.

Usually, during this time of year, I take time to find good quality dividend stocks to add to my long term holdings. This year is likely to be no exception. If the market is taking a break, it will be the perfect time to pick up stocks at lower prices. I may be adding to some of my current holdings like AT&T (T), General Electric (GE), Merck and Co. (MRK) and a few others. Might also buy back in to British Petroleum (BP) and Universal Insurance (UVE) since I think both have good long term prospects and they both pay good dividends. I do still hold both stocks in my IRA account for the long term payouts and growth prospects. Also hoping to pick up more shares of AFLAC (AFL) if I can get them at a decent price. Would also like to unload some of my less productive holdings and re-invest the cash. I'm currently holding extra cash in my money market account in case the market does drop back some, so I will be able to take advantage of bargain priced stocks.

Hope everyone had a great weekend!