On a separate note, both Air Products and Chemicals (NYSE:APD) and Kinder Morgan (NYSE:KMI) are funding aggressive expansion plans. If those expansion plans work out, both companies’ valuations may increase as a result. But in the meantime, their dividends aren’t as well covered by free cash flow as they could be, thanks to the capital expenditures they’re making for those expansions. As a result, while success should bring higher valuations, failure may lead to a sale of one or both because of dividend risks.
And then there’s defense contractor Raytheon Company (NYSE:RTN). The company looked reasonably valued back in February, when it was picked for the IPIG portfolio, but its shares have been gaining incredibly since then, largely because of its own successes. Its recent market cap of around $24.6 billion is nearly 31% above the $18.8 billion fair-value estimate from that original pick.
That’s a sign that the original fair value estimate needs to be reviewed in light of the company’s new news since then. If the original fair value estimate holds steady, then Raytheon Company (NYSE:RTN) may be a candidate for selling base on valuation.
Nothing lasts forever. Until then, enjoy the ride.
As wonderful as it would be to just find great companies, buy their shares, and hold on forever, the reality is that there are reasons to sell, just as there are reasons to buy. Thanks to its consistent set of principles to guide its buys and sells, the IPIG portfolio stands a decent chance of meeting its objective of providing a rising income stream. Nothing in the future is guaranteed, of course, but here’s how the portfolio stands as of the market’s close on Aug. 2:
| Company Name | Purchase Date | No. of Shares | Total Investment (Including Commissions) | Current Value, Aug. 2, 2013 |
|---|---|---|---|---|
| United Technologies | 12/10/12 | 18 | $1,464.82 | $1,939.86 |
| Teva Pharmaceutical | 12/12/12 | 38 | $1,519.40 | $1,478.20 |
| J.M. Smucker | 12/13/12 | 17 | $1,483.45 | $1,937.49 |
| Genuine Parts | 12/21/12 | 23 | $1,476.47 | $1,945.11 |
| Mine Safety Appliances | 12/21/12 | 36 | $1,504.96 | $1,957.68 |
| Microsoft | 12/26/12 | 55 | $1,499.15 | $1,753.95 |
| Hasbro | 12/28/12 | 43 | $1,520.60 | $2,020.57 |
| NV Energy | 12/31/12 | 84 | $1,504.72 | $1,993.32 |
| United Parcel (NYSE:UPS) Service | 1/2/13 | 20 | $1,524.00 | $1,758.40 |
| Walgreen | 1/4/13 | 40 | $1,501.80 | $2,039.20 |
| Texas Instruments | 1/7/13 | 47 | $1,515.70 | $1,877.18 |
| Union Pacific | 1/22/13 | 6 | $805.42 | $980.22 |
| CSX | 1/22/13 | 34 | $712.50 | $885.70 |
| McDonald’s | 1/24/13 | 16 | $1,499.64 | $1,587.20 |
| Becton, Dickinson | 1/31/13 | 18 | $1,518.64 | $1,827.18 |
| AFLAC | 2/5/13 | 27 | $1,466.35 | $1,681.02 |
| Air Products & Chemicals | 2/11/13 | 17 | $1,510.99 | $1,818.15 |
| Raytheon | 2/22/13 | 27 | $1,473.91 | $2,042.55 |
| Emerson Electric | 4/3/13 | 28 | $1,548.12 | $1,751.40 |
| Wells Fargo | 5/30/13 | 37 | $1,525.48 | $1,646.13 |
| Kinder Morgan | 6/21/13 | 42 | $1,518.37 | $1,581.30 |
| Cash | $271.01 | |||
Data from the IPIG portfolio’s brokerage account, as of Aug. 2, 2013.
The article Is It Time to Start Selling Stocks? originally appeared on Fool.com is written by Chuck Saletta.
Chuck Saletta owns shares of Aflac, Texas Instruments, Microsoft, McDonald’s, Genuine Parts Company, United Technologies, Wells Fargo, Teva Pharmaceutical Industries, Emerson Electric Co., Becton Dickinson, Walgreen Company, Union Pacific, Hasbro, United Parcel Service, CSX, J.M. Smucker, Air Products & Chemicals, Mine Safety Appliances, NV Energy. Raytheon, and Kinder Morgan. The Motley Fool recommends Aflac, Becton Dickinson, Emerson Electric Co., Hasbro, Kinder Morgan, McDonald’s, Mine Safety Appliances, United Parcel Service, and Wells Fargo. The Motley Fool owns shares of Hasbro, Kinder Morgan, McDonald’s, Microsoft, Raytheon Company, and Wells Fargo.
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