As I ponder current market conditions and my portfolio, I find myself wanting to liquidate a few positions. Definitely not all, but some excess fat can certainly be trimmed. After SNC recently revised down their 2016 guidance the stock took a really big hit, and I decided now was as good a time as any to get rid of this one. Note: I wanted to sell before guidance was revised down, this just solidified my decision.
I first bought 25 shares of SNC for $42.47, when it was a low P/E of 4.8, a dividend of 2.33%, and a slew of legal troubles hanging over them. At that time I was fairly certain the price would rise considering it was close to it’s 52-week low and was a contrarian play. I had probably learned that term – contrarion – the same day I bought my shares as it was all the way at the beginning of my journey. My original cost basis came to $1,068.70 which includes the CIBC Investor’s Edge trading fee of $6.95.
First Claimed Profit: SNC-Lavalin Returns 21.41%
On October 3rd, I sold all my shares of SNC at $50.90 (an increase of 19.85% over my purchase price), with another trading cost of $6.95.
I recouped $1,265.55 on this trade, when my initial investment was $1,068.70. This is a profit of $196.85, or 18.42% due to transaction costs. In addition to the capital gains achieved from holding SNC, the stock has returned $32.00 in dividends over my holding period.
Therefore, my initial investment of $1,068.70 has ultimately become $1,297.55; a total return of $228.85 or 21.41%. Sadly just the week before this gain was over 30% before it was knocked down due to their revised guidance.
Considering the annual dividend of SNC is $1.04 ($26 for 25 shares), I’ve gained 8.8 years worth of dividends at it’s current price by cashing out. The dividend growth on SNC has been stagnating in recent years as well, as they’ve added $0.01 per quarterly dividend since 2011.
Dividend Income Falls 1.17%
By selling SNC, I have reduced my annual dividend income by $26.00. SNC accounted for a measly 1.17% of my annual dividend income. My new 12-month forward dividend income has been reduced from $2,213.34 to $2,187.34. Monthly income has been reduced from $184.45 to $182.28.
|Annual Dividend Income||$2,213.34||-$26.00||$2,187.34|
|Monthly Dividend Income||$184.45||-$2.17||$182.28|