Sometimes it makes sense to cash in some capital gain and reinvest in another opportunity. And so this is what I did. I sold AT&T
not because it’s a bad investment but I cashed in 420$ of capital gain which would take me around 5 years to receive from the company. ( 50 shares at 49cents a share/quarter). With the proceeds I bought 27 shares of CVS
I believe this stock has been oversold lately, I am happy to get in to this type of valuation. This company has a very strong dividend growth track record and has a payout ratio of only 30%. The economies of scale and the moat of this company have not been damaged for the long run.
So the 2 main Reasons for this Trade are:
- Expected dividend raise from CVS in the coming years is much higher. Most likely 10 to 15% a year VS At&t Raise of 1 to 2 %.
- I believe valuation of CVS at 79$ a share is a lot more attractive than At&t, which would eventually bring a better total return in the long run.
Be well & get wealthy