Today, as discussed in last week’s update
, I will be replacing Linear Technology Corp which in a few ways has fallen below the standard that I’m looking for in this portfolio. Members of our free mailing list got some insight this morning into the different things that I considered adding to the USDP. If you’re not yet a member, you can join here:
In the end, I decided to replace LLTC with Baxter International (BAX), a company in the medical products sector
. The great thing of course is that no matter how the economy performs, health care, like insurance
, will continue to be required by large portion of the population. If I compare the two names, as you can see below, I think it’s fairly obvious that BAX is not only a better fit and a better play for my income portfolio but it also provides better diversification to my portfolio which I absolutely love. Here is the BAX chart for this year:
|Ticker||Name||Price||Current Dividend Yield||5 year Dividend Growth||1 year Dividend Growth||Sales Growth (1 year)||Sales Growth (5 year)
|LLTC||Linear Technology Corp||32.82||3.05||7.49||4.21||-14.65||9.65
|BAX||Baxter International Inc||58.32||3.09||14.44||7.79||8.18||4.93
|Ticker||Earnings growth||P/E ratio||Margins growth||Payout ratio||Return on Equity||Debt to Capital Ratio||Industry (declining, volatile, etc)
|LLTC||20.28||19.08||-0.62||57.36||64.1||0.11||Semicon Compo-Intg Circu
The trade will be done on the close today! With that and my decision to start using DRIP’s
, I’m confident that I will be able to increase the overall performance of this portfolio.
For those asking, it’s not by luck that the dividend yield is almost identical to the one of the outgoing stock. All of the income/return assumptions that I have been doing on this blog depend on constant growth across the portfolio which is easier to reach if you do not swap out high dividend stocks by lower ones.
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