USDP Trading

By: ispeculatornew
Date posted: 05.21.2014 (3:00 am) | Write a Comment  (0 Comments)

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Texas-Instruments-logo-designAs I discussed last week, I am now ready to do a small reshuffle of my USDP portfolio. The four stocks that I was going to consider getting rid of were:


KN is the obvious stock to take out. It was a recent spin-off and while it may end up paying dividends at some point, I prefer going for safer picks.

I also want to get rid of INTC mostly because it looks like the dividend will remain at its current level right now which is not what I’m looking for in the USDP.

What am I looking for?

Ideally, stocks that fit all of these:

-history of growing dividends (over 1, 5 years and hopefully longer)
-growth in earnings per share and sales
-solid brand
-stock that will bring diversification to my portfolio

I ended up looking starting my quest by looking for stocks that trade in the US and have the following:

-dividend yield over 2.5%
-earnings per share growth over 5% over 5 years
-dividend growth over 5% over 5 years
-sales growth over 5% over 5 years

That search gave me about 80 results that I needed to trim down from. I then decided to raise those from 5% to 9% and to not consider stocks that had a debt to market cap over 50%. I also took out stocks with a payout ratio above 60%

TickerNamePriceDividend YieldPayout RatioDiluted EPS 5Y GrDvd 5Y GrDVD 1Y GrSales 5Y GrDebt to Mkt CapP/EIndustry
ESVEnsco PLC49.5556.0736.916.9690.3753.8533.710.418.51Oil&Gas Drilling
CVXChevron Corp122.623.4934.8932.039.38109.570.111.89Oil Comp-Integrated
OXYOccidental Petroleum Corp95.583.0234.945.7715.5816.8116.220.0913.63Oil Comp-Explor&Prodtn
CPACopa Holdings SA137.442.823.9726.4154.2143.4118.470.1713.05Airlines
XOMExxon Mobil Corp100.822.7434.3120.89.7510.2612.640.0513.71Oil Comp-Integrated
TXNTexas Instruments Inc45.742.6355.271025.7422.3735.639.460.1121.5Electronic Compo-Semicon

The very positive news of course is seeing that there are several available results. Unfortunately, most of them are in the energy sector where I already have big enough exposure. That being said, Texas Instruments, despite a P/E slightly higher than what I’d like to see, looks like a great diversified pick. I will use it to replace Intel Corp (INTC) which does not look like it will increase its dividend anytime soon.

I will also get rid of both KN and COP and buy Chevron (CVX) instead as it seems to have a much stronger profile. I will be doing that switch at tonight’s close.

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