Sell Sysco (SYY)
I’m selling Sysco (SYY) out of my Dividend Income Portfolio with this post.
The stock made a new 52-week high yesterday, April 6. That brings the dividend yield down to 3.38%. That was attractive when the economy recovery still seemed iffy and I was willing to trade some yield for safety.
But now that the recovery is more certain—if not the speed or momentum of the recovery (for more on those issues see my post http://jubakpicks.com/2010/04/05/so-yes-weve-got-an-economic-recovery-but-how-strong-is-still-an-open-question/ –I’m willing to stretch a little more for yield. To do that I need to clear a slot in this 10-stock portfolio and that means selling Sysco.
I’m looking at a 5.27% gain in the stock’s price since I added it to this portfolio on December 8. On April 23 I’ll also be collecting the 25 cents-a-share quarterly dividend that the company recently declared for shareholders of record as of April 1.
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Jim:
It sounded to me that this “sell” is not because of any bad outlook. Correct?
Jim,
With your desire to stretch some for yield, would international, emerging markets being an area of interest. Being a close follower of your Dividend Income Port., using it for part of my retirement income, a larger yield would help.
Thanks.
As a previous SYY owner, I would think that an improving economy would be reason to hold onto the stock since they benefit from increase in sales to restaurants as people start eating out more. I would not get in at a 52 week high, but would not necessarily sell out at this point. Another factor would be if they have increased their dividend, which have not researched.
Jim,
It seems that one of your reasons for holding Sysco was that it had a reasonably good yield while also providing a relatively safe place to put your money. But I have to question your decision to sell – even though the current yield is lower, that would have no impact on your original yield on cost. In this situation, I would only sell if 1) the fundamentals have taken a turn for the worse and/or the company cuts the dividend, or 2) you have found an absolutely stellar replacement (as you sort of alluded to in your post). In choosing a replacement and “stretching” for more yield, I can only hope that your next pick has a comparable long-term outlook and safety. Great site regardless.
don’t sell possible buyout going to be happening
I’m holding the shares I’ve got; it’s still a good dividend return for my investment – and of course the growth doesn’t hurt. It’ll be interesting to see what stock Jim picks for a replacement.
Jim, restaurant stocks are on fire – should be positive for SYY going forward. Ex-dividend pullback now occurring, looks like a pullback to the 50d moving average, around $28.50, is likely.
hunter, what’s the source of the TO rumor?
Hi Jim,
Re: Sysco Sell.
Correct me if I’m wrong Jim but what does it matter if today’s yield is lower that it was when you originally purchased Sysco. Assuming the dividend amount remains the same, you continue to earn the higher yield . The lower dividend yield only applies to new purchases at the higher share price. Correct ?
I consider myself a Dividend Investor. For my portfolio I would consider 3.38% Chump Change. I’m pretty high on NS which combines pipeline mlp with the asphalt business. They are a very good stock which will only get better because the asphalt is about the last part of a highway project. The best is yet to come.
Another excellent dividend play for me has been VGR. They not only pay a steady 10% div but they have an annual 105:100 stock split.
Check itl out.
WACowboy – I’ll check out NS. For a good dividend – 16% – take a look at ANH