Week 7: Reshuffling the deck with Ford

I took a chance.

Early indications are it isn’t going to work out as well as planned, but I made my bed … now I have to sleep in it.

Remember when Ford (F) was ticking up around the $10.50 range? It wasn’t all that long ago – as recently as late last month – but that changed rather quickly when less-than inspiring second-quarter numbers took any shine off a stock that didn’t have much shine to begin with.

The revenue beat fluttered over investors’ heads. The earnings per share miss and lowered guidance didn’t, though. That said, the stock, which had been up more than 30% in 2019, sank in a major way.

Meanwhile, General Motors (GM), which I had 20 shares of, was doing quite nicely. I was up more than $50 on those shares. Naturally, being the amateur investor I am, I decided it made sense to sell the GM shares ahead of the earnings call, which I figured would be comparable to Ford’s (a.k.a. a borderline dud), and pour the cash into Ford. Both companies are pretty much doing the same things, right? Both are diving headfirst into an autonomous and electrified future and both are making some exciting investments in tech. I really can’t say I like one over the other if I’m being honest with myself. I mean, they’re not all that different. That said, and I think you can see where I’m going with this, I decided to sell what had been a winner and use the proceeds to scoop up a beaten-down loser.

Swapping GM for Ford

My can’t-miss plan missed, though. GM did indeed go down, but so did Ford … all the way to $9.34. I’ve already lost $30 and it’s been a week, wiping out most of the gains I earned from holding GM.

Not all was lost, though. I swapped GM for Ford knowing one key thing: Ford’s dividend yield (6.44%) is considerably higher than GM’s (3.79%). There’s the silver lining.

I sold 20 shares of GM for $815.40 ($40.77/share). The price has since dropped to $39.82. Those 20 shares would have earned me $30.40 in dividend income over the course of the next year.

With the $815.40 from the sale of GM, I bought 85(ish) shares of Ford. Those shares will earn me $51 in the coming year (more than $20 more than GM), so that’s something. I added another 15 with some leftover cash I had in my Robinhood account, bringing me to 100 total. We’ll see where things go from here. Either way, though, I’ve learned my lesson. I’m sticking with Ford.

The Problem

Now, aside from not making any money, at least initially, I quickly realized I had another problem on my hands after making the swap. I was banking on my 20 shares of GM to earn me $7.60 in dividend income in September. I didn’t wait until after the ex-dividend date to sell, though, so that won’t be happening. Ford, on the other hand, had its ex-dividend date come and go back in July, so I missed the boat big time. That said, I needed to find a way to earn some dividends in September or my goal of month-over-month income increases was going to be dashed after just two. Remember, I’ve already earned $2.88 in July from Fifth Third Bank (FITB) and $5.10 in August from AT&T (T).

The Solution

Enter Exxon-Mobile (XOM). It’s a good company with a solid track record, but it’s also a bit beaten down at the moment … exactly my kind of investment. It currently pays $3.48 a share (4.80% yield) and has hiked its dividend each of the last 36 years. Better yet, the ex-dividend date isn’t until August 12, meaning I knew if I bought a few shares I’d be able to collect the dividend in September and boost my streak to three months of increasing dividend payments.

I bought 10 shares for $749.10 ($74.91/share). Those 10 shares will earn me $8.70 in dividend income in September. See … problem solved.

March with me

Looking to get started? Start with Robinhood: http://share.robinhood.com/benjams352

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