Previously, I listed all the Chump holdings and whether the stock was "Core" to the portfolio. WBA is a core holding for now with a great dividend growth streak of 39 years. I'll continue to watch the integration of Alliance Boots, but plan to hold this stock for awhile.
That said, WBA has reached a dangerous level of overvaluation. I trimmed the stock some right near year end (reduced my holding by 20%), and now I'm going to turn off automatic dividend reinvestment.
In fact, I'm instituting a few new rules to the portfolio:
- Decide whether a holding is core or not. Core tend to be dividend growth Champions, have very high quality financials and performance, and an excellent track record over decades. (This rule is not new)
- When a core or non-core position gets overvalued, say 20% - 50%, then turn off dividend reinvestment, and have the dividends go to cash for investment elsewhere in the portfolio
- When a core position gets dangerously overvalued (greater than 50%), then trim it back to a full position
- If a non-core position gets dangerously overvalued (greater than 50%), then sell it completely, and find a good replacement with a better valuation and dividend.
With these new rules in play, I've turned off dividend reinvestment to MO, GD, and WBA.