What to switch into from GM
My problem with allocation and stock rotation in my IRA portfolio may not be as simple and straight as the title of the post sounds.
Recently, I added to my my existing position in General Motors - GM , which I am having second thoughts about. Despite having potential to grow and find a foothold in the electric and hybrid passengers vehicle market, compared to Ford - F, GM hasn't been doing very well in the 2nd half of the year.
Some of the gains of the 1st half of the year have dissipated due to challenging conditions in the passengers vehicle market that has been impacting most players, including the Japanese big three (Toyota, Honda and Nissan). GM is also in the initial stages of a strategic shift to electric and hybrid vehicles, including autonomous and semi-autonomous vehicles and driving. The wrangles it is having with its workforce and inability to strike a deal so far with the UAW is also weighing in on the market perception and sentiment towards this ticker.
Unfortunately for me, the addition to the position was made at the time of intense volatility of earlier this week. In the short term, the forward dividend yield of 4.38% is not really compensating for the capital depreciation already incurred and the prospects of further declines in the stock, as long as troubles around its legacy plants and plans linger.
The decision is complicated by the fact that GM has a consensus average target of around $48, which will mean a substantial jump from the current price, if that comes to pass.
One approach could be to look at Dividend paying gainers in the portfolio like Paychex - PAYX, REIT's like New Residential - NRZ and Brookfield Prop - BPR or more resilient pharma majors like Pfizer - PFE and Abbievie - ABBV.
Outside of my portfolio, it may not hurt to look at O&G majors that are diversifying their portfolio into non-fossil resources such as British Petro - BP, and not only paying a better dividend yield of 6.70% than GM, but also being closer to 52 low and undervalued.
Recently, I added to my my existing position in General Motors - GM , which I am having second thoughts about. Despite having potential to grow and find a foothold in the electric and hybrid passengers vehicle market, compared to Ford - F, GM hasn't been doing very well in the 2nd half of the year.
Some of the gains of the 1st half of the year have dissipated due to challenging conditions in the passengers vehicle market that has been impacting most players, including the Japanese big three (Toyota, Honda and Nissan). GM is also in the initial stages of a strategic shift to electric and hybrid vehicles, including autonomous and semi-autonomous vehicles and driving. The wrangles it is having with its workforce and inability to strike a deal so far with the UAW is also weighing in on the market perception and sentiment towards this ticker.
Unfortunately for me, the addition to the position was made at the time of intense volatility of earlier this week. In the short term, the forward dividend yield of 4.38% is not really compensating for the capital depreciation already incurred and the prospects of further declines in the stock, as long as troubles around its legacy plants and plans linger.
The decision is complicated by the fact that GM has a consensus average target of around $48, which will mean a substantial jump from the current price, if that comes to pass.
One approach could be to look at Dividend paying gainers in the portfolio like Paychex - PAYX, REIT's like New Residential - NRZ and Brookfield Prop - BPR or more resilient pharma majors like Pfizer - PFE and Abbievie - ABBV.
Outside of my portfolio, it may not hurt to look at O&G majors that are diversifying their portfolio into non-fossil resources such as British Petro - BP, and not only paying a better dividend yield of 6.70% than GM, but also being closer to 52 low and undervalued.
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