I am going to sell BP and NUE in the taxable account tomorrow 12/26. When the funds clear, I will move the proceeds into the ROTH Ira for the 2013 contribution. At that time, I will replace BP with COP and replace NUE with KMI.
There will be a net loss, due to BP showing capital losses at this time, so that will be used for tax purposes.
COP carries a higher safety rating with Value Line and is expected to outperform BP in the coming year. I expect I can repurchase BP at a later date, with new funds, and not give up much price appreciation. I want to wait until the legal woes over the Gulf spill have been settled.
NUE has slowed their dividend growth down to almost nothing. The year ahead growth is just 0.7%. Like BP, I think I can come back to NUE at a later time, if I so choose, and not give up a lot of price appreciation. In fact, I may even get it at a better price. We'll see.
I'm giving up $137.70 in annual dividends with BP. Giving up $82.02 in annual dividends with NUE. Total is $218.72.
I'm gaining $118.80 in annual dividends with COP. Gaining $91.92 in annual dividends with KMI. Total is $210.72.
An $8.00 annual loss.
I think I can make that loss up in dividend growth going forward.
The 3 year compounded annual growth rate (CAGR) for NUE is 1.41% ... The 3 year CAGR for BP is still negative.
BP did raise the dividend 14.2% this past year.
The 3 year CAGR for COP is 11.79%. ... The 3 year CAGR for KMI is 0%.
KMI hasn't been around long enough to have a 3 year record. Richard Kinder is on record as saying he expects to grow KMI's dividend by at least 12% per year out to 2015. The dividend did rise 20% fourth quarter 2012 over fourth quarter 2011.
So, when I look at the two deletions to be, and the two additions to be, I think the $8.00 annual dividend income loss will be made up with the dividend growth going forward.