Investing Club: We're trimming a retailer after a run-up to buy more of this high-dividend payer

Published Tue, Mar 15 20229:26 AM EDTUpdated Tue, Mar 22 202212:45 PM EDT

We are making a couple of moves in the portfolio Tuesday. We are buying 200 shares of Devon Energy (DVN) at roughly $50.39. In addition, we are selling 75 shares of Walmart (WMT) at roughly $144.11. Following the trades, we'll own 950 shares of DVN, increasing its weighting in the Trust portfolio to 1.36% from 1.08%, and 400 shares of WMT, decreasing its weighting to 1.57% from 1.86%. Devon Energy Oil is sliding early Tuesday, with WTI crude pushing below $100 per barrel, as the Covid-19 lockdowns in China have taken out some short-term demand. With oil stocks following the commodity down, it's the third day in a row of big declines — representing a good time to pick up shares of Devon Energy. After refusing to chase the stock higher, Devon has finally hit a level we find very attractive. At $50 per share, the stock's fixed-plus-variable dividend yields roughly 8%. This is one of the best dividend yields in the market and is likely sustainable with the price of oil as elevated as it is today. Additionally, we like how the company is aggressively repurchasing stock. Alongside Devon's fourth-quarter-earnings report, it announced it expanded its repurchase authorization to $1.6 billion, representing about 5% of its outstanding shares. Walmart Funding the Devon buy will be a trim of Walmart. This retailer has been one of the few bright spots in the tough market. In late February, we added to our position and upgraded our rating to a 1 in our article here because we thought it was wrong that the stock had erased all of its post-earnings gains. It was a timely call because Walmart has rallied roughly $10 per share, or more than 6%, since our trade, compared to a drop in the S & P 500 of more than 4%. One reason why WMT has pushed higher lately is because concerns about a slowing economy have forced investors to circle back to defensive, consumer staple names. But after this stretch of relative outperformance, we think it is a good idea to lighten up on our position and use that cash to buy a stock with a much larger dividend yield and a more aggressive share repurchase program. We will also downgrade our WMT