Monday, November 23, 2015

Recent buy: NVO & CVS; Tax loss harvest

Tax loss harvest selling:
WMT: $1930
AMGN: $580
GILD: $1160
UNP: $2400

NVO: $6753
CVS: $1247

This week's $8000 went into low yielding stocks with high growth. Much of the cash came from tax loss harvesting positions. Cash is also coming into the 401k account and I will be buying utilities SO (4.8%) and D (3.8%) to balance the low yield of NVO and CVS. 

Walmart was sold to tax loss harvest. I also wanted out because of its low earnings growth and dividend growth. I replaced some of the Walmart proceeds with the healthcare store CVS which has high growth consistency and earnings but lower dividend.

GILD and AMGN were speculative positions that were traded for NVO for higher consistency and quality. I did not lose or gain in this trade.

UNP was sold to tax loss harvest and I wish to add to CNI if I had additional funds.

Below are some plots showing the consistency of NVO and CVS. Although past results do not indicate future returns, they still demonstrate how capable the company is to cope with difficult situations.

Earnings plot of NVO: 18.1% annual rate (graph is log scale)

Return of NVO 1986-2015: 20.5% annual rate (graph is log scale)

The NVO business is very consistent and predictable. Their CAGR is around 20%, which spans many decades, including the many many recessions. Note that the plots are in log scale so the actual results have been exponential. NVO manufacturers medicine for Diabetes and hormonal treatment. The company has next to no debt, a AA- credit rating by S&P, and A++ financial rating by Value Line. The company is situated in Denmark so it pays its dividends in Krone. Their dividends have been increasing for many years but are still subject to foreign exchange rates.

Below is a plot of CVS's earnings growth. This is in linear scale and shows that CVS has been able to consistently increase its earnings at a stable rate.

At this time, I have around -$2500 tax loss dollars that I can deduct from my income next year. That will allow me to get around an additional $830 in my tax refund check. In the weeks to come, I will see if there are other stocks I wish to swap to hit the maximum $3000 tax loss harvest limit.

Happy investing


  1. I really need to take a look at CVS. I currently own WBA and getting CVX into the portfolio as well could be a nice complement. I wish I had some capital available because there's some positions I'd like to do a tax loss harvest on but I prefer to purchase the replacement shares first in order to guarantee I'm getting shares near the same price I'd sell for.

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