Selling Shares for Kindle
You won't see a lot of these posts, but I decided to sell shares in two companies that I own. The main reason behind my decision was based on raising capital for my Kindle Project. I assigned myself enough money to publish at least 10 books on Kindle. I've currently published 9 books, and I have 11 others in various stages. I wanted to see what income it would make before I invested any more money into it. For those of you that have been reading my Monthly Goal Updates you'll be aware that I managed to make a 18% ROI in my first whole month of doing it. This caught my attention and gave me the motivation I needed to progress further with the project. I decided to invest in another Kindle course to increase my knowledge further. I'm now learning how I can eventually outsource my work to other people all over the world, and have other people to do the jobs I don't enjoy (and are time consuming) like editing and promoting. The course, and the additional books have all cost money and before I get into a situation where I don't have anything left in my Kindle 'stash', I decided to look at my share account for some additional capital.
Berkeley Group Holdings
I purchased shares in this company back in September 2014. I was drawn in initially by the high dividend payment (currently 5.65%). It just so happens the housing sector in general has experienced a nice increase in the last 6 months and all of the investments I made back in my Investing Experiment back September have gone up in value.
I sold approx 40% of the shares in this company at the start of the year to help fund my Kindle Project. I decided to sell the rest of them now whilst their share price was closing in on an all time high, and I had already received their first dividend payment (£36.90) for the calendar year. This decision left me with a small capital gain after fees. The remaining shares cost me £576.16, and after I sold them I received £642.58 after charges (11.5% gain), not including the dividend payment. The price at the point of sale was 2,677.4p per share.
It wasn't an easy decision to make as I didn't own this company in my NISA account, they were doing very well, their yield is still high, their PEG (which is an indicator of growth) is at 0.3, and a P/E (at the time of writing) of 11.99. I see plenty of growth potential in BKG, but the election could slow that down, with the rest of the housing sector. As always with shares, who knows!
My decision was made clearer when I was comparing the two investments side by side. If I stayed with BKG, I'm in line to get £21.60 dividends in September, and the possibility of some capital gains between now and then. Could I earn more than at least £21.60 if I invested in Kindle between now and then?*
The answer is a resounding yes. I earned the equivalent of the future BKG dividend payment (£21) in one book that cost me £44.00 to make. I'm sure I can make numerous books and a lot more money with the £642 put towards Kindle. With this logic, you could argue that I should sell all of my shares and just focus on Kindle. I'm not discounting that I'll sell more shares in the future, but I plan on keeping my shares and Kindle investments separate. They both have their place for me and I'd like them both to fund themselves in the near future.
The idea with investing in shares is that it's a one off payment and I receive an increasing ROI over time as the dividends increase. At the same time, I can benefit from the capital gains of the share price going up.
With Kindle the ROI in cash is higher but there are no capital gains to be made. In a month or two, the one book that cost me £44 to make will be paid off, and it will become a free asset. All future income will be free. I'd like to set up 100's of these free assets and use the cash to invest in shares!
Overall, I had made a double digit gain with BKG, I wanted the money for Kindle, and they are nearing an all time high, so I pressed the 'Sell' button.
*I'm comfortable forecasting dividend payments in a company but I don't like to forecast share price (capital gains) as it's unpredictable and uncertain.
This decision was a little easier for me. I purchased more shares in GSK back in October 2014, in my taxable account, when their share price dropped to a 3 year low. I've received one quarterly dividend payment, and I'm due one more next month as I still owned shares on the Ex-Div date (totalling £29.82). My NISA portfolio still has 5% weight in GSK, even after this recent sale.
I invested £997.46 in October (including charges), and the investment was worth £1,157.39 after the sale and charges. When you include the dividends, that's a nice £189.75 ROI (19%), which I was delighted with for 5 months work!
Similarly to BKG, I believe GSK are still likely to grow this year but to what extent, you guessed it.....who knows! They are approaching their 52 week high, and their P/E has risen to 28.53 at time of writing. I've made a nice profit on them in the last 5 months, so I'm going to take that for now. I still own their shares, and intend on keeping with them in my NISA so I'll still benefit from any future growth in the company.
What are your thoughts on each sale? What do you think about using capital for Kindle? Did I move too soon?
Labels: Kindle Publishing, Stock Sold, Strategy