I'm Taking A 30 Percent Profit On This Holding
By Genia Turanova | January 26, 2018 |

The year is still young, but the S&P 500 has already run up more than 6%. That's not bad at all -- especially considering that we're only two weeks into the year! 

For such a short time, this is outstanding. And this should make you happy, especially if you subscribe to the so-called "January Theory," which states that a strong (positive) month of January will often be followed by a strong year in the markets. 


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But the truth is that, as much as every investor's situation is unique, every year in the stock market's history is quite different from the rest, too. This year's set of circumstances range from the enactment of the new corporate tax law in the United States to the strengthening of the largest world economies. And don't forget a key technical consideration: The markets are on the uptrend, which is a bullish sign on its own. 

All of these taken together may well give us yet another strong leg of this amazing bull market.

But it's during times like these when it becomes important to not forget the old adage that nobody ever went broke taking a profit.

This is sometimes tough for investors -- especially for those whose overriding goal is income over principal. Nevertheless, sometimes it's important to know when to let go.

Saying Goodbye To A Consistent Money Maker
It's been one of my favorite holdings of 2017, consistently paying upwards of 7% and appreciating a total of 20.8% since I added it to the portfolio. But upcoming events mean that stability could be faltering, and I'm not about to risk my gains. 

Global asset manager AllianceBernstein Holding LP (NYSE: AB)  has been in my Daily Paycheck portfolio since December 2016. The company is a master limited partnership (MLP) and is heavily invested in fixed-income securities, both of which help to guarantee its regular investor payouts. Its reliability, high 7.5% yield, and potential for growth thanks to a relatively low valuation made it a promising addition -- and it remains one today, mostly. 

However, the firm's nearly 8% year-to-date return makes you wonder if something is going on behind the scenes. (And before you ask, the year in question is 2018, not the year we just left behind, although in 2017 the partnership also delivered outstanding results, with a 16.8% in total return for the year.) Still, the 8% rally in the first two weeks of the year smells of speculative rumors. 

The most likely reason is the market's excitement about the upcoming spinoff of French insurer Axa SA's (OTC: AXAHY) U.S. businesses. Axa SA is the majority owner of AllianceBernstein, and the spin-off is expected to be completed in the second quarter of the year. 

While the portion of AB's business not currently controlled by Axa is expected to remain a publicly traded entity, the transaction is likely to be extremely complicated and the pricing of the spun-off unit is far from certain. This uncertainty is compounded by the likely end of the bull market in bonds and the frothy overall market.

With that in mind, I've decided to take my profits on AB, and I've recommended that my Daily Paycheck readers that they do the same. We have amassed an outstanding total return of almost 30% on the position in a span of less than 14 months.

This gain satisfies the expectations I had for AllianceBernstein when I first recommended it to my readers. Since then, the dividends have come rolling in as expected, and the yield has been pushed down slightly by the impressive price gain (I'm not complaining). 

Plus, if AB's history is any indication, we should be able to have plenty of opportunities to re-enter this position in the future, after the dust settles. 

The Power Of Monthly Dividends
As we wait to get back into AB, I'll be keeping my readers updated on how we'll book our next 30 percent gain -- while still reeling in thousands of dollars each month in reliable income. 

Over a year, my "dividend trifecta" system could put an extra $23,000 in your pocket -- or more. That's $1,916 per month you could spend on travel, home improvements, payments on a new car -- anything you want. 

And all from a portfolio that's 31% less volatile than the wider market. 

If you'd like know more about the income stocks we hold in The Daily Paycheck, you'll need to try a risk-free subscription. To get the names and ticker symbols of the rest of the monthly dividend payers we own, you can go here.

This article originally appeared on StreetAuthority.

 

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