Sept '26 dividend portfolio update: 1 sell, 1 top slice, 1 buy & 3 top ups

September was a moderately busy month for results from my model dividend portfolio with results from a FTSE 100 tech stock, two unloved FTSE 250 firms and two high yield small caps.

As it turns out, September is also going to be a busy month for trades within the portfolio.

Selling: Subscribers will already know that I'm planning to sell the whole of my holding in a well-known financial stock at the end of this month. This company has been a strong performer and a long-term hold for me, but I'm unconvinced by a recent strategic shift.

I've also decided to top slice the portfolio's largest position. As I explain below, the company in question has profited massively from the AI data centre boom. But I'm starting to feel that its valuation could be vulnerable to a sharp correction if any signs of slower spending emerge.

Although I have a very positive opinion on this company and its management, I think it could make sense to take some profits at this stage.

While I may be acting too soon, but I'm fairly confident that in principle, I'm correct. Timing trades perfectly is impossible, so instead I'm leaning on this quote from John Maynard Keynes:

“It is better to be roughly right than precisely wrong.”

The sale and partial sale mentioned above will leave the portfolio with a cash weighting in excess of around 12%. That's a little higher than I'd like, so I'm moving straight away to replace the stock I'm selling and top up some existing positions.

Buying: when I launched this model portfolio in 2021, my intention was for this to be a systematic, data-led approach. To this end, I developed my own scoring system and used this to guide the initial selection of stocks for the portfolio.

While I've maintained this system, I have to confess my discipline has slipped; I've found myself buying relatively lowly-ranked stocks from my screen results, not just top scorers.

Starting now, I plan to remedy this. I'll will favour more highly-ranked shares and will only buy new shares that score at least 60/100 in my dividend scoring system. For context, companies rarely score above 80.

To this end, I'm planning a number of purchases in my usual quarterly trading window.

• A new financial stock: this company is currently the second-highest ranked financial stock in my screening results, with a score of 78/100. I'm buying it as I believe it offers very similar exposure to the company I'm selling. The dividend yield is also (more) attractive, at above 5.5%.
• Top ups: I'm adding to three of the portfolio's existing positions; two small caps and one FTSE 250 company. Broadly speaking, all three offer high yields and are currently unloved to the extent where I think there's value on offer, even if trading is less than sparkling.

Subscribers can see full details of all of my planned trades below.

Quick reminder: my model dividend portfolio broadly mirrors the shares in my main personal portfolio, although position sizing and prices paid will vary for practical reasons.

Please note that my comments reflect my personal views and are not investment advice or recommendations. Please do your own research and seek professional advice if needed. Full disclaimer here.

For an explanation of my Quality Dividend score, see here.

In this month's report

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