First Sell: Baxter (BAX)

Today marks the first sell in my dividend portfolio. As mentioned in my previous post, taxes are the prime reason I’m selling my Baxter (BAX) stock ahead of the spin-off.

Despite the effective dividend cut in the post spin-off situation I’m optimistic about the long-term prospects of Baxter and Baxalta but unfortunately the Belgian government still has a rule in place that investors need to pay 25% tax on most spin-off shares.

It doesn’t make a lot of sense as there’s no value gain when a company does a spin off but unfortunately that’s just the way things are. It’s probably no surprise that most Belgian investors avoid this tax by selling shares before a spin-off goes into effect.

In case of the South32 spin-off from BHP Billiton a couple of weeks ago I decided to keep my shares because South32 was a relatively small part of BHP Billiton and I estimated the cost of selling and then re-buying the shares after the spin-off would be more expensive than paying the tax.

The Baxalta spin-off from Baxter it’s quite different, Baxalta makes up nearly half of Baxter’s current market cap so the tax bill would be much higher than transactions costs.

As such, I just sold my 9 BAX shares for $70.96 a share . Maybe I’ll pick up BAX again in the near-future, I’m planning at least one more buy in the energy sector but after that I want to increase my exposure to consumer staples and healthcare.

Baxter building

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One thought on “First Sell: Baxter (BAX)

  1. Pingback: New buy: More RDSB | Dividends are Coming

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