Quarterly Rebalance Note

Q3 2026 Rebalance — Income Growth Strategy

Portfolio 766 · quality exits, drift trims, replacements, and any policy updates documented before trades were entered. Whole-share trades only. Q3 quality rotation applied the written rulebook going forward; January founding trades were not rewritten.

Executed · Jul 2026

$102,035

Portfolio value (pre-trade)

+2.9%

Since Jan 1 · VIG +12.0%

1.8%

Fwd yield · target 2.0%

Sell orders

$-19

Net proceeds deployed

The trades

Trade list — 8 sells, 9 buys

Full exits fire on mandate/quality screens (FCF payout, growth floor, or dual-mandate yield). Trims fire on the ±25% drift band ( trim above 6.25%, add below 3.75%).

Action	Ticker	Why	Shares	Est. $
SELL ALL	TXN	Verdict C — FCF payout 192%, 3y CAGR 4.9%	26	−$7,759
SELL ALL	BLK	Verdict C — FCF payout 94%, 3y CAGR 3.5%	5	−$4,902
SELL ALL	LMT	Verdict C — 5y CAGR 6.4%, 3y CAGR 5.0%	8	−$4,175
SELL ALL	HD	Quality exit — FCF payout 72.4%	15	−$5,263
SELL ALL	CL	Quality exit — 5y CAGR 3.3% (never met 7% floor)	56	−$5,195
SELL ALL	AMGN	Quality exit — FCF payout 63.3%	14	−$5,059
TRIM	UNH	Drift 7.52% + over 7% hard cap — trim 5 sh	5	−$2,133
TRIM	CAT	Drift 6.80% — trim 1 sh	1	−$991
BUY	ACN	ADD band — top up from 3.21%	13	+$1,705
BUY	ABT	Healthcare replacement	26	+$4,238
BUY	AVGO	Technology replacement	11	+$4,158
BUY	WM	Industrials replacement	19	+$4,256
BUY	CTAS	Industrials compounder	25	+$4,350
BUY	MCO	Financials · replaces BLK	9	+$4,212
BUY	PH	Industrial tech	4	+$3,856
BUY	ZTS	Healthcare · 20th name	61	+$4,392
BUY	ACN	Residual deploy — balance session to ~$0	33	+$4,327

+$35,475

Proceeds from sells

−$35,494

Deployment to buys

≈ $0

Session balanced

Same-day execution

Enter every sell and buy in one session. Manual portfolios do not track cash — unmatched sells look like withdrawals and corrupt NAV. Size buys so proceeds ≈ deployment; if a few dollars remain, add a band-edge top-up (not a separate withdrawal).

New positions

Replacements — 7 new ~5% slots (~$5,102 each)

ABT · Healthcare

~2.7% yield · 10.4% 5y CAGR

Replaces AMGN — passes all screens; medtech diversification, 55.7% FCF payout.

AVGO · Technology

~0.7% yield · 12.6% 5y CAGR

Replaces TXN — elite compounder; 41% FCF payout vs TXN at 192%.

WM · Industrials

~1.6% yield · 8.6% 5y CAGR

Replaces LMT — capital-light compounder, 47% FCF payout.

CTAS · Industrials

~1.1% yield · 13.9% 5y CAGR

Uniform-services oligopoly; streak verified via raw rows (metrics artifact on R1).

MCO · Financials

~0.9% yield · 10.9% 5y CAGR

Replaces BLK — ratings moat, 27% FCF payout vs BLK at 94%.

PH · Industrials

~0.8% yield · 14.8% 5y CAGR

Industrial tech — 26% payout; reinvestment flywheel intact.

ZTS · Healthcare

~2.9% yield · 20.1% 5y CAGR

Animal-health compounder — restores 20th name; fills Healthcare sleeve.

Policy amendment — Quality Exit (Q3 2026)

Holdings failing two or more entry screens (or payout plus growth deceleration) are rotated out mid-year rather than deferred to January. This is documented as a policy amendment — not a retroactive edit of January trades. The founding book was assembled without running these screens; this rebalance applies the written rulebook prospectively.

Income Growth: Quality Exit for multi-screen failures (765 precedent). Balanced: Dual-Mandate Exit when yield or growth dimension fails at the quarterly screen.

Diagnosis

Holdings — pre-trade weights

Ticker	Sector	Weight	Streak	Status
TXN	Technology	7.60%	22	EXIT
UNH	Healthcare	7.52%	16	TRIM
CAT	Industrials	6.80%	12	TRIM
ADP	Industrials	5.54%	24+	hold
V	Financials	5.51%	17	hold
SHW	Materials	5.43%	24+	hold
LIN	Materials	5.23%	24+	hold
HD	Cons. Discretionary	5.16%	16	EXIT
MA	Financials	5.12%	14	hold
CL	Cons. Staples	5.09%	24+	EXIT
GD	Industrials	4.98%	12	hold
AMGN	Healthcare	4.96%	14	EXIT
MSFT	Technology	4.90%	20	hold
SPGI	Financials	4.88%	12	hold
BLK	Financials	4.80%	16	EXIT
SYK	Healthcare	4.61%	16	hold
LOW	Cons. Discretionary	4.57%	24+	hold
LMT	Industrials	4.09%	24+	EXIT
ACN	Technology	3.21%	6	band edge

Allocation

Sector weight vs. target (pre-trade)

Technology

Target: 20%15.7%

Healthcare

Target: 15%17.1%

Industrials

Target: 25%21.4%

Cons. Discretionary

Target: 10%9.7%

Financials

Target: 15%20.3%

Materials

Target: 10%10.7%

Cons. Staples

Target: 5%5.1%

Post-rebalance snapshot

After the trades · July 2026

$102,038

Book value (post-trade)

1.8%

Blended yield

9.7%

Dividend growth (5y)

Six exits, two trims, seven replacements + ACN top-up (46 sh total). Session balanced — no cash residual.

Accountability

Performance vs. VIG

Trades entered July 1, 2026. Pre-trade portfolio value about $102,038 (+2.9% since January 2). Post-trade forward yield about 1.81% versus the 2.0% target. Six full exits, two trims, seven replacements, and ACN increased to 46 shares total. All sell proceeds were deployed in the same session.

Income

Top income contributors (pre-trade)

Top 5 names produce ~42% of forward income. Replacement picks should not deepen concentration in ultra-high-yield names unless the mandate requires it.

Ticker	Income	% of book
UNH	$167	9.0%
ADP	$163	8.8%
ACN	$163	8.8%
TXN	$148	8.0%
AMGN	$141	7.6%
HD	$140	7.6%