Thursday, November 29, 2012

Recent Buy

This morning I purchased 40 shares of Target (TGT) for a price of $61.81 per share.  With the current dividend payment of $1.44 I was able to pick up the shares for a 2.32% YOC.  I've been following Target for a while and the price just never quite got to where I felt comfortable jumping in until now.  I'm hoping for a further pullback to allow me to average down a bit in the position.  If you remember from my recent stock analysis on Target I calculated a fair entry price of $60.65.  I paid 2.25% over that price but I feel that this is a good starting point for my position in Target and I'll give it some time to see if there's a pullback.  If it stays flat then I'll probably be picking up some more shares unless there's other opportunities that are more appealing.

Based on the current annual dividend payment I'll be receiving an extra $57.60 in yearly payouts before further increases or reinvestment.  Target was very appealing because they are a dividend champion with 45 consecutive years of dividend growth with a 10 year annual dividend growth rate over 17%.  I know it seems like every time I walk into one of their stores I can't leave without buying almost $100 of stuff.  Unfortunately I won't be receiving any dividends from them this year since I just missed the last ex-div date but I plan on holding Target for a very long time so that won't make that big of a difference in the end.  My YOC for my portfolio decreased with this purchase from 2.93% to 2.90%.

My forward 12-month dividends for my FI portfolio now sits at $1,496.68.  I made so much more progress than I thought I would at the beginning of the year.  I was pretty sure I wouldn't reach my $1,000 in dividends received mainly due to there being debt that needed to get paid off before I could really start investing.  After the 1st quarter of the year my forward dividends stood right around $450 and since then I've been able to increase them by $1,000.  I still have enough cash to make at least 2 purchases and possibly 3 if I make slightly smaller purchases.  One company that I'm hoping to get the chance to buy is Chevron (CVX), although I might have just missed the price drop into my safe buy zone.

6 comments:

  1. Nice purchase! I actually haven't spent too much time looking at Target, prior to reading your stock analysis article. The stock is doing real well, and the dividend growth has been great. I've added it to my watchlist.

    I have some WMT, but as a shopper, I actually much prefer shopping at Target. The stores are so much cleaner and the crowd less frantic. I've been seeing a lot of new Target stores popping up around my area.

    Take care!

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    1. FI,

      Thanks. I've been watching it for awhile now. The dividend growth is definitely awesome, especially when coupled with the low payout ratio. I think the growth in Canada and the improvement of the US economy will be a big boon for them. Especially the US economy as people start trading back up from Walmart to Target since it's aimed more for the middle/upper middle consumer.

      Thanks for stopping by!

      Delete
  2. Interesting purchase. I'm very familiar with Target, but not the stock. I knew it was a dividend champion but didn't realize the streak was 45 years hmm. Quite impressive.

    I also prefer to shop at Target over Walmart. Every time I used to go to Walmart I felt like I was going to get mugged. There were bums begging for money in the parking lot which you won't see at Target.

    A guy I work with gets TGT stock from his grandma every year and I'm jealous of that!

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    Replies
    1. CI,

      Yeah I was a little shocked to see that it was 45 years. That's an impressive streak. Like FI said, Target just always seems cleaner than the Walmart's in my area. I wish my grandmother gave me stock every year. My grandfather did give me some stock from the company he had worked for back when I was in middle school. Through all the mergers and spinoffs it's been a pain to track down what all has happened with it but I've got it figured out now. It pays a good dividend but it's not growing it at any kind of record setting pace since it's a utility.

      Thanks for stopping by!

      Delete
  3. TGT has been on my watch list for several months; I keep waiting for a substantial pullback that never comes. I think the company has more growth ahead compared with competitors such as WMT; for example, only now is TGT starting to expand into Canada, which should be a good market for them. From my own shopping experience, I also prefer TGT over WMT. I've been wanting to add a solid retailer to my portfolio for a while, so I'll continue to watch TGT.

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    Replies
    1. DGM,

      I kept waiting for that ever elusive pullback too but it just never came, so I took the little pullback that they did have to start a position. I really like the TGT stores and their potential for new growth in Canada. I have a small position in WMT but that was my only retail stock so TGT fit the mold there. It doesn't hurt that they have a great history of increasing dividends.

      Thanks for stopping by!

      Delete