Tuesday, December 11, 2012

Recent Buy

This morning I set a limit order for 45 shares of Medtronic (MDT) and earlier this afternoon the order was executed.  I purchased 45 shares for $42.46 per share.  With the current annual dividend of $1.04 per share my YOC after commissions is 2.44%.  I would have liked to get into the shares a little lower but I feel that today's prices are around the fair value range and still offer a solid return going forward.  As you'll see in my stock analysis report on Medtronic due out tomorrow I picked up the shares for about 6% higher than my fair value calculation so I'll be looking for an opportunity to average down my cost basis.  I finally got a pure-play on the health care industry since Walgreen's was my only exposure to health care.

The shares go ex-div on 12/13 for a payout on 12/28.  Medtronic has moved their usual January payout forward a month due to the potential dividend tax increase.  Taxes are going to be inevitable so it's something I'll deal with when that comes up but I'll enjoy the chance to get the shares compounding a little earlier.  Their typical payout schedule is January, April, July, October so this will give me some diversification on dividend payouts.

The shares will provide $46.80 in annual dividends before any future increases or dividend reinvestment.  I'll also be receiving the December payout of $11.70.  Unfortunately these shares lowered my YOC for my FI portfolio from 2.95% to 2.93% and lowered my non-ESPP share YOC from 3.35% to 3.31%.  

My forward 12-month dividends now sits at $1,547.40.  

6 comments:

  1. Pursuit,

    Nice buy here. I haven't looked at MDT in a while because it quickly moved up after I purchased it. It's a solid company with a long-standing policy on rewarding shareholders.

    I'd like to increase my ownership at some point, and also purchase another similar company in BDX. You can't go wrong with companies like this as the global population increases and also gets older.

    Best wishes!

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    1. DM,

      I'm regretting not picking up the shares earlier this year but I still think this is a fair price. I would really like for a broad market pullback to let me average down my cost basis because I'd like to get a much larger position in MDT and start one in BDX. But we'll see what happens. You'll see in my stock analysis report posting tomorrow that if the growth in EPS and dividends follows my projections that with at today's prices we could still see almost 8% total returns, before accounting for inflation, over the next 10 years. I can live with that.

      Thanks for stopping by!

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  2. Even though I am not a retiree, I still like dividends because along with my regular savings, they provide me with the cash to make further investments without the need to sell existing ones.

    Best Dividend Stocks

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    1. I totally agree. Dividends are a wonderful thing because you can use them as spending money, whether for fun or regular expenses, or you can invest them to increase your portfolio. I'm nowhere near being able to retire yet but I'm hoping that not too long from now I'll be able to live off the dividends and free up my time substantially. There's so much more to life than working for a paycheck.

      Thanks for stopping by!

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  3. One day I'll get my hands on some Medtronic stock, I like the company a lot. I'm waiting to get a yield of 2.75% though, same with BDX. It might be a long wait, haha!

    The nice part about buying some now is that you'll get your first dividend very soon. Always a plus! I think MDT will be a great long term holding, nice pick.

    ReplyDelete
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    1. CI,

      It could be a while to get either of those companies for a 2.75% yield. That sure would be nice though. That first dividend being paid less than a month after purchase will be welcomed to my account. Got to get that compounding started. I'm still sitting on a good chunk of cash that I hope to get working for me soon.

      Thanks for stopping by!

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