Saturday, December 29, 2012

Recent Buy

Medtronic has pulled back since I first initiated my position so I doubled up on it yesterday for a price of $40.75 per share.  This brings my total position up to 90 shares.  I'm hopefully done buying for a bit but I do have some cash available should the right opportunity pop up.  Phillip Morris is high on my list and a pullback into the mid $82's would bring a few more shares my way.  I'd rather not make any purchases this close to the fiscal cliff deadline, for some reason I believe that Congress will come to an agreement and keep us from dropping off the cliff.  Whether a deal is reached or not I expect there to be big moves in the market next week in reaction to an agreement or lack thereof.  Only time will tell.

I was able to average down my position in Medtronic bringing the cost basis down to $41.78 which is 2.01% lower than after my first purchase.  This price is a 4.4% premium to my average fair value calculation of $40.01.  The new shares carry a YOC of 2.54% which increases the YOC for the whole MDT position from 2.44% to 2.49%.  Unfortunately this lowered my YOC for the whole FI portfolio down to 2.88% from 2.89% and my non-ESPP share YOC dropped to 3.19% from 3.22%.

My 10 year projected return is for a 179.23% return from price appreciation assuming the EPS grow at the rates used in my stock analysis and slapping a 13.8 PE ratio on that.  If the dividends can grow at the rate I used as well, then I'll get a further 34.88% return from the dividends.  This gives a total return of 214.11% which is annualized to 7.91%.

These shares will add an extra $46.80 in annual dividends bringing my forward 12-month dividends up to $1,770.65.

8 comments:

  1. Nice buy! Friday was indeed a good day, as the pullback helped produce some attractive value. I'm looking at adding some KO and LNCO myself. VOD still looks cheap as well.

    Have a great weekend!

    ReplyDelete
    Replies
    1. FI,

      KO and PM are probably the 2 that are highest on my list. PM already pulled back to where I'd add some more so I'm going to wait and set a limit order on Monday most likely to add some more. Hopefully down to the sub-$80 level but we'll see what the market brings. I'd like for KO to pullback more to the $34's or lower. I think VOD will stay depressed more due to Europe, at least that's what I'm hoping for because I have limited capital.

      Thanks for stopping by!

      Delete
  2. I like this purchase. I was close to picking up additional shares myself. If we have another drop I will likely add MDT or more PM. Happy New Year!

    ReplyDelete
    Replies
    1. AAI,

      I really like MDT and I was able to decrease my cost basis so it was a win-win. PM is probably next on my list unless KO takes a big dip. You get fewer chances to pick up KO on the relatively cheap.

      Thanks for stopping by!

      Delete
  3. I made a recent purchase as well and plan to back up the truck if no deal is reached. It's unbelieveable that our policy makers cannot agree on a resolution...

    ReplyDelete
    Replies
    1. CI,

      I was very torn on whether I should make the buys or wait. And well you can see what I chose.

      I'm not too surprised that they haven't come up with anything yet because they're looking for the best political move. By waiting until the 11th hour to reach a deal they can try and spin it saying that they did the best they could and fought until the last minute. And if a deal is reached neither party looks as bad because they waited until the end to make concessions "for the good of the country". For some reason, that's what I feel is going to happen. And the markets will either rejoice or fall over a cliff as well. Time will tell though.

      Thanks for stopping by!

      Delete
  4. Pursuit,

    Nice purchase here. 90 shares of MDT is fantastic. I'd love to add to my position as well.

    This is one of those boring companies that just continues to make money for shareholders. It's the snoozefest companies like this that I really adore.

    Best wishes!

    ReplyDelete
    Replies
    1. DM,

      Yeah it's funny how boring companies seem to make the best investments. It's not as fun to own for the normal investor because they're looking for 1000% gains over night, but those boring staid companies gets the DG investors drooling when they go on sale.

      Thanks for stopping by!

      Delete