Friday, February 22, 2013

Recent Buy and an Unexpected Dividend Increase

Yesterday, I was finally able to pick up some shares of Vodafone (VOD).  I've been wanting to own some VOD for over a year and just kept missing the pullbacks that it took.  It dipped below $25 again this past week and I decided that I needed to start my position.  I purchased 50 shares for $24.51 a piece giving a cost basis after commission of $24.67 per share.


Vodafone pays out a semi-annual dividend with the first/interim payout in February and the second/final payout in August.  Since they are a foreign company that pays dividends in pounds, the payout that I receive is also dependent on the pound to USD conversion at the time that it's set, typically around 2 weeks prior to the payment.  In order to calculate the dividends and YOC I'll be using the last interim and final payment and their USD payouts.  These were $0.508033 for the interim and paid in February of this year and $0.990808 paid in August of 2012.  Based on a total annual dividend of $1.498841, I can expect to receive $74.94 from these shares.  They carry a YOC of 6.08% and increased the YOC for my FI portfolio from 2.93% to 2.99%.  I'm just shy of my goal of carrying a 3.00% YOC for my FI portfolio, but I do carry a 3.37% YOC for my portfolio excluding my ESPP shares.  I'm also 58.76% of the way towards my goal of $3,500 in forward dividends by the end of the year.

I had debated selling a put on Vodafone but held back since I wanted to own VOD and selling a put does not guarantee that.  There were some very compelling combinations of strike and puts and I still might sell a put in the future should the premiums remain high.  

Speaking of my ESPP shares, my employer HAL increased their dividend yesterday as well by a whopping 38.89% from $0.09 to $0.125 on a quarterly basis.  Halliburton is by no means a consistent dividend grower with the last increase coming over 5 years ago, but this is great for me since I currently own over 560 shares through ESPP purchases.  So while I wait to have the shares hit LTCG treatment I can collect a much better dividend in the process.  I have 3 open call options out to start trimming some of my position which I need to get in the works with another purchase going through in March of this year.  If none of the options are executed then I will receive an extra $79 in annual dividends to be able to put to work in other DG stocks.  

My forward 12-month dividends crossed the $2k mark for the first time ever which is a great milestone and now sit at $2,056.52 after the VOD purchase and HAL increase.

For more information about VOD, Dividend Growth Machine recently purchased some himself and has a great write up about the current value prospects of VOD.

7 comments:

  1. Man, we are almost in the exact same position here. I waited over a year to pick up shares this week as well. I purchased 115 at 24.68. I also linked to DGM post!! Congrats on the purchase. I think VOD at these prices are very reasonable.

    ReplyDelete
    Replies
    1. The Stoic,

      It's a shame that we never purchased some before but Mr. Market likes to give second chances and luckily this one was 10 years in the making. I was very tempted to have my position be much larger but didn't want to get too much invested all at once. I think for the next batch of VOD shares it's going to be through selling puts. There's some really great premium returns 15-20% (annualized) with an effective cost basis at or below the current price. Sounds like a win win to me.

      Thanks for stopping by!

      Delete
  2. Pursuit,

    Great buy here. I really like VOD, and it's one of my larger positions.

    I like the potential acquisition of Kabel Deutschland as it gives them a firm footing in Germany and the ability to bundle higher priced cable/internet packages in with fixed line or wireless. They are buying the infrastructure and wires already in place.

    However, I'm a bit concerned about increasing rumors/talks of potentially offloading the 45% ownership Verizon Wireless. I think this is a fantastic piece of the business, and arguably the best asset they have. Getting rid of it would seriously make me consider selling VOD. We'll have to see. I can't imagine them selling.

    Great YOC here. VOD pays out a very healthy semi-annual dividend that is growing modestly.

    Best wishes!

    ReplyDelete
    Replies
    1. DM,

      I've been trying to become a part owner for a while but just never did. The acquisition could be great and I don't think the VOD will give up it's stake in VZ anytime soon. I was reading about that last night and they pretty much said we'd be open to it, but there's no negotiations going on. With as much of a mess as Europe is in right now I think that would be pretty foolish to get rid of that cash cow and I'd be considering grabbing my life jacket and jumping ship.

      I love the YOC, I don't have too many high yielders and this was a great way to juice my yield a bit.

      Thanks for stopping by!

      Delete
  3. Looks like a pretty good buy. The only telecom stock I have so far is T, but it's about 8% of my portfolio at the moment, so I'm not in too much of a hurry to increase my telecom exposure.

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    Replies
    1. MyFIJ,

      T was my only previous telecom position prior to this, although HRS is involved but it's not a service provider. I wanted to get some more "utilities" in my portfolio to juice the yield a bit with steady albeit slow growth. VOD fit the bill there and I feel it's undervalued.

      Thanks for stopping by!

      Delete
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    ReplyDelete