Friday, June 14, 2013

Recent Buy

On Wednesday, June 12th I picked up some shares of ExxonMobil (XOM).  I've been trying to become a part owner of this company for a long time but the initial yield is what has kept me from doing so.  Since my cash has continued to build up during the market run up I took advantage of a bit of weakness in the markets and XOM's share price to put some money to work.  You can only build cash to a certain point before you're losing out by not being invested.  I drew a line in the sand and decided that on the next dip below $90 I'd finally become a part owner in this wonderful company.

I picked up 18 shares of ExxonMobil for $89.76 each which cost a total of $1,623.63 after commission.  My per share cost basis works out to $90.20 per share.  Based on the current annual dividend of $2.52 these shares will provide $45.36 in annual dividends and carry a YOC of 2.79%.  I'm not excited about the purchase price, but I believe it's at least around fair value which is about all you can hope for when the markets have been on fire as they have in 2013.

I have a target entry price of $89.25 for XOM, so I didn't overpay by a whole lot.  The analyst 1 year target price for XOM per Yahoo! Finance is $94.96 implying over 5% of upside plus the dividend to boot.  Upon further weakness I'll average down my cost basis for this position because I still expect solid 9-10% dividend growth for years to come.

My forward 12-month dividends are up to $2,694.90 which is 77% of the way towards my goal of hitting $3,500 by the end of 2013.

I've updated my Portfolio page to reflect this addition.

6 comments:

  1. Nick pickup, I was wanting to add another Energy company and was looking really hard at OXY. XOM was also on my list. I should have pulled the trigger because OXY had a nice pop back to the upside. I think now I'll continue to build up my current positions in CVX, COP, RDS.B and KMI.

    You are building your portfolio at a great pace, keep it up!

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    1. AAI,

      I'm at the point now where I'm going to really concentrate on building my current positions up instead of starting new positions. Although obviously given the right opportunity, I'll gladly start a new position. XOM should be a great holding for a long time to come although I do think CVX's growth and dividend growth will be better just because of the fact that they're half the size of XOM. Law of large numbers and all. XOM won't be a disappointment though.

      Thanks for stopping by!

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  2. Another blogger mentioned XOM being on his buy list. I left a comment about buying XOM via DSPP through Computershare or Wells Fargo because it is the least expensive way for lower dollar amount purchases. You should look in it. Thanks for the site and keep up the good work.

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    1. Anonymous,

      If your plan is to DCA into most positions with smaller amounts then I think using the DSPP program through Computershare or the like is a great way. Most times all fees are covered by the parent company. The only big drawbacks are that the commission to sell is usually pretty high plus your trades aren't instantaneous. There's usually a 1 week or so delay from when you start the process to either buy or sell. Personally I'll pay the slightly higher commission costs with my brokerage accounts for better flexibility and liquidity. Thanks for sharing though, because a lot of people don't know about that option.

      Thanks for stopping by!

      Delete
  3. Pursuit,

    Nice buy. I can't imagine you being disappointed in this investment 20 years from now. Just keep collecting and reinvesting those dividends and you'll be just fine! :)

    XOM is also on my watch list. Below $90 is definitely a starting point for shares in XOM. I'm also looking at CVX and RDS.B here.

    Best wishes!

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    1. DM,

      That's the plan, collect, reinvest, collect reinvest...20 years later. How the hell did that much money get there?

      I want my next purchase of CVX to be sub-$120 and XOM probably sub $89. I'm not sure where I stand on RDS.B. The higher starting yield is nice but you sacrifice the growth. Although there's a place in a portfolio for higher growth and a place for higher yield.

      Thanks for stopping by!

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