Sunday, June 16, 2013

Recent Buys and a Dividend Increase

Well further weakness in the markets has allowed me to start or add to positions.  I didn't go very heavy into any of these positions with the recent buys being in the $1,500-1,700 range.  Typically I like to make larger purchases to help mitigate the effect of commission, but I chose the smaller purchases because the shares in some high quality companies were only trading at reasonable levels.  Although not quite at undervalued levels.  Earlier in the week I initiated a position in ExxonMobil and on Thursday I added to my positions in Coca-Cola and Wal-mart.

First, I purchased 22 shares of Wal-mart (WMT).  I actually missed the purchase on Wednesday because my limit order was off by $0.01.  Well, weakness early in the morning in shares of Wal-mart let me pick up some shares for slightly cheaper than my original limit order.  I picked up the shares for $74.6299 each, the limit order was actually set for $74.63 but I got to save $0.0001 per share, what a deal!  After commission my cost basis was $74.99 per share.  This is for just over a 7% discount to my average valuation price, although still 8% higher than my target entry price that represents a real bargain price.

Based on the current annual dividend of $1.88 per share these shares will provide $41.36 in annual dividends and will carry a YOC of 2.51%.  It's not the best starting yield but I believe it's still a solid price for Wal-mart since I expect solid growth in both revenue, EPS, and dividends for the next several years.  Check out my recent stock analysis update of Wal-mart (WMT).

My second purchase was adding to my position in Coca-Cola (KO).  It's another situation where I don't feel it's at absolute bargain prices but when a lot of share prices are overvalued, you need to stick with super high quality or sit on cash.  I feel that my cash level is about as high as I'd like to get it so I needed to start deploying some savings.  Luckily this came right when the markets started to cool off a bit with the increase in US Treasury yields and fears of the end or slowing of QE by the Federal Reserve.

I purchased 45 more shares of Coca-Cola for $39.72 per share to go along with the 35 I picked up last week.  After commission my cost basis is $39.90 per share which is about 6% higher than my average valuation price, although Dividend Monk has a more recent analysis that has a fair value value in the low $40's so I got it cheaper than his fair value target.  Based on the current annual dividend of $1.12 I'll receive $50.40 in annual dividends before reinvestment or further increases.  This lot will carry a YOC of 2.81%.  The YOC for my whole position in KO was lowered to 3.01%, which I'm still happy with.

Unfortunately I'll only be receiving 1 dividend payment from Wal-mart and Coca-Cola the rest of 2013 so they won't be helping out too much for this year.

As the title of this post mentioned there's also a dividend increase to report.  I love dividend increase announcements.  On Wednesday, Target (TGT) announced a 19.4% increase in the quarterly dividend from $0.36 to $0.43.  The increase will provide an extra $7.07 per quarter and an extra $28.28 in annual dividends.  Caterpillar also announced an increase on Wednesday over 15%.

My forward 12-month dividends are now at $2,815.20 which is 80.4% of the way towards my goal of $3,500 by year end.  The YOC for my FI portfolio now sits at 2.99% and 3.36% excluding my ESPP shares.

I've updated my Portfolio page to reflect these purchases.

11 comments:

  1. Nice buys. You cant go wrong with two giant companies like Wal-Mart and Coca-Cola. these two are not going anywhere.

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    1. Gareth,

      I have to agree on that one. WMT and KO will be around for a long time and I'm sure a long time after I'm gone as well.

      Thanks for stopping by!

      Delete
  2. great adds to your existing base...I added some more COP and TRV to my accounts. You have a great blog and I enjoy reading your posts.

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    1. Anonymous,

      I like COP and TRV has interested me. Thanks for the kinds words and keep on coming back.

      Delete
  3. Nice purchases. I would like to add to my position in KO and eventually start a position in WMT. By the way, KO pays its dividends on an Apr-Jul-Oct-Dec schedule (see link below; I don't know why it's Dec instead of Jan), so your latest purchase will get you two instead of one dividend payments for 2013.

    http://www.coca-colacompany.com/investors/stock-history/investors-info-dividends

    ReplyDelete
    Replies
    1. DGM,

      I meant to change that but forgot to. KO's payout always confuses me because I think of it as being a normal payout schedule like most companies but then always have to go back and double check. WMT is another one of those companies that the starting yield just usually isn't there so it's kind of tough to pick up shares. Eventually quality will win out in the long run though.

      Thanks for stopping by!

      Delete
  4. Pursuit,

    Nice buys here! A couple of heavyweights with KO and WMT. Can't go wrong with those companies. I picked up WMT quite a while ago and just haven't added to it in a while. As you mention, it's tough to buy it because the yield is always so low.

    Congrats on a couple of robust dividend increases. TGT and CAT both knocked it out of the park. CAT looks cheap here. A little concerned about growth in China along with the acquisition they recently had there that had some fraud issues. But, they are near the bottom of their price cycle, so as the economy picks up it's likely share prices will advance heavily.

    Best wishes!

    ReplyDelete
    Replies
    1. DM,

      I knew those increases were coming but really didn't expect either of them to be that large. It was a nice surprise. I expected CAT to be more conservative with their increase given all of the talk about China slowing down.

      I first picked up some WMT during the Mexican bribery scandal about $58, if only we could see that price level again.

      Thanks for stopping by!

      Delete
  5. WMT , KO and XOM are all solid buys into large blue-chip companies that you won't have to worry too much about. I own a little bit of KO but want to add more and I also own CAT. I'd like to add a retailer like TGT but will do some more research. The store always seems to be doing well when I'm in there.

    Take care!

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    Replies
    1. AAI,

      No sleep will be lost on any of these positions. I like TGT as well as I have a considerable position there. The stores do always seem packed in my area as well. I'm curious how the expansion into Canada will end up doing.

      Thanks for stopping by!

      Delete
  6. You really can't go wrong buying those two on any dip. I was strongly considering buying KO recently myself. Good job !

    ReplyDelete