On Wednesday, June 5th I made 2 buys of some dividend champions in Coca-Cola (KO) and Proctor & Gamble (PG) after further weakness in both shares. Neither purchase was made at my ideal price points but I'm still happy to add to 2 very solid companies with solid entry points. I've been struggling with whether it's better to wait for the bargain prices or not and thanks to some of the comments from the readers I went ahead and made these two purchases. In the long run, I don't think it will matter that I paid a little too much and the added dividend income from these purchases and continued years of increases will more than make up for waiting for the perfect price.
I picked up 35 shares of Coca-Cola for $41.11 each costing me a total of $1,446.80 after commission. This gives me a per share cost basis of $41.34 on this lot and based on the current annual dividend of $1.12 will carry a YOC of 2.71%. This purchase will add $39.20 in annual dividends before further increases or reinvestment. Unfortunately this lowered my YOC for my entire position in KO since I had originally picked up shares back in 2011 for about $8 less per share after the split. The added income is still worth it though. The added bonus is that I'll receive the next dividend payment from KO, since the shares will trade ex-dividend on on June 12th.
For my second purchase, I added to my small stake in Proctor & Gamble, actually by tripling it, but don't get confused it was a very small position to begin with thanks to wanting the price to drop and never doing so. This caused me to miss out on dividends and never add to my position. Live and learn. I picked up 20 more shares of PG for $76.81 each which cost a total of $1,544.15 after commission. The per share cost basis on this lot if $77.21 and based on the current annual dividend of $2.41 carry a YOC of 3.12%. These shares will provide $48.12 in annual dividends before future increases or reinvestment.
Both of these purchases were for smaller amounts than I normally aim for because I wasn't in love with the prices. I wanted to add to both positions but I didn't want to eat up too much of my capital in case a larger pullback is coming. Overall I'm happy with both buys since the total return projection using Yield + Dividend Growth is 2.71% + 7% = 9.71% for KO and 3.12% + 6.50% = 9.62% for PG using conservative dividend growth rates.
My FI portfolio's YOC is now 2.96% and my forward 12-month dividends are up to $2,633.24. This is 75.24% of the way towards my goal for the end of 2013.
I've updated my Portfolio page to show the two purchases.