Friday, July 26, 2013

Recent Buy

Well I wasn't planning on doing much to the portfolio other than selling off more shares of HAL, my employer's stock.  General Electric reported a great quarter with a huge list of back-orders and I'm not really sure how I've never picked up any shares.  It's not a steal of a price but the potential for both capital appreciation and dividend growth is there.  Management has stated they are targeting dividend growth that matches earnings growth, which if you believe management and analysts that should be around 10% for the next five years.  I'm hoping for the markets to pullback some other the next few weeks so I can average down my cost basis for the new GE position.

I purchased 50 shares of General Electric (GE) for $24.52 each.  After commission my per share cost basis is $24.68.  Based on the current annual dividend of $0.76 these shares carry a YOC of 3.08% and will provide $38 in annual dividends before reinvestment or future increases.  I'll only receive one dividend from GE this year but they're due for an increase with their payment in January 2014 and I expect to see at least a 10% increase again unless the economy takes a big step backwards.  As I mentioned above I really like GE's prospects to grow their industrial business.  Almost all of their segments saw increases in the last quarter and there is a huge backlog of orders.  It's always a good sign to have a bunch of people wanting your products.  Management has been working to reduce the financing arm, GE Capital, since it almost bankrupted the whole company back in 2008/09.  GE Capital's size has been the biggest deterrent for me to become a partial owner of an otherwise great company.

I also sold off 73 more shares of Halliburton (HAL) which I purchase through the ESPP program that they offer.  This lot of shares had a per share cost basis of $24.31 and I was able to sell them for $46.13 before commission and fees.  Not a bad return there.  Unfortunately these shares were a disqualifying disposition with short-term capital gains.  Ouch!  I'll have to report $757.74 as additional income on next years taxes and $827.11 as short-term capital gains.  A profit is a profit and I needed the cash to finish building up the down-payment for our house purchase later this year.

My FI portfolio's forward 12-months dividends now sit at $2,934.66 which is 83.85% of the way towards my goal of $3,500 by the end of the year.

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

6 comments:

  1. I just love how transparent you are with your holdings as I've told you before. Good luck on reaching your goal. That would be exciting.

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    1. Lee,

      I try to be as transparent as possible to help show exactly how the "average joe" can reach his investing goals. There's still so many life changes coming up with the house purchase underway and kids probably in the next few years so it'll be more difficult to try and forecast but I'm still looking forward to the journey towards it.

      Thanks for stopping by!

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  2. Pursuit,

    Great buy here. I purchased shares in GE not to long ago myself and for the same reasons as you. I think this company is doing a great job at getting back to what it does best and focusing on the industrial side of the business. I only wish I would have purchased at $17/share when I first started looking at the company (or held the $15 shares I bought way back in Jan 2010).

    Best wishes!

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    1. DM,

      I also wish I had purchased earlier. I think the industrial side is such a great business with it's hands in so many different aspects that even in a downturn of the economy they shouldn't fare too bad. That's the reason I'm surprised I didn't own any. I didn't have a problem getting involved with BAC and that's turned out great so far. Once they started increasing the dividend again I expect a 10%+ YOC in a pretty short time. Just increasing the dividend to $0.14 quarterly will get me there and that's well below what they paid out before the financial crisis.

      Thanks for stopping by!

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  3. Nice job! I hadn't had GE on my radar, but I will have to consider them for future purchases.

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    1. CF,

      I liked GE's industrial business but GE Capital was still too big a part of the business for me to feel comfortable investing. I don't think I got the best price that I could but with the expected growth and management reducing GE Capital I think it's at least a fair price and I expect dividend growth to be pretty solid.

      Thanks for stopping by!

      Delete