Last week International Business Machines reported their quarterly earnings. While they ended up beating on EPS by $0.03, the top line growth in revenue fell short by about $1 billion. Mr. Market did not like this one bit and the share price dropped over 6.50%. For me this was just a chance to pick up some more shares and average down my cost basis. The lower share price fits right into IBM's management's plan to continually provide shareholder value both through rising dividends and share buybacks.
On Monday, I purchased 11 more shares of IBM for $173.75 each. After commission my cost basis for this lot is $174.47 per share. Based on the current annual dividend of $3.80 per share, my YOC for this lot is 2.18% and it will provide an extra $41.80 in annual dividends. Even better is that I got to lower my cost basis from the first lot of 10 shares that I had purchased back in late August. The overall per share cost basis for my position in IBM is lowered to $179.85 and the position now has a YOC of 2.11%. The new lot was purchased 6.08% lower than the first lot and lowered my cost basis by 3.18%. With the cost basis lowered to $179.85, the total position is in for over a 10.5% discount to my fair value calculation and just 3.0% above my target entry price.
My FI Portfolio's forward 12-month dividends now sit at $3,017.64 which is 86.22% of the way towards my goal of $3,500 by the end of 2013.
I've updated my Portfolio page to reflect this change.