I try to be as open and transparent as I can with my investing decisions in order to give a real life example of what it takes in order to become financially independent through dividend growth investing. In order to keep track of my reasoning behind a purchase and inform you all about what's catching my eye, I have my Recent Buy series. This allows me to have a written record as to why I made a purchase for my portfolio and be able to look back and see if that holding is still serving its purpose. With the markets continuing their almost no stop climb higher, investment ideas have been lacking so I asked all of you for some help in coming up with some fresh ideas. And you all didn't disappoint in the slightest. There were several names that kept coming up and one that I really liked was General Mills (GIS) as I don't have a whole lot of exposure to the consumer staples sector.
On Thursday of last week I purchased 35 shares of General Mills (GIS) for $49.24 each. After commission, my per share cost basis is $49.47 per share. Based on the current annual dividend of $1.52 these shares carry a 3.07% YOC and will provide $53.20 in annual dividends before future increases or reinvestment. The shares aren't exactly a steal at this price but considering how heated the market has been, I'll take around fair value for a solid company that will continue to increase profits and in turn dividends. I was able to purchase the shares at approximately a 18.5 trailing P/E and a 15.8 forward P/E. The five year average dividend yield is 2.9% and with a 3.07% YOC for this position, it's well above the 5 year average. General Mills has been able to grow their dividends 8.7% annually over the past 10 years and 12.2% over the last 3 years.
I last looked at General Mills back in May of 2012 and will get an updated analysis up in the coming weeks. However, Dividend Growth Investor has a much more recent analysis of General Mills and I still like where GIS is heading. International expansion could provide a big catalyst for growth going forward, but even if they don't they have pricing power on an in demand product that should allow them to at least increase prices to match inflation.
My forward 12-month dividends are now at $3,269.66 which is 93.42% of the way towards my goal of $3,500 by the end of 2013.
I've updated my portfolio page to reflect this purchase.