Thursday, December 5, 2013

Recent Buy

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 change of the month, markets have started to sour a bit which is just fine with me.  On Monday, December 2nd I initiated a position in PepsiCo (PEP).

I had actually set a limit order about 2 weeks prior so I was pleasantly surprised when I noticed a purchase of Pepsi.  I purchased 20 shares of PepsiCo for $83.71 each.  After commission my per share cost basis comes out to $84.11.  This is about 1.50% higher than my average valuation price from my stock analysis on Pepsi which I feel is a decent price.  Based on the current annual dividend of $2.27 these shares carry a YOC of 2.70% and will provide an extra $45.40 in annual dividends before future increases or reinvestment.  Whenever I have capital available I try to get at least a portion of it invested each month in order to continue increasing my dividends.  No one knows if the market is going to drop, take a breather, or continue on it's merry ways of daily increases so I feel that I should put at least some capital to work when it's there.

I didn't get the best price that could have been gotten as the markets continued their descent to start the month off, but I feel it's a decent price to pay for a high quality company that should continue to pay increasing dividends year in and year out.  I'll be looking for opportunities to average down my cost basis and also increase the weighting on par with my position in Coca-Cola.  Pepsi has increased their dividends for over 4 decades in a row which is an amazing feat and testament to their operational efficiency and the increasing demand for their products.

My forward 12-month dividends increased to $3,384.90 which is 96.71% of the way towards my goal of $3,500 by the end of 2013.  A little bonus is that the shares went ex-div yesterday meaning I get the next payment.

I've updated my Portfolio page to reflect this change.

Are you buying in this relatively heated market or sitting on the sidelines?

12 comments:

  1. Last time I looked at PEP, a couple of months ago, I thought it was overvalued. I have to look at it again. But I guess companies like KO & PEP are always trading at a bit of a premium.
    I will be taking a look at it again to consider adding to my portfolio.

    regards
    R2R

    ReplyDelete
    Replies
    1. Roadmap,

      I think it's a decent value here but I'm definitely looking for chances to average down. Although you'll have to wait a quarter for the next dividend now so I'd probably wait to see where the price goes from here as the markets have turned a bit to start off December. Unfortunately a lot of the dividend champions are perpetually trading at a premium.

      Thanks for stopping by!

      Delete
  2. PEP is always a good buy!
    I will this month don´t purchase any shares, because all the money has already been used for Christmas gifts. ;-)

    And in the last days, the markets go down.
    I hope this movements will go on until Januar 2014.
    Then I can buy some shares to very cheep prices (I hope so...)

    Best regards!
    D-S

    ReplyDelete
    Replies
    1. DS,

      I was in the same situation in September during the debt ceiling/budget mess. I didn't have any capital available because of our house purchase and the markets sold off hard. The day my capital was transferred over, sure enough we had a huge up day.

      Thanks for stopping by!

      Delete
  3. I view Pepsi as a hold forever stock. Great company. You'd have to pry it out of my hands with a crowbar, no way I'm selling my shares unless something fundamentally changes. Have you tried Quaker Honey Graham Oh's cereal? so addictive!

    ReplyDelete
    Replies
    1. CI,

      PEP is definitely up there when it comes to high quality holdings. I don't ever intend to sell these shares, I just hope I can pick some more up at some cheaper valuations. Haven't tried those yet, but from the sound of it I probably don't need to. At least my PEP dividends could help fund that addiction.

      Thanks for stopping by!

      Delete
  4. Pursuit,

    I really like PEP. It's one of my larger positions. I really like the snack food diversification. They have chips and dips just about on lock down. It's funny, people think of PEP as a beverage company when really it's a snack food company with exposure to beverages. I think you'll be very happy owning PEP over the long haul.

    Best wishes!

    ReplyDelete
    Replies
    1. DM,

      That's very true about the snacks. I was wanting to get some more consumer staples exposure which is why I purchased GIS a few weeks back. The soda/drink business is just gravy in my opinion.

      Thanks for stopping by!

      Delete
  5. I like PEP and KO and that's why I ended up buying both. I'm targeting a half position for each of them instead of just owning one. They are both great companies that I'll probably never have to worry about in my portfolio.

    ReplyDelete
    Replies
    1. AAI,

      I own both now and but KO is a much larger position currently. I hope to get to add some more to my PEP position to help bring it up to par with KO. Like you, I don't think we'll ever really have to worry about these two. If we do, then I'm sure there's still going to be plenty of other companies that are much worse off.

      Thanks for stopping by!

      Delete
  6. I also own both PEP and KO. Have had PEP longer, but I don't make too much at my job so I cannot purchase many shares of anything at one time.

    My last 2 purchases were 2 shares of RLI in time for the special dividend and a 2 for 1 split next year. I just bought 6 shares of BP yesterday and it ended up closing at the same price of $46.80. I could not resist putting BP in my portfolio any longer and should have bought it when it spilled into low $30's. Hopefully can add more BP before the first dividend in March I'm also in the process of trying to get a Bachelor's degree and maybe buying a house/condo.

    ReplyDelete
    Replies
    1. SWAN,

      I don't think you'll go wrong owning KO or PEP, although I really like PEP because of the huge snack food business. Just curious, what are your brokerage fees like? I'd hate for them to be eating into your capital base, especially if funds are a bit limited. I've got a lot of changes in the works as well. I'm hoping to get a rental property next year and my wife and I are going to start trying to have children. What's your degree in?

      Thanks for stopping by!

      Delete