Sunday, February 2, 2014

Another buy

Well the markets continued their difficult start to the year by selling off again to end January.  They started off really bad to start the day with the DJIA dropping over 200 points before clawing it's way back to just a 100 point loss and closing in the middle with a 149 point loss.  Quite a hectic day in the markets.  Well Chevron announced 4th quarter earnings and things were disappoint with a double miss on both earnings per share and revenue.  Global oil and natural gas production declined 3.4% year over year.  But the bright spot in an otherwise disappointing earnings announcement is that management is keeping their capex plans in place to continue to increase their production.  Other big oil companies have slowed their capex due to weakness during 2013, but Chevron is staying the course which I like because their business is managing depleting resources while constantly having to seek out more reserves.  You can only do that by spending money.

The markets didn't like the earnings report at all, especially on the heels of Exxon's disappointment, and the shares promptly shaved 4% from their price.  That's fine by me though as it gives me a chance to continue to add to my position as I purchased some more shares a little over a week ago.  With the sell-off on Friday I had to take advantage and average down my cost basis even more.  Shares made a new 52 week low and are giving the highest yield since November 2012.  I purchased 14 more shares for $112.09.  After commission my per share cost basis comes to $112.66 which is almost 7% below my cost basis before accounting for these shares.

I'll get to receive the next quarterly dividend payment of $1.00 per share that's payable in March.  Based on this dividend payment, my YOC for these shares is 3.55%.  However, this will be their fourth payment of $1.00 per share in dividends so they're due for an increase.  If operations don't improve much between now and April, the dividend increase might be on the low side but even if it's a 5% increase I'll be happy.  That would quickly increase my YOC to 3.7%.

My average cost basis for my position in Chevron decreased by 1.7% to $118.75 and my YOC increased to 3.37%.  I really like Chevron and feel it represents one of the better values in the markets currently as it's trading around my target entry price from my recent analysis of the company,of course that doesn't mean the share price can't go lower.  Unless we see the price get down to around $108 I'm going to have to do my best to hold off on making more purchases.  One of my goals for 2014 is to purchase a rental property and of course the markets are starting to offer good values right when I need my capital for other means.

My forward 12-month dividends are now at $3,784.08 which is 75.68% of the way towards my goal of hitting $5,000 in forward dividends by the end of the year.

If you follow me on Twitter you noticed that I also made some option trades on Friday as well.  There's 2 new positions and one expired position to discuss so I'll be combining those in a post of their own in the upcoming week.

I have several other companies that I'd love to add to or initiate positions in.  Wal-mart is offering pretty solid value here as well as Phillip Morris and Unilever.  I'm going to have to sit down and crunch some numbers to see what kind of capital I have to work with for both the rental property and other purchases here in my FI Portfolio.

Did you buy anything last week?  What companies are at the top of your watch list?




8 comments:

  1. So far from what I have seen COP is the only oil major that doesn't have a 2014 drop in EPS estimate. They had made a bunch of changes in the past couple years, noticeably the spin off of PSX. I don't think you'll go wrong with CVX and its just one year. As you have already done.... buying opportunity. Its not like CVX will struggle

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    Replies
    1. PMU,

      I agree, this is a buying opportunity. It might take a year for things to get fixed but given the large amount of projects they're working on to increase production this is a great price. Over a 3.5% yield is great for CVX. I wish I had waited longer on my purchase about a week ago but I'd been looking to add to CVX since I first purchased. It just never seemed to line up right where I had capital and the price was <$118 so I had to wait. A little more patience on my part would have been better in hindsight.

      Thanks for stopping by!

      Delete
  2. PIP,
    CVX is a good price here. Could go lower of course, but I think another $.40 increase is a safe bet for the June 2014 quarter.
    I took a hit on Mattel the other day. Looking to pick up some more as they increased the dividend and the price tumbled. I'd like to buy some HAS too. Also nibbling at some VTI in my retirement accounts, maybe soon some VIG.
    -RBD

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    Replies
    1. RBD,

      I'm going to do my best to stop adding to the O&G sector but that should be easier now that there's better value in other sectors. I'm not sure if we'll see a $0.40 increase but I expect to see something between $0.20 to $0.32 on the annual dividend.

      I don't own any of the toy companies but they've treated owners well. I liked your initiation of the AquaAmerica DRIP. That should be another buy and hold for 20 years company.

      Thanks for stopping by!

      Delete
  3. I love that you were able to capitalize on the dips in January. Nothing like buying assets on sale, right?

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    1. Done by Forty,

      I love sales. Especially in great companies that will continue to grow their operations and in turn their dividend. I need some more capital though because there's a lot of companies I want/need to buy but nowhere near enough capital to go around.

      Thanks for stopping by!

      Delete
  4. Nice purchase! CVX is one of the companies I have orders going through for tomorrow. I hope the price stays down for a while...I'd love to add more!

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    1. Warrior,

      I hope you were able to pick up some shares of CVX. It's a great company and this is a great entry price for the long term investor. I also want the markets to stay depressed for a while but I don't want to see much more downside in the near term because I'm pretty much out of capital.

      Thanks for stopping by!

      Delete