I'm a bit late on this update but it was a crazy weekend with lots of work and other writing that I wanted to get done. The markets have started to turn things around in February and I have no idea which was the head-fake, the dip or the subsequent recovery. What I do know is that a company I wanted to own was trading at a price I was comfortable with so it was time to add to my position. Out of the carbonated beverage makers, Coca-Cola was the first one I bought and for the longest time it was the only one of the two soda giants that were in my portfolio. That all changed back in early December when I finally started to build my position in PepsiCo (PEP). I knew I wasn't getting the best price at the time of the first purchase but I felt that it was a decent price to start building the position from. Luckily Mr. Market gave me an opportunity to average down my cost basis and buy some more shares on Valentine's Day. How sweet Mr. Market.
Earlier in the week PepsiCo had announced a huge 15.4% dividend increase, but Valentine's Day wasn't sweet for the share price. PepsiCo announced earnings that morning and the markets didn't like it apparently and the price dropped. I purchased 21 more shares of PepsiCo for $79.085 per share. After commission my per share cost basis on these shares is $79.46. That's a 4.1% discount from my average valuation price that I calculated in my stock analysis on the company,so I'm fairly pleased with the purchase price. Based on the previous quarterly dividend these shares would have a 2.86% YOC and provide $47.67 in annual dividends. However, since the dividend increase has already been announced, although not effective until the June payment, my YOC based on the increased dividend is 3.30% and the shares will provide $55.02 in forward dividends starting with the June payment.
I was able to purchase these shares for a 5.51% discount to the previous cost basis and lower my overall cost basis by $2.37 or 2.82%. I'm hoping the shares will have a bit more weakness in price before the next ex-div date in early March. I'll be looking to add some more shares if they can get down to the low $77's or break down into the $76's. One more lot would bring the position to about par with my Coca-Cola position which I'm also looking to add to after this morning's weakness after announcing earnings.
My forward 12-month dividends are now at $3,970.45 which is 79.41% of the way towards my goal of $5,000 by the end of 2014.
I've updated my Portfolio page to reflect this addition.