Well I just couldn't help myself this past Friday and made another purchase. It wasn't that long ago that I had doubled up my position in PepsiCo, February 14th to be exact but the price continued to decline so I added some more. I was fairly impressed with their 4Q and full year 2013 results and really like their outlook going forward. Despite being named PepsiCo, they are much more than a soda company. Besides the namesake brand of cola they have several other soda, tea, coffee, and juice brands under their control as well as a hefty snack division. Like a lot of the large cap US consumer staple companies, the domestic market is pretty much fully developed and in some instances, like soda consumption, declining. Fear not though as PepsiCo has a large presence in the developing and emerging markets and that's exactly where the real growth will come from.
On Friday, February 21st I purchased 20 more shares of PepsiCo for $78.16 per share. After commission this lot carries a $78.56 per share cost basis. PepsiCo also announced a 15% increase in their quarterly dividend to $0.655 per share starting with the June payment. Based on the increased dividend, this share lot carries a 3.34% YOC and will provide $52.40 in dividends. I was able to purchase the shares around where my calculated target entry price is at so I'm quite happy with the purchase.
I didn't initiate my position in PepsiCo until late last year because it always seemed a bit overvalued whenever I had free capital. But I've built it up to a good size position now with the 2 purchases this month and now own 61 shares which currently represents about 3.9% of my portfolio. I want to get Coca-Cola and PepsiCo on par with each other as far as portfolio weighting is concerned so there's still a bit more work to do there if the prices continues to decline. Even more so if I get a chance to add to my Coca-Cola position which I'm very close to doing as well.
The new lot of shares were purchased for a 3.88% discount to my previous cost basis of $81.73 and lowered my average cost basis for the position by 1.27%. The new adjusted cost basis is $80.69 per share and I'd love to be able to get that down underneath $80 with another purchase. Hopefully Mr. Market gives us all the opportunity to average down some positions. Consequently, my YOC for the position increased from 3.21% to 3.25% and the whole position will provide $160.18 in annual dividends before future increases or reinvestment.
The YOC for my portfolio is now at 3.57% which is pretty good considering the current yield is 3.13%. My forward 12-month dividends are now at $3,993.14 which is 79.86% of the way towards my goal of $5,000 by the end of 2014. I'm slowly inching my way towards and past the $4,000 mark.
I've updated my Portfolio page to reflect this purchase.