Thursday, June 12, 2014

Recent Buy

Whenever I make a new purchase for my portfolio I feel it's only fair to get a post written giving all of the juicy details. I want to be as transparent as possible with my journey to reach financial independence through dividend growth investing. Being open about the moves I make allows for better discussion with all of you and helps spread ideas around as well as letting me create my own "investing journal" to chronicle why I purchased a company in the first place and that way I can revisit if something changes and make the decision on whether to continue owning the company or not.  On Monday of this week I added to my position in Wal-Mart (WMT) (Full Analysis Here).

I purchased 20 shares of Wal-Mart for $76.76 per share which gives me a per share cost basis of $77.15 after commission.  Based on the current annual dividend of $1.92 these shares will provide $38.40 in annual dividends and carry a YOC of 2.49%.  Unfortunately I'll only receive one dividend payment the rest of this year in September.  I first purchased WMT in my FI Portfolio almost exactly one year ago when I purchased 22 shares.  The per share cost basis for my whole position in WMT increased from $75.01 to $76.02 or 1.35%.

A lot of investors were quite disappointed with the last dividend increase from WMT where they increased the dividend a rather paltry 2.1%, and rightfully so when 10%+ was quite the norm.  Coming out of the "Great Recession" it's been a very tough retail environment and retailers have been struggling, but I still expect great things out of Wal-Mart.  They continue to make in-roads with their online store which is going to be key to at least maintain market share from Amazon for non-perishable items.  I'll be watching Wal-Mart a little more closely than I expected to when I first purchased shares but this company will still around around churning out profits and dividends for years to come.  Another reason I purchased Wal-Mart is because the position was way out of whack compared to my position in Target.  My Wal-Mart position is still only about half the size of Target so I'll continue to look for opportunities to average down my cost basis.

Thanks to Target's (TGT) huge 21% increase yesterday and my purchase of Wal-Mart on Monday, my FI Portfolio's forward 12-month dividends are now at $4,374.00 which is 87.48% of the way towards my goal of reaching $5,000 by the end of the year.

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

Have you been making any purchases in this rather heated market?

18 comments:

  1. Nice addition to your portfolio and yearly dividends are looking nice as well.

    I have most of my cash tied up in an investment property that I've been working on, but I still watch what the stock market is doing. I have to admit that even if I were investing in stocks now would not be the time. It's just a little too pricey for my liking.

    Cheers

    ReplyDelete
    Replies
    1. stoic,

      Great to hear from you. I was wondering how the rehab/investment property was going.

      I'm not excited about putting capital to work here but I'm also not wanting to have $30k sitting on the sidelines. It's pricey but I've been trying to focus on some really high quality companies. WMT is still a great company and I even made 2 other purchases this week. I'll probably slow down my purchases some but I'm still on the lookout for decent valuations.

      Thanks for stopping by!

      Delete
  2. 87% of your goal is awesome JC. Great work! You've got to love the Target raise
    -Bryan

    ReplyDelete
    Replies
    1. Bryan,

      I'm getting close to my goal but there's still a lot left to do. I'm still $1,400 short before any other purchases/increases. That Target increase was quite unexpected. I'd have been happy with something around 5% after all of the negative news but 20% is awesome!

      Thanks for stopping by!

      Delete
  3. Nice purchase. I wish I had not sold WMT sometime in 2011 after holding it for about 2 years.

    ReplyDelete
    Replies
    1. DGJourney,

      I wish I had bought more back when I was first starting to invest and the shares sold off after the Mexican bribery scandal. Live and learn. That's one of the reasons I went pretty heavy into TGT after some of their struggles.

      Thanks for stopping by!

      Delete
  4. Replies
    1. Evan,

      CVX is great and I wish I had bought more earlier this year when Mr. Market hated their quarterly results and they sold off down to around $110. I did pick up some during that time though.

      Thanks for stopping by!

      Delete
  5. Instead of picking a single winner in a sector, I like the idea of purchasing the 2 big giants in a duopoly. I own both ATT & Verizon. I recently picked up Target. I should look at Walmart as well.

    ReplyDelete
    Replies
    1. Greg,

      It's the same thing with KO and PEP. I'd much rather own both instead of trying to pick the best one for the next few years. Chances are they'll be fairly similar performers so I'll take a piece of both of them to hedge my bets. I'm wanting to add to both T & VZ in the future and need to sit down to see how I think the DirectTV purchase will change T.

      Thanks for stopping by!

      Delete
  6. Walmart is a proven winner and in a good market. they have great growth through expansion and they will perform well in good markets and possibly better in downmarkets. I believe in their business model and I am much more optimistic about them than Target right now. i think its a good buy!

    Good Day and Grind On!

    ReplyDelete
    Replies
    1. A-G,

      Obviously we're not going to see the rapid growth days of the 90's and early 00's but they can still provide consistent mid to upper single digit growth which is just fine by me. They should do even better if we get another recession as people will trade down to Walmart from the mid and high end stores.

      Thanks for stopping by!

      Delete
  7. Nice buy here!

    I think WMT going forward will be a nice income producing investment for you. Nice to get it near the middle of its 52 week range. They have a strong business model on low prices and I would not mind joining you as a shareholder in the future.

    ReplyDelete
    Replies
    1. Swan,

      WMT should do quite well and continue to give those annual increases. It's one of the few DG companies that isn't on the top end of their 52 week range so that's a plus. I just wish I'd have waited until today to purchase to get the shares for even cheaper. But I'm still glad to have added to my position. I might even make another purchase if it continues to fall from here because I'm very seriously contemplating adding to my TGT position after there was no jump in price today after their awesome dividend increase.

      Thanks for stopping by!

      Delete
  8. Great progress on the goal, and I like this buy a lot. I'm right there with you and hoping to pick some WMT up soon now that I have a little TGT. Very curious to see where you'll put that income to work next.

    ReplyDelete
    Replies
    1. Ryan,

      I want to get WMT and TGT on about equal grounds so there's still room to add to my WMT position and even more if I decide to add to my TGT. It's very tempting after that increase. I've been fairly busy the last week or so and have made 3 purchases this week. I'm working on getting the posts written for the other two. I've still got plenty more capital to put to work so I'll probably make a few more additions over the next month until I get it down to around $20k cash. Then I'll sit and wait for that elusive pullback.

      Thanks for stopping by!

      Delete
  9. Nice purchase....holding shares in the #1 and #2 players in a particular category can never be a bad thing. Especially when #2 just raised its dividend by 20.9%. But as someone who plans to live of my dividends in retirement, I like WMT here and believe their dividends are stable with a payout ratio of just under 40%. At the current yield, I also expect WMT to continue increasing these dividends in the coming years as retail continues to emerge. AFFJ

    ReplyDelete
    Replies
    1. AFFJ,

      I think both companies are pretty safe right now. TGT's payout ratio looks kind of bad due to the depressed earnings but I think this will very much be a short term situation. In a few years EPS and dividends will be higher but the payout ratio should fall from here. My only real concern with WMT is how big they already are. There's not nearly as much room for growth but being the #1 global retailer will allow for consistent increases over the next decade or two.

      Thanks for stopping by!

      Delete