On Friday I decided to add a new position to the portfolio. It's a company that I've been eyeing for a while but just never added it into the mix. That finally changed on Friday when I purchased 11 shares of 3M Company (MMM) for $141.63 per share. After commission my per share cost basis came to $142.35. Based on the current quarterly dividend of $0.855 these shares will provide $37.62 and carry a YOC of 2.40%. I'll be looking to average down my cost basis if we happen to get a 5%+ pullback from the current price.
The initial yield is a bit low but the position will grow into a solid yield over time. Shares of 3M aren't the cheapest available in the market with a 20.57 TTM P/E ratio but they are at a better 17.18 forward P/E. The capitalization structure isn't ideal with a 39 debt to equity ratio but the company is very resilient and is a huge industrial conglomerate which allows them to ride out the economic storms better and usually come out stronger. Heck, name a company and at a minimum they use 3M's tape and post it notes. The payout ratio based off earnings and free cash flow are both about the 40% mark which leaves plenty of room for further increases especially when coupled with the potential growth. Analysts expect full year sales growth of 4.20% for this year and 4.80% for FY 2015 and 11.97% earnings growth over the next 5 years. If that growth does materialize then I'll be quite happy with what should be high single digit dividend growth at a minimum.
I've gone through a good chunk of my capital over the last few weeks and purchases will probably slow down some for my portfolio. But I'm excited with the progress that's been made so far this year. There's still quite a bit of capital ready to be put to work and adding in my large savings from each month that will continue to grow. I'm still looking at adding some more Johnson & Johnson (JNJ) (Full Analysis Here), Deere (DE), YUM Brands (YUM) (Full Analysis Here), AT&T (T) as well as continue to dollar cost average into positions with my new Loyal3 account.
My forward 12-month dividends are now at $4,963.58 which is 99.27% of the way towards my goal of $5,000 by the end of the year. I haven't increased my goal yet but expect to do so at my
Make sure you follow me on Twitter@JC_PIP to get quick updates about purchases that I'm making.
I've updated my Portfolio page to reflect theses additions.
What companies are on your shortlist to buy?