Monday, August 11, 2014

Recent Buys

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, August 4th I purchased 27 shares of Aflac (AFL) for $58.63 per share.  After commission my per share cost basis was $58.92.  Based on the current quarterly dividend of $0.37 these shares will provide $39.96 in annual dividends and carry a YOC of 2.51%.  I normally try to average down my cost basis but it's been a long time since I purchased shares of Aflac, about 18 months.  Unfortunately this purchase increased my per share cost basis of Aflac by 6.08% to $53.63 with a blended YOC of 2.76%.

I have some concerns about Aflac mainly due to their large exposure to Japan.  The Japanese economy continues to struggle but I believe that Aflac will do just fine in the long run.  With the Affordable Care Act being implemented in the United States I expect to see supplemental insurance companies do quite well as the insurance through the ACA exchanges are quite expensive and from what I've read lacking in critical coverage areas.  That's where Aflac comes in and should be able to grow their presence in the United States.

I mentioned in my Recent Buy post from last week that I was looking at ExxonMobil (XOM) for a potential purchase as well.  The price came down enough for my limit order to trigger on Tuesday, August 5th.  I purchased 16 shares of XOM for $99.12 per share.  After commission my per share cost basis for this lot came to $99.62 per share.  Based on the current quarterly dividend of $0.69 these shares will carry a YOC of 2.77% and provide $44.16 in annual dividends.  This increased my position in ExxonMobil by about 50% from the last purchase that I had made.  It had been over a year since I added to ExxonMobil and it was underweight in my portfolio when compared to its' counterpart Chevron (CVX).  This purchase increased the per share cost basis of my position by 3.29% to $92.82.

The world needs energy and when it comes to relatively cheap sources per unit of energy fossil fuels are still leading the way.  In 2010 ExxonMobil released a report on their forecast for global energy through 2040.  Global energy demand is expected to rise by 35% in 2040 as the global population continues to grow and the emerging/developing markets continue to see the transition of people into the middle class and all of the consumption that entails.  ExxonMobil expects that natural gas will see the largest net growth among the various energy sources while oil will grow as well.  The one thing I'd like to see out of ExxonMobil is a bit more focus on the renewable sources.  Renewable sources such as wind and solar will continue to grow their presence/reach.  I personally feel we're still a long ways off from a behemoth like XOM being troubled by the switch from non-fossil fuel sources though.

I've gone through a lot of my cash stock pile but there's still plenty of ammo left should we get some better values.  I've been a bit more liberal with my purchases due to the amount of cash I had on the sidelines and the fact that each month should bring another $4k+ in investable savings from my paycheck.  I'm trying to focus more on adding to existing positions rather than initiating new ones, although there's a few companies that I have on my radar and positions open for.  Some of the companies that I'm looking to add to are Johnson & Johnson (JNJ) (Full Analysis Here), Deere (DE), YUM Brands (YUM) (Full Analysis Here) and ExxonMobil (XOM), AT&T (T) as well as a few others.

My forward 12-month dividends are now at $4,924.58 which is 98.49% 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 3Q goals update after my next purchase or two.  My FI Portfolio now has a YOC of 3.52% and a YOP of 3.64%.

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.

Have you been making any purchases with the markets in limbo?  What companies have you bought or are on your watch list?

14 comments:

  1. I also bought Aflac last week. Unfortunately I didn't find Aflac 4 or 5 years ago, but i am interested in buying aggressively if the stock price stays here or continues lower. Lately I've been buying and selling "cigar butt" stocks. It's almost time to unload Endurance Specialty Holdings (ENH), which is my most recent successful trade. Insiders bought a fair bit last week, so i'll take another look before selling
    -Bryan

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    Replies
    1. Bryan,

      AFL is a great value right now. Luckily I picked some up in Feb 2013 at a much cheaper price and much better yield. So I was happy to "average up" my cost basis some. I still have concerns about the heavy Japanese exposure but I'm willing to give them a few years to see what happens.

      Thanks for stopping by!

      Delete
  2. Great Pickup JC. I recently bought some XOM, and am going to keep adding to the pile as long as the valuation stays attractive. I'm still looking to grab some more MCD while the price is so low.

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    1. Ryan,

      XOM might not blow it out of the water with the dividend growth but the consistency is awesome. Add that to the buybacks and you're looking at really good annual returns. I'll be holding off on MCD but that's because it's still over 6% of my portfolio.

      Thanks for stopping by!

      Delete
  3. I love Aflac. My original purchase was between $49-$51 and it looks like you were right around that point before adding. However, still a good investment at the current price. Actual dividend rate is a tad low for me at the moment.

    Thanks,
    WE#1

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    Replies
    1. WE,

      You're spot on, my first purchase was at $50.15. I'd like to see the yield a bit higher but it's cheap on a bunch of other metrics so I went ahead and added some more. I'm hoping the increase this year will be a better than last years.

      Thanks for stopping by!

      Delete
  4. I was looking to buy either AFL, DE, XOM, or T this week. AFL has an upcoming dividend and is very attractive at the current price. I also need a little exposure to the financial sector. I only wish the dividend yield was a little higher but they may keep increasing that as years go by. Thanks for keeping us posted on your buys.

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    Replies
    1. Mongrel,

      The upcoming dividend and relatively cheap share price does make AFL a nice purchase here. I wanted to have some more exposure to the financial sector without necessarily getting involved with more banks so I added to AFL. I'll probably be done adding to AFL for a while because I want to get another insurer in the mix maybe Chubb or Travelers.

      Thanks for stopping by!

      Delete
  5. Great purchases PIP. AFL is very attractive right now and I might initiate a position since I don't have much exposure to the insurance sector anyway. I will hold off on XOM since I have exposure to COP and CVX.

    Also looking to average down on MCD (especially if it declines a bit more) after my initial purchase at 98 in June.

    DGJ

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    Replies
    1. DGJ,

      I can't blame you for not wanting further exposure to the energy sector. I've actually got a bit more than I should especially since I work in the oil field, but that sector was presenting good value so I stocked up.

      Thanks for stopping by!

      Delete
  6. PIP,

    I also bought DE recently and added XOM in my DRIP portfolio. I maintain 4 portfolios on my blog to show how they are performing.

    I've being thinking about AFL, WFC but still need to pull trigger on some of these financial companies.

    Keep up the good work!

    Best wishes.
    PIM

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    Replies
    1. PIM,

      I'm looking to add DE as well hopefully in the $83-84 range. I missed the last dip down there but I expect we'll see it there again shortly. WFC is another company I'd like to add some more to because I think it's one of the better run US banks.

      Thanks for stopping by!

      Delete
  7. I added to my position in AFL last week. I'm very happy with this dividend champion and am happy to get it at an attractive price.

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    Replies
    1. Kay,

      AFL is one of the better values in the markets and it's a fairly conservatively run business. I love the insurance companies for much the same reason as Buffett, the float is very powerful as long as the investments and insurance business are done conservatively.

      Thanks for stopping by!

      Delete