Thursday, September 11, 2014

Recent Buy - Nothing Runs Like A Deere

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 Tuesday of this week I decided to average down my cost basis in Deere & Company (DE).  I initiated a position in DE back in June and frankly the second purchase I made was a mistake as I should have waited until a bigger drop to add to my position.  I still feel that the purchase was made with a good long term value but "averaging down" for a 1.5% discount was a bit early and left me in a bit of a bind when it comes to future purchases.  I purchased 23 shares of DE for $82.32 per share.  After commission my per share cost basis came to $82.67.  Based on the current quarterly dividend of $0.60, these shares will provide $55.20 in annual dividends and carry a 2.90% YOC.

I was able to average down my cost basis but the effect wasn't as significant as I'd have liked.  Before this purchase my per share cost basis for the position was $91.15.  The new lot was purchased at a 9.31% discount to the prior cost basis and lowered my whole positions' cost basis by 3.56% to $87.91.  As I mentioned earlier I was a bit early on my second purchase of Deere and should have waited on a lower secondary entry price.  My hands are a bit tied right now from adding more to the position due to the position accounting for 3.07% of my portfolio.  If the shares dip to around $77-78 then I'd likely make another purchase but until I build up some other positions I'll be holding off on adding more.

My forward 12-month dividends are now at $5,070.70 and I've officially passed my goal of $5,000 by the end of the year.  Success!!!!  I raised my goal to $5,500 during the August's dividend update and I'm currently 92.19% of the way towards the new goal.

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 this purchase.

What companies are on your shortlist to buy?  

18 comments:

  1. PIP,
    Congrats on passing your original goal of $5000 and setting the bar higher. I'm also still chasing $5000, and hopefully this month getting closer. I'm still working my CAT DRIP and probably won't buy DE this dip. But it does look attractive here.
    -RBD

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    Replies
    1. RBD,

      It's pretty cool to officially pass the $5k mark and I hope to hit my increased goal as well. We'll see how that goes though because I'm probably going to save up a bit more capital for emergency/medical expenses since I expect them to be quite high once Lucas comes. Hopefully all works out with him though.

      Thanks for stopping by!

      Delete
  2. Congrats, and a good pickup here! I actually just snagged some myself this morning. I think the latest dip really provides a good buying opportunity.

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    1. w2r,

      Nice buy of DE! I should have waited and made my 2nd buy around the $85-86 area and then the 3rd buy here but I got impatient.

      Thanks for stopping by!

      Delete
  3. As usual, I like their brand name recognition. I don't know that a competitor will come along disrupt their brand, either. I'm still trying to figure out why I'm opposed to buying DE. I grew in a farming town; love Deere.

    WE#1

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    Replies
    1. WE,

      Got to love a John Deere tractor. And the fact that the majority of their equipment is agriculture related bodes well for them. With populations continuing to expand and a subsequent increase in demand for food, we'll need more farm equipment that's more efficient. Sounds like it's right up DE's alley. The next year or two could be rough based on the forecasts but I expect they'll be just fine.

      Thanks for stopping by!

      Delete
  4. PIP, great purchase. I added to the position last week at levels a little higher. If it drops below 80 I also plan to buy more. Keep up the great work.

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    Replies
    1. StockFox,

      I wish I had made my 2nd purchase around the $85 mark but I jumped the gun a lot. Something closer to $75-76 would probably tempt me enough to add some more but I'm hoping that doesn't come for a while so I can build up the rest of my portfolio some. Still love the company though but it might be a bumpy ride.

      Thanks for stopping by!

      Delete
  5. JC,

    Nice! Hopefully their dividends remain as green as their tractors. :)

    I've thought about averaging down again on DE right now, but I never intended for it to become more than maybe 1.5% or so of my portfolio. Love the company, but I just don't see it as a huge position for me. But if it breaks $80 I'll likely buy more because I just can't pass that up! :)

    Congrats on crossing over $5k in forward dividends. You're rocking along, my friend.

    Best wishes!

    ReplyDelete
    Replies
    1. DM,

      You and me both!

      I didn't really plan on DE making up 3% of my portfolio. I was thinking something in the 1.5% range like you but I messed up on the 2nd purchase that I made and jumped the gun. Something in the $75-76 range might get me interested but I'll have to do some serious thinking on that one. I figured that I needed to either add to or close out the position. The value is really good here so I felt that I had to make a move one way or another. Eventually I'll get the weighting back under control and hopefully closer to the 1.5% mark. Unfortunately that means a doubling of my portfolio to reach that.

      Thanks for stopping by!

      Delete
  6. Congratulations on passing that 5k barrier! I'm excited to be passing the 100 barrier this month lol, so I have a long way to go.

    I see many bloggers buying DE. DE is a great company and seems to offer an attractive entry point at the moment, with so many stocks trading high. Good purchase and thanks for sharing.

    ReplyDelete
    Replies
    1. SAG,

      Congrats yourself on crossing the $100 mark. With consistent saving/investing you'll make up ground quickly. And the gains you see each month will be awesome and motivating. Just stay focused.

      DE is a bit cheaper than more companies but it's in a completely different field from most of the DG staples like PG, GIS, KO, PEP... Which is why it's much cheaper than those right now. Still like the company long term though.

      Thanks for stopping by!

      Delete
  7. Congratulations on passing the $5K forward dividend mark! Coincidentally, I also joined the $5K club this week when PM increased its dividend. Onward to $6K!

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    1. DGM,

      Congrats to you as well then! I can't wait to get up to $6k and then $7k and then $8k...

      Thanks for stopping by!

      Delete
  8. What a great company. It was the first company's shares I ever bought. I bought 40 shares in 2005 and got the physical certificates. Because of this, I get paper checks in the mail every quarter. Originally, I got $6.20/quarter and bought myself a Big Mac meal at McDonald's. Nine years later, I get $24/quarter in the mail and treat my wife and I to a meal at a local restaurant. Truly dividend growth in action! (Plus, my yield-on-cost is an obscene 6.8%!)

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    1. Widerhaken,

      That's pretty cool and I've thought of getting the physical certificates for some shares because it'd be neat to have. The power of dividend growth is pretty amazing.

      Thanks for stopping by!

      Delete
  9. JC,

    Great job smashing and raising the forward dividend goal! With reinvestment you're going to have such a monster year in 2015. I was right with you on 2 early purchases, one in the ira and one in the taxable. I'm also with you and Jason on not wanting this as a larger holding, but I almost can't resist averaging down on a change of +10%. This is a great company and I like the purchase!

    All my best,
    Ryan

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    Replies
    1. Ryan,

      It's always fun to smash through a goal and power through towards another one. Yeah I could't resist either because the opportunity was pretty large. I didn't want to make the move because it has me a bit more exposed than I'd like but DE is a great value proposition right now and the 10% drop convinced me to add.

      Thanks for stopping by!

      Delete