Friday, November 21, 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.
Earlier this morning I initiated a position in National Oilwell Varco (NOV).  I purchased 21 shares at $72.8399.  After commission and fees, my per share cost basis came to $73.22.  Based on the current quarterly dividend of $0.46 per share these shares will provide $38.64 in annual dividends and carry a YOC of 2.51%.

Since I work in the oil field NOV is a regular around the rig locations and I see them all the time either delivering parts or performing maintenance.  It's definitely a company that I've tried to take a closer look at but for some reason it kept escaping me.  I don't have the time to do a full write up right now on NOV but I really like what I see.  You can check out a Fast Graph of NOV here at My Dividend Growth.

I also had forgotten to get a write up from earlier this month when I added to my position in IBM.  On November 5th I purchased 9 more shares of IBM for $162.71.  After commission and fees my per share cost basis came to $163.59.  Based on the current quarterly dividend of $1.10 these shares will provide $39.60 in annual dividends and carry a YOC of 2.69%.

Shares of IBM sold off about 10% after their latest earnings report and I felt that a decision had to be made.  I either needed to close my position or average down my cost basis so I added some more shares because I still think IBM is set up well for the long run.  They've been  able to deliver great results even though revenue has been stagnating and there's still plenty of time for them to sort out the business headwinds while they convert to higher growth and higher margin services.  For a little more information on IBM check out this post by The Conservative Income Investor.  I think I'm in good company with Warren Buffett as a fellow shareholder.

I've got enough capital for one more smaller purchase and I've narrowed it down to a sector but I haven't decided on which company yet.  I'm wanting to add a bit higher yield to my portfolio which is leading me to REITs and specifically the healthcare REITs.  The two companies that I'm looking at are Omega Healthcare Investors (OHI) or Ventas (VTR).  Both companies have great long term growth trends between consolidation of the sector as well as the aging population in the United States.  I think Ventas offers a bit better value at current prices but OHI offers a higher current yield.  Which of these two companies do you think offer the better long term prospects?

My FI Portolio's forward 12-month dividends are now at $5,399.65 and adding in the $48.73 from my new Loyal3 Portfolio bring my total to $5,448.38.  That's 99.06% of the way towards my revised goal of $5,500 by the end of the year.  If you add in the dividends I can expect to receive from my shares of Halliburton my forward dividends are up to $5,514.29 but since my plan is to sell those shares later I don't include those in my forward dividend calculations but it's nice to see them over $5,500 even with the lower yielding shares.

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 you looking at for possible purchases?  What do you think of IBM and NOV as dividend growth investments?

8 comments:

  1. A couple of great pick-ups! The energy sector is offering some decent value and IBM is unloved, just like TGT was earlier this year. And now look...

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  2. I hold OHI and have been happy with it for a couple years now. I also have a long term position in HCN which has been giving steady div increases for over 20yrs. Might be worth a peek as well.

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  3. PIP,

    I don't know much about NOV, but I have been "all in" with the energy sector lately. IBM is probably a sleeper stock for 2015. I have been accumulating shares of it as well.

    MDP

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  4. NOV sounds like a great business, I saw Dividend Mantra recently picked these up too and he had a pretty good write up on it. I also like that it's something you know from your work - I'm sure it well within your 'circle of competence'.

    I guess whether you add to IBM really depends how a big a portion of your portfolio it takes up. I'm a fan of averaging down with the best quality businesses, but you have to have a limit on how much you put into a single stock.

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  5. Didnt know about NOV until DivMantra brought it up couple of days ago...it seems to be undervalued - My Div Growth also featured it in his list, as you said. I am already well over my allocation in the energy sector - but will put it on my watchlist and will read up on it. Thanks for sharing

    R2R

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  6. JC,

    Glad to see you join me as a shareholder in NOV. The fundamentals are outstanding, although the short term could be rough with oil prices. I'm extremely confident about their long-term prospects, however. You're closer to the action than I am due to your job, so it looks like you're giving the company a big approval. :)

    Best regards.

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  7. I don't know much about NOV. The thing that worries me about IBM is that they are struggling for revenue growth, and have been for a while. I'm not entirely sure what the catalyst is that will change that. Moving their proprietary hardware business over to the cloud will cannibalize some core business revenues, and that has made me a little cautious about investing. Similar issues to what Cisco and Oracle face. Fortunately they have plenty of cash flow which should see handsome near term dividends.

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  8. I own IBM in DivGro, but not NOV, OHI or VTR. Good to have you as a fellow share holder in IBM!

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