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.
I've had to slow down the pace of my investments over the last month because there's a whole lot in flux right now with our finances. Starting in May I should be covering all of our expenses since my wife resigned early this year to be with our son while he's in the hospital. So I've been trying to conserve more capital to help with the transition. However, since I had sold some shares of HAL, my employer, I had some capital to invest back into some excellent dividend growth companies. I mentioned in my dividend growth checkup that I wanted to increase my exposure to the health care industry. I'm very bullish on the sector over the long term as the global population ages and also as a larger percentage of the emerging/developing markets' population moves to the middle class and demands better health care service. That's two big tailwinds for the industry.
Earlier last week I initiated a new position in Becton, Dickinson & Company (BDX)(Full Analysis Here) but to close out the month I added to an existing holding in one of the great dividend growth companies, Johnson & Johnson (JNJ). On April 30th I purchased 13 shares of JNJ for $99.26 per share. After commission my per share cost basis came to $99.87 per share. Based on the recently increased dividend of $0.75 per quarter this lot of shares will provide $39.00 in annual dividends and carry a 3.00% YOC.
I previously owned 50.213 shares of this dividend champion at an average cost basis of $96.86. With the new purchase, I now own 63.213 shares at an average cost basis of $97.48. I normally try to average down my cost basis but that's hard to do with excellent companies like Johnson & Johnson that continue to grow and almost always trade for a premium.
Johnson & Johnson isn't cheap at current prices but I'll gladly pay up for quality at a reasonable valuation. JNJ has a 52 year streak of raising the dividend. The TTM P/E ratio is 17.6 and the forward P/E ratio is 15.6. Doing a simple Gordon Growth Model calculation with my cost basis of $99.87 and current annual dividend of $3.00 JNJ would need to raise the dividend by just 6.79% to provide a 10% annualized return. I'm working on a more in-depth analysis of Johnson & Johnson and hope to have it up on Seeking Alpha some time this week.
My forward 12-month dividends are up to $5,687.10. Total taxable accounts', Loyal3 and FI Portfolio, forward dividends are at $5,743.08.
I've updated my Portfolio page to reflect this addition.