Monday, June 1, 2015

Recent Buy


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.

Since my last few purchases have been some higher yielding REITs, W.P. Carey and Omega Healthcare Investors, I felt more comfortable adding a lower yielding higher growth company to my portfolio to add a little bit more juice to my dividend growth.  On May 22nd, I purchased 15 shares of Ross Stores, Inc. (ROST) for $101.50 per share.  After commission my per share cost basis came to $102.03.  Based on the current quarterly dividend rate of $0.235 my position in ROST will provide $14.10 in annual dividends and carry a YOC of 0.92%.

Unfortunately the day I made this purchase also saw the share price of ROST fall around 4%.  Since initiating the position the share price has declined over 5% and I'll be looking for a chance to average down my cost basis sometime over the coming week should the price remain at current levels or drift lower.  My original target entry price was around the mid-$90's for a starter position in ROST but became impatient and loosened my standards a bit.  I still feel that my purchase price is solid for a long term hold but with the recent dip in the share price an average down is definitely a possibility.  Another thing I really like about Ross Stores is that they should pick up market share during struggling economic times since they offer department store items at discounted prices.  It's one of the few companies that should hold steady or even see growth during a recession.

I really like Ross Stores, Inc. (Full Analysis Here) over the long term.  Based on managements' expectations there's still plenty of room for store count growth domestically.  There's also the possibility that they could follow in TJX Companies (Full Analysis Here) footsteps and expand internationally as well once their domestic operations are further developed.  Management has shown a solid growth plan with conservatively opening up stores in new markets and then developing the market fully before moving onto new markets.  They also use very little debt to finance the growth preferring to fund growth through cash flow.  Even better is that the dividend is well covered by both earnings per share and free cash flow and with forecast earnings growth over 10% per year there should still be excellent dividend growth going forward.

My FI Portfolio's forward 12-month dividends increased to $5,839.58.  Including the $55.98 from my Loyal3 portfolio brings my total taxable accounts forward dividends to $5,895.56.

Image courtesy of Stuart Miles on FreeDigitalPhotos.net.

7 comments:

  1. Nice move, JC. ROST has been on fire the last few decades, such phenomenal growth. I imagine you'll do quite well from here, with plenty of room for further expansion. I've been a little hesitant on retail because of unpredictable consumer trends, but ROST has proved any investors who hesitate completely wrong. I've only shopped there a few times, but managed to find good deals on what I was looking for. Do you ever shop there? Hope all is well with you, thanks for sharing and have a good week my friend!

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  2. I also purchased W.P. Carey in May. I am looking to potentially add to WP Carey in June and initiate positions in Omega Healthcare Investors and HCP Inc. These will be my /first REIT investments. Thanks for sharing your recent purchases, its always helpful to know what other dividend investors are doing.

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  3. Hi JC,

    Congrats on your purchase in ROSS. Hope the div. growth keeps on giving. Sucks about the instant decline but either way it'll be OK long term!

    Best of luck
    DB

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  4. JC,

    ROST has a been a really strong performer over the last decade. I've long been lukewarm on retail in general, but they've really bucked the trend. TJX is another one that's done well in this space.

    Enjoy those discount dividends. :)

    Best regards.

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  5. Nice job increasing your forward dividend income though ROST is not really my cup of tea. Not that it's a bad company or dividend grower I just don't like the retailers in general. Keep watching that stock and as long as you have conviction in the business and where it's headed the chance to average down will always be welcome. Thanks for sharing this buy. It's nice to read what others are buying especially when those buys are not typical to most dividend portfolios.

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  6. I don't know much about Ross Stores, but adding more growth seem like a good move to me! Too bad a little more patience would have paid off, but it happens to all of us at times!

    Cheers,

    Mike

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  7. Nice buy in ROST. I've seen this stock popping up in my screener and it looks like a solid stock. I don't know much about Ross Stores though, just that I've seen it in the states here and there. Enjoy the dividends. :)

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