Thursday, July 23, 2015
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, July 21st I initiated a new position. I know my plan is to try and build up positions rather than continue adding new ones, but this is an excellent company in a stable sector trading at fair value that I've been after for a while now. I purchased 11 shares of The Hershey Company (HSY) (Full Analysis Here) for $90.57 each. After commission my per share cost basis comes to $91.02. Based on the current quarterly dividend of $0.535, this position will provide $23.54 in annual dividends and carry a YOC of 2.35%. I hope to get a chance to average down my cost basis if the share price falls from here.
Hershey has a dominant 45% of the domestic chocolate/confectionery market which is truly amazing. The dividend growth streak is relatively short at just 5 years. That has them off the radar of dividend growth investors because it seems like a company that should have a long streak. But that doesn't mean this isn't an excellent company. Market leader in their specialty. Dominant market share. Fairly inelastic demand for their product. Able to raise prices and still grow volumes. And trading around fair value. I recently did a full stock analysis on The Hershey Company over at Seeking Alpha that you can check out for more information on this excellent company and the current valuation.
Currently Hershey is pretty much a US only play which means there's around 7 billion as of yet untapped consumers. Hershey has been trying to expand internationally which would provide tremendous growth for them going forward as their current market is able to provide 5-9% annual growth year after year. Plus Hershey is due for a dividend increase based on when they've normally been increasing it the past few years and just a 7% increase will boost the yield up to 2.50%.
If you happened to notice this purchase was smaller than my usual purchase size. That's because I recently started a second brokerage account with TradeKing. The commissions at TradeKing are only $4.95 (Affiliate link) for stock purchases which means I can invest smaller dollar amounts to keep at my target "expense ratio" of 0.50% or less. Going forward I will be including all purchases within either of my portfolio's into just one portfolio on my FI Portfolio page.
My FI Portfolio's forward 12-month dividends increased to $6,046.62. Including the $56.62 from my Loyal3 portfolio brings my total taxable accounts forward dividends to $6,103.24.
What companies have you been buying? What companies are on your watch list for purchase? What do you think about the long term investment prospects of The Hershey Company?
Image courtesy of Stuart Miles on FreeDigitalPhotos.net.