Freedom Buy 2019

Dividend Growth Investing | Recent Buy | Financial Independence | Stocks

Purchases for my FI Portfolio have been few and far between the last few years.  That's not for lack of opportunities or desire rather it had to do with our lives being on a roller coaster.  However, there's a light at the end of the tunnel as our main goal for this year is to get rid of all non-mortgage debt and then refocus our energy towards building up the portfolio.  

We aren't contributing fresh capital to our investments just yet as we're focused on getting rid of our non-mortgage debt.  *Should be gone before the end of the year!*  However, that doesn't mean that we're not able to make new purchases thanks to the dividends that keep rolling in from our other positions.

One of my goals for my FI Portfolio is to build up the positions rather than build out the positions.  Essentially I want to get more exposure to the companies that I own instead of many small positions that make it hard to be motivated to monitor the company.  With the dividend growth strategy I still think it's fine since the bulk of the work should be done upfront; however, why invest more capital into your 20th or 30th best idea if one of the top 10 is attractively valued?

After making some sales in December and combining that with cash dividends that had been received I was looking forward to getting some of that cash working for me once again.

On January 16th I added to my position in Altria Group (MO).  I purchased 25 shares at $47.18 per share.  The total cost basis, including commissions, came to $1,184.45 or $47.38 per share.

Altria is a Dividend Champion with 49 consecutive years of dividend increases.  Based on the current quarterly dividend payment of $0.80 per share my YOC for this lot is 6.75% and I can expect to receive $80 in dividends over the next year.

I now own 43.95 shares of Altria at an average cost of $53.91 per share.  The YOC for my Altria position increased to 5.94%.

Due to this purchase my FI Portfolio's forward 12-month dividends are $6,594.92.


As a dividend growth investor any potential investment must Jerry Maguire me, i.e. "SHOW ME THE MONEEEEEEYYYY!!!!".  I judge that based on a company's history of both paying and growing dividends to shareholders.  As I mentioned earlier, Altria has increased dividend payments for 49 consecutive years.

*A full screen version can be found here.

I like to examine the dividend growth rates over varying time periods.  Since many businesses see their operations ebb and flow this smooths out the dividend growth and can give an idea of how things could look in the future across the entirety of a business cycle.

The 1-, 3- and 5-year rolling dividend growth rates can be found in the chart below.  

*A full screen version can be found here.


Altria's share price has been beat up since late October and is currently down over 30% since October 30th.  Shares are currently valued around 11.3x FY 2018's estimated earnings and 10.5x FY 2019's estimates.  That's an insanely cheap valuation for a business that's been steady as she goes for over half a century.  The yield is now over 7% so growth isn't necessarily required to make this a decent investment over time.


I was originally targeting a 7% yield on the purchase of my second lot of Altria shares, but I just didn't want to risk the share price recovering.  Don't let perfect be the enemy of good.  So I went ahead and pulled the trigger on the second slug.  And as it usually happens the share price quickly dipped down to that 7% yield level.  I'm not worried though and am targeting a third slug of shares somewhere between $40-42 if it gets there.

What do you think of my purchase of Altria?  Did you pick up some shares recently one this big dip?


  1. MO seems to be a popular one with the DGI community these days. Not a company I follow closely but maybe I should take a second look. I am just a bit nervous of potential lawsuits and as a reason have always stayed away from tobacco company.

    How does PM compare to MO, from a valuation and market reach perspective lately? Doesnt PM give you a better growth profile with international markets?


    1. R2R,

      The demise of big tobacco has been going on for 50+ years. Law suits are always an potential issue, but then again they've been an issue in the past. I don't think the US government will do anything to overly burden MO or other big tobacco companies because it's a cash cow for tax revenues for them between corporate profits as well as the "sin" tax.

      PM does have more growth opportunities than MO and should benefit greatly from a declining dollar. But my PM position is about 2.5-3x my MO position even after the purchase of MO here. From a value perspective MO is trading cheaper than PM right now too.

      Thanks for stopping by!

    2. I hear you that its not going to go bankrupt with lawsuits...they will survive, perhaps even thrive.

      What was the reason for big drop from Nov to Jan? Sorry, I havent followed the news too closely regarding MO.

    3. R2R,

      More sellers than buyers is the obvious answer here.

      In reality probably concerns about rate hikes, their large debt levels, investment in JUUL which was at a significant premium to the last investment that was made into JUUL as well as potential lawsuits/regulation of JUUL (vaping). General market malaise?

      They recently bought a stake in CRON as well.

  2. Hi PiP
    I like your acquisition. Altria is a great company with very strong financials and top brands. I also like their holding in the beer sector AB Inbev. Philipp Morris and British American Tobacco might have more growth opportunities due to their massive geographic diversification but the US is one of the most attractive markets, high margins are a major advantage of Altria.
    Altria's acquisition of Juul, especially at that high price had me hesitate to pull the trigger. I have the feeling that they severely overpaid , that cash could have been invested in a much more sensible way in my view. But either way, Altria at these price level is very attractive.

    1. Financial Shaper,

      There's a lot going on with Altria other than the core tobacco business which has great economics by itself. But their secondary investments are the real kicker here. Like you I don't think the Juul investment was the best use of capital. There's a reason that Juul's management required Altria to pay a valuation much more than the previous investment valued the business at. They either don't feel like they need Altria's distribution channels or felt that they could extract some more cash from them because of Altria's growth struggles.


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