Recent Buy (3)

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 number of 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?

With some cash in hand and after making additions to my positions in Altria (MO) and AT&T (T) earlier in January I decided to initiate a new position in an industrial giant: Honeywell International (HON).


On January 31st I initiated a starter position in Honeywell International.  I purchased 9 shares at $142.90 per share.  The total cost basis, including commission, came to $1,291.05 or $143.45 per share.

Honeywell is a Dividend Challenger with 8 consecutive years of dividend increases.  Based on the current quarterly dividend payment of $0.82 per share my YOC for this lot is 2.29% and I can expect to receive $29.52 in dividends over the next year.

Due to this purchase my FI Portfolio's forward 12-month dividends are $6,731.84.

Dividends

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, Honeywell has increased dividend payments for 8 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-, 5- and 10-year rolling dividend growth rates can be found in the chart below.  

*A full screen version can be found here.

Valuation

I'm not going to go into too much detail with the valuation of Honeywell because I recently did a full analysis that you can check out over on Seeking Alpha.  

While I don't think Honeywell is necessarily a bargain here I do believe that it's in the range of fair value.  Since I was sitting on some cash that I wanted to put to work I decided to pull the trigger and initiate a position a position in this excellent company.  I feel that this purchase falls squarely in the realm of buying a great company at a fair price. 

Conclusion

I'm pretty stoked to have started investing some of the cash that was sitting in my brokerage account and get it working for me once again.  After making 2 purchases earlier in January, Altria and AT&T, that I feel are much more undervalued plays I was content to put some capital to work in a fairly valued, but high quality business.

What do you think of my purchase of Honeywell?  Do you own any shares of Honeywell in your own portfolio?  What other companies have you been investing in or are you close to purchasing?