Recent Buy (2) - Roth IRA

One of my goals for my investments 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?


After making my first purchase in a looooong time in my Roth IRA back in April and armed with my 2018 contribution of $5,000, I finally put a bit more of that capital to work. 

On June 26th I purchased an additional 25 shares of Walgreens Boots Alliance (WBA) at $52.47 per share.  The total cost basis, including commissions, comes to $1,316.70 or $52.67 per share.

Walgreens Boots Alliance is a Dividend Champion with 43 consecutive years of dividend increases.  Based on the most recent quarterly dividend of $0.44 the YOC for this position comes to 3.34% and I can expect to receive $44 in dividends over the next year prior to any raises or reinvestment.

In my Roth IRA I now own 43.121 shares of Walgreens with an average cost basis of $53.49.  

Due to this purchase my Roth IRA's forward 12-month dividends increased to $509.30.




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, Walgreens Boots Alliance has increased dividend payments for 43 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 since 1972 can be found in the chart below.  

*A full screen version can be found here.

Valuation

Frankly the stock seems too cheap to ignore for a Dividend Champion with an absurdly low payout ratio.  Dividend growth might be a bit slower while they work things out but I believe that the valuation is cheap enough that even a "bad scenario" for Walgreens will still generate solid returns.


Based on dividend yield theory, the current dividend yield up near 3.2% is one of the best that has been offered on shares of Walgreens since the early 1990s.  It was only in 2012 when shares offered a better starting dividend yield.

A full screen version of this chart is available here.


What do you think of my purchase of Walgreens Boots Alliance?  Interested in adding shares yourself?  What about in their largest competitor CVS?