Thursday, January 19, 2017

Some Recent Purchases for the New Year

Hello everyone,

I figured I'd take some time right now to go through some recent purchases for my dividend growth portfolio, to help me along my journey to financial freedom.

But first a funny / not funny really short story.

So when I was hired at my current job, I was fortunate in that I was given a pension. Unfortunately, direct contributions into that pension stopped recently. The good news, however, is that it continues to compound every year.

So every January, I check the balance to see what the new value of it is.
Well, part of this process is that the pension company wants you to select certain retirement dates as input for them to calculate the pension value when I stop working.

Of course, it calculates this value at the traditional retirement age of 65, but then I also chose a custom early retirement date to see when my benefit would be when I stop working.

For kicks, I came up with the year of 2025. I adjusted it to the end of December of 2025, which did not sound too too crazy.

You know what?

As they say, "that's my story, and I'm sticking to it".
This is now my target for an early retirement, and I will try my best to make it happen. I have now written it down, and it has become real to me, so that is now the goal. Nothing I would love more than to gain my time freedom, so now I am pushing for it. We'll see if it materializes.

Anyway, back to the subject at hand. I wanted to summarize some recent buys, as I have not done this in a while. Since the start of the new year, I have focused on 3 stocks, 2 of which I already hold positions in, and 1 was a new position.


WSM - Williams-Sonoma. 
This was a new position I opened this year. It had been sitting on my watch list for a while, but I noticed recently the price had decreased to a level where the yield had reached 3%. This is a threshold I am using currently as one of the factors I look for to start a position for my taxed brokerage account (for my Roth IRA, this is less of a factor, as I keep both high and low yielders in this account). I am looking for yields of at least 3% for the taxed brokerage account, as I want to grow my dividend payouts sooner than later in that account.

Originally when looking at this stock, I was less than excited, because I basically thought of it as just "pots and pans". Pretty uninspiring.

I gave it more thought, however, looking into why one may purchase said pots and pans. When it comes to food, I believe people tend not to skimp on quality when it comes to tools used to prepare food, at least for their customer base. Also, with housing markets doing well, as people move in to new residences, they tend to want to upgrade various parts of the home, including kitchens, and tools that go into those kitchens. So I began to feel better about WSM as an investment.

The payout ratio is quite reasonable at 43%, there have been 7 consecutive years of dividend growth (with annualized dividend growth over the last 3 yrs of 8%, which is not the best, but not the worst), and earnings have been steadily growing in recent years. Another key is that, although this is considered retail, and retail has been battered and bruised on account of Amazon, one can actually order their products on Amazon, so while Amazon soars to new heights, I don't see WSM being as impacted as some other stores that are in direct competition with Amazon.

Since the start of 2017, I have added 13 shares of WSM.


TGT - Target
Target's story is well documented, I won't repeat the details here. They are a Dividend Aristocrat with strong dividend growth, and so when they go on sale, I am all for picking up new shares. Struggles with Amazon have been well documented, but at the same time, I don't think Target is going anywhere anytime soon, or that sweet 3+% dividend yield. There is room for it to grow further, plus even though it may not experience 20+% annualized dividend growth like we've been used to, I expect the dividend growth to grow at a decent clip, maybe closer to what you see from WSM above.

News hit earlier this week, that TGT is lowering their guidance, and of course that means the sky is falling to the financial media (thanks CNBC, Marketwatch, and Yahoo Finance!).

In the meantime, I calmly added 10 more shares this week on the news. It may fall further, and I plan to be there to lower my cost basis.


CAH - Cardinal Health.
Speaking of battered and bruised, healthcare stocks have been fitting that bill, since our President-Elect referenced drug prices being too high. However, with CAH being in the business of delivery of needed medications to people, and the need for healthcare to be more key, the older we get, CAH is another long term play for me. The yield is a bit low, at around 2.5%, but the annualized dividend growth is strong in the double digits.

I added a few more shares in the new year to add to my existing position.


So while many stocks have run up into the super-frothy department, I still see these 3 companies being good values at the moment, and I have scooped up shares, adding to my projected dividend payout.

At present, my projected forward 12-month dividend income is $1,475.01, and I intend to add to that every week, as I noted in My Saving System.

Have you been making any buys recently? Let me know in the comments!



4 comments:

  1. Awesome job keep bringing in those dividends and you won't need to touch that retirement lol

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    1. Thanks D&H, my plan to save enough and have enough coming in from investment income that I will not be dependent on that pension, but it's good to know it will be there. In the meantime, I keep working toward financial freedom!

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  2. I like the CAH pick up. Of course, I think most health stocks will have a long term tailwind for many decades to come. On the other hand, retail stocks have an uphill climb that I do not see ending any time soon. Many have been buying into TGT and others like M and KSS as the whole sector has been battered. I understand the desire to buy beaten and unloved stocks but I am not confident in the long term health of this sector. Of course, in the near to mid term a pop can occur in the stock price. Thanks for sharing. The most important thing is to keep investing.

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    1. Thanks Keith, for stopping by and providing your perspective. As a whole retail stocks do have serious challenges, however, I think on the retail spectrum, TGT is not doing the worst, and I'm willing to collect the dividend until they either figure out some things (I'm a savvy online shopper, but still have a weekly Target run, so I imagine that is the case for others too, and Target won't fall off a cliff in the short term), or they cut the dividend. I think the dividend is rather safe at this point in time, so I'm willing to be paid to wait, at a nice yield to boot.

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