On your journey to financial freedom or financial independence, you have to stay hungry out there. The stock market showed opportunity and one has to be ready to strike on a dividend stock when the price is right. Time to check out my January activity!
Investing consistently in Dividend Income Stocks allows you to create & build another income source, with Dividends. This is my primary vehicle on my road to Financial Freedom, which you can see through my Dividend Income and my Dividend Portfolio, to which continues to build and build.
How do I make dividend stock purchases and screen for dividend stocks? I usually put the stocks through our Dividend Diplomat Stock Screener and trade on Ally’s investment platform (one of our Financial Freedom Products).
See – Dividend Diplomat Stock Screener
See – Financial Freedom Products
How do I build the capital to make these stock purchases? I save anywhere from 60-85% of my take-home pay and strongly believe Financial Freedom does not happen by hitting a home run on an investment. Nothing matters more than your savings rate on your journey to Financial Freedom, plain and simple. Therefore, I work my butt off to make sure expenses remain in-check and that my savings rate is meeting our investment and financial independence goals! Then, you rinse and repeat.
The stock purchases
Even though the market was shaky and rocky, I was able to make consistent dividend stock investments in the market. The new $0 in trading fees really has allowed the individual stock investor to make smaller purchases, often. See January’s dividend stock purchases below!
Stock Purchase – Viacomcbs (viac)
Not only are they on my February Dividend Stock Watch List, but I have been purchasing ViacomCBS (VIAC) quite frequently. To no surprise, I wanted to add to my previous CBS position, which I started back in November. Decreases in stock prices and then having their 33% dividend increase in December may have had something to do with my dividend stock purchases in January.
The dividend metrics for GD just felt right, as you’ll see below. Further, if one cannot find a stock that’s in your portfolio already, what better way to add a new position and a dividend aristocrat, nonetheless. See the stats through our screener:
- Price to Earnings: As noted in my article, analysts are expecting $6.10 for 2020. At purchase prices of $40.67, $37.25, $35.60 and $33.70, this equates to a price to earnings ratio of 6.67, 6.10, 5.84 and 5.52. Crazy…LOW.
- Dividend Growth: ViacomCBS is not necessary a dividend growth stock, from a consistency standpoint. ViacomCBS, however, does increase their dividend every 3 years, it seems. December 2019 happened to be that year and their dividend was increased by a whopping 33%! I therefore, give that an average dividend growth rate of 11%.
- Dividend Yield: Given my spread of stock purchase prices, the yield went from a low of 2.36% to 2.85% on my last purchase.
- Payout Ratio: Based on expected earnings of $6.10 and a dividend of $0.96 per year, this equates to a payout ratio of 16%. Again, amazing room to continue strong dividend growth for years to come.
Here is proof of the investment purchase below:
I purchased 68 shares during January for a total cost of $2,528.85. The 68 shares added $65.28 to my forward dividend income projection. I now have approximately have 93 shares and am eager to add another 7-12 shares to round out my stock position here.
Stock Purchase – Cisco (CSCO)
Cisco (CSCO) was on my January Dividend Stock Watch List and I definitely made a move on them this month. I won’t go through detail whom they are, since I have mentioned them on my watch list and elsewhere on the blog.
The dividend metrics for Cisco were ripe for the taking. I wanted to beef up my technology position and wanted better yield to go along with the stock purchase. See the stats through our screener:
- Price to Earnings: Analysts are expecting $3.24 for 2020. At a purchase price of $47.13, this equates to a price to earnings ratio of 14.55; fairly low in today’s market.
- Dividend Growth: Cisco is going on their 9th year of consecutive dividend increases, just one away from the first milestone of 10, as a dividend growth company. Their most recent increase was a solid 6% and the year prior was 14%. Look at the payout ratio below, to see the room for additional growth.
- Dividend Yield: At a purchase price of $47.13, and a dividend of $1.40, the yield at the time of this purchase was 2.97%, above the S&P 500 average and higher than most tech-based companies.
- Payout Ratio: Based on expected earnings of $3.24 and a dividend of $1.40 per year, this equates to a payout ratio of 43%. Definitely room for growth. I would anticipate the upper single digits for the next few years.
Here is proof of the investment purchase below:
I purchased 15 shares during January for a total cost of $706.88. The 15 shares added $21 to my forward dividend income projection. I now have approximately have 100 shares and am eager to add another 15 shares to round out my stock position here.
Stock Purchase – Canadian Imperial (CM)
Canadian Imperial Bank of Commerce (CM) is one of the Big 6 Canadian Banks and I have owned them for almost a decade, as well. They were also on my January Dividend Stock Watch list and I will say, this is the first time I grabbed all 3 companies on my watch list in quite some time.
The Canadian Banks have been safe dividend stock investments for a while, now. Further, this is always a place I look when trying to find an undervalued dividend stock opportunity. Did the metrics stack up for CM? See the stats through our screener:
- Price to Earnings: As noted in my article, analysts are expecting $9.65 for 2020. At purchase prices of $82.55, the price to earnings was only 8.55. Signs of an undervalued dividend stock for sure.
- Dividend Growth: CM is going on their 11th year of dividend increases and CM announces two dividend increases per year. The two times are February and August, can’t wait to see how much their dividend increase is!
- Dividend Yield: At a forward dividend of $4.36, the dividend yield calculated out to be 5.28%.
- Payout Ratio: Based on expected earnings of $9.65 and a dividend of $4.36 per year, this equates to a payout ratio of 45%. Still room to grow, no doubt.
Here is proof of the investment purchase below:
I purchased 12 more shares during January for a total cost of $990.55. The 12 shares added $52.32 to my forward dividend income projection. I now have approximately have 123 shares and am fairly satisfied with my dividend stock position.
Stock Purchase – Iron Mountain (IRM)
I also purchased more shares of Iron Mountain (IRM) within my Roth IRA account. They are in the back-up, record retention/storage business and majority of the largest companies in the world use them. How did they stack up in the stock screener?
- Price to Earnings: In REIT Terms, we use the adjusted funds from operations (AFFO), which is approximately $2.75. The ratio is 14.9. Fairly undervalued, no doubt.
- Dividend Growth: They are at 10 years of dividend increases, and with the yield (you’ll see below), dividend growth for IRM is incredible. The most recent increase was 1.22%. Not great, but it’s there.
- Dividend Yield: At an annual dividend of $2.474, the yield at time of purchase was 8%. Definitely higher than my yield, but I definitely don’t want a heavy concentration either.
- Payout Ratio: Iron Mountain (IRM) has a payout ratio of 90%, when using the dividend of $2.474 and the AFFO of $2.75.
Here is proof of the investment purchase below:
I purchased 25 more shares during January for a total cost of $768.88. The 25 shares added $61.85 to my forward dividend income projection. I now have approximately have 65 shares and am fairly satisfied with my dividend stock position.
Stock Purchase – Isabella Bank Corp (ISBA)
For more of a thorough analysis on Isabella Bank Corp (ISBA), we published a dividend analysis back in 2019. They are a community-based bank in Michigan and I fell in love with the name, which I am biased because it’s my niece whom I am the godfather of.
Here is Isabella’s stats from the Dividend Diplomat Stock Screener:
- Price to Earnings: I am projected Isabella to earn $2.04 in earnings per share. The stock price, at the time of purchase, was $24.25. This equates to a price to earnings ratio of 11.9.
- Dividend Growth: They are going for 12 years of dividend increases. The most recent was $0.01 per share, per quarter increase or 3.85%. I anticipate similar dividend increases going forward.
- Dividend Yield: At an annual dividend of $1.08, the yield at time of purchase was 4.45%. This is a higher yield than my overall portfolio and fits nicely with Isabella and their dividend growth rate.
- Payout Ratio: Since Isabella pays $1.08 per year over $2.04 in earnings, this equates to a payout ratio of 53%. Right in the sweet spot, I say!
Here is proof of the investment purchase below:
I purchased 71 more shares during January for a total cost of $1,721.75. The 71 shares added $76.68 to my forward dividend income projection. I now have approximately have 78 shares and wouldn’t mind having 100 shares.
Mini Stock Purchases (~$500 and Less)
Since the trading wars have heated up and fees now are $0 to trade, I am going to list out and talk at a significantly high level, those dividend investments made that are ~$500.00. That way, I can still show the results from the month, who I am buying, the impact; but also – not to go into too much detail on smaller purchases.
Therefore, I purchased 1 share of General Dynamics (GD), to average down my price, as well as an additional 12 shares into Royal Dutch Shell (RDS), which they were on my January Dividend Stock Watch List.
In total, I deployed a total amount of $875.15 and added $49.20 to our forward dividend income, equating to an average dividend yield of 5.62%.
My Wife’s Dividend Stock Purchases
My wife has an account that we also make dividend stock purchases into. Though we are married, we are still running two separate, individual, taxable accounts. All is good, especially because we use the same platform, but just haven’t wanted to deal with the administrative tasks of combining. In January, we made quite a few dividend stock purchases for my wife’s account:
We initiated 2 new positions for her – Oracle (ORCL) and Nordstrom (JWN) – no shock she wanted Nordstrom (sigh… haha). At least she is buying stock, instead of buying clothes! Further, we added to her Consolidated Edison (ED) position, one of our Top 5 Foundation Stocks. Her portfolio is full of safe and sound dividend investments and since we’ve been together, her portfolio has been blossoming into an extremely significant part of our family’s finances.
In total, $1,741 was put into investments, producing $51.84 in Dividend Income going forward. This is an average dividend yield of 2.98%.
Summary & Conclusion
Another solid, consistent month. Combined, my wife and I deployed a total capital amount of $9,333.06 for January and added $378.17 to our forward dividend income total (4.05% yield overall)!
I will maintain my main message. Stick to the strategy that works for you, but review if there is anything that may impact your strategy going forward. You are in control and the emotion button is hard to turn off. Persevere and stay consistent, if you can and are able to. I am locked in and ready for further opportunities. This was one step closer to financial freedom and I hope to continue making strides. Lastly, my dividend portfolio has been updated.
Therefore, we managed to be very active during the month. Did you stay on the sidelines, based on the market increase? Any dividend stock purchases you were surprised about, based on what you see above? Please share your thoughts and comments! Thanks again everyone, and, as always, good luck and happy investing!
-Lanny