4 Stocks to “Re-Up” My Position

Hold on tight everyone on this ride — the week has brought a tremendous downturn, which really, the week has brought us tremendous new opportunities!  The S&P 500 is down 2.43% since Monday’s close and even more so on a few stocks I’m going to talk about…As our friend Jason or Dividend Mantra stated in his recent watch list post, where he talked about three stocks that he currently owns and his debate/monitoring on which “lucky” company to, what I like to call,”Re-Up” on his position.  This makes sense, such as one asks themselves – if I bought my stock at X and it drops 2-5%, why not buy it again if you have the capital, as long as your view points haven’t changed from the company AND nothing fundamentally has changed at the company.  This is a great way to dollar cost average down on your position and to add more dividend income this purchase than your last.  Also – the best situation is that you bought it at $X when the dividend was $2/share/year when now it’s trading 5% below that amount and now pays $2.50/share/year – even a bigger bang for your new capital infusion.  I have added to positions such as: McDonalds (MCD), Intel (INTC), Total (TOT), FirstEnergy (FE), Aflac (AFL), Shell (RDS.A), Philip Morris (PM), and AT&T (T).  However, as one can tell, this last may grow or there could be similar names…

1.) Proctor & Gamble (PG): As of 7/31 close date – $77.75.  Down YTD: 5.02%.  Current Yield: 3.33%.  5 Year historic Yield: 3.14%.  Those are quick metrics.  This is one of the ultimate dividend aristocrats and I own 19(ish) shares of this company and bought them recently in the mid-$79 range.  Why wouldn’t I buy again?  I bought before their last dividend increase, so the yield was actually lower than now and the price dropped with a bigger dividend to boot?  This is one of the best dividend paying stocks one can have in their portfolio and always look at it as one of those “foundation” stocks to begin your investing journey.  Given the level it is at now with an EPS of $4.19, the PE is approx. 18.50 with a forward EPS of $4.50, thus reducing the P/E ratio.  The payout is approaching a higher level, but I do agree with the analysts and see earnings growing going forward.  They recently sat on over $8B in cash, I feel this company will continue to pay and increase dividends in the future.  Closely monitoring this one… $1.5K more would add $49.50 to my income (also yield is higher than the 5 year… perfect).

2.) Pfizer (PFE): As of 7/31 close date – $28.70.  Down YTD: 6.30%.  Current Yield: 3.62%.  5 Year historic Yield: 3.84%.  This is a story stock for me, as this was the first big stock I purchased back in 2010 I believe with $750 at $14.28 per share.  Also Known as HALF of the stock price right now.  If only I had more money then… DANG!  I have gone through multiple dividend increases and more than doubling of the stock price, lucky timing, right?  However, PFE has been trying to buy AstraZeneca to monopolize more of the playing field, and this buyout has been going on for quite some time.  Obviously PFE has some big names, which we can all probably joke around about a certain brand.  Bert – how has the blue pill been? Joking, joking.  Projected earnings are $2.26 for this year, giving this stock an astounding 12.70 P/E ratio.. very undervalued at the moment I would say.  Projected earnings for FY 15 is only $2.25, however. The payout ratio appears to be below 50%, giving it ample room to continue to grow the dividend (Cough, December by $0.02, Cough).  Given that I haven’t increased my position in over 4 years, I would absolutely love to own more of this little blue pill producing pharmaceutical.  $1.5K more would add $54.30, slightly more than PG.  However, current yield, is slightly below the 5 year average.

3.) McDonalds (MCD): As of 7/31 close date – $94.56.  Down YTD: 2.55%.  Current Yield: 3.43%.  5 Year historic Yield: 3.20%.  The big arch has been paying an increased dividend for 37+ years, one can say “I’m Loving It” and it’s not because I’m throwing back a Big Mac and  America’s favorite french fry.  What’s great is with the downturn, the yield is now above it’s 5 year mark, with an expected dividend increasing coming, I am going to throw out a guess of September 22nd (Lets take a look back to see if this hits) at approximately 8-12%.  The analysts are projecting earnings of $5.64, giving this a 16.76 P/E ratio with forward earnings of $6.11 lowering the Forward P/E to 15.47, not too shabby, slightly undervalued.  I have bought MCD on 3 occasions, with one of those being over the $100 mark.  Needless to say – I am going to continue to monitor this.  What I Like is the historic yield is below the current yield, and this moat should get further due to upcoming dividend increase.  $1.5K more would add $51.45 to my annual dividend income amount.

4.) Aflac (AFL): As of 7/31 close date – $59.74.  Down YTD: 10.57%.  Current Yield: 2.43%.  5 Year historic Yield: 2.58%.  Earlier this month I analyzed Aflac and they were trading at $62.72 aka it is now $3 below 4 weeks ago.  The historical 5 year yield was 2.58% at the time, so I won’t update that, however, the margin could be closer as the 28 days that fell off that calculation could have held higher dividend yields.  I’ve always liked the duck and think it’ll keep quacking out earnings and increasing those dividends, even if the sound from the TV commercial gives you shrills sometimes!  With projected earnings of $6.25 to finish the year, the P/E now is at 9.56 aka very undervalued.  Projected EPS is $6.55 for 2015 as well, even lowering this down showing the value it has now.  Given the name, branding and strong earnings – I do believe this company will continue it’s aristocratic streak, continue to raise dividends and pay at a very low payout ratio.  $1.5K more would add $36.45 to my annual income amount.

I know that is a lot right there, but I have been excited to post these stocks since Dividend Mantra’s post earlier last week.  However, the market kept sliding just a little bit more, and then just a little bit further down it went – giving me more time to build the article and to be honest – I only had 3 at the time when I was thinking this one over, as Pfizer took sharper declines lately.  Given how large these companies are, the branding, the strong cash and earnings position and adequate pay out ratios – I do not feel that owning more of these would be a bad decision, heck I own them already and why not scoop some more up during this down turn.  However, I may not invest a heft $2.5 – $3.5K amount, as prices may continue to tumble, but I feel that a $1.5K infusion into 1, 2, 3 or… 4 of these wouldn’t be a bad idea, to which you could always add more later on.  Also, if I do make a move, I may spread the risk/love around and buy 1 or all 4 of them at once, we all, including myself, shall find out what I end up doing!  And…

That’s the joy of it all – it’s in my control to make this decision, no one else’s.  Which is why this is so great – WE control our destiny to reach financial freedom – it’s not up to anyone else but ourselves.  That is why we are here as a community, pushing each other to reach the destination.  Excited to see what the market does on Friday, hope to “Re-Up” on something soon. Thanks for stopping by – anyone else “Re-Up”ing into anything?  What opportunities is everyone seeing in the Market?  Have a great Friday!  I wonder how Bert’s watch list is coming along..

-Lanny

DISCLOSURE: I DO NOT RECOMMEND ANY DECISION TO THE READER OR ANY USER, PLEASE CONSULT YOUR OWN RESEARCH. THIS IS ACTUAL DATA, ANALYSIS, HOWEVER I BASE NO INVESTOR RECOMMENDATION.  THANK YOU FOR YOUR UNDERSTANDING.
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12 thoughts on “4 Stocks to “Re-Up” My Position

  1. Lanny,

    Thanks for the kind mention!

    I personally think AFL makes a lot of sense here. I’d buy more myself if I didn’t already own 100 shares. But I think there’s a few stocks in the insurance space that look pretty strong, with AFL being probably tops.

    PG is another rock solid company. I don’t think it’s a steal here, but one can do worse than paying a fair price for a great company. I don’t like the way they moved management around, but I hope the Lafley move was the right one. He certainly did a great job the last go ’round.

    Cheers!

    • DM,

      Of course! It was because of your post that placed me in a position to do something similar, as I always think of adding to what I own. It’s funny asking yourself – I bought it before – has anything changed that would cause me not to want to own it?

      I do love Aflac and PG. Hoping to add for sure to Aflac – owning 100 shares is awesome, especially with a nice dividend increasing looming here in October. I’m hoping they bump between the 7 and 10% mark, as their payout ratio is always historically low and I don’t see them wanting to dramatically change that. I didn’t fully dive into their quarterly earnings release, but seems like they did very well in earnings this quarter, beating estimates by 7 cents.

      It’s hard though, to hold back as the market downturns, but I think adding a little here and there should allow you to dollar cost average and take advantage of the dips that are happening now and – in a funny way – continue.

      Talk to you soon DM and thanks again.

      -Lanny

    • Henry,

      Loving AFL as well – the P/E is insanely low, low with peers and a very low payout ratio with an October dividend increasing coming shortly. They have reached closer to their 5 year dividend yield average and it feels like the time is right. Stay tuned! Have a great rest of the weekend Henry, talk soon.

      -Lanny

  2. Lanny,

    I didn’t think Aflac would fall below 60, so when it did I jumped all over it yesterday. Kraft also fell through a trap door and I picked up some shares. Unfortunately Procter, while down yesterday has shot way up today. I was hoping to grab more shares next week. MCD and BP are looking very interesting at these level also.

    MDP

    • MDP,

      I didn’t think they would be back to this level either, quite amazing. Congrats on purchasing AFL… maybe I am sitting in the same boat with you and MAY have purchased some as well, stay tuned on that. I know Bert picked up some more Kraft the other day as well.

      PG definitely shot right back up on Friday, and were looking great. I know Bert & I also kicked around the thought of BP, but I own so much oil (over $10K in total) that I think my weight in that area is still high, but would love MCD, and hope they continue to slide.

      Thanks again for stopping by MDP, keep us updated!

      -Lanny

  3. I was this close to picking up PG yesterday, but decided to pick up some T instead. Looking at the rally from PG this morning, I wish I had picked the other way around 🙁

    Oh well, I guess I’ll wait and see how this correction plays out and start investing in PG later. All great names on the list here and would love to own them.

    Happy investing
    R2R

    • R2R,

      I know. I was in the same boat with PG. Thought okay – well if all of these stocks are on the short downfall, it’ll probably trickle into friday and worst case it would be a slight up tick. Wrong on PG! haha. Oh well, it’s okay, there is always time to buy, and I always feel it’s never a bad time to pick some shares up.

      Great stocks all around. Looking to add to undervalued stocks that are in my portfolio, that given the appreciation of other stocks, new buys, etc. – now have lower weights in it as well. I feel the excitement coming back with opportunities, so let’s hope this continues.

      Have a great Sunday, talk soon!

      -Lanny

  4. I was very seriously considering adding to PG and was hoping for a bit more weakness today but that wasn’t in the cards after a pretty solid earnings report. Although I’m looking at XOM, YUM, and JNJ for possible additions in the last 30 min today or sometime next week.

    • I agree, looks like PG had a pretty good day in the market on Friday, but I am hopefully there will be more pullback soon.

      XOM is looking enticing after this week of Oil, strong company as well.

      My eye is strong on AFL & MCD, we shall see what triggers are pulled! Thanks for stopping by JC, talk soon!

      -Lanny

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