Bert’s November Stock Purchases

Like Lanny, as he noted in his November purchase article, this has been a relatively quiet month from a purchasing perspective.  After a crazy October that saw wild swings in the market and a lot of small purchases, November was calmer as many companies rebounded from that rough October.  Of course though, there were some opportunities that presented themselves.  I had to dip my toe in the market a little bit, right??  Here is a summary of my November stock purchases!

Due to the fact I still have free trades from my brokerage transfer, I had the opportunity to make many, many small purchases of companies.  For some, I took the opportunity to lower my cost basis as the price continued to fall.  For others, I had to purchase shares this way based on when my transferred capital arrived.  Rather than list out each purchase individually, I will summarize the purchases by company and run each company through the Dividend Diplomats’ Stock Screener quickly.

company #1: Exxon Mobil (XOM)

This is a new position in my portfolio, although I am no stranger to the major integrated oil sector as I own Chevron, BP, and Royal Dutch Shell (A).   It shouldn’t be a secret to anyone falling the markets closely that the oil sector has been pretty volatile in November.   When the prices of the major stock companies fell, I thought this would be a great time to add to a position in a Dividend Aristocrat that was yielding over 41%.   My purchase price was $76.80/share, so I will use this figure in the following analysis.  I will also use a forward EPS of $4.78/share and an annual dividend of $3.28/share.  Here is the analysis:

  • Price to Earnings Ratio – 16.06X using the figures above.  This is below the broader markets P/E ratio.
  • Dividend Payout Ratio below 60% –  68%.  Slightly above our threshold above.  However, the amount isn’t significantly over and the company has a long-term history of paying a dividend.  Overall, I’m not that concerned about the dividend payout ratio at this level for XOM.
  • Dividend Growth Rate/History of Increasing Dividends –  Easy.  XOM is a Dividend Aristocrat and one of the few oil companies that continued to increase their dividend through the financial crisis and oil situation a few years ago.  The company has a 5-year average dividend growth rate of 5.63%.  Their last dividend increase, announced in April, was 6.5%.  For a company yielding 4%, that’s not too bad!

In my opinion, XOM passed our stock screener.  Therefore, I initiated a position in my traditional portfolio and my wife’s Roth IRA with cash we had sitting in the account.   I added 5 shares in my individual account and added 3 more shares in her Roth IRA at an average purchase price of $78.77.  In total, the 8 new shares  added $26.24 in dividend income to our portfolio.

company #2: Leggett & Platt (LEG)

Lanny purchased this company as well in November.  One of the people commenting on his article mentioned how this stock has been all over our blog the last few months.  That’s because we have each taken the opportunity to lower out cost basis in this Dividend Aristocrat as their share price continued to fall.  In total, I purchased this company 3 different times between 11/12 and 11/15 with an average purchase price of $36.89/share.   Using this price, along with an EPS of $2.44/share  and an annual dividend of $1.52/share.  Here is the quick analysis:

  • Price to Earnings Ratio – 15.11X using the figures above.  This is below the broader markets P/E ratio by a nice margin.
  • Dividend Payout Ratio below 60% –  62.3%.  Much like XOM, the amount is slightly above our threshold.  Again, I’m not that concerned about this percentage as the company still has room to grow their dividend before sacrificing the safety of the dividend.
  • Dividend Growth Rate/History of Increasing Dividends –  Again,  LEG is a Dividend Aristocrat and has a 5-year average dividend growth rate of just under 5%.

I’ve enjoyed the opportunity to continue adding to LEG over the last few months as their price has tumbled.  In total, this month, I added 23 shares, adding $34.96 to my forward dividend income total.  I now own 110.652 shares of the company, producing $168.19 annually.

Company #3: Abbvie Inc (ABBV)

Last, but definitely not least, the new position in my portfolio.  Historically, I have not owned a lot of pharmaceutical companies in my portfolio.  I only own Pfizer and GlaxoSmithKline.  So having the opportunity to add the producer of Humira.  Despite the fact the patent is expiring soon, ABBV has a strong pipeline and market share in their sector.   After performing my stock screener, and having a long conversation with Lanny of course, I was excited to initiate a position.  On top of it, this has been a popular stock in the dividend investing community and plenty of other bloggers have been scooping up shares!   My initial purchase price was $85.62/share on 11/26/18 and I am looking for the chance to add once the price falls back down to those levels.  Using a forward EPS of $7.95/share and $4.28/share, we performed the following analysis.

  • Price to Earnings Ratio – 10.76X using the figures above.  This is significantly below the market and in line with some other companies in the industry.
  • Dividend Payout Ratio below 60% –  53.8%.  The company passes this metric right here!
  • Dividend Growth Rate/History of Increasing Dividends –  While ABBV is not a Dividend Aristocrat, the company has increased their annual dividend since their split with Abbott Laboratories in 2013.  In fact, the company has been aggressively increasing their dividend lately and even announced a 11.4% increase at the beginning of November!

In total, I added 7 shares, adding $29.96 in forward dividend income to my portfolio.  I’m a little mad at myself that I didn’t pick up more shares at this price, but I’m hopeful that the price will fall again before the company’s next ex-dividend date in January 2019.  For now, I’ll patiently wait.

summary

Again, it was a relatively quiet month on my end.  But I was happy and fortunate to add the stocks that I did to my portfolio and continue to push my dividend income forward.  I’ll be more aggressive in December of taking advantage of opportunities that present themselves!  In total, these three purchases added $91.16 to my forward dividend income.  I’m closing in on a milestone here, so hopefully I’ll be able to surpass it in early September!

What are your thoughts about my purchase?  Have you added to XOM, LEG, or ABBV recently?  If not, what stocks have you been purchasing?

Bert

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32 thoughts on “Bert’s November Stock Purchases

  1. Abbvie is ridiculous (in the best possible way!). At the end of 2017 their annual dividend was $0.64 per share… Then they announced a 10.9% increase… and a few months later an insane 35% increase! And then, as you said, another 11.4% increase recently, which takes the dividend to $1.07. Talk about meaningful dividend increases 😀

    • Ricard,

      I was so focused on the last dividend increase that I completely forgot about the one that was announced in February and October of the previous year. So yeah, they are crushing it in terms of dividend growth. However, I would not expect this kind of growth annually. That would put some stress on their dividend payout ratio for sure haha

      Bert

  2. Bert,
    LEG and XOM are high on my radar. 4%+ yields that are likely to grow at 3-5% annually is a big deal. Just so many good deals out there that are hard to ignore. TXN and ITW come to mind, with huge YoY dividend growth on 3% yields. Also if you are still in the materials space I would look at EMN, would be a nice complement to WRK.
    – Gremlin

    • Gremlin,

      Thanks for the awesome comment and all of the stock suggestions. TXN has gotten a lot of mentions in the comment section. Definitely on my radar now. I have added to ITW a lot over the last few months, so I am taking a break from them and focusing elsewhere for the time being. But hey, if it slides down to new lows, I’ll definitely turn back towards them once again.

      Bert

  3. At current price points I like ABBV a lot. The worries regarding Humira are likely overblown. Overall they have a really strong pipeline. ABBV is on top of my potential buy list for December. Congrats on your buys.
    Alex

    • I reached the same conclusion about the pipeline after reading a few articles and spending time on their website. They have some great products that are pretty far along in development that should help generate cash when Humira starts to take a few steps backwards. Let me know when you add to ABBV Alex. Thanks for stopping by.

      Bert

  4. Great to see you picking up some more shares in great companies Bert! I haven’t been able to take advantage of October/November’s sell off since we need cash on hand more than anything else. I’m hoping that by the end of January we’ll be all stocked up and can then start investing regularly again. Another company in the healthcare space that I think looks attractive is BDX. They’ve got a low yield, but dividend growth should really pick up in a few years as they de-lever post the CR Bard acquisition.

    • JC,

      Thank you very much. I was excited for the opportunity to add/initiate positions in these companies. BDX is a solid company too, although I don’t think there recent dividend increase was anything to write home about. I forgot about the acquisition and man, those are two great companies joining together!

      Bert

  5. Really like ABBV, and XOM is solid. LEG just isn’t a business I want to own long term, but understand its an attractive valuation.

    I’d recommend looking into TXN and ITW as someone else said. Particularly TXN, their dividend is still above 3% and has been raised 24% for two consecutive years. Much more attractive IMO than a div closer to 4% that just gets raised 1-3% a year…

    • Brian,

      I really need to spend some time looking into TXN. Do you have any good articles you’ve written about them or have read? I already have a large position in ITW and added to my position frequently in October. So I am looking elsewhere at the moment and will only add if they are a screaming buy.

      Bert

  6. Great purchases, Bert! I’m long all 3, but especially ABBV. I picked up a share of ABBV last month at $80.39, brining my cost basis to $94.60 a share. Congrats on adding $91 in dividend income and keep it up!

  7. These buys definitely added some high yield punch to your passive income. Like most comments I like the buys. Oil is beaten down, strike, LEG beaten down, strike, ABBV up a lot down a lot, strike. Nice to see you taking advantage of some solid long time dividend payers when they are in the dumps. Keep it up!

  8. Love seeing you put that money to work! These are all great buys, and I too recently added to my XOM position with an eye to nibble a little more should they dip any farther. I like ABBV a lot but it is my 2nd largest position behind Apple so I have not been looking to add more.

    I don’t own LEG but it has been on my radar since I initiated my portfolio, and I keep it on the watch list for a potential add should I be looking to add new positions.

    • Thanks DivvyDad! CAn definitely understand that you are wanting to allocate your capital elsewhere, especially if ABBV is suck a large position in your portfolio. Hopefully you can add to LEG or another great dividend stock that is out there 🙂

      Bert

  9. Hi Bert,
    nice buys, I especially like XOM as it also on my watch list again. It has been a stock I am looking for since I started with dividend investing.
    Keep up the good work!
    Cheers

  10. Hey Bert,
    You’ve added shares in three solid companies to your portfolio through November.
    It’s insane how many bloggers seem to be initiating positions in ABBV this month (myself included)! The price weakness coupled with a sizeable dividend seems to have brought in all of our attention. I’m personally hoping for some additional weakness to double down on the stock in the near future… though after this week it seems there’s upward momentum at the moment. It sounds like they’re handling the Humira biosimilar erosion quite well with the deals they’re striking (with PFE just this past week, for example).
    Take care,
    Ryan

    • Ryan,

      ABBV has been very hot recently. I meant to add more before the price jumped to the early $90s/share. I hope the price will drop down so I can add to things. That new deal with PFE for Humira was huge and it should help on the downside of the losing the patents. I’m even more sold on the company, so hopefully the price continues to decrease.

      Bert

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