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