Bert’s October Stock Purchases – Part 3 – October 19th through October 26th

Since I am have free trades for a few more months, I was able to make a series of small purchases over the last several weeks.  With Mr. Market being moody, there were plenty of positions that I wanted to add to or begin establishing.  There is one new name on this list and I was able to add this company three times during this time frame!  With the market sliding, I turned my attention to Dividend Aristocrats.  In times like these, I like to try to add to those companies that have demonstrated their ability to pay their dividend through many economic cycles.  Especially when the Aristocrats are trading at a discount. 

Summary of More October Stock Purchases

I’ll provide a quick summary of each of the purchases in this section and then discuss the purchases in greater detail in the subsequent section.   Here are  my October stock purchases:

  • Stock Purchase #1 – Illinois Tool Works (ITW) – 4 shares @ $127.00 /share on 10/19/18 – $508.00 Cost basis added – $16.00 in annual dividend income added.
  • Stock Purchase #2 – Exxon Mobil (XOM)  – 10 shares @ $78.96 on 10/23/18 – $796.60 Cost basis added  to my wife’s Roth IRA – $32.80 in annual dividend income added.
  • Stock Purchase #3 – Exxon Mobil (XOM)  – 6 shares @ $79.02/share  on 10/23/18 – $474.17 Cost basis added  to our regular investment account – $19.68 in annual dividend income added
  • Stock Purchase #4 – Exxon Mobil (XOM)  – 4 shares @ $77.22/share  on 10/24/18 – $310.28 Cost basis added  to our regular investment account – $13.12 in annual dividend income added.
  • Stock Purchase #5 – AT&T (T)  – 10 shares @ $29.97/share on 10/25/18 – $297.70 Cost Basis added to my wife’s Roth IRA Account.  $20 in annual dividend income added.
  • Stock Purchase #6 – Leggett & Platt (LEG) – 13 shares  @ $35.78/share on 10/26/18 – $465.14 cost basis added. $19.76 in annual dividend income added.

In total, I purchased $2,851.89 of stock during this time frame, adding $121.36 in annual dividend income!   This equates to a 4.25% yield on cost.  One fun thing is that three of the companies pay in an “off” month.  It is always nice to add to positions that will pay in either the first or second month of the quarter.

Detailed Review of the four companies purchased

Wow.  I was very fortunate to make so many small purchases over the last couple of weeks.  I mentioned I would provide a little more detail about WHY I purchased shares in these four companies during this timeframe.  Using the Dividend Diplomats Stock Screener and other metrics/considerations, I was able to arrive at a purchase decision for the following reasons.  For all metrics cited below, I will use the stock price on the date of purchase and the average analyst earnings per Yahoo! Finance.

Illinois Tool Works (ITW)  –  This has been one of my favorite companies to purchase this year.  I have added to my ITW position several times during the year when the company’s stock price was in the $130 range.   The Dividend Aristocrat checked all the boxes of our stock screener in that price range and they announced an insane 28% dividend increase in August.  After the increase, their payout ratio was still below our 60% threshold.  Well, imagine how I felt when the company’s stock price fell into the $120s?  You knew I had to add to my portfolio in some capacity.  At my purchase price, the company’s P/E ratio was 16.7X.  I will look to add more if the company’s stock price continues to stay in the $120s or even gets back to the low $120/share range, like it hit at one point during the crazy month.

Exxon Mobil (XOM) –  This may have been a surprise for some of you.  I have not considered or discussed purchasing Exxon for years on this blog.  So what gives?  In a downturn like this, I always have my sights on a trying to pick up a Dividend Aristocrat that is a powerhouse in their industry at a discount.  To me, Exxon could not have checked that box any better.  Once their price dipped below $80/share, I was instantly interested.  They passed our stock screener.  XOM’s P/E Ratio was 16.90 (Assuming an average purchase price of ~$78.50/share), their payout ratio was 70%, and the company has demonstrated their ability to increase their dividend annually.    XOM’s dividend payout ratio slighty exceeded our 60% threshold.  However, in my article explaining “What the Payout Ratio is,” I mentioned there are certain industries where companies typically carry higher payout ratios.  The oil industry is one of those.  Thus, I am less concerned with the higher payout ratio.  Once the price fell, I was all in.

AT&T (T) – I have owned AT&T for years and it is a company that I will continue to add to over the years.  My wife and I receive over $400 annually from this company, so clearly it is a favorite of ours (and many in the community).  Much like the oil industry, the telecom giants will typically maintain a high payout ratio.  Interestingly though, their payout ratio is only 55% assuming an average annual EPS of $3.58/share.  The company’s P/E Ratio was well below 10X and the company is a Dividend Aristocrat.  Again, another company that checks all the boxes of our dividend stock screener.  I didn’t have a ton of capital on hand, so I thought this was a great company to purchase with limited funds and still receive a nice chunk of dividend income.

Leggett & Platt Inc. (LEG) – Last, but not least, LEG.  I initiated a massive position back in the second quarter.  Suddenly though, with the impact of tariffs and the broader economic environment, LEG’s share price fell through the floor.   I was starting at an unrealized loss.  Naturally, I had to run LEG through our stock screener and see if it made sense to add to my position.  On top of it, the company’s earnings release wasn’t that bad in my opinion.  The company’s sales growth was strong (8%) and their earnings grew as well.  However, guidance was lowered as a result of the items mentioned earlier.   The reduction in EPS was small though, to $2.40–$2.50/share versus the prior range of $2.55-$2.70/share.  To be safe, I’ll use $2.40/share for the purposes of our stock screener.   The company’s P/E Ratio was 14.90X, their payout ratio is 63%, and they are a Dividend Aristocrat and announced a nice increase earlier in the year.  Again, yet another great company that passed our screener.

What are your thoughts about my purchases?  Have you added to any of the companies listed above?  If not, what other companies are you considering purchasing during this current market environment?  Would you have purchased XOM if you were me?  Or would you have looked elsewhere?

Bert

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30 thoughts on “Bert’s October Stock Purchases – Part 3 – October 19th through October 26th

    • Happy Halloween Tom! I appreciate the kind words here and I’m definitely going to enjoy the extra dividends I’ll receive in the coming year. I don’t want the market to get too scary; however, I would love for some more buying opportunities to present themselves.

      Bert

    • Jordan,

      Thank you very much! You didn’t miss an article, I haven’t written on the topic. I have just made comments about it throughout the last few months. I transferred brokerages from Capital One to Ally once Capital One sold their investing wing. As a part of the transfer, Ally offered a period of free trades. So I am enjoying every second of it haha The regular fees will become $3.95/share.

      Bert

    • P2035,

      Thank you very much! I am excited to summarize the impact of all three waves of stock purchases this month. Man it was pretty busy haha T’s yield is insane and I may still add a little more to my position.

      Bert

  1. Hey Bert,

    I don’t own any of those companies but certainly do follow them. I try to avoid investing in cyclical industries and so have never picked up XOM, but it is a sentimental favourite of mine; I read “Titan” (the biography of John D. Rockefeller) quite a few years back and have felt he’s the greatest capitalist of all-time ever since (leave it to a finance-geek to rank capitalists from the past). Anyhow, it has a great track record of rewarding shareholders and hope XOM pays off well for you over the decades to come.

    Take care,
    Ryan

  2. Looks like we both put a tidy sum to work in October. So many solid names trading at much higher yields these days because of serious price swoons. Like the ITW buy a lot. They are on my short list for November along with some others. Considering CVX too in the energy space?

    • Divhut,

      Yes, yes we did. Glad we were able to put some capital to work and pick up some of these high yielding stocks. Don’t worry, I also have my eye on CVX here as well. But oil started to rebound towards the end of the week. Are you looking into them? Looking forward to reading your short-list.

      Bert

  3. Hi Bert,

    Great purchases. I personally prefer Royal Dutch Shell in the oil & gas industry, mostly because I’m an european investor and because they are better placed currently for the future. I do own some XOM stocks, at the moment I wouldn’t add any stocks to both of those positions. The last time I added shares to these two positions was when oil was in the low 30’s. Because of the negative sentiment I could scoop up these shares at very low prices, I was just like a kid in a candy store in those days.

    Keep up the great work.

    Cheers,
    TLTI

    • TLTI,

      Thanks! I own XOM, CVX, RDS.A, and BP, so I can’t disagree with your strong opinion about Shell. I’d be interested to read more or pick your brain more about why you think they Shell is better suited for the future.

      Bert

  4. I’m seeing ITW purchased all over Dividend Blogs — it was on my short list for the month as well — but I ended up pulling the trigger on a much much risker bet NWL — time will tell if they can turn it around or not. I’m sure ITW will get in my portfolio sooner or later. Solid buys DD

    • Divs4Jesus,

      ITW is making an appearance on a lot of blogs and I’m sure IBM will be doing so as well. NWL is riskier for sure, but it also just popped in price. Just out of curiosity, what did you see in the company? Are you planning on holding for the long term, or was this a short term position?

      Bert

  5. Nice variety of buys here Bert. And quite a sizable amount too. That 4% yield sure looks mighty fine. I wish I had added to T when it was beaten down. But due to no funds available, I had to pass up on the sale. I am looking at initiating a position in Illinois tool works soon. Their dividend yield and growth are looking very promising.

    Nice purchases! Keep up the awesome job

  6. I really like these purchases Bert, and I too was eyeing XOM for an add but I needed to reload on some capital so I wasn’t able to grab some below $80/share. Still keeping an eye on it though as I would like to add some more. Mapping out my primary watch list for November now.

    It is great seeing all of your buys, as you are crushing it lately!

    • DivvyDad,

      Thank you very much. Too kind. I’m sure the volatility isn’t ending anytime soon and I wouldn’t be shocked if the price falls below $80/share once again. If it does, I’ll be joining you on the purchases. What other names are on your watch list for the coming month?

      Bert

  7. Interesting purchase with XOM, but totally makes sense. Both XOM and T are companies I buy on a regular basis. But, unlike T, I practice traditional DRIP investing with XOM. Sounds like you made a great buy, especially since, as of today’s writing, the price is back up above $80 per share.

  8. Great purchases! Also have XOM and T in my own portfolio.

    I would love to open a position in ITW too, because the current valuation seems great and I don’t have anything from the industrial sector. I’m hoping the stock price doesn’t increase too much before I can get my hands on some extra cash.

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