Yesterday was a very fun day for me as I quickly went from a passive trader who was standing to the sideline in a matter of minutes. My purchase on Friday shared a lot of parallels with a situation from a month or two ago, which resulted in learning a valuable investing about always having a watch list prepared. The best part…the result was different and I couldn’t be happier. See why I purchased Emerson Electric (EMR) yesterday.
I won’t go into too much detail about why I purchased Emerson Electric because the stock has been getting a lot of coverage on our website recently. Heck, Lanny loved the metrics to the point where he also purchased the stock this week (If you want the most up to date metrics, check out his purchase article). Shortly, EMR has current dividend yield north of 4%, has a long track record of increasing their dividend (58 years), has a payout ratio below 60%, and has averaged a 5% dividend growth rate over the past five years. What’s not to love about this Dividend Aristocrat?
To me, buying Emerson on the company’s slide is a given considering the strong fundamentals listed above, our stock analysis from a few months ago, and the fact the company passes of Dividend Stock Screener with flying colors. Great company, strong yield, great fundamentals. The best part of this purchase was…you guessed it….the story behind the purchase. Come on, do you think each stock purchase is made by having a perfect plan, logging onto the website, and simply executing the trade? Heck no! The stock market is volatile (especially recently) and can have sudden swings that throw curveballs at us investors.
On the day I purchased Emerson, my fiancé and I were flying to St. Louis to visit her old college roommates and meet their newborn children. I hadn’t been to St. Louis in 3+ years, so I was excited to visit, explore the city, and re-unite with the gang. Our flight landed at 8:40 AM central standard time, just a few minutes after the market opened. I turned on my phone and had a few text messages from Lanny (are any of you surprised?) letting me know that the stock market was dropping right out of the gate.
Does this story sound familiar to any of you? For me, I felt like I was in déjà vu from a month ago when the stock market suddenly dropped and I learned that lesson about having a watch list prepared. What happened a month ago was shocking, as I received a text message from Lanny letting me know that the market was falling. Instead of buying a stock, I froze in place since I had no idea where I wanted to spread my capital. After this episode, I promised I would never let this scenario happen again and constructed an “Always Buy” watch list so I had a list of five stocks readily available in the event the market suddenly dropped again. One of the stocks on this watch list was, you guessed it, Emerson Electric.
So this time, when Lanny texted me that the market was sliding, I knew how to react and which five stocks I would potentially purchase. I opened my investing app and noticed that Emerson had the largest decrease of the five stocks on my watch list and just like that my investing decision was made. I was ready to purchase a stock within 30 seconds. But this story also required some luck since I was not using Sharebuilder’s automatic purchasing option that allows users to purchase fractional shares. Obviously I wanted to receive the highest number of shares possible, who wouldn’t? When I received Lanny’s text, I had enough capital to purchase 26.95 shares of EMR. In an angry manner, I began setting up an order that would automatically execute at the price that would allow me to purchase 27 shares on my phone and the trade executed within seconds as EMR’s price continued to fall. Just like that, I increased my position in EMR by 27 shares and added $50.76 in forward dividend income to my portfolio. Now, I own 65.6076 shares of EMR, which is projected to produce $123.34 in annual dividend income. All in all, the purchasing process took 5 minutes.
I’m lucky. Rarely do we get the opportunity to turn a negative experience into a positive one as quickly as I just did. Building that “Always Buy” list was huge for me as it allowed me to act quickly and decisively. I didn’t have to waste valuable time researching the best investing option to determine which stock I should purchase, and that made all the difference between capturing a downturn or missing it (as I did last month when I exited my meeting and the stock market had rebounded). Hopefully you all enjoyed the story behind the purchase as much as I did and liked the purchase itself.
Do you have any “Always Buy” stock list? Did any of you purchase stock this week? Are you considering purchasing EMR? If so, which company did you buy? If not, are you waiting to see what the market has in store for us? Are you currently watching any companies?
-Bert