It didn’t take too much arm twisting by Lanny to convince me to add to my stake in Procter & Gamble (PG) this week, especially after he took the first step, backed up his talk, and purchased 10.1 additional shares of the company earlier in the month. I have no shame in admitting that I followed his lead and purchased shares in the company because let’s be honest, it is a great company! Time to summarize my purchase of PG this week.
On Tuesday, I purchased 20 shares of PG, adding $53.52 in annual dividend income to my portfolio. With this purchase, I now own 51.4982 shares of the consumer stock giant that will produce $137.91 in annual dividend income to my portfolio. This is my first purchase of the 2017 and the first time I have stepped off the sidelines since I initiated a position in Realty Income in November 2016. Man is it exciting to be back in the game! As I mentioned earlier, Lanny has covered this stock a lot recently on our website, so I don’t want to spend the rest of the article repeating everything he covered in his purchase article and his Stocks To Look Forward To in 2017 article. It was a major influence on my decision and I am very lucky to have someone like him to push me into the deep end at times. But here are some of the reasons why I purchased 20 more shares of PG
- We all know this market has been hot lately and the S&P 500’s P/E Ratio is at a level I personally have never seen before (Remember – I’m 27, so I’m sure there are plenty of earlier examples of the market reaching insane levels. Just not when I was actively participating in the market). With few values out there, one of the industries I have found some value compared to the market is the Consumer Goods market. PG’s P/E ratio may not be low by any standards, it is below the current market place, which means that it passes Screener #1 of the Dividend Diplomats Stock Screener.
- I love the fact that PG is a Dividend Aristocrat. Lanny and I have been talking a lot about how there have been many companies with stagnant dividend growth rate. PG’s dividend growth rate of late isn’t going to set any records, but I like the fact that the company still continues to increase their dividend. I’m hoping for a larger increase in April and I cannot wait to see what they have in stock for us.
- This one point may sound weird, but I was not happy with the size of my position and I wanted to increase my stake in this stock. We talk often how this is one of our five foundation dividends stocks for a portfolio. I’ve been trying to build less larger positions recently versus more small positions recently. While I’m not quite doubling my position in PG, I will not own over $4,300 in the company and PG will be the third largest individual stock holding in my portfolio. We call it a foundation stock, so I wanted to make it such in my portfolio. Two of the other contenders for this purchase were Kimberly Clark (KMB) and Unilever (UL). However, with this mindset, I opted to increase one position by adding to PG versus holding two smaller positions. I’ll hopefully initiate a position in both companies one day too when I can make one massive purchase.
- I was able to buy this stock right before the ex-dividend date to ensure that I am going to receive a dividend on this purchase. So I won’t even have to wait one month to get my first dividend check. This point played a HUGE roll in the timing of my purchase and I may have waited a little longer if it weren’t for the rapidly approaching ex-dividend date.
Overall, couldn’t be happier with my purchase. While there isn’t much to add here in terms of a financial analysis, because Lanny has done a great job analyzing the company over the last month, I hope this provides some insight into why I decided to purchase PG at this time. At the end of it all, I just want to continue building positions in amazing companies that continue to grow their dividend income on an annual basis. I’m going to try not to over think investing in 2017 as I look to accomplish my goals and take the no-brainer investment decisions while they are right in front of me. To me, adding to PG this month was that kind of a decision. I have a few companies in mind for my next purchase, but I want to take some time to reserve some cash and save to pay off our student loans. Hopefully I’ll have another no brainer investment decision to report to you soon because if it ends up being the stock at the top of my watch list, it definitely will be considered a no brainer!
What are your thoughts on my purchase? Do you like consumer stocks at the moment? Would you have purchased KMB or UL over PG at the current prices? What stocks are on your radar?
Bert