I just couldn’t sit on the sideline any longer. For those of you that have followed our blog over the last month, you would have realized that there was one stock I have been fixated on…Target (TGT). It was the number 1 stock on my June watch list for a reason. Over the month, I was patiently waited for the right moment to strike. When I went to buy, the stock price increased. When I wasn’t able t access the internet to actually purchase the stock, the price fell. Finally, the stars aligned as the markets had two terrible days after the Brexit situation. Time to check out why and most importantly, how much TGT stock I purchased this week!
This week, I purchased 50 shares of Target (“TGT”) at $67.96/share. Luckily for me, I had a free trade credit with Capital One Investing; so the total cost of the purchase was only $3,397.90. This purchase added $120 to my forward dividend income, bring my total dividend income total to $2,912. Man am I close to crossing $3,000! Watch out Lanny, I’ll pass you and your recent milestone before you know it! This may sound strange, but the purchase just felt right and I couldn’t be happier to add the company to my portfolio. Here were some of the reasons why I purchased TGT and some other fun facts/things about the purchase that I wanted to note to all of you:
- The metrics CRUSHED our stock screener and overall were looking very good. I won’t go into too much detail about them because Lanny did a great job summarizing them when he purchased the stock a couple of weeks ago. For the detail behind the metrics, I suggest reading his TGT purchase article! Buy some of the metrics that jumped out to me were the dividend yield (3.5% at the time of purchase), payout ratio (47%), dividend growth rate (5 Year Average DGR = 15%, 3 Year Average DGR = 11%), and P/E Ratio (slightly over 13X at time of purchase). As I said earlier, some great looking metrics.
- I wanted to focus back to the topic of dividend growth. The recent dividend growth is impressive, especially considering the trend over the last year has been to lower your dividend growth rate or even cut it! TGT’s last dividend increase was 7% and represented TGT’s 45th annual dividend increase…aka TGT is a Dividend Aristocrat. One of my 2016 goals was to invest in 5 new Dividend Aristocrats to improve the quality of my dividend income stream. Before this purchase, I had only 1 to date. So now, I have now accomplished 40% of this goal. Inching closer, but still some work to do!
- Over the last year I have taken steps to diversify my portfolio and reduce my allocation in oil and utility stocks. My purchases this year have been in financial (Citizens and Northern) and Asset Management (T.Rowe Price), and pharmaceutical (Pfizer). What’s funny is that through this, I have never purchased a large retail store. And I love stocks that impact consumers daily life. Well, with this purchase, I have officially added a new industry to my portfolio. Any chance you can to diversify your portfolio with a great yield and a strong company, how can you say no?
- Earlier in the year Lanny got me hooked on the concept of buying stocks in large purchases. It was nice to unload nearly $3,400 and buy an even 50 shares of the company. Hypothetically, if the price remained the same for the next four quarters, DRIPing $120 in dividend income would net me about 1.8 shares, which would then increase my forward income by $4.23 anually. You all know and get the point I am trying to make. The larger the purchase, the larger the DRIP, and the sooner the power of dividend re-investing begins to pay dividends.
- First, I don’t ever buy a stock off of sentiment. Heck, if I bought every product my wife and I used my portfolio and dividend income would both be terrible! So this point is more of a bonus or icing on the cake fact. What made this purchase fun was the first joint stock my new wife and I purchased together happened to be the one place that we shop at more than any other store. Owning stock in the company will make shopping there even more fun and every purchase we make is contributing to the company’s ability to grow its dividend. That’s a win-win, right? Now I must spend more while shopping! Kidding, kidding, especially after Lanny’s “Every Dollar Count” has motivated me to save as much as possible to invest now!
A great stock, with a great dividend history, showing some great dividend metrics, at a great price…..how could I say no to purchasing shares? I mentioned earlier that I couldn’t be happier with my purchase and I was even reminded of this as I wrote the article. TGT just happened to be the perfect fit for me! I guess you can add me to the growing list of dividend growth investors in the community that purchased TGT over the last few weeks.
What are your thoughts on my purchase? Would you have added TGT or opted for Walmart instead? If you weren’t watching Target, what industries are you watching instead? Or are you sitting on the sideline all together as the Brexit dust settles?
-Bert