Shortly after I purchased shares of KHC last week, I decided to jump back into the action. Mr. Market presented two opportunities for investments that were on my watch list. So I couldn’t resist the opportunity to add some nice dividend income, right? Here is why I purchased additional shares of Kraft (again) and initiated a new position in National Grid (NGG)!
Overall, this post my be brief/shorter than some of my other purchase articles. It isn’t that I didn’t research my investment decision. But I performed a detailed analysis of KHC in my last purchase article and Lanny did an excellent job summarizing NGG’s current profile in his last purchase article. So I don’t want to duplicate work. However, I will make sure to cover some of the important points in this article!
Stock Purchase #1 – Kraft Heinz Corporation (KHC)
Last week, I purchased shares of KHC at $57.93/share. KHC performed well in our stock screener as well. Their P/E ratio was below the broader market, the company’s payout ratio wasn’t too bad, and their dividend yield is solid. Sure, their dividend growth had a question mark based on the fact that the company did not increase their dividend in August. However, it wasn’t anything that was too concerning for me.
The, the day after I purchased shares at $57.93, KHC opened down over 3%! If I liked the metrics one day before, and there was no new news released, then how could I not buy more shares when the price fell? The answer was that I couldn’t.
I purchased 10 additional shares of KHC at $56.55/share. This purchase added $25.00 in forward dividend income. In total, I own 60.425 shares of the consumer staple giant. The position produces $151 in forward dividend income. If the price continues to fall, I may continue to build this position.
Stock Purchase #2: National Grid (NGG)
National Grid was a company that was not initially on my radar when I put together my September watch list. However, the utility sector continues to fall, which brought NGG and other great yielding companies on my radar. Then, I performed a quick sector analysis over my traditional investing portfolio (more to come in a later article) and determined that I was underweight in the utility sector. As with most purchases, Lanny brought a stock on my radar. Naturally, I loved his analysis and agreed with his conclusions, so I was convinced to initiate a position in NGG.
Here are some of the quick details. I’ll use the metrics from Lanny’s purchase article since my purchase price was essentially the same as his. Their P/E Ratio is ~7X, significantly below the broader market and the utility industry. Their dividend payout ratio is 41% and the company has demonstrated an ability to grow their dividend going forward. Thanks for doing the leg-work with this purchase Lanny. This company definitely crushes our stock screener!
With that in mind, I purchased 29 shares of NGG. This added $88.45 to my forward dividend income total. Since the company pays semi-annually in January and August, it will be a while before I receive my first payment from the company. However, I’m excited about adding this high yielding utility! Similar to Kraft, I will continue to add to my position if the stock price continues to fall or even remain at its current levels.
Summary – $113.45 in additional dividend income
All in all, another exciting week in the stock market and glad to move some cash from the sidelines! I couldn’t be happier with my purchases and the opportunity to add $113 in forward dividend income to my portfolio. Lanny’s new goal is to pump up his traditional investment account. Fortunately for me, both these purchases were in a traditional investment account and not my Roth IRA. While I still have a long way to go to reach Lanny’s level, I’m slowly starting to build up my traditional account!
What are your thoughts about the purchases? Are you a fan of KHC, NGG, or both? Would you have looked at other utilities over NGG? What about other consumer staple stocks?