Lanny’s Dividend Stock Purchase Activity – August 2019

On your journey to financial freedom or financial independence, you have to stay hungry out there.  August brought many stock opportunities and I was going to feed that hunger by making dividend stock investments, in order to take steps closer to being financial independent.  In August, I was able and lucky enough to make 4 dividend stock purchases and my investments only covered two different companies!  The investment purchases were for one company already in my portfolio and one new addition to the dividend family!  Time to check out my August activity!

The stock purchases

August definitely was busier than previous months, as the stock market went through a turbulent time period with recent trade tariff discussion and trade wars with China.  This sent stocks swirling downward.  However, by a simple mention of stalling discussions or working things “out” with China, markets come right back up.  It’s the funniest thing to watch, since Jim Carrey’s comedic performances in the 1990’s.

Since the stock market did drop quite a bit, on a few occasions, during the month, I was able to make a few dividend stock purchases.  How do I make stock purchases and screen for dividend stocks?  I usually put the stocks through our Dividend Diplomat Stock Screener and trade on Ally’s investment platform.

See – Dividend Diplomat Stock Screener

See – Financial Freedom Products

This month, I invested my hard earned capital into a company I already own and initiated a position in a wonderful Dividend Aristocrat.  I love to add to current positions and love to employ an ~5% rule.  That 5% rule is when a stock drops ~5% since the last purchase price and nothing fundamentally changed, then add to that position.  Over $4,700 was deployed during August into dividend income producing stocks.

How do I build the capital to make these stock purchases?  I save anywhere from 60-85% of my take-home pay and strongly believe Financial Freedom does not happen by hitting a home run on an investment.  Financial Freedom is mostly dependent upon your ability to save money, plain and simple.  Therefore, I work my butt off to make sure expenses remain in-check and that my savings rate are meeting our investment and financial independence goals!  Then, you rinse and repeat.

Stock Purchase – Cummins, Inc. (CMI) – 3X

Cummins, Inc. (CMI) was first purchased by me back in July 2019 at a decent price of $166.25.  Decent pricing became significantly better in August, to say the least!  This is where my 5% rule came to play and I started to add quite a bit to my position during August.  What else is better than buying an undervalued dividend income stock?  Buying them at a lower price, of course!  

When using our Dividend Stock Screener, we look at these metrics:
P/E Ratio less than the S&P 500
Payout Ratio less than 60% – See – What is the payout ratio & how do you calculate it?
Dividend Growth – See – Impact of the Dividend Growth Rate

  1. Price to Earnings: Analysts are anticipating an average earnings of $15.77.  I captured the purchases below in a snip and you can see my 3 purchase points during August – $157.10, $148.39 and $142.29; each 5.50%, 5.54% and 4.11% lower than the previous purchase!  The most recent purchase of $142.29 was 14.4% lower than my first purchase.  Therefore, with expected earnings at $15.77, the P/E ratios, in order, were 9.96, 9.41 and 9.02.  Each ratio was far below the S&P 500 P/E ratio.
  2. Dividend Growth: As stated earlier, they have increased their dividend for over 10+ consecutive years.  Their last increase was 15%, but can be anywhere from 5-25%.
  3. Dividend Yield: CMI produces $5.244 per year in dividends.  Their dividend yield, at time of each purchase, was 3.33%, 3.53% and 3.69%, well above the S&P 500 (on average).
  4. Payout Ratio: Based on expected earnings of $15.77 and a dividend of $5.244 per year, this equates to a payout ratio of 33%.  Another low payout ratio company.  This leaves more room for dividend increases!

Here is proof of the investment purchase below:

In summary, I purchased CMI 3 different times, adding a total of  24 shares during August for a total cost of $3,591.47. The 24 shares added $125.85 to my forward dividend income projection.  In total, I own 30 shares that produces over $157 going forward!

Stock Purchase – 3M Company (MMM)

FINALLY, I have now gotten into the dividend aristocrat, that everyone knows and loves in 3M (MMM).  I know Bert has always been adding to his position of 3M and glad to finally be in good company.  For those that haven’t read yet, but 3M has always been one of Bert’s 5 Always Buy Stocks.

See – Bert’s 5 Always Buy Stocks

  1. Price to Earnings: Analysts are expecting $9.41 this year.  At a purchase price of $163.24, this equates to a price to earnings ratio of 17.34.  Not the lowest p/e ratio, but is still below the S&P 500, on average, which is approximately 21, at this time.
  2. Dividend Growth: 3M is a dividend aristocrat and have actually increased dividend for 61 consecutive years.  Talk about history.  Their 3 year growth rate is 9.30% and most recent increase came in at 5.89%, so much lower than recent history.
  3. Dividend Yield: MMM produces $5.76 per year in dividends.  Their dividend yield, at time of each purchase, was 3.53%, well above the S&P 500 (on average), which hovers around the 1.90-2.00% mark.
  4. Payout Ratio: Based on expected earnings of $9.41 and a dividend of $5.76 per year, this equates to a payout ratio of 61%.  This is right at the ceiling of where I like the payout ratio to be.  However, they’ve gone through all cycles from an economics standpoint and this doesn’t scare me too much.  Still have plenty of room for safety.

Here is proof of the investment purchase below:

In summary, I purchased MMM shares on 8/6/2019, adding 7 shares to my portfolio for a total cost of $1,146.61. The 7 shares added $40.32 to my forward dividend income projection.  I would love to keep adding to MMM if they get back into the $150 range!

Summary & Conclusion

Therefore, I deployed a total of $4,738.10 in capital and added $166.17 in forward dividend income.  The average dividend yield on this round of dividend stock purchases equates to 3.50%.  I am hungry and anxious to add more to my newly found 3M position, that’s for sure!

I will maintain my main message.  Stick to the strategy that works for you, but review if there is anything that may impact your strategy going forward.  You are in control and the emotion button is hard to turn off.  Persevere and stay consistent, if you can and are able to.  I am locked in and ready for further opportunities.  This was one step closer to financial freedom and I hope to continue making strides.  Lastly, my dividend portfolio has been updated.

What other investments are you seeing out there?  What industry has been your preference as of late?  Anyone just stock piling cash?  Thanks again everyone, and, as always, good luck and happy investing!

-Lanny

Facebooktwitterredditpinterestlinkedinmail

27 thoughts on “Lanny’s Dividend Stock Purchase Activity – August 2019

    • PCI –

      Yes sir! You know it, trying to throw down stacks as often as I can. I’m strapping up more ammunition this month, after August’s capital deployment.

      Time to keep moving forward, financial freedom awaits PCI!

      -Lanny

  1. I like those purchases, Lanny. I bought MMM at the end of last year and am looking to average down. CMI is one that interests me as well.
    It was a nice bump to your forward dividend income! Financial freedom is coming your way…

  2. Don’t know much on CMI, but I also have been adding MMM. Looking at Yieldchart.com you see that the dividend yield for purchases has been greater less than 5% of the time since 10/95. Be a buyer of above average businesses, at below historic average valuations with above historic average dividend yields, being more patient than the average investor, and on average, things will work out well. MMM fits the bill using this guidepost.

  3. Since I added to my 3M I like that purchase. CMI definitely looks like an intriguing investment candidate. Solid dividend growth, low payout ratio and low multiple. That’s a great combination especially with a starting yield up near 3.7% for that last slug. I’ve got enough cash for one purchase for sure but nothings really caught my eye just yet. Those last few days last week made me lose my interest to add, but I know there’s opportunities out there.

  4. I love me some 3M so I can only applaud your decision to add more shares.

    Shares have come down after my initial purchases so I’m down 2,75% but would gladly buy more of them in the future.

  5. Now that’s some serious investing Lanny. I like both companies and have both. If you keep investing at that rate, you’ll hit financial independence faster than you think. I need to save more of my take home pay to get to that level. I am saving about 10% a month at this time.

    – John

      • I’m seriously considering cutting my DirecTV. I realize I only keep it because I like watching my baseball team. There is no streaming option at this time and I’m blacked out on MLB.com.
        …and I like rewinding.. But it’s just not worth it.
        There are 50 over the air tv stations in Seattle and I think there is an OTA box that can pause and rewind live TV.
        That will add $75 per month.

        Then there is Google Fi once it fully supports my phone. That will save about $50/mo with my data use.
        I just cancelled HBO after Game of Thrones. $20. Cancelled Hulu – $5.99.
        So I’m getting there.

  6. Congrats on your purchases. It’s incredible to think of how your current purchase will compound over the next few years alone, and then factoring in all your past purchases, it’s easy to see why the DGI strategy works.

  7. Lanny,
    Nice, you have so much $ going into buys you have moved to monthly summaries! That $166 dollars is a few more hours a each year you don’t need to work really. Keep it up. Like CMI, loving that MMM deal that is out there now.
    – Gremlin

    • Gremlin –

      You know what, I didn’t even realize that you are probably right. I think going to the monthly summaries, due to frequency ends up helping in that facet. I will keep pumping those dollars, so long as I have them! That’s a few extra hours per year of freedom I’m getting… a few more hours closer to the 8,760 hour goal!

      Whoa… thinking of that… have we thought of calculating out the cost per hour of living? Here comes a fun article for me to write tonight!

      -Lanny

Leave a Reply

Your email address will not be published. Required fields are marked *