Lanny’s Dividend Stock Purchase Activity – December 2019

On your journey to financial freedom or financial independence, you have to stay hungry out there.  November was fairly quiet and December was no different.  Not surprisingly, the market continued to surge but one must stay consistent and find that one undervalued dividend stock.  Time to check out my December activity!

Investing consistently in Dividend Income Stocks allows you to create & build another income source, with Dividends.  This is my primary vehicle on my road to Financial Freedom, which you can see through my Dividend Income and my Dividend Portfolio, to which continues to build and build.

How do I make dividend 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 (one of our Financial Freedom Products).

See – Dividend Diplomat Stock Screener

See – Financial Freedom Products

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.  Nothing matters more than your savings rate on your journey to Financial Freedom, plain and simple.  Therefore, I work my butt off to make sure expenses remain in-check and that my savings rate is meeting our investment and financial independence goals!  Then, you rinse and repeat.

The stock purchases

First, as you re-call last purchase article I had, the S&P 500 broke through 3,140 for November.  Look at the chart below.  This was no different for December and into the first week of January.  The market went from above 3,140 to end over 3,274 to wrap up December & enter the first week of January.  Obviously, that is why I don’t try to time or predict the market, that’s for sure.

Even with the market screaming upwards, I was still able to find and invest into dividend paying stocks throughout November!

Stock Purchase – General Dynamics Corp (GD)

Well, well, well!  We have a NEW company added to my dividend income portfolio.  The dividend community always loves a Dividend Aristocrat, as well.  I am sure we all have heard of General Dynamics Corp (GD), right?  If not, here is a brief bio:

GD is an American aerospace and defense corporation. As of 2019, it was the fifth-largest defense contractor in the United States, and the sixth-largest in the world, by sales.  The company ranked No. 92 in the 2019 Fortune 500 list of the largest United States corporations by total revenue.

The dividend metrics for GD just felt right, as you’ll see below.  Further, if one cannot find a stock that’s in your portfolio already, what better way to add a new position and a dividend aristocrat, nonetheless.  See the stats through our screener:

  1. Price to Earnings: Analysts are expecting $12.89 for 2020.  At a purchase price of $178.41 this equates to a price to earnings ratio of 13.84.  Very low and significantly below the market, as a whole.
  2. Dividend Growth: Ring the bell baby!  We have a dividend aristocrat on our hands. GD has had 28+ straight years of dividend increases.  The dividend growth rate is 10.30% on average, over the last 3 years. Guess what?  GD has the same growth rate for the 5 year average, as well.  Absolutely love it.
  3. Dividend Yield: GD produces $1.02 per quarter in dividends or $4.08 per year.  At a share price of $178.41, this yields to 2.29%, which is just above the S&P 500 yield, on average.  Luckily, they have an above average dividend growth rate to trump the lower yield.
  4. Payout Ratio: Based on expected earnings of $12.89 and a dividend of $4.08 per year, this equates to a payout ratio of 31.65%.  Bring it on GD!  This is great, showing significant room for future dividend increases.  They have the ability to continue to increase their dividend at a 10% rate, no doubt.

Here is proof of the investment purchase below:

I purchased 10 shares during December for a total cost of $1,784.12. The 10 shares added $40.80 to my forward dividend income projection.  In addition, I am looking to acquire an additional 10-20 more shares of GD in the future if prices come back down, as they are up since my purchase.

Mini Stock Purchases (Less than $500)

None this past month!  Maybe in January.

My Wife’s Dividend Stock Purchases

My wife has an account that we also make dividend stock purchases into.  Though we are married, we are still running two separate, individual, taxable accounts.  All is good, especially because we use the same platform, but just haven’t wanted to deal with the administrative tasks of combining. In December, we made quite a few dividend stock purchases for my wife’s account:

We initiated one new position for her – with Unilever (UL) within her taxable account, and added to her Bank of Nova Scotia (BNS) position within her IRA account.  Her portfolio is full of safe and sound dividend investments and since we’ve been together, her portfolio has been blossoming into an extremely significant part of our family’s finances.

In total, $3,431.92 was put into investments, producing $142.00 in Dividend Income going forward.  This is an average dividend yield of 4.14%.

Summary & Conclusion

Another solid, consistent month.  Combined, my wife and I deployed a total capital amount of $5,216.04 for December and added $182.80 to our forward dividend income total (3.50% yield overall)!

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.

Therefore, we managed to stay slightly active during the month.  Did you stay on the sidelines, based on the market increase?  Any dividend stock purchases you were surprised about, based on what you see above?  Please share your thoughts and comments!  Thanks again everyone, and, as always, good luck and happy investing!

-Lanny

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23 thoughts on “Lanny’s Dividend Stock Purchase Activity – December 2019

  1. Lanny,
    Long GD, BNS, and UL over here. Very nice choices!
    at this point might as well put up pages on your wives’ portfolios. I know if my wife wanted to invest, I would definitely make it a friendly competition with a solid wager!
    – Gremlin

    • Gremlin –

      Looks like the dividend stock purchases are in good company with you. Might as well, we’ll have to see who’s portfolio is producing more income soon, side note – mine totally crushers hers : ) Joking, joking, it’s all combined/shared! What’s crazy is how the investing is almost on auto pilot now, except finding those undervalued stocks can be tough in today’s valuations. However.. there always is one… eh?

      -Lanny

    • PCI –

      A LOT of love – dividend aristocrat, hard not to see why : )

      And yes… there’s always a spot for a Canadian Bank or two, right? For some reason, their valuations are always good, I think the US needs to learn a thing or two.

      -Lanny

    • MDD –

      It’s weird – it’s normal/such a ritual now. Just save, invest as you go into undervalued companies. Then, you do it again and you do it again and again. We have been lucky, but it’s incredible seeing the impact. Thanks for the comment.

      -Lanny

  2. Congrats on another solid month of capital deployment! I noticed that we both initiated positions in GD within days of each other. Great minds think alike, eh?

  3. Thanks Lanny for pointig to GD. Definatly a good buy at todays market, altoug too low yield for me barely 1,5% post-tax (-30%). I saw growing sales, net income and even equity which is rare in these buyback fewer days 🙂 Leverage ok ~2x, P/E ~15 also ok. All is good here. Maybe its their sector where mr market is worry due to possible US defence budget cuts in LT perspective. You mentioned that its 5th laegest, what are the other 4 defence companies?

    • P2035 –

      Can you tell me how/why you use a 30% tax bracket for dividends?

      They are growing, definitely and their dividend growth rate AND streak is obviously rare today. Other names: Lockheed, Boeing, Northrop, Raytheon.

      -Lanny

  4. Lanny, great buys on your side. I am currently trying to shift my portfolio into more high quality stocks and pulled the trigger on GD myself. At such a low yield for me the growth rate also was the deciding factor. It is really hard to find undervalued, high quality stocks in today’s market. I will follow closely your candidate list.

    • DGJ –

      Yes, you definitely aren’t buying for a low yield, you are buying for the great financial metrics and dividend growth rate, which has been in the double digits, consistently.

      It is hard. BUT… you can always find one : )

      -Lanny

  5. Some great purchases over there, the thought “the gifts that keep on giving” comes to mind.

    I’m also don’t try to time the market since I have no idea where it’ll go especially in times like this where we hit new highs almost everyday

  6. It’s funny to see how the DGI community always seem to be buying the same companies at a specific time :). When I opened this post I thought to myself ‘Probably General Dynamics in here’. And yup, there it was. I also bought some GD recently.

  7. I bought some GD last month, adding to the position I started last April. I like the purchase, Lanny. Glad you are now a fellow shareholder.
    You and your wife are really saving nicely, resulting in being able to invest a very healthy amount. Tremendous work! You seem to be picking up momentum in your march to financial freedom.

  8. GD has been getting a lot of attention from DGIs lately. I like the financials, growth. Yield is a bit low for it to be a home run…but it looks like a 10% raise is around the corner. Hmmmm
    Earnings report on Wednesday, let’s see what happens.

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