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).
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:
- 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.
- 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.
- 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.
- 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!