Whoa Whoa! The market has been on the slide, going downwards and man, new opportunities are unleashing! I know everyone has been busy with re-couping over the KMI decision – they will be fine, and with the large moat they have, should survive. It’s been a wild as all hell week and the capital has been unloaded. Let’s check out the purchase.
Archer Daniels Midland Co. (ADM)
Here I go… I did it again. I left another limit order until it expires on Archer Daniels Midland Company. Here is the brief background on the entity from google Finance:
“Archer-Daniels-Midland Company is a processor of oilseeds, corn, wheat, cocoa, and other agricultural commodities and manufactures protein meal, vegetable oil, corn sweeteners, flour, biodiesel, ethanol, and other value-added food and feed ingredients. The Company’s segments include Oilseeds Processing, Corn Processing, Agricultural Services and Wild Flavors and Specialty Ingredients. The Corn Processing segment is engaged in corn wet milling and dry milling activities. The Agricultural Services segment utilizes its United States grain elevator , global transportation network and port operations to buy, store, clean and transport agricultural commodities, such as oilseeds, corn, wheat, milo, oats, rice and barley, and resells these commodities primarily as food and feed ingredients and as raw materials for the agricultural processing industry. Wild Flavors’ products include flavors, colors, sweeteners and health ingredients, as well as ready-to-market concepts and complete solutions.”
We all know that Mr. Market continues to take a downward turn and in these scenarios – we have to try to be ready for opportunities that unlock themselves. This is one that I couldn’t pass up. Heck, I couldn’t even pass up the opportunity to purchase a dividend aristocrat for $13 or almost 27.5% lower than Bert’s purchase price into this company when he made his purchases – Bert – thank you for introducing this company to me and showing me the aristocrat that has been showing it’s true colors and true opportunistic value. Without your analysis and actions, I more than likely wouldn’t have come across or even considered this aristocrat. This downturn has allowed us investors to buy more dividend income for less price, one of the many benefits we can experience through this.
ADM Stock analysis
Why did I then purchase this company from a dividend and stock metric standpoint? Let’s run it through the Dividend Diplomat Stock Screener for old time’s sake:
- Price to Earnings (P/E) Ratio: Based on the forward EPS for 2016 at $3.08, the price of $34.50 computes out an 11.20 ratio – very undervalued, below the S&P and below the threshold we like to see.
- Dividend Yield: Additionally, at $1.12 annually per share per year, at a price of $34.50, this led to a yield of approximately 3.25% I like it, lower than my overall weighted average yield, but that’s okay, this is an aristocrat!
- Dividend Aristocrat Status – outside of my frequent purchases into EMR, I haven’t bought an aristocrat in a while it feels like. This definitely solidifies my desire to continue to build my positions here. Should Bert consider this now as one of his 5 always buy stocks? Over 25+ years of increasing dividends, gotta love it. Bert and I have been chatting about our new horizons and outlook and it appears aristocrats are going to be even more prevalent, so be on that lookout!
- 5 Year Dividend Average Yield: Additionally, I love it when the current yield trumps the heck out of the 5 year yield average. This is essentially higher by a full 100 bps or 1.00% than the 5 year average. This shows further undervaluation from my dividend investing mind.
- Dividend Growth rate: The impact of the dividend growth rate is huge, and they definitely aren’t shy here. The last year growth was 16.67% (HUGE!!) and the 3 year growth on average was right in line at 17.18% (love the consistency), definitely higher than my current weighted average DGR. This will allow my dividends to grow at a very solid rate for years to come it looks like.
Is that enough for us to make that decision here? It was definitely enough for me. Further, year to date the stock has been diving down to the tune of 34% since 12/31/14. It’s always hard to catch these types of long-term dividend stocks at such valuations. I just couldn’t pass up this deal here. Very lucky and fortunate I was able to capitalize on something here. (Insert sad comment regarding KMI’s 74% dividend cut…OUCH!)
ADM Stock Purchase Summary:
Without further ado, here is the summary of my stock purchase. I bought 50 shares of Archer Daniels Midland Co. (ADM) at $34.50 triggered by a FREE limit order trade (hell yes!). Total Price: 50 X $34.50 = $1,725.00. Total dividends added to my annual income based on purchase of ADM = 50 X $1.12 = $56.00 added per year or $14.00 per quarter going forward. I am very excited about adding this dividend aristocrat to my stock portfolio! Looking forward to seeing my dividends reinvest (which is what us Diplomats DO!!!).
What are your thoughts on the purchase? Making any moves in the downturn during the week of 12/7? What are you seeing? Would you be buying ADM at these levels? Please share and thank you all so much again for coming by, definitely appreciate it.