November is underway folks! The market has had a blood bath out there and it was time for me to re-up in a position that I already had a stake in. Let’s just say – it was about time to pump my retirement accounts back up, since I haven’t contributed to that bad boy in months. Let’s see what purchase transaction I had!
HCP, Inc. (HCP)
The last time I purchased HCP was back in May 2015 and that was my 2nd time purchasing them. Let’s just say I purchased them for $39.32 per share. Well Mr. Market had a downturn and I had to scoop up more of this dividend aristocrat where and when I could. Third time again for this company…. which has been a common trend – such as KMI and Emerson Electric. But the question is, why did I purchase them? Let’s do the quick and skinny from the dividend diplomats stock screener:
1.) First – they are a dividend aristocrat, having increased dividends for 25+ years, this is just incredible. Easy stock to buy when you have this sort of history… which falls into my 2nd point.
2.) Their 5 year dividend growth rate is 4%. Not amazing and not over my weighted average dividend growth rate for my portfolio, which has decreased down to approximately 5.80% – partly due to larger companies paying smaller than normal dividend increases. The growth rate is great for this reason, however…
3.) Dividend yield – with an annual dividend amount of $2.26 at a price point of $34.10 that I bought in at on the 6th, equates to 6.62%! Whoa… this is about 2.5% higher than my overall portfolio. Combining that with a 4% 5 year year dividend growth rate, we are at a dividend power figure of 10.62%… I can get behind that.
4.) One of the largest health care REITs and they have to pay out 90% of earnings due to the REIT status
5.) 5 year dividend yield average is 5.30% and at 6.62%, this represents 132 basis points higher than the historical average, money and I like this.
It’s interesting. The healthcare and the interest rate environment continues to change and cause MUCH volatility within the market – especially down to the health care REITs. I felt confident that with the industry HCP is in, the long-term track record of this company and it’s current dividend metrics compared to the historical figures playing well – it was hard to tell myself not to purchase this stock. I could have waited and picked it up for a quarter or so less than this during the 2nd half of the afternoon, but I didn’t make a substantial purchase, as you’ll see in my summary below. I will say this – extremely excited to have added to my position here and to knock out some ROTH IRA contributions – remember my – set it and forget it article? That’s definitely playing here.
HCP Stock Purchase Summary
I purchased midday on November 6, 2015 20.00 shares at $34.10 per share + commissions of $6.95. Total cost = $688.95. Dividend Income added at $2.26 per share per year, 20 X $2.26 = $45.20 added. Total shares of HCP, Inc. (HCP) owned now stands at ~71 shares in my portfolio, which now produces a forward annual amount of over $160 of dividend income per year. At the price of approximately $35 per share (random average), that is close to 4.6 new shares added per year, which would add $10+ going forward upon reinvestment at the analyzed price of $35. Loving this! Also, if 2016 brings 4% growth to the dividend, $160 would turn into $166 and so forth… without including new dividend reinvested shares throughout the period. One last piece of icing – my last purchase price at $39.32 per share equated to a 13.26% drop, you know my rule… > 5% since the last time I purchased and it was hard to not buy them. Love to average down my cost this way, add more yield for less money (one of the reasons why a downturn is good for a dividend investor). Further this aims me closer to my $6,750 projected dividend income goal by the end of the year, still have a mountain to climb, but this REIT is helping me get there.
All in all, I was happy with this purchase and it had been essentially three weeks since I made a move into the market, as stocking capital during appreciating days in the market isn’t a bad thing. Just need to find signs of opportunity, especially when an Aristocrat gets a beating and strike when you can/are able to. What does everyone think of this dividend stock purchase of HCP? Think this was a good purchase? Would you buy? What else are you seeing? Thank you for coming by and as always – appreciate your input and comments. Talk soon!
-Lanny