Wow! The market has been busy and I have been trying to stay as active as I can, as there are quite a few things going on outside of blogging, working and family. I typically buy big, blue chip companies who have that 10, 20 or even 30+ years of consecutively increasing their dividend. This recently dividend stock purchase may be a little different. One thing the community may not know is, I am Italian. Needless to say, I love pesto, pasta, meatballs and cheese. Here is a smaller company that I purchased, that sells these products! I will go into the details on how I came across them, how much I purchased and why I ended up purchasing them! On June 8th, I purchased 500 shares of Armanino Foods of Distinction, Inc. (AMNF)!
The Stock Purchase – Armanino Foods (AMNF)
Now, this all started with Jason Fieber and I’m going to link to his holdings, so you see that this in his portfolio. He purchased them on a few occasions and ever since then, the company was on my radar. Why were they on my radar? Well, their original pesto recipe came from Italy. Since I am Italian, there was a little bias in my following of the company, after Jason purchased them. Knowing that the original family emigrated to the U.S., just like my family, was also fun to read about. Landing in Northern California, they grew and marketed herbs and vegetables.
Officially a corporation in 1986, their primary products are Pesto, Pasta and Meatballs. What’s not to love? Net Income from 2015 through 2017 has increased from $4M, to $4.2M and to $5.1M. Quarter 1’s earnings were $1.3M, which would project to be $5.2M. Therefore, not only does the stomach expand, but the earnings and financial position is expanding as well. Further, earnings per share increased and are expected to be over $0.16 per share this year, based on the $0.04 per share in quarter 1. These results are looking very promising. However, being a dividend investor, we need to run them through the Dividend Diplomat Stock Screener.
Dividend Diplomat Stock Metrics
Here are the quick dividend stock screener metrics:
- Price to Earnings: At $2.57 with a forward earning project of $0.1636, this equated out to a p/e ratio of 15.7. The ratio is easily in the range that I like to see and shows sign of undervaluation.
- Dividend Growth: They recently announced this year a dividend increase of 12.5%, which was definitely better than usual. The primarily reasons for the strong increase is a combination of a lower tax rate and better overall sales. Further, the 5 year dividend growth rate is 6.72% and with a yield, seen below, that is a very likable growth rate. See the Impact of the Dividend Growth Rate.
- Dividend Yield: With the $2.57 price point, at a dividend of $0.09, their yield was at 3.50%, well above the S&P 500 (on average) and this yield was greater than my portfolio yield, as well.
- Payout Ratio: Based on quarter 1, the forward earnings is expected to be $0.1636. Therefore, with their dividend of $0.09 per year, this equates to a payout ratio of 55%. This is definitely within the dividend payout ratio range I like to see. See why the Payout Ratio is an extremely important metric.
Here is proof of my purchase:
In summary, I purchased 500 shares of Armanino Foods (AMNF) at $2.57 with a $6.95 trading fee for a total cost of $1,291.95. The 500 shares adds $45.00 to my forward dividend income project. Further, their dividends are received on “off-months” or January, April, July and October.
Armanino Foods (AMNF) Stock Purchase Summary & Conclusion
Talk about funny, right? I am sure this is the last stock that one would think I was going to buy. However, I am very happy with this purchase. It’s a different addition to my portfolio and one would say, one of the smaller one’s to boot. The food is great, dividend metrics look rock solid and they are starting to show consecutive dividend growth, as well, as they are 4+ years in their run. I am happy to add the Italian-based company to my portfolio holdings.
What do you think of Armanino Foods? Do you like them as a stock? Do you enjoy Pesto, Meatballs and pasta? Well, sometimes you have to go with your, “gut”, eh? I am curious on what you think! Thanks everyone for stopping by and looking forward to the comments.
-Lanny