August has been hot and heavy with dividend stock purchases already!  As you can tell from the title of the article, this isn’t about just one dividend stock purchase.  We are talking a nice double triple punch to the portfolio.  However, “punch” has a much more positive tone.  Prices were ripe and I deployed a bit of capital into three young dividend producing & growing stocks!

The Stock Purchase #1 – Bed, Bath & BEyond (BBBY)

Ah, yes, a stock that was on my robust August Dividend Stock Watch List.  I didn’t have a significant position created here, but nonetheless, I did start one.  I wanted to see how this company performs, as they’ve been fairly successful and I know a few other retailers that continue to do fairly well, by managing their balance sheet and cash flow.  Once you see the metrics below, I hope you agree.  Further, my fiance and I have been planning the wedding and you guessed it, BBBY is on the registry.  I realized over the last 5+ years of going to weddings and helping pick out items for bridal/baby showers, this has been one of the go to places.

Dividend Diplomat Stock Metrics

1. Price to Earnings: At $18.75 with a forward earning projection of $2.28, this equated out to a p/e ratio of 8.22.  This is insanely low, I know, and you don’t seem to many massive companies of this size, at this level.  They are in retail, with the headwinds of Amazon, Target and Walmart – I still see people going in/out of these stores.  Further, for wedding and baby registries – this place has been an absolute staple from talking to ~15 or so people.
2. Dividend Growth: They are a young dividend company, going on three years of dividends and dividend increases.  They increased back in March to the tune of 6.67%.  I can see this to be similar going forward.  See the Impact of the Dividend Growth Rate.
3. Dividend Yield: With the $18.75 price point, at a dividend of $0.64, their yield was at 3.41%, well above the S&P 500 (on average) and above my dividend yield, overall, on my portfolio.
4. Payout Ratio: Based on forward earnings of $2.28 and a dividend of $0.64 per year, this equates to a payout ratio of 28%.  This is significantly lower than what I usually see in retail, which is going to allow room on their balance sheet, cash flow usage and ability to increase dividends or buy back shares.  I love it.  See why the Payout Ratio is an extremely important metric.

Here is proof of my purchase:

In summary, I purchased 40 shares on 7/31/2018 of Bed, Bath & Beyond (BBBY) at $17.75 with a $0 trading fee for a total cost of $750.  The 40 shares adds $25.60 to my forward dividend income projection.  Further, their dividends are received on “off-months” or January, April, July and October.

The Stock Purchase #2 – WestRock Co. (WRK)

You know I had to do it!  They are a multinational provider of paper and packaging across the world.  They are on track for $24B in annual sales and are massive.  Further, they are dominating the pizza box market, whoo!  I am serious, have to go to their recent 10-Q and search the word “pizza”, you won’t be disappointed.  The metrics stacked up well for WRK and this dividend income stock is strapped & ready to produce dividends on a quarterly basis.  Check out the metrics and the summary below.

Dividend Diplomat Stock Metrics

1. Price to Earnings: At $53.49 with a forward earning projection of $4.04, this equated out to a p/e ratio of 13.24.  The ratio is easily in the range that I like to see and shows sign of undervaluation, as the S&P 500 is in the low 20’s.  Further, their price dropped quite a bit on Thursday, the 2nd.
2. Dividend Growth: They will be announcing their increase in November.  They’ve only been paying dividends for 3 years.  The average has been around 10%, dating back to their first dividend.  I expect mid to upper-mid single digits, such as 5-8%, for this November.  See the Impact of the Dividend Growth Rate.
3. Dividend Yield: With the $53.49 price point, at a dividend of $1.72, their yield was at 3.21%, well above the S&P 500 (on average) and just above my dividend yield, overall, on my portfolio.
4. Payout Ratio: Based on forward earnings of $4.04 and a dividend of $1.72 per year, this equates to a payout ratio of 42%.  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 23 shares on 8/2/2018 of WestRock Co. (WRK) at $53.49 with a $0 trading fee for a total cost of $1,230.21.  The 23 shares adds $39.56 to my forward dividend income projection.  Further, their dividends are received on “off-months” or February, May, August and November.

The Stock Purchase #3 – Illinois Tool Works Inc. (ITW)

BOOM!  Yes, I think for the first time in Dividend Diplomat history – I bought all three stocks that I listed on my watch list baby!  You could say that their 28% dividend increase had something, er, a lot to do with it.  Check out the metrics below everyone.

Dividend Diplomat Stock Metrics

1. Price to Earnings: At $139.75 with a forward earning projection of $7.61, this equated out to a p/e ratio of 18.36.  A great price to earnings ratio for a company like this – a dividend aristocrat.  Further, their price dropped quite a bit on Wednesday, the 8th and this was after their huge dividend increase!
2. Dividend Growth: They just announced a 28% dividend growth rate, and their 5-year average is over 15%, with their 3-year average is over 17%, in terms of growth rate.  Their 5-year dividend yield, on average is 2.00% and, as you’ll see with their current yield – they are a place they haven’t been in a long time!
3. Dividend Yield: With the $139.75 price point, at a new dividend of $4.00, their yield was at 2.86%, well above the S&P 500 (on average) and slightly lower than my overall portfolio.
4. Payout Ratio: Based on forward earnings of $7.61 and a dividend of $4.00 per year, this equates to a payout ratio of 52.5%.  This is definitely within the dividend payout ratio range I like to see.

Here is proof of my purchase:

In summary, I purchased 10 shares on 8/8/2018 of Illinois Tool Works Inc. (ITW) at $139.75 with a $0 trading fee for a total cost of $1,397.50.  The 10 shares adds $40 to my forward dividend income projection.  Further, their dividends are received on “off-months” or January, April, July and October.

Stock Purchases Summary & Conclusion

Well there we have it!  In 6 days I deployed almost $3,400 in capital, $3,377.77, to be exact.  This increased my forward dividend income by $105.16 on a go-forward basis.  I know they aren’t the most popular names out there and are in completely different industries that most don’t/aren’t currently investing in.  What’s also cool about this is that Bed, Bath & Beyond and WestRock are on the same dividend life of going on three years.  It should be a fun story to see these two companies unfold for their dividend path.  Their metrics seem strong to continue to fuel the fun-loving dividend engine for a long time, not to mention their solid balance sheets, as you read in my watch list article.  Then, you have Illinois Tool Works (ITW) a dividend aristocrat going on 54-55 years of straight divvy increases!

However, I won’t be done, just yet.  I am feeling rejuvenated to be back on buying sprees and I would expect more from me, which ultimately does mean – more posts baby!  I’ll keep everyone in the loop on what stocks I am adding to my dividend portfolio.

What do you think of the purchases?  Like or hate the price point?  Are you buying something else?  Thank you for sharing your thoughts everyone and, as always, good luck and happy investing!