Lanny’s Recent Stock Purchase – Bed, Bath & Beyond (BBBY), WestRock Co. (WRK) & Illinois Tool Works (ITW)

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!

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17 thoughts on “Lanny’s Recent Stock Purchase – Bed, Bath & Beyond (BBBY), WestRock Co. (WRK) & Illinois Tool Works (ITW)

  1. Great job deploying that new capital, and that’s fantastic that you were able to buy into all three stocks on your August watch list. That’s a nice bump to the forward dividend income as well.

    I just published my recap of my recent purchase – Cummins. I had an order in today for MDP but it didn’t reach my price. I’ve got my eyes out for opportunities to add to my current holdings but being patient to get the right prices. Keep up the great work Lanny!

    • DivvyDad –

      Thank you, thank you! Just lucky to have them on the radar, having the capital and $0 trading fees helps : )

      You are killing it, by the way, in your march towards financial freedom. Keep firm on your price, as it’s your money, you know? There are always opportunities out there, trust me!!

      Let’s stay after it… each day that passes.

      -Lanny

    • Doug –

      Haha, love the comments about the triple play. BBBY is def. worth a look, take a look at their balance sheet as well. Damn I wish I had more capital when I went to purchase them!!

      -Lanny

  2. Really like your ITW buy! I am also building a position this month. Added 2 weeks ago, will most likely re-add soon (have a limit set for the next buy). This a super high growth stock, with relatively high starting yield, having safety and increasing dividends since 1964: I wish I add found and bought this stock 5 years ago…. but it’s never too late 🙂 Thanks for sharing your buys Lanny

  3. Awesome (but not suprising) to see that you put your money where you’re mouth is. Being able to buy all three of the stocks on your watchlist must have felt great! You’ve got me interested in ITW as well and have added it to my own watchlist. Thanks for sharing Lanny!

  4. Hi Lanny,
    I like what I’m seeing – the metrics look good for all 3 companies and I think that you won’t regret making those buys. More than $100 additional forward income in a single month is amazing!
    I am not familiar with any of those companies (I guess their main market is US, at least definitely not Lithuania) but I will give a look at them. I would especially like to boost my dividend income in the first month of the quarter, so BBBY or ITW would be great additions (added them to my notebook for further investigation already)! 🙂
    Keep it up!
    BI

    • BI –

      Thank you SO much. I love dividends and these companies had amazing metrics. Were you a fan of Zidrunas Ilgauskas? He is from Lithuania and played for our team here in Cleveland, Ohio!

      -Lanny

  5. Man! You’re killing it! Love the ITW buy and Westrock seems like a smart buy too, I’ll have to look into that one more. Keep pushing the limit because the sky is the limit. You’re adding some serious forward income here!

    DI

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