Lanny’s Stock Activity Through April 30th

Can you smell it?  Yes, it’s earnings release seasons!  The time period where stocks can shake, rattle and roll with their prices on a daily basis.  Therefore, she made a dividend stock purchase for her account and we also made one for my portfolio.  It is time to dive in and see what move I made!

The stock purchases

April has brought many more dividend stock opportunities than in the previous months.  We have seen stocks plunge after earnings releases, but also have seem some sky rocket.  UPS had dropped over 10% in one day, as well as 3M.  Then, you have lawsuits being dropped and Qualcomm’s stock popping up!  It’s been a roller coaster of a month and I was happy to get in on the action.  At times, there are price points that you can’t pass up.  That is how I felt with my two dividend stock purchases below.  In April, I purchased additional shares into two dividend stocks, CVS and WestRock.

Stock Purchase – CVS (CVS)

They finally made it to my April Dividend Stock Watch List I released in March.  Further, their stock has dropped from 1/1 to 4/17 (date of purchase) by a whopping 20%!Why did I buy them?

First, I wanted to average down my position, as the price of $52.47 was 10% less than the last time I made a move (February).  They have had quite the downward spell on their price point and the stock has been oversold.  Additionally, I wanted to reach 60 shares or $4,000 total invested, which has been achieved.  Here are the quick-stats on the stock purchase by using the Dividend Diplomat Stock Screener:

  1. Price to Earnings: At a $52.47 price with a forward earning projection of $6.79 for 2019 (from 28 analysts), this equated out to a p/e ratio of approximately 7.27, which is well below the overall market on average.
  2. Dividend Growth: Same story as last purchase article.  Sadly, due to the debt load they took on to acquire Aetna, there is no dividend growth right now.  I don’t anticipate dividend growth until 4th quarter 2020.  Due to the halt to dividend growth,  was okay to pay at the price I did, to drastically reduce my cost basis and buy a higher yield.  This is the risk I am taking, as it doesn’t have the DGR checked.  See why the impact of the dividend growth rate is real!
  3. Dividend Yield: With the $52.47 price point, at a dividend of $2.00, their yield was at 3.81%.  Their yield is well above the S&P 500 (on average).
  4. Payout Ratio: Based on forward earnings of $6.79 and a dividend of $2.00 per year, this equates to a payout ratio of 29%.  CVS has a very low payout ratio.  Hopefully they use their cash flow for debt repayment at this time, to grow the dividend later.

Here is proof of my investment:

In summary, I purchased an additional 15 shares during the month for a total cost of $790.97.  The investment firm I use is Ally Invest and since my account is over a threshold, the fees are only $3.95 per trade.  We recommend them in our Financial Freedom Product listing, as their savings account is higher than most, as well.  The additional 15 shares added $30.00 to my forward dividend income projection for CVS.  My total position is at 62 shares, producing $124+ per year.  This position needs no more!

Stock Purchase – Westrock (WRK)

This is the FIFTH time I’ve purchased WestRock (WRK) and the last time was February 1st.  The last time I purchased WRK, they had a prince point of $38.82.  They are the 2nd largest American packaging company and one of the largest paper companies.  Further, they also own my favorite type of box – a pizza box, as they also acquired (three years ago) the largest maker of pizza boxes.  What’s not to love?

Well, they sweetened the deal, when their price dropped even more to $35.98.  This represents an additional 7.3% decline. How do they look, now, through the diplomat stock metrics?

  1. Price to Earnings: At a $35.98 price point with a forward earning projection of $3.99 for 2019 (from 14 analysts), this equated out to a p/e ratio of approximately 9, which is well below the overall market on average.
  2. Dividend Growth: Similarly, fairly young in their dividend growth infancy, at 4 years.  They are usually between 5% and 7% per year on the dividend growth stand point.  I can be okay with that going forward.  You’ll see why, with the yield below.
  3. Dividend Yield: With the $35.98 price point, at a dividend of $1.82, their yield was at ~5.06%, well above the S&P 500 (on average).
  4. Payout Ratio: Based on forward earnings of $3.99 and a dividend of $1.82 per year, this equates to a payout ratio of 46%.  Another, “sweet-spot” payout ratio.  They can grow dividends going forward, at a consistent rate, no problem.

Here is proof of the investment purchase below:

In summary, I purchased 30 total shares on 4/17/19 at $35.98 with a $3.95 trading fee for a total cost of $1,083.31. The 30 shares added $54.60 to my forward dividend income projection.  In total, I have over 112 shares producing over $204 in dividends per year!

Dividend Stock Purchase Summary & Conclusion

Therefore, I deployed a total of $1,874.28 in capital and added $84.60 in forward dividend income.  Two stocks purchased and two stocks that were already in my portfolio.  I have a total investment of ~$4,000 for CVS and a ~$4,750 for WRK.  Therefore, These two positions don’t need anything more, at this time, and I am looking forward to reinvesting those dividends!  At the current price, the reinvestment each quarter should add 0.60 shares of CVS and 1.40 shares of WRK.

I will maintain my main message.  Stick to the strategy that works for you, but review if there is anything that may impact your strategy going forward.  You are in control and the emotion button is hard to turn off.  Persevere and stay consistent, if you can and are able to.  I am locked in and ready for further opportunities.  This was one step closer to financial freedom and I hope to continue making strides.  Lastly, my dividend portfolio has been updated.

What other investments are you seeing out there?  What industry has been your preference as of late?  Anyone just stock piling cash?  Thanks again everyone, and, as always, good luck and happy investing!

-Lanny

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16 thoughts on “Lanny’s Stock Activity Through April 30th

  1. Nice buys Lanny and great increase in dividend income! CVS is still high on my watchlist, even though I need to replenish my cash reserves before I can make new buys. We will see what happens this summer. 🙂

    • MDD –

      Thank you for the comment! Yes, I think CVS price point – it just doesn’t make sense yet to me why it’s so fricken low! Had to scoop up just a little bit more with plans for the future.

      -Lanny

  2. Can’t go wrong with those valuations (pe 7 & 9) haha! Nice pickups and interested in seeing how the whole cvs acquisition thing plays out myself, gotta like their earnings from last week. Great message at the end, very important!

    • DivIncome –

      Thank you. Likewise – Aetna should be adding quite the punch to their operations and to create easier transitions for customers to go between both companies. I agree!!

      -Lanny

  3. nice buys and additional forward income.

    cvs has been on my watchlist for quite a while.

    wrk numbers seem solid too! i got to look into them. has their sales been going up or down?

    anyways keep it up Lanny
    cheers

    • PCI –

      Great question on WRK – they have primarily going up. They have been acquiring companies throughout the year, which helps bolster that part. They had higher Income before tax this quarter vs. last quarter. Therefore, margin is still solid. Let me know what you think!

      -Lanny

  4. Solid buys, Lanny! Those are very nice positions producing incredible amounts of dividends. Congrats on adding $80+ in forward annual dividends. Way to keep that dividend snowball rolling down the hill!

    • Thanks Kody –

      Wish it was $800 and not $80 being added : ) It’ll be nice to see CVS start to grow their dividend soon, as the impact will be felt, no doubt. Thanks again for the stop by!

      -Lanny

  5. Nice Lanny,
    I added 5 new positions and averages down 2 others in April. I’m kicking myself for not getting WRK, it’s taken off since your most recent purchase. It’s still cheap though so I may grab some in May when I raise some cash.
    Thanks April!

    -Brent

    • Brent –

      Still VERY cheap. I am topped out on this investment for now. You’ve been fricken busy over there, that’s for sure, which is extremely exciting. You are just adding mounds and mounds of income going forward.

      -Lanny

  6. Lanny,
    That is $80 more you don’t need to work for. I am long both, of them I think CVS will be a huge winner long run. That said, WRK is still going to be doing what they do, winning in the boring ways.
    – Gremlin

    • Gremlin –

      You are right. That $80 will grow without me doing much, as well – via reinvestment, dividend increases, etc..

      WRK is boring but funny – love them. CVS – this should be a monster and curious what they do to the industry!

      -Lanny

  7. Interesting to see you making moves! I recently bought into WBA but might add some CVS to boost diversity in my companies.

    Seems like there are some new opportunities rising for the DGI community.

    • Mr. Robot –

      Very nice! My wife picked up some WBA. Therefore, she has them and I have CVS, combined – we’ve got it covered!

      Today, yesterday, etc.. – opportunities are rising across the damn board! I love it and let’s get it!

      -Lanny

  8. I like your buys Lanny! CVS was one of my most recent purchases (I bought some at $53/share in March) and WestRock was on my latest watchlist. I decided to go with another company then (Uniqa Insurance Group, Austrian insurance company) but WRK is still in my sight. It’s a little bit sad that their price went up after their earnings release but it’s still attractive.
    I am also looking at MMM after their recent fall.
    BI

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