Another cold month, but I am not talking about the weather. I am talking about the dividend stock purchases that were made during the month of March. I sat on the bench and my portfolio became stiff, with limited moves being made. However, my wife and I did sit down and go through our portfolio in early March and made investment decisions, which felt great. 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 purchase
I know that you can see the subject line below . I purchased a new stock, representing a new position for my dividend portfolio. They are a cash-flowig, chemical monster and this purchase is a small step towards financial freedom. Each move made, can only get you closer, as long as your expenses are controlled. However, this dividend stock is not on the, “Top 5 Foundation Dividend Stocks“, nor were they on any recent watch list. Those are a few reasons of what made this purchase more unique, than others. Also, I have not seen many, if any, individual bloggers out there purchase/own them. Without further a-do, let’s see my dividend stock purchase of Lyondellbasell (LYB) below!
Stock Purchase – LyondellBasell (LYB)
LyondellBasell, have you ever heard of them? Per my friends at wiki, LYB “is a public multinational chemical company with American and European roots, incorporated in the Netherlands, with U.S. operations headquarters in Houston, Texas, and global operations in London, UK. The company is the largest licensor of polyethylene and polypropylene technologies. It also produces ethylene, propylene, polyolefins, and oxyfuels.” LyondellBasell was formed in 2007 through the acquisition of Lyondell Chemical Company by Basell Polyolefins and are one of the world’s major players in the chemical arena.
As you will see below, their dividend metrics were looking promising and a good fit for my portfolio. This is my initial position and, sadly, as of April 3rd (date of this writing), their stock is already up almost 4% from the purchase date. Why do I mention? I want to add more than what I initially acquired, but due to filing my taxes, I had to conserve, as I may owe quite a bit. Here are the quick-stats on the stock purchase by using the Dividend Diplomat Stock Screener:
- Price to Earnings: At a $87.45 price with a forward earning projection of $10.46 for 2019 (from 22 analysts), this equated out to a p/e ratio of approximately 8.36 which is well below the overall market on average.
- Dividend Growth: Increasing their dividend for more than 8 years, they actually did not increase their dividend in January/February, as anticipated.. This could be due to the acquisition of A. Schulman and also the announced $15.00 special dividend to the convertible stock announced. See why the impact of the dividend growth rate is real!
- Dividend Yield: With the $87.45 price point, at a dividend of $4.00, their yield was at 4.57%, well above the S&P 500 (on average) and peer group.
- Payout Ratio: Based on forward earnings of $10.46 and a dividend of $4.00 per year, this equates to a payout ratio of 38%. A very low payout ratio, to which, they go back to their increasing ways.
- Balance Sheet: Rock solid with ~2x coverage of current liabilities with current assets, as well as a consistent long-term debt situation.
Here is proof of my investment:
In summary, I purchased 17 shares during the month for a total cost of $1,490.60. 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 new 17 shares added $68.00 to my forward dividend income projection. I wouldn’t mind adding more in the near future.
Stock Purchase Summary & Conclusion
Therefore, I deployed a total of $1,490.60 in capital and added $68.00 in forward dividend income. I dug deep and found a nice company in my research. This increases my weight in the industry of LYB and reduces my exposure elsewhere. In addition, LYB offers a healthy yield with a safe payout ratio. When reading their financial statements, they earn solid returns on their performance and keep their balance sheet simple. Further, last summer they announced a 58 million share repurchase program, which should help maintain earnings and dividend increases in the future.
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. Lastly, my dividend portfolio has been updated and I am locked in and ready for further opportunities. This was one step closer to financial freedom and I hope to continue making strides.
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