Lanny’s Stock Purchases January 16th Through February 1st

I am happy to see the Polar Vortex didn’t take anyone down, I hope.  We are a full month down and it was nice opening February up on a Friday, as I was able to squeak a purchase in on that day.  What’s wild, though, is we have gone from devastating cold temperatures, to running outside in shorts a few days later.  Thank you OHIO!  Well, enough about the weather, it’s now time to check out my dividend stock purchases over the last two weeks of January and first day in February!

The stock purchases

It’s the start of the new year and I feel refreshed on the path to add more investments and dividend income through capital contributions, as the main artillery.  I am soon to be eligible to contribute to my new employer’s 401(K) plan (will start on 2/1/19, due to 6 month waiting period, which I’ll receive on the 2/8/19 pay).  Therefore, I currently have more cash on hand to deploy in the market and it made sense to start juicing up my taxable account.  The stock purchases you will read below may not be as significant of a purchase that I typically make (primarily due to building positions, etc.).  Lastly, one purchase was actually/already for my Roth contribution of 2019.  However, enough of my rant, let’s see what stock purchases I made over the last two weeks!

Stock Purchase – Abbvie (ABBV)

First, this has been a very popular company for dividend growth investors, from what I’ve read in the community.  Abbvie was a spinoff from Abbott Laboratories (ABT) in 2013 and have continued being a dividend machine ever since.  They were recently on my dividend stock watch list for February, though, I did buy them in January!  This big pharmaceutical has the drug Humira, which accounts for the bulk of their revenue.  Here are the quick-stats on the purchase by using the Dividend Diplomat Stock Screener:

  1. Price to Earnings: At $80.28 price with a forward earning projection of $8.75 for 2019 (from 18 analysts), this equated out to a p/e ratio of approximately 9.17, which is well below the overall market on average.  Further, the share price dropped from my first purchase at $85.00 per share, or 5.6%.
  2. Dividend Growth: Now, they used to be labeled a dividend aristocrat, when under the ABT label.  However, they are starting their own streak and are currently at 6 years in a row.  Lastly, their recent increase was approximately 11% and they should be poised to offer upper-single/low-double digit growth if they’d like to, going forward.  See why the impact of the dividend growth rate is real!
  3. Dividend Yield: With the $80.28 price point, at a dividend of $4.28, their yield was at ~5.33%, well above the S&P 500 (on average).
  4. Payout Ratio: Based on forward earnings of $8.75 and a dividend of $4.28 per year, this equates to a payout ratio of 49%.  A perfect payout ratio.  They can grow dividends going forward, no problem.

Here is proof of my investment:

In summary, I purchased an additional 15 shares on 1/25/19 at $80.29 with a $3.95 trading fee for a total cost of $1,208.22. The 15 additional shares added $64.20 to my forward dividend income projection.  In total, now, I own 36 shares that over $154 in dividend income per year.

Stock Purchase – Westrock (WRK)

This is the FOURTH time I’ve purchased WestRock (WRK) and the first time since October 9, 2018.  You can read about the last time I purchased them here, which was at a prince point of $45.20.  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 to $38.82 from the $45.20 last purchase point, which represents a massive 14% decline!  How do they look, now, through the diplomat stock metrics?  

  1. Price to Earnings: At a $38.82 price point with a forward earning projection of $4.41 for 2019 (from 14 analysts), this equated out to a p/e ratio of approximately 8.80, which is well below the overall market on average.  Notice the trend with the ABBV purchase above?
  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.
  3. Dividend Yield: With the $38.82 price point, at a dividend of $1.82, their yield was at ~4.69%, well above the S&P 500 (on average).
  4. Payout Ratio: Based on forward earnings of $4.41 and a dividend of $1.82 per year, this equates to a payout ratio of 41%.  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 32 total shares on 2/1/19 at $38.82 with a $3.95 trading fee for a total cost of $1,246.16. The 32 shares added $58.24 to my forward dividend income projection.  In total, I have over 81 shares producing over $148 in dividends per year!

Stock Purchases Summary & Conclusion

I deployed a total of $2,454.38 in capital and added $122.40 in forward dividend income. This equates to an average yield of 4.99%.   Not too bad and happy with adding to current positions.  The last week or so, though, has been hard finding right buy opportunities.  Dig deep enough, though, you can find them.

Similarly and keeping the message consistent, stick to the strategy that has worked for you and review to see if there is anything that you need to see out there 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.

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

-Lanny

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26 thoughts on “Lanny’s Stock Purchases January 16th Through February 1st

  1. Lanny,
    Great work. Both companies should reward you handsomely. ABBV looks like a steal, assuming they can reinvigorate their pipeline. I like WRK, and I would add if I did not have like 8% of my portfolio right now in basic materials (EMN, WRK, and SON) – but there is always tomorrow!
    – Gremlin

    • Gremlin –

      That’s awesome you have them already and love ABBV. Let’s see that pipeline of new pharmaceuticals build up. I’ll have to keep an eye on all metrics, but everything seems safe, as of now.

      -Lanny

  2. Great buy in ABBV. They are one of my favorite holding right now. Actually, as part of my journey, I am recently learning about WRK, so I always enjoy reading your breakdowns, and learning about companies I did not know much about before. I will have to add WRK to my watch list.
    Nice buys! And congrats on your 6 months at your new job (and your adding again to the 401k)!
    -New2Dividends

  3. Nice buys Lanny! ABBV is one of my largest positions so I haven’t been adding, but it has been getting harder and harder to ignore at these prices. WRK looks good too, although do you have any concerns about their debt levels?

    I was a bit bummed with ABBV, actually with myself, as I mistakenly thought that they had a divvy raise in January, but it was simply a repeat share on SA of their raise from late last year. Still love the stock though.

    • Divvy D –

      Good call on the debt levels of WRK, but believe they were primarily used to finance acquisitions. I think I am okay but am excited about each 10Q of theirs, to see their performance. A company you don’t see often, you know?

      Oh man, I run into the inadvertently excited moments about an old news-type of article creeping in a new article. Stinks! At least it shows your heart is in the game of dividend growth!

      -Lanny

  4. nice buys Lanny.

    Love abbvie aNd will most likely add to them if they are around this level at the next ex dividend date.

    Wrk i dont know much about but packaging is a growing business with the rise of ecommerce.

    pizza aint going nowhere!

    nice additon to your forward income.
    keep it up
    cheers

    • PCI –

      I would be lost without pizza. Literally just said to my wife – we didn’t have pizza in over a week – that’s changing my Friday and you better believe it comes in a box when we pick it up!

      -Lanny

  5. Loving the Abbvie buy. I’m quite overweight in my portfolio at the moment but dang if it isn’t hard to resist pulling that trigger! Glad I spent all my February capital on a large ADM purchase (post coming next week) 🙂

  6. Solid buys and a nice amount of capital deployed, Lanny! I don’t know too much about WRK or its fundamentals, but ABBV is very much still on my watchlist. Keep rolling that snowball down the hill!

    • Thanks Jordan –

      I have been using Ally since the close of CapitalOneInvesting. THey had great promotions when I switched over, plus, I get a reduced $3.95 trading fee. You? Also, not sure how long-term I’ll stay with them.

      -Lanny

  7. Wondering what the idea is around ABBV, was it more or less for the current yield and historical growth? How do you factor in the risk for the future humira drug fallout? Also I’m wondering what your philosophy is on low yield high dividend growth stocks like visa and other tech stocks. Thanks!

    • Allen –

      Humira is definitely a talking point. I do own Visa and a few other lower-yielders that have stellar growth. For ABBV – it’s a monster pharm company, that puts a ton into R&D. The yield is there, due to that risk, though. However, none of the metrics point to poor performance, you know? Luckily, and I mean luckily, my portfolio consists of over 50+ companies. Spreading that out…

      -Lanny

  8. How do you guys feel about averaging up? I bought into ABBV when it was in the low $60s. I want to increase my position but the thought of increasing my cost basis by $10+ is giving me heart palpitations. Logically, I know that if it’s a good deal to buy (which it is) I should just do it, but I’m having a heard time doing it. Thoughts?

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