Can we get another article out about dividend stock purchases or what? Yes, this is yet another dividend stock purchase article, covering my last two weeks of activity. I am going to start doing this now, from an article standpoint, as my dividend stock purchases are becoming more frequent, due to certain life events and brokerage changes. Though the stock market has continued to roar, set new highs and show the bullish signs, there are always dividend stocks being undervalued out there. Therefore, I made a few purchases over the last two weeks and let’s find out what I bought!
The stock purchases
After I released my new $7,200 in forward taxable dividend income goal article, you should have a great sense why I have so many stock purchases. I am currently two and a half months into my six month entry period at my new employer, before I am allowed to contribute to their 401(k) plan. Therefore, I have more cash on hand to deploy in the market and it made sense to start juicing back my taxable account. The stock purchases you will read below aren’t as significant as I usually do, as another event (switching investment brokerage firms) allows me to have free trading for 90 days (through MId-October). Therefore, this allows smaller purchases to be made along the way! Now let’s see what stock purchases occurred over the last 2 weeks!
Stock Purchase – National Grid (NGG)
Wow. National Grid (NGG) baby! Why am I SO excited? This was one of my first purchases back when I first started dividend investing. I purchased them in mid-2010, at a share price of $37.61. Think about that, it’s been more than 8 years! I was sitting at 23 shares before these purchases, therefore, because of DRIP and a few other items, my initial ~18 share purchase, turned into 23. Who is National Grid (NGG)? They are a major utility player in the United Kingdwom and Northeastern part of the United States, primarily New York and Massachusetts. Though they are International, I will do my best to break down their stats via the Dividend Diplomat Stock Screener:
- Price to Earnings: I purchased them two times, actually! Once at $52.79 and the other at $51.71. Earnings estimates, after conversion from the pence, is $7.48 USD. Therefore, the P/E was at 7.05, approximately. Fairly undervalued, if you ask me.
- Dividend Growth: This is where it gets EXTREMELY difficult! I do not know, exactly, their dividend growth rate. This is due to fluctuating conversion rates, as well as a modestly fluctuating dividend. They pay 2x per year – in January and August. This year, their dividend is approximately $3.08. They have gotten through a tough part of their business/capital history, and I expect growth to continue. See the Impact of the Dividend Growth Rate.
- Dividend Yield: With the $52.79/$51.71 price point, at a dividend of $3.08, their yield was at ~5.90%, well above the S&P 500 (on average) and also well above my overall portfolio, on average.
- Payout Ratio: Based on forward earnings of $7.48 and a dividend of $3.08 per year, this equates to a payout ratio of 41%. A perfectly low payout ratio and are right in the 40-60% range I love. They can grow dividends by double digits, no problem, in the near-term. See why the Payout Ratio is an extremely important metric.
Here is proof of each investment:
In summary, I purchased 27 shares on 9/17 & 9/19 of 2018 at $52.79 and $51.71 with a $0 trading fee for a total cost of $1,414.53. The 27 additional shares adds $83.16 to my forward dividend income projection. In total and my position of NGG is now at 50 shares pumping a total $154 per year.
Iron Mountain (IRM)
Iron Mountain (IRM) is a new name, that I purchased within my Roth IRA, actually. Therefore, I’m bucking the trend, as I’ve been aggressively investing into my taxable account. Who is Iron Mountain? Founded in 1951, in Boston, they are a world-wide service provider, with over 220,000 customers. We have all seen their image, name or product somewhere. What exactly do they do? They are in the information destruction, and data backup and recovery services business. This is also known as – servicing every single business need from a data back-up and document destruction standpoint. I love it. They are a REIT, as well, which carries high yield with it. Now, from using our Dividend Diplomat Stock Screener Metrics, these were the quick stats:
- Adjusted Funds From Operations Ratio: Typically we use this ratio for REITs, given how their operations work. The AFFO is similar to the P/E ratio, though. Based on last quarter’s results, AFFO is expected to be $3.15 per share for the year. My purchase price was $35.09. Therefore, the ratio was 11.14, which shows signs of undervaluation.
- Dividend Growth: They have increased their dividend for 4-5 years straight now. Their dividend growth rate is approximately 7.4% over the last 3 increases. I would be just fine with mid-single digit increases on this rate, as you’ll see the yield below.
- Dividend Yield: With the $35.09 price point, at a dividend of $2.35, their yield was at 6.70%, well above the S&P 500 (on average) and well above my dividend yield, overall, on my portfolio.
- Payout Ratio: Based on AFFO of $3.15 and a dividend of $2.35 per year, this equates to a payout ratio of 75%. This is on the higher side, but isn’t abnormal from a REIT. In fact, I would expect this to be a little higher. They definitely have room for growth, if they wish!
Here is proof of my investment:
In summary, I purchased 17 shares on 9/19/2018 of Iron Mountain (IRM) at $35.09 with a $0 trading fee for a total cost of $596.51. The 17 shares adds $39.95 to my forward dividend income projection. I wouldn’t be opposed to monitoring the price for another purchase.
Stock Purchases Summary & Conclusion
Technically 3 moderate purchases, but I am always here to put it all to work! I deployed a total capital amount of $2,011.04 and added $123.11 in forward dividend income for an average yield of 6.11%. Every dollar counts, right?
However, I still won’t be done! Given my situation, as long as there are opportunities, I’ll be on the path making small scoops of undervalued dividend stocks over the 4 weeks! I’ll keep everyone in the loop on what stocks I am adding to my dividend portfolio.
What do you think of the stock purchases? Feel like these stocks are undervalued? Would you have not bought one of these dividend stocks above? Thank you for sharing your thoughts everyone and, as always, good luck and happy investing!