Lanny’s Stock Purchases – September 24th through October 7th

The dividend stock purchases machine keeps rolling!  Yes, this is yet another round of dividend stock purchases, 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.  The stock market was more volatile the last two weeks, creating value on dividend stocks I own.  Therefore, I made a few stock 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 three 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 stock 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)

Well, this shouldn’t be too much on the news front, as I recently talked about my earlier purchases into this Utility behemoth in my last article.  Guess what?  The stock price dropped from that date of purchase, from $51.71 to $51.15, the price point of purchase.  Did anything really change with them?  No.  To read more about National Grid (NGG), please go to this article.  Though they are International, I will do my best to break down their stats via the Dividend Diplomat Stock Screener:

  1. Price to Earnings: We will use my purchase price of $51.15.  Earnings estimates, after conversion from the pence, is $7.48 USD.  Therefore, the P/E was at 6.84, approximately.  Fairly undervalued, if you ask me.
  2. 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.
  3. Dividend Yield: With the $51.15 price point, at a dividend of $3.08, their yield was at ~6.02%, well above the S&P 500 (on average) and also well above my overall portfolio, on average.
  4. 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 10 shares on 9/25 of 2018 at $51.15 with a $0 trading fee for a total cost of $511.50.  The 10 additional shares adds $30.80 to my forward dividend income projection.  In total and my position of NGG is now at 60 shares pumping a total $184 per year.

Iron Mountain (IRM)

Iron Mountain (IRM) is a now a consistent name, as I purchased them within my Roth IRA, recently.  Please refer back to my prior purchase article to learn more about IRM!  I purchased 13 more shares, as the price point dropped by over 2.8% or $1 per share.  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:

  1. 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 $34.09.  Therefore, the ratio was 10.82, which shows signs of undervaluation.
  2. 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.
  3. Dividend Yield: With the $34.09 price point, at a dividend of $2.35, their yield was at 6.89%, well above the S&P 500 (on average) and well above my dividend yield, overall, on my portfolio.
  4. 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 13 more shares on 9/27/2018 of Iron Mountain (IRM) at $34.09 with a $0 trading fee for a total cost of $443.17.  The 13 shares adds $30.55 to my forward dividend income projection.  My IRM position is now at 30 shares producing over $70 in dividends.  Similarly, getting to 50 shares wouldn’t be a bad thing.

Stock Purchase – Bed, Bath & Beyond (BBBY)

Just when you thought I could go one month without buying more shares, I did it again.  However, the position I was building wasn’t full yet and their metrics are still solid.  Management released their second quarters earnings on 9/26, which net sales are flat and costs are slightly higher.  This sent the stock price tumbling, down from my last purchase point of $17.85, down to below $14.00 per share.  I purchased this latest round at $14.60 per share.  I won’t bore you with many details, except provide a short synopsis on their dividend metrics when using the Dividend Diplomat Stock Screener:

  1. Price to Earnings: At $14.60 price with a forward earning projection of $1.99 (revised from this release), this equated out to a p/e ratio of approximately 7.33, which is well below the overall market on average.
  2. Dividend Growth: Young in the infancy stages of dividend growth, BBBY has performed 2 raises, consecutively, which does date back to when they initiated a dividend.  Their metrics show they can consistently increase that dividend, though!  The growth rate, on average, has been 13.33%.
  3. Dividend Yield: With the $14.60 price point, at a dividend of $0.64, their yield was at ~4.38%, well above the S&P 500 (on average) and also above my overall portfolio, on average.
  4. Payout Ratio: Based on forward earnings of $1.99 and a dividend of $0.64 per year, this equates to a payout ratio of 32%.  A super low payout ratio.  They can grow dividends by double digits, no problem, in the near-term.

Here is proof of my investment:

In summary, I purchased 17 more shares on 9/27 of 2018 at $14.60 with a $0 trading fee for a total cost of $248.20.  The 17 additional shares adds $10.88 to my forward dividend income projection.  In total and my position of BBBY is now at 99 shares pumping a total $63.36 per year.  I would say this will do it for my current position, as one quarter’s worth of reinvested dividends will trigger over an additional share, crossing the 100 share mark.

Stock Purchase – Kraft-Heinz (KHC)

One can see my last time purchasing KHC, therefore, I won’t bring in the details of who they are.  Their price dropped from $59.25 to $56.20, the latest price I snagged them.

  1. Price to Earnings: At $56.20 with a forward earning projection of $3.71, this equated out to a p/e ratio of 15.14.  A very solid p/e ratio, which is below the overall market on average.
  2. Dividend Growth: They are a “now” a young dividend company, given the merger between the two a few years ago. They’ve increased their dividend for 3 years and their average growth rate is around 4.3%.  Not amazing, but not too bad either.  They didn’t increase it in August, as expected, but I am hopeful for November.
  3. Dividend Yield: With the $56.20 price point, at a dividend of $2.50, their yield was at 4.44%, 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 $3.71 and a dividend of $2.50 per year, this equates to a payout ratio of 67%.  Little high and a bit outside of the 60% threshold I like, however, management is working to improve that bottom-line through cost reduction.

Here is proof of my purchase:

In summary, I purchased 10 more shares on 9/25/18 of Kraft Heinz Co. (KHC) at $56.20 with a $0 trading fee for a total cost of $562.00.  The 10 shares adds $25.00 to my forward dividend income projection and in total, I know have a solid 50 shares of KHC producing $125 in forward dividends.  Tired yet?  One more…

Stock Purchase – Westrock Co. (WRK)

This was a company I bought in my first round of consistently making routine/frequent purchases.  The stock price from WestRock Co. (WRK) was $53.49 at the date of my first purchase and they dropped to the low $51 range recently.  They had a stock price run-up, actually, therefore – seeing a price decrease was enticing.  For those of you who do not know who they are, they are a multi-national provider of paper and packaging products.  I had a few funny/small purchases here.  I bought 7 shares at $52.25 and 1 share at $51.20.  We will use both prices in the metrics below:

  1. Price to Earnings: At $52.25/$51.20 share price with a forward earning projection of $4.04, this equated out to a p/e ratio of 12.93/12.67.  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.
  2. Dividend Growth: They will be announcing their increase in October/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%.
  3. Dividend Yield: With the $52.25/$51.20 price point, at a dividend of $1.72, their yield was at 3.29%/, 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.

Here is proof of my purchase:

In summary, I purchased 8 shares, 7 at $52.25 and 1 at $51.20, on 10/3 and 10/4, of WestRock Co. (WRK) with a $0 trading fee for a total cost of $416.95.  The 8 shares adds $13.76 to my forward dividend income projection.  My position is now at 31 shares and I wouldn’t mind bringing this up to at least 40 shares.  In total, WRK produces $53.63 in forward dividend income.

Stock Purchases Summary & Conclusion

I had 5 moderate stock purchases, but I am always here to put every dollar to work!  I deployed a total of $2,181.82 in capital and added $110.99 in forward dividend income.  This equates to an average yield of 5.09%.  Let’s go and get it everyone!

I know this article was long and the fact that I even bought 1 share, cracks me up.  I am lucky to have this capital and to have $0 in trading fees, especially because this will not last.  I would not normally make these small purchases, if there was a fee.  I am now over $6,800 in forward dividend income on my taxable account and am closing in on $12,000 in forward dividend income overall.  My dividend portfolio has been updated and I am locked in and ready for further opportunities.

What are you seeing out there?  What stocks are you buying?  Anything you would recommend?  Thanks again everyone, and, as always, good luck and happy investing! .ads in wordpress

Facebooktwittergoogle_plusredditpinterestlinkedinmail

28 thoughts on “Lanny’s Stock Purchases – September 24th through October 7th

  1. Thanks for sharing your purchases Lanny. I do own IRM in my Roth, which I had more cash available in it for adding more. I have never considered NGG, thanks for sharing. Currently eyeing AVGO, recently purchased some and may do again.

  2. Lanny,
    Small free buys feels pretty great sometimes. Its a great way to dip your feet in and see if the water is right without taking on a bigger risk. Of your buys we share KHC, I like them and their generous yield at present. NGG is on my short list.
    – Gremlin

  3. You have been really active purchasing. I’ve been mainly sitting on the sidelines when it comes to purchases this year. It’s easier with my money market fund yielding 2.1% and sizable dividend increases from my existing holdings continue to roll in. I like it when my companies and the market are doing all the work. I’ve got cash and ready for a correction. Tom

    • PiV –

      Hard to argue the yield, payout and p/e ratios on both of them, specifically NGG. Very compelling for both. The volatility is here and should bring opportunities for you and others, looking forward to it myself.

      -Lanny

    • Thanks Tawcan –

      It all comes down to not able to do the 401k, yet. I have under 100 days now, to go, and am looking forward to being able to have a better system down, haha. Appreciate the comment!

      -Lanny

  4. Absolutely love it Lanny! You’ve been busy putting those dollars to work for you with some really nice choices. I’m looking to add to my IRM position as well as a few of the other REITs that I bought recently as they’ve been moving down a bit recently.

    It’s always nice to add a big fat number like that to the forward income, and those annual numbers are looking fantastic!

  5. Amazon changed, and comtinues to change the retail sector. Many companies have adapted and are stronger now than ever. BBY is one that I can’t see surviving over the next decade. I would dump them tomorrow and pick up some FED EX- lower current yield that is growing 30+% over the last 3 years, and a very low payout ratio. Trade war talk has created a nice entry point.

  6. Looks like you’ve been quite busy Lanny and you’ve got to love that $100+ of additional dividend income set to come your way. I picked up shares of IRM about a week ago and KHC is looking pretty interesting here too. I just need to get some cash lined up to start making purchases once again. I can’t wait.

  7. Hi Lanny,
    Thanks for sharing those buys – I don’t own any of the companies yet. I have quite a few companies in my radar at the moment – TXN, DFS, ABBV, GIS, K, KHC. This current correction may present some opportunities. I hope it stays until October when I have some available funds to invest 🙂
    BI

  8. Looks like you’ve got a solid set of criteria for assessing investments but it looks like you leave out the Balance Sheet. Image you have two identical companies both with the same dividend yield and attractive PE. However, one company has $1bn in bank debt and the other has $0. Clearly they’re not equal investments despite the earnings potential

  9. Nice to see you making so many movies in the portfolio. KHC has been beaten down a lot lately. Would make a good entry point or lower cost basis for those who have it. These should add some nice dividend income for you going forward.

Leave a Reply

Your email address will not be published. Required fields are marked *