Latest Stock Purchase 5/21/14

This market is very difficult to find a good value/purchase.  The average P/E within the S&P is hovering around 19 (give or take 20 basis points), and the shiller P/E around showing higher, the value buys are there but are becoming very small glimmers in the rough.  I updated my goals page and realized, it’s time to make a move towards that 4% overall yield and a nice little boost to my projected annual income.

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This recent purchase was a simple add-on to what I currently have and they’ve made big news/headliners this week: AT&T.  Based on EPS of $3.39 from 2013, the current P/E stood at the time of purchase ($35.27) at 10.40.  Which is well under the S&P average, below VZ and also below the average telecommunications stock.  There’s a plus!  One strong dividend valuation metric, CHECK.  Additionally, they increase their dividend every year (25+ years) and are considered an aristocrat, CHECK on the dividend board.  Their current dividend of $0.46/quarter or $1.84 annually computed to a 5.21% dividend yield, which is above my current individual portfolio average of 3.92%, CHECK again on my goal/strategy checklist.  Further, a $1.84 dividend computes to a 54% dividend payout ratio, which is in the range I like to see, personally, as it is between 40 and 60% – they don’t give too little and don’t give too much, another dividend CHECK on the board.  The metrics above regarding the P/E, consistent dividend growth and payout ratios – are all apart of what Bert discussed and that we use within our dividend screener. With that being said: I purchased another 48 shares and added $88.32 in annual income to my portfolio yesterday afternoon. AT&T hasn’t had the greatest growth in dividends – essentially raising in 1 cent per year every quarter, which last year was at 2.22%, but I look at it more in terms of an income stock.  AT&T are widely used for those that have internet, cell phones and cable/entertainment purposes.  I feel that two of those items are almost necessity to the traditional individual – internet and cell phone, and between them and Verizon(cell)/Comcast(cable) – have a strangle on the market.  AT&T made headlines with the $48B+ purchase offer for DirectTV, which is causing quite a bit of headwinds.  I see this more as synergistic and hopefully they have the big NFL deal/package squared away, as I know that is a very key/integral part – as well as adaptation of 4K technology & capability between the two companies should come together quite well.  Further, I believe there are new markets to be shared between the two companies, that hopefully the bottom-line EPS number should be happy.  I think there should be a stripped down version of selling, general and administrative costs, to increase that EPS figure.  This should provide further room for dividend growth going forward, and would then increase that dividend growth rate past the traditional 2-3%. I was also very excited to add to a current position to the portfolio.  I own roughly 21 individual companies right now and am looking to reach 25, but if there are no “new” stocks to add and a current one is still on sale – bring out the ice cream scooper and dig back into that container, right?  I know have an estimated $202 in annual dividend income total from AT&T, which, at today’s prices would add over 5.5 more shares per year.  This trade was actually, in a way, funny – as I had set a limit order in a few days beforehand at this target price, but actually thought I had it set to “expire at the end of the day”.  Little did I forget – it was set at “order when the price hits” and boom, it dipped at the price and the trigger was automatically pulled.  Another side lesson – a Limit Order is an order you can place where you set the price you want it at, and as long as you have the resources available – the price will trigger.  It is always wise to review the trade before submitting ; ) or you may just receive a little stock purchase surprise, which isn’t a bad thing, sometimes! You will see all of the additions and summary in the monthly re-cap of May that I will post.  What are your thoughts on AT&T deal?  What is on your current list? -Lanny Disclosure: LONG T

Disclosure: I do not recommend anything, please consult your own research. This is actual data, analysis, however I base no investor recommendation.  Thank you for your understanding.
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6 thoughts on “Latest Stock Purchase 5/21/14

  1. Though I’m not really a fan of T for the long term I can see why it’s popular these days among div growth investors and these days it is fairly priced relative to it’s peers. Not a bad call. 🙂

    • DivHut ,

      Thanks for the post. I know the telecommunications game is always changing – I’m hopeful that cellular service, internet, etc.. will still be widely used going forward – but we can never predict what new innovations are down the road! I figured – a major player, the weight in my individual portfolio was fairly small, solid yield, dividend increases year over year – not a bad thing to add a new dose to my current prescription. Thanks for stopping by – always love the comments DivHut!

      -Lanny

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