Wham! And right out of left field – I purchased a stock on Monday, July 21st. Ready to get down and dirty? I’m talking about being outside, in your garden, your lawn, pruning up those rose bushes… so wait, what did I just purchase?
Scott’s Miracle Gro Company! (SMG) – was purchased on Monday the 21st (yesterday). I was watching Dividend Mantra, DGI, PIM’s watch list , Compounding Income getting on top of the Tractor with John Deere (DE) – I thought Okay, if they are playing outside, I’m jumping out there too.
The analysis on Scotts Miracle-Gro:
- Dividend yield: 3.20% at the time, which is higher than the S&P on average, one of our pegs and from our post regarding why we use the 5 year average, is over 90 basis points (2.30%) higher than the 5 year historical average! The dividend increases have been nice with 34.6% last year, 8.33% year before and 20% three years ago, average of about 21%, I’m smiling ear to ear. Not to sound cliche, but I think this stock will fertilize my dividend portfolio a bit.
- Payout Ratio: This is around 50% based on a $3.50 EPS figure, but EPS was $2.00 for last quarter alone so… I think I feel very good here, Green Light is a go.
- Price to Earnings: Based on an expected $3.50, P/E is 15.65 based on my purchase at $54.77, which is less than the S&P average of roughly 19.57. Looks undervalued to me and undervalued compared to competitors of CF, Potash, etc. Green Light.
- Dividend Increases: 4 years. Hmph. Only 4 years? Well they’ve only paid dividends since 2009 and they are going to, more than likely, increase their dividend within the next 30 days – if earnings are showing it now – I think this will be a go for years to come!
Highlights with the Company:
- Down approximately 12% YTD at the date of purchase for reasons that could be associated with…
- Sell off from stock of the CEO, he is getting older, around 58 years and not sure if he is looking to cash in right now or not.. or if he is selling because…
- Costs to produce their products may increase further into the year or
- Increase in fuel price to make their products and to also ship their products
This total purchase of $1,972 adds $63.00 to my projected annual Dividend Income, which inches me closer to my projected annual dividend income goal of $3,825.
Who is getting out there and getting into their yards, cleaning and fixing them up? Who uses Scott’s products? Also – do you think this is a company that is long-term focused and is here for the haul? Thanks for stopping by, I’m hoping this company sprinkles magic on my portfolio and I’ll soon see the benefits grow from this wonderful fertilizer company. Talk soon!
-Lanny