Recent Buy – Cardinal Health, Inc. (CAH)

This week, I officially jumped back into the marketplace.  It feels like it has been a while and finding great stocks at a value has been difficult (which is part of the reason why Lanny’s portfolio has sky-rocketed over the last few months).   If you have been following the blog over the last few weeks or if you read the title to the article before clicking, the stock I purchased this week shouldn’t be a surprise.   Time to see where I allocated my capital this week.

On Tuesday, I purchased 50 shares  of Cardinal Health, Inc. (CAH) at $78.06 per share.  My total cost basis in the stock after including investment fees is $3,909.95 and the investment will produce $22.45 in quarterly dividend income quarterly, or $89.78 annually.   I was a little nervous that my trade wouldn’t trigger after the run-up in stock prices on Monday.  However, the market gave back its gains on Tuesday and I received an email while I was in a meeting at work that my order triggered.   It is just my luck that the price continued to fall another 3% the next day.  While it is unfortunate that I didn’t capture the stock at the lowest price point, this presents two great options for me in the event the price continues to fall.   Dividends will be re-invested at a lower rate, resulting in more additional shares, and I can always continue to add to my position and lower my cost basis.   My last purchase of Target marked the first time I owned over $5,000 in an individual stock, so I would love to add some more capital to CAH  down the road to have another stock cross the mark!  So please CAH, continue falling in price!

Why did I invest in CAH?  Well, the stock has been on my radar for several weeks now.  CAH first caught my eye when I ran a screener to help create my August stock watch list.   Further, the price continued to fall, so I decided to perform a detailed stock analysis over CAH and crunch additional numbers to see if CAH passed all of our metrics.  Since I just published the stock analysis about a week ago, I won’t repeat too much of the analysis in this article.   But some of the things that really got me excited about CAH was the dividend growth rate/history, the low payout ratio that was below the targeted payout ratio cited by management, the pricing metrics compared to the market, and honestly, the fundamentals of the business.   I left the analysis feeling very excited about the long-term dividend growth prospects of CAH, especially considering they are a healthcare services company in a quickly aging population.  

And now the fun part….updating and discussing the progress towards knocking out my 2016 investing goals.   Let’s see where I now stand with only three and a months remaining in 2016:

  • Dividend Income as of 12/31/16 = $3,250 – After the purchase, my projected annual dividend income is $3,150.  Man I am rapidly closing in on this goal, which is exciting considering the fact that I was felt like I was behind at June 30th.  In this quarter, I also managed to cross a huge milestone of surpassing $3,000 in forward dividend income.  So I am very fortunate that I was able to make up some progress here in the third quarter.  Now it is time to finish this goal off!
  • Invested $20,000 of New Capital –  With this purchase, I have added $13,905 of “new capital” to my portfolio to date in 2016.  New capital includes funds transferred to my investing account from my checking account and does not include dividend re-investment or 401k contributions.  Now that I am about $6,000 short of my goal, I am 2-3 stock purchases away from crossing the mark considering I have adopted Lanny’s idea of making investment purchases of at least $3,000 recently.
  • Invest in 5 New Dividend Aristocrats – CAH has a double-digit consecutive dividend increase streak; however, the amount is below 25 years and the company is not considered a Dividend Aristocrat.
  • Invest in 2 Stocks with a Dividend Yield <2% – AHHHH….so close here on this one.  At the time of my purchase, CAH was yielding 2.3%.  The spirit of the goal was achieved though because I added this goal to my list in 2016 because I was trying to find a better blend of dividend yield and dividend growth rate in my portfolio.   CAH has a very nice blend.  But, since the yield is above 2%, I can’t say that I have made any progress on knocking out this one.   Bummer!

So there it is.  A nice purchase of a stock I have had my eye on recently.  I was patient and in the end, I was able to get the company for the price I wanted.  Plus, this large purchase is really helping me towards knocking out some of my 2016 investing goals and continues to help push my portfolio forward.  I am knocking on the doorstep of another big milestone and the fastest way to get there is to continue to invest…invest….invest.  This just serves as a great reminder and I think I have included it at the end of all my articles recently.  But if you want financial freedom, every dollar counts.  You cannot save enough and you cannot invest enough in stocks that will help you produce a growing income stream and allow you to pursue the things that make you happiest in life.

What are your thoughts on my purchase?  Did you buy any stocks this week when prices finally pulled back?  If not, what stocks are on your watch list?   Lanny is watching PFE, T, TROW, and TGT…are you watching any of those stocks over CAH?

Bert

 

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16 thoughts on “Recent Buy – Cardinal Health, Inc. (CAH)

    • Woah Woah, that is quite the shopping streak right there. That’s some serious dividend income right there. Definitely happy to add something during this opportunity and add a nice, quality dividend stock to my portfolio. Aren’t sales a blast haha!

      Bert

  1. I was very close to buying some WFC, just couldn’t pull the trigger…

    Trying to time the market is a fool’s game. The way I look at it these days is, do I think this company will be more expensive in 10 years or less. If it’s more and pays a dividend i’m good no matter what happens short term. I think CAH meets that goal.

    Congrats Bert, you’ll hit that $3,250 soon

    • Thanks!!

      No sense in trying to time things. Fools game is the best way to describe it. I’m more and more in the camp now of “If the stock checks the boxes and fits your metrics, then get it.” In 5,10,25 years, do you really think you are going to remember whether you purchased the stock at $78.06 or $77.25? No!

      Are you waiting to see how everything with the WFC account scandal? What else you were watching?

      Bert

  2. This wasn’t a surprise. CAH is a quality name that has gone on sale and I think in the long run it should serve you well continuing to pump out dividends and raises for years to come. As you already know, ‘every dollar does count’ and whatever you can contribute towards a passive income stream the better. I like the sector, I like the stock. Nice pick up.

    • No, not at all. Our screeners and constant monitoring of the markets are designed to indetify and purchase great stocks like CAH. They should be in a great position to continue increasing their dividend going forward, which is huge considering the low DGR for the majority of companies right now.

      Take care Keith!

      Bert

  3. I’m not that familiar with CAH, but sounds like a very good buy. We are closely watching WFC, with the downturn recently we could average down there. Although there are a lot more opportunities laying around nowadays. We need to wait a few weeks anyway before we have enough cash to make a bigger buy, so who knows what happens.

    • Divnomics,

      Thank you very much! Agree completely. After a few months of nothing, opportunities are finall starting to pop their head up. What are the things you are looking for in WFC? Are you waiting to see how the account scandal plays out in addition to hoarding cash?

      Bert

  4. Hi there,

    nice investment I haven’t had such big investment so far, but glad you are feeling comfortable with. Unfortunately I am not familiar with cardinal health. But nevertheless in the last weeks there are some stocks which look a little more attractive again. I am close to pull the trigger for ORI.

    Cheers
    Andy

    • Andy,

      Woah. Just looked up ORI’s chart and it has had quite the fall over the last few weeks. Will have to look into what is causing the dip here. You are right though, there are plenty of great stocks that have fallen over the last couple of weeks and the market is finally starting to provide us with some opportunities. Now, let’s get out there and CAPITALIZE!

      Bert

  5. I added the 3 big players in this space to my list after reading your last post on them want to do some DD on them soon. I think they’re all attractively valued from a bird’s eye view but I want to take a closer look. The only thing that worries me are the razor thin margins in the industry which can be good since there’s no chance any other competitors will enter the space but can also be risky if there’s any governmental interference around drug pricing in the future. From doing some basic reading, I do like CAH’s recent purchase of Cordis since it shows they’re aware of that and are moving a little bit into higher margin areas.

  6. CAH is taking a beating today. Down 15% in the early session and down about 11% at this time on some industry news making reference to a price war.

    Is it time for a double dip on CAH for you guys?

    I dont own any shares as of last night, but i’m running my numbers.

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