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?