The last couple of months has been pretty active for me. Since the beginning of February, I have either initiated a new position or re-upped my position in 6 stocks, with the most recent transaction occurring a few weeks ago when I purchased both CVX and PM. Well, I had some extra capital laying around and wanted to purchase a stock that has been on my radar for a while now. If you have followed our website over the last month, you will probably know which stock I purchased, as it has appeared in several articles recently.
Over the last two weeks, I purchased ADM twice due to the timing of when I could transfer funds into my account. In total, I purchased 26.891 shares of the company, adding $30.12 to my projected annual dividend income. What’s funny is that I purchased the stock for essentially the same price twice even though the second purchase occurred almost two weeks after the second one (The first and second purchase prices we $47.56 and $47.66, respectively)! I would have written about the purchase after the first transaction, but I knew that I would be re-upping a position when funds were available so I wanted to wait until my investing was complete. So why did I invest in ADM?
The stock performed very well in our dividend stock screener when I performed a stock analysis last month. Quite frankly, I cannot remember a stock that has passed all of our metrics as well as ADM did. In addition, when I published my stock analysis at the end of March, ADM was trading in the low $47/share range, which was about the same purchase price at my time of purchases. Since I recently published my stock analysis over ADM and the price has remained relatively the same, I will keep this section of the article brief. If you want more detail or would like to see additional metrics, feel free to read the stock analysis!
- P/E Ratio was in the 14 range at the time of my purchases, which is below the S&P 500, and the company has a payout ratio below 30%.
- In February, ADM announced a dividend increase of 16.7%. Not only was the dividend growth rate phenomenal, but it well exceeds my portfolio’s weighted average dividend growth rate. Lanny introduced the metric to me at the end of last year and now I love monitoring my portfolio’s growth rate. Since my current portfolio consists of a lot of high yielding/low dividend growth stocks, adding ADM will provide a nice boost to my dividend growth rate and will balance this dynamic of my portfolio.
- ADM is a Dividend Aristocrat, so the company has a track record of increasing its dividend. After my ARCP investment, which I sold earlier in the year, I told myself that I would place more emphasis on the longevity of the dividend. If I would have focused on investing in a REIT with a longer track record of paying and increasing their dividend, I would have more likely than not invested in O over ARCP and the rest would be history as both have had stock prices trend in opposite directions. The fact that ADM has increased its dividend for 40 consecutive years is pretty telling and leaves me very confident that management is committed to growing its dividend for the long-term.
- ADM is a market leader in its industry and represents a sector that is not present in my portfolio. While I own shares of Scotts Miracle Gro, which is also in the agriculture industry, ADM and SMG are in different sectors of the industry. Thus, by owning ADM, I am further diversifying my portfolio with another market leader.
Honestly, this was a no-brainer for me. ADM passed every metric in our stock screener with flying colors and even passed several additional metrics we used in our analysis, such as comparing the five year average dividend yield and the dividend growth rate. After I ran the screener and researched ADM further, I just kept thinking to myself that the reason we all have our own personal stock screeners is to identify stocks that meet our investing strategies. When a stock passes the screener and your research indicates it is a great company, you have to strongly consider initiating a position. For me, I couldn’t find a reason not to invest and now I am a proud owner of ADM!
Do you own ADM or are they on your watch list? Would you have purchased the stock based on the results of our stock analysis? If not, why? Are there any other companies you are watching instead of ADM?