Stock Purchase – 11/28/14 – BBL

Well, my Black Friday shopping did in fact happen!  Even after I talked about ways to appreciate and be frugal this holiday season, I still went shopping Friday early morning!  However, I didn’t wait in line overnight, instead – I chose to buy stocks with a few clicks of my mouse!  There was one area of the market that took a beating yesterday – oil and minerals, and I took advantage of the steep, STEEP decline on Friday the 28th.  Let’s dive into what I bought, how many and why.

Buying-Stock

Well, without furthado – heck, you can see it from the article title!  I ended up making a purchase into BHP Billiton (BBL) on Black Friday.  This has come after Dividend Mantra purchased his second round , as well as other investors in the community, I thought to myself – Okay, what are these guys and ladies on to?  What are they seeing and how come I don’t know about this arena?  I didn’t own Basic Materials really in my portfolio in the coal arena and iron ore, etc.. and thought I should definitely take a look and see if it passes the Dividend Diplomats Stock Screener.

BBL Dividend Stock Screener Analysis

To get into the reasons why I decided to purchase this dividend income stock, I, as I do in the past, threw it in our stock screener to see if it passes the test!

  1. Dividend Yield: First, the dividend yield at time of my purchase was at 5.07% – which is higher than the S&P average and my portfolio.  The other metrics we will dive into will show the support of this dividend.  I like this yield – not absurdly high, and is higher than what it historically has been, as you know I use the 5 year average as a good benchmark, the 5 year mark for this is 3.70% – boom, way above this!
  2. Price To Earnings (P/E): Based on the earnings estimate for next year of $4.37, the P/E at time of purchase (I bought at $47.60) is 10.89.  This is definitely under the S&P, but also below the industry average of approximately 18 and Rio Tinto is around 14.  A pretty good green light in this area for me.
  3. Payout Ratio: Based on EPS of $4.37 and a payout of $2.42, the ratio % is 55%.  This falls under the 60% area, which is nice to see and fulfills one of the metrics.  Dividend appears sustained and the prior 6/30/2014 EPS of over $5 had the dividend well covered.  Green light in this area.
  4. Dividend Increases: Surprisingly, the company has increased their dividend since they’ve initiated it in 2003.  This is 11 great years of dividend growth.  The 5 year dividend growth rate is 8.19% and when going back to 2003, the annualized dividend growth rate according to buyupside is 20.84%.  This is great to see and I am excited about the future prospects for this company.  The company is based in the UK, has the favorable tax treatment but only pays semi annually – March and September.
  5. Ratings:  I usually don’t bring this into the picture but I went across many websites and found these ratings on the stock: Morningstar = 5 Stars, The Street = Moderate Buy, Yahoo! = 2 Hold, 1 Buy, Sabrient = Hold.  In between a hold and buy here with more signs towards the buy arena.

Stock Purchase Summary

Given the fine tuned dividend stock screening metrics above, I was loving BBL and was finding a reason now to buy their stock.  With the history of 11+ years of dividend growth, strong earnings, a solid payout ratio, good ratings from third party analysts, as well as the price to earnings being favorable not only to the market but to the industry as a whole?  To me this was a no brainer!  Further, the 12/31/13 stock price was $62.12 and with my purchase of $47.60 = 23.37% price smack it has taken this year.  I know that buying stocks just because they are down isn’t a good philosophy but I look at it as a great stock that just went to a deep dive black Friday sale!  Similar purchases can be found in my IBM purchase when a great company went on a deep discount.

I purchased 42 shares at a price of $47.60, to which this added $101.64 to my forward looking dividend income total.  Based on this purchase, my new forward looking 2015 dividend income projected is at $4,851.70 – crossing my $4,750 dividend income goal!  Few – very excited to cross this mark!  Thanks everyone for the push and shove to get me there!

What do you all think of this stock purchase?  Do you see value here?  Would you have bought this instead of oil stocks or the other way around?  Do you own BBL and increase your position on Friday?  Thanks everyone, hope everyone enjoyed their close to November!

-Lanny

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23 thoughts on “Stock Purchase – 11/28/14 – BBL

  1. Lanny,

    Way to swoop in an grab BBL at the low. I like the aggressive move and may join you in buying some more shares this week. The energy sector is in turmoil right now and may get worse, but I think looking back in a couple of years your purchase will be smiled upon.

    Also, I know it may be a bit early to tell you “I told you so” but it looks like I may have been right about you being able to reach 5K this year. 🙂

    Nice job.
    MDP

    • MDP,

      Thanks for coming by the blog! Would love you to join myself and a few others in the BBL shareholders club haha — as there have been quite a few individuals infusing their position here. I am more curious as well where XOM, CVX and RDS are heading… I need to read a few financial reports regarding the push coming for oil prices over the next 4 weeks.

      And MDP, haha, dammit you were right – I actually had reinvestment already for 12/1 dividends paid to me and have a projected dividend income as of right now at $4,855 aka Your confidence in me and your suggestion of 5K was on point, as $145 more in dividend income isn’t as much to push here. $5K is one milestone but $14.5K… that’s a WHOLE other level to be on haha — what is your goal for end of 2015 to have projected for 2016?

      Appreciate the post MDP – hope to hear back!

      -Lanny

    • TW,

      Thank you! Nice — I see you bought those BP shares ,nice! I know we are having too much fun on twitter – I am hoping oil stock prices surge down more, just for the sake of picking up more income! Congrats and thanks for the post.

      -Lanny

  2. Wow, does it seem like every DGI blogger has been buying BBL in recent days? To me it does. I totally understand why and get the reasoning behind the purchase. I have added BBL to my watchlist and might be very compelled to make a buy in December. I’m curious to see how December will open up. Thanks for sharing your recent purchase.

    • DH,

      It truthfully does feel like every blogger is scooping them up. Looks like it took another discount earlier on today (could have bought it a buck cheaper than I did!). Market is playing the game now with ups/downs across the board… it’s interesting. Let’s see what December brings – final month of the year, should always be an eventful time!

      -Lanny

  3. You were doing so well with your justification to buy BHP Billiton, until you mentioned IBM and then I lost all belief. IBM is a disaster not waiting to happen, but is already happening and owning this stock is incredibly dangerous. This is going to be Warren Buffet’s next Tesco.
    Read this article by Terry Smith who is probably the smartest guy in the world right now with respect to understanding stock valuations and companies real prospects :-
    http://www.telegraph.co.uk/finance/personalfinance/investing/shares/11262328/Terry-Smith-Is-this-the-next-Tesco.html

    Sorry to put a dampener on your article, but you should seriously protect your wealth and dump IBM.

    • LR,

      Well, thanks for coming by and I appreciate the post. LR – what type of an investor are you? Just curious. Also, is this why Warren then bought more IBM last quarter? Thank you for the article, to which I’ve read it. Definitely a different view point on the company. IBM has made big transactions with divesting their semi-conductor manufacturing, as well as having built up a decent amount of current assets to cover current liabilities. I’ll be analyzing them at every quarter and do appreciate a different mindset to things, thanks, hope you’re having a great week.

      -Lanny

  4. Lanny,

    Nice purchase here. Obviously, I’m a fan as I’m putting my money to work here as well. Nobody wants commodities right now, but when everyone is being fearful…

    Keep up the great work. And congrats on passing $4,750 in forward dividend income. 2015 is going to be very kind to you! 🙂

    Best regards.

    • DM,

      Thanks for rolling in! Of course – we are putting the money to work in BBL – > when everyone is running away, the few of us jump in to seize the moment, that’s what we do and history prevails with a good track record for the most part for those that act with no emotion when it comes to the investing gambit.

      Thanks on the $4.75K! 2015 is going to be fun, just knowing I have the ammo of that much already working for me, it’s humbling really. Just trying to catch up to you my friend, thanks again DM, talk soon!

      -Lanny

  5. Nice purchase, a lot of PF bloggers are buying BBL lately. At current level BBL is very undervalued. Congrats on passing $4750 in forward looking dividend income. Now time to hit $5000 and beyond. 🙂

    • Tawcan,

      I hear you! $5,000 is knocking on the door pretty quick, I must say! I’ll be very close to it by end of the month, for sure, unless I make any additional contributions over the next 4 weeks.

      BBL has been hot and yesterday took a nice little hit in the early AM hours. I know you’ve been scooping up high quality Canadian companies – I actually hung out with my Aunt last night who worked at Bank of Nova Scotia for over 30 years! Keep it up Tawcan, talk soon!

      -Lanny

  6. Nice purchase, Lanny! And congrats on passing another passive income milestone.

    Wish I had some more room to add to BHP. Maybe if the price drops a bit further, which seems to be the case today.

    Keep it up,
    NMW

    • NMW,

      Thanks for rolling on by! Appreciate the massive support from you and the community.

      It did seem to be the case today.. my friend picked them up at $46.80, so got in on them about a buck cheaper almost, that punk! Joking, joking. Excited for us all to hold this great stock, great yield to come along with it as well. Keep it up, lets keep this engine in Drive mode!

      -Lanny

  7. Looks like we are all participating in a Black Friday sale of our own! I really like BBL at these prices. I’ve had my eye on it for literally years, but I can’t ignore it much longer. It’s to mining what JNJ is to healthcare. A great resource portfolio with lots of built-in diversification. I intend for BBL and NOV to be my two December purchases, so I should be joining you all as a shareholder soon!

    • DD,

      I like the way you put it with the reference to JNJ to healthcare. I hope you got in today, went on a sharp discount in the morning – were you able to? Or still waiting for the right time? Keep us updated!

      -Lanny

    • FTFF,

      Thanks for the stop by! Of course – and congrats to you for passing $100K… just awesome! My portfolio just hit north of $130K and it was only 6 months ago where I crossed $130K…. it has been an uphill rollercoaster this year and I wouldn’t be opposed to having a dip soon!

      BBL just looked too darn good and couldn’t find many reasons to not grab a great company. Let’s keep pushing – 30 more days!

      -Lanny

    • AFFJ,

      Thank you! I wonder if all of us dividend investors buying BBL has moved the needle at all… joking, joking, but there are quite a slew of us! Thanks again for the congrats on passing a milestone, so close to $5K, setting the year of 2015 up just right for me, excited to really dig into that year and see what’s in store for me. Hope you’re having a great week, talk soon!

      -Lanny

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