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.
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!
- 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!
- 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.
- 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.
- 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.
- 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