One of my favorite quotes from Warren Buffett deals with an issue that many dividend investors face from time to time. The quote is” If you like a stock at $50, you would love it at $30”
As usual this quote is jam-packed with a lot of insight. It makes perfect sense that a long-term investor should be excited to purchase ownership stakes in real businesses at cheaper valuations. If you have analyzed a company, and you like the business, and the economics of the business are not materially impaired, the investor should be excited that prices are lower. For us dividend growth investors, it is always better when we can obtain dividend income at a discount. Who doesn’t like getting more bang (dividend income) for their buck?
In the month of July, I managed to add to my stakes in the following companies listed below. I didn’t get to buy all companies I was eyeing at the beginning of the month, since unfortunately I only have a limited amount of capital to deploy each month. I also decided to take advantage of the declines in two transportation companies, which have been exhibiting weakness recently.
3M Company (MMM) operates as a diversified technology company worldwide. The company is a dividend king which has increased dividends for 57 years in row. The ten year dividend growth rate is 9%/annum. Currently, the stock is attractively valued at 18.90 times expected earnings and yields 2.70%. Check my analysis of 3M Company for more details.
Eaton Corporation plc (ETN) operates as a power management company worldwide. The company has increased dividends for 6 years in row. The ten year dividend growth rate is 13.80%/annum. Currently, the stock is attractively valued at 12.80 times expected earnings and yields 3.60%. Check my analysis of Eaton for more details.
United Technologies Corporation (UTX) provides technology products and services to building systems and aerospace industries worldwide. The company has increased dividends for 22 years in row. The ten year dividend growth rate is 12.90%/annum. Currently, the stock is attractively valued at 15.90 times expected earnings and yields 2.60%. Check my analysis of United Technologies for more details.
Exxon Mobil Corporation (XOM) explores for and produces crude oil and natural gas in the United States, Canada/South America, Europe, Africa, Asia, and Australia/Oceania. It is also involved in refining and transporting carbons throughout the world. The company is a dividend champion which has increased dividends for 33 years in row. The ten year dividend growth rate is %/annum. Currently, the stock is attractively valued at 17.90 times expected earnings and yields 3.70%. Check my analysis of Exxon Mobil for more details.
Union Pacific Corporation (UNP), through its subsidiary, Union Pacific Railroad Company, operates railroads in the United States. The company has increased dividends for 9 years in row. The ten year dividend growth rate is 19.70%/annum. Currently, the stock is attractively valued at 16.20 times expected earnings and yields 2.40%. Check my analysis of Union Pacific for more details.
Norfolk Southern Corporation (NSC), together with its subsidiaries, engages in the rail transportation of raw materials, intermediate products, and finished goods. The company has increased dividends for 14 years in row. The ten year dividend growth rate is 20%/annum. Currently, the stock is attractively valued at 15.10 times expected earnings and yields 2.90%. Check my analysis of Norfolk Southern for more details.
I am not trying to time tops or bottoms here. I simply believe that the steady accumulation of blue chip dividend paying stocks over time, should produce satisfactory results that will help me achieve my long-term goals of living off dividends someday. Building wealth takes time, persistence and perseverance. I measure my success by the rise in my forward annual dividend income. With each dividend investment I make, I can see my expected dividend income increase a little bit. Little by little, and step by step, I see how dividend income increases, taking me one step closer to the coveted dividend crossover point.
What companies did you purchase last month?
Full Disclosure: I have a position in all companies mentioned above
Relevant Articles:
- Dividend Companies I am Considering this Month
- My dividend crossover point
- Dividend Kings List for 2015
- How to value dividend stocks
- The Value of Dividend Growth
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Ciao DGI,
ReplyDeleteGot myself some EMR recently, following the same exact policy that you describe there. :)
Hi Stalflare,
DeleteThanks for stopping by. EMR does look interesting, but I didn’t like the flat earnings per share when I last reviewed it:
http://www.dividendgrowthinvestor.com/2015/06/emerson-electric-emr-dividend-stock.html
EMR, O, CMI, ED and some rail are on my watch list. The price on these are more than acceptable for me, but I'm waiting for this pre-recessioin/fed rate increase chatter to stabilize. May be over thinking this.
DeleteLooking at DIS on a pull back.
Missed GILD, AFL on the recent 110 and 62, respectively.
Closed out 45k of a moderate aggressive brokerage account and I am holding this in cash. For record, I opened this account in the Spring of last year and the return was about 1.5%. Hope to deploy the 45K amount in the next two months.
Recent purchases:
Buys
33 HP @ 60.40 (having 2nd thoughts)
10 XOM @ 81.90 (thinking about adding more)
25 Apple @123.88
35 MO @ 50.09
35 MMM@ 153.10
10 PANW @ 177.47
Sold
20 ITW @ 93. Still holding 26 shares.
9 UA @ 96.20 (bought at 66) Still holding 27 shares and will redeploy after the split. Not sure if this was smart but it felt right at the time.
Sold out of AUDC for a 2300 loss.
I bought more shares of TROW this month, but I'm thinking about averaging down on EMR as well.
ReplyDeleteHi Anon,
DeleteTROW looks nice here. For some reason I am more attracted to AMP, as I view their AUM to be stickier.
Interesting, I'm not sure financial planning is any stickier than mutual funds and 401K management offered by TROW but I like both business models and believe they will be around for years to come.
DeleteI initiated a small position in AMP to watch this stock. Without skin in the game I won't pay as much attention as I'd need to to make further decisions on the stock. AMP 10 share @ $123.50
I FINALLY got some 3M. Yeah!
ReplyDeleteI also added (to your article point on great businesses) to PG on weakness.
HI,
DeleteMMM sounds like a nice addition. I am not sure about PG – EPS has been stagnant, and the valuation should be around a P/E of 15 – 16.
Excellent purchases, DGI. All fantastic companies to load up during these times.
ReplyDeletecheers
R2R
Hi R2R,
DeleteThanks for stopping by!
DGI,
ReplyDeleteWe have a couple buys in common this month, MMM and XOM. I also added to NOV and SO and started a small position in CELG even though it doesn't pay dividends. PG is starting to look good and I might add especially if it falls below $74.
Best wishes,
Keith
Interesting, I have not looked at CELG. I might end up initiating a really small position in GILD, but need to review it better first.
DeleteNice purchases. I have seen a lot of people buy NOV, but for whatever reason I never understood it well enough. What do you like about it?
Great stuff DGI. I would love to add MMM and XOM in our portfolio one of these days. A bit short on US cash right now though.
ReplyDeleteHi Tawcan,
DeleteCan't you do the Smith Maneuver and get more US dollars?
Anyways, looks like if I had waited a little, I would have been able to buy XOM on sale today.
OHI
ReplyDeleteAAPL
AMP
AIGWS
I feel like Oil and related companies may go down further or may stagnate at current prices. Additionally, I feel that I am already exposed to oil price changes with my current holdings including RDS.B and others. I admit the XOM and the railroads are tempting.
Interesting ideas, thanks for sharing. I agree that oil could go lower, and bring down values in other sectors also - like Canadian Banks or energy pipelines.
DeleteAlso Interesting purchase of warrants on AIG. I believe BAC also has some warrants which could deliver good returns if BAC delivers returns.
Great ideas in your lists, DGI . Like others I appreciate the trouble you take in sharing your thoughts and the time you spend writing your analyses; it is good of you.
ReplyDeleteI had UTX but as a subscriber to AAII.com's dividend folio, I sold when that association dropped UTX from its dividend model. I had not thought of 3M but thanks for pointing out its merits . 3M does look like good, innovative company, well run and I am looking to make it a long term hold.
You asked us what we bought . Just FYI I bought Cummins (CMI): first a half position in mid July, and the other half just a few days ago (My average cost in CMI was $125.45 per share inclg commission) . As an American temporarily working in Quebec and Ontario, I have been following Cdn companies and my other modest purchases are listed on the TSX (.ca) .
Best,
Adam Okhai
Hi Adam,
DeleteThanks for stopping by and commenting. I need to review CMI in more detail, as it is one company that recently went on my to do list after raising its quarterly dividend.
Great discussion, DGI. Thanks for all you do!
ReplyDeleteNice set of additions, DGI. I am sure they will serve you well in the future! I am seriously considering topping up my Royal Dutch Shell holding at the moment. The really mega-cap oil majors look far too good value for the long-term to me!
ReplyDeleteKeep up the good work!
Excellent buys DGI. We recognize 2 (MMM and UNP) of the 6 mentioned as we also made the same buys this month. Even though we did not pick up the others mentioned, all 4 are on our watch list. Thanks for sharing the buys.
ReplyDeleteHope you enjoy your weekend! AFFJ
Added a bit of KMI and ETP this month. Also CA banks too low to pass up, added a bit of RY. The pipeline companies have followed oil down but the drop is overdone. Similar arguments for CA banks. There is blood in the street and opportunities are bubbling to the surface.
ReplyDeletebought 1000 shares att
ReplyDeleteAccording to my algorithm these are the top 3 'quantitative income stocks' for the S&P 500 (as of August 6, 2015):
ReplyDelete1- Cummins (CMI)
2- Eaton PLC (ETN)
3- Dow Chemical (DOW)
Regards from Spain