It's stock buying time and here are my results for March 2014. I may need help because it seems like I have an addiction... to tobacco stocks. This morning I purchased 13 more shares of PM (Phillip Morris) at $80.24/share for a total cost of $1,043.12. This satisfies my goal of buying at least $1,000 worth of stocks each month, but most importantly PM is currently paying $0.94 per share quarterly increasing my dividend by a total of $48.88 per year for a new forward yearly dividend of $492.09.
In order to reach my goal of $900 in forward yearly dividends by the end of the year I would need to invest about $13,600 or about $1,510.8 per month at a 3% return rate. This is going to be a serious challenge because I have recently made an offer on a new house which if successful will eat into my emergency fund. If this new house deal goes through I will more than likely stick to my $1,000 per month while I refill the war chest. Regardless I am confident that I will meet my original goal of $700 per month in forward dividends.
My portfolio has been updated to reflect this new purchase.
Disclosure: Long PM
What stocks are you buying this month?
Nice buy, and I think you entered at a solid price for PM. As I said on your last update, the $700 original goal will drop with no problem given the amount of capital you are putting to work. Given a 3.0% entry yield, you need less than $7,000 of additional contributions to hit that mark, without including any further dividend increases (PM for one).
ReplyDeleteW2R,
DeleteI agree that the 700 mark shouldn't be too hard but that 900 mark is a heck of a stretch. Anything seems possible at this point since I have been working 60+ hour weeks for the last month and a half, gotta love the overtime. I really like PM at this price point and even though there are many other companies I would like to own I couldn't pass it up. Thanks for stopping in sir!
Nice buy and congrats on the house! :) I almost pulled the trigger today on PM as well. I'm hoping to join you as a shareholder any day now. Good work and keep it up!
ReplyDeleteThank you, it is an exciting prospect. An investment that you can live in sounds pretty good to me! I look forward to you jumping on the PM train with me, it should be a good ride. Take care Ryan.
DeleteGood stuff, Dividendasaur.
ReplyDeleteI just dont understand the numbers with the tobacco companies, esp PM. I just dont understand what the negative book value means and all my judgement on valuation of companies is out of whack.
In addition, the roadblocks created from governments around the world for smokers keeps me away from these stocks. I know they are really popular amongst dividend growth investors, but I cant bring myself around the invest in them.
Roadmap2Retire,
DeleteExcellent questions, I think PM is a really good topic for my next stock spotlight as that negative book value certainly can be confusing. They are basically taking advantage of extremely low interest rates because they know they can do better with the money. Even with the crackdowns worldwide the rate of smoking is still increasing globally, it also helps that they sell an extremely addictive and profitable product. Thank you for giving me the idea for my next article, now I'm all motivated to write about PM :-) Take care.
I would really appreciate that :)
DeleteMaybe you can point some of the things out that I fail to understand when I read other articles or try to figure things out by myself.
Addictive and profitable product, no denying that.
regards
I really like PM at these prices, although the mid-$70's from early February was even better.
ReplyDeleteIt's even more attractive after the ~1% drop today. I agree about those February prices though, I initially bought in at the end of January and was happy to get more at this price.
DeleteDividendasaur,
ReplyDeleteGreat buy here. I think PM is very attractive right now. Unfortunately, it's my largest position already so I'm already overweight. But I guess that's a good thing!
Keep up the great work. Looks like you're making some serious progress already.
Best wishes.
I am overweight in tobacco stocks with this new purchase but I can give no guarantees that I won't pick up more if the prices stay down like this. There are a-lot of good deals out there right now but tobacco is one of my favorites.
DeleteThank you, it's amazing how quickly the dividends are adding up, gotta love March!
Nice Buy. I have PM as well. There's a lot of stocks I'm looking at because we are just starting out. I just want to have an instant portfolio. haha.
ReplyDeleteI'm probably looking at KMI right now or one of the monthly dividend payers (ARCP, O, MAIN, PSEC) as my March buy once I get my tax refund back.
Anyway, I have a question for you. Long term, I see myself investing in 40-50 companies with each having approximately equal weight to spread the risk around. How much are you thinking per position? The reason I ask because you bought PM again. I was thinking in order to get to my long term goal I was going to buy 40-50 stocks at about 1k in each company and when I get to my goal i was going to start adding on to the existing position. I have no idea what how much money I ultimately want tied up in each stock. The other option is to buy a company at a good price and continue to go at it if it's a good price (because you never know if it will be at a good price again), but then you have all your money tied up in one stock if it continues to stay at a good price, which is a big risk. What strategy is the best way to go?
I love having a monthly payer in the portfolio, for me it is motivating to at least see some sort of number month by month.
DeleteThat is a really good question. My investing horizon is very long, eventually I would like to hold between 25-40 companies however I am not terribly concerned with the rate at which I pick up the new companies. Every time I start to consider a new buy I also review all of my portfolio's positions to see if I can add to them at an attractive price. Basically my entire portfolio is always on my watch list. Another major goal that I have is to own at least 100 shares of each stock in my portfolio. This will allow me to trade options (write covered calls) on some of my positions as I deem fit.
For the short term I like the idea of picking 10-20 stocks and building those positions up to ~100 shares each and then starting to branch out into more companies. However I will always snatch up whichever stock I believe is the best deal at the time. Thanks for the great question Richie!
That makes sense if you eventually want to trade options in the future by getting 100 shares. I'm on the fence about options but maybe if i had enough capital i'd consider it. If I did, I'm trying to figure out if I would really want to get 100 shares of say chevron which would be like 11500 of capital needed vs 100 shares of att which is only 3300 of capital needed. Seeing how I want to be approximately equal weight in each company. I'd probably get more att shares to match the capital i put into chevron. Sorry just thinking aloud.
DeleteI might have to consider a position as set amount until I figure out what I want to do with options.
Thanks for replying. I have things to consider when shaping my portfolio.
It is a delicate dance balancing the weights of your portfolio especially when considering the 100 shares necessary to write the covered calls. You are right in your chevron vs att comparison in that it would terribly unbalance things. It's not so much that I am actively considering rushing a stock up to 100 shares but more that it is a secondary bonus when I buy into a position I already own. I think you are very smart to diversify but if you find a stock you own to be a terrific deal make sure you don't pass it up for the sake of diversification. Always chase the best deal.
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