Tuesday, June 24, 2014

June 2014 Bonus Buy

It's time to put my income to work again with a duo of bonus buys for June.  Earlier in the month I picked up shares of VZ and NAT.  Since then I have been putting in my time researching the next place I want to unload a pile of cash.  I have also been working on coming up with a mathematical formula to help me assign scores/multipliers to dividend paying/growth stocks and populating a database with basic statistics to test the formula.  While I am still far from perfecting the process I did use the formula to single out my two buys this month.

For my first purchase I bought 30 shares of TGT at 58.09 per share for a total of $1762.69.  Target has been struggling recently with multiple management changes, a major security breach, and poor performance in its Canadian expansion.  While these are real issues (particularly the failures in Canada) they are somewhat reflected in the low price of Target stock.  If the new Canadian leadership can bail out this sinking ship Target is set for a major rally, if not there will be more blood-loss.

Shares of Target recently saw a dividend raise of 21% which is in line with their excellent history of being very generous with dividend raises.  This increases Target's payout ratio to 56% however future dividends could be in jeopardy if things do not improve.  Sounds like my cup of tea!

For my second purchase I bought 108 shares of SPLS at $11.14 per share for a total price of $1213.11.  Yuck another beleaguered retailer?  Well not so fast, Staples has been cutting costs recently by closing unprofitable brick and mortar stores around the country while ramping up their online operations. Staples is now the third largest global online retailer after Amazon and Apple.  Staples has an incredibly low debt and excellent free cash flow.  The dividend is secure and has seen steady admirable growth over the last five years.  Major insider buying is also another positive sign.

With these two purchases and the raise from target my yearly dividend income has increased from $1964.4 to $2085.12


  1. Hi Dividendasaur, I agree with your TGT and staples but why NAT? I agree that it has high dividend/yield but the company looks like it's on the decline instead of future potential growth.

    1. Excellent question. While I do not trade often, NAT for me is a potential short term trade candidate. It is not a company which I plan to hold for the long term, but will likely exit before too long. Prior to todays 3.5% dropoff I was up almost 15% on the month and was getting an itchy trigger finger. Because of the high dividend I am willing to sit on it for awhile. I was thinking that the NAO spinoff, increasing rates for Suzemax tankers and recent acquisitions of two tankers at low prices would be reflected in the share price. I still think it has room to run up a bit before I sell. Again, not my usual but I thought I would have some fun with this one.

  2. Thanks for sharing your recent purchases for the month. TGT has definitely been the theme among the dividend bloggers in June. It seems that almost everyone picked up some TGT as prices have been depressed in recent times and TGT's dividend history and crazy high increase I'm sure influenced many of the purchase decisions. I'm still not hot on the retailers, WMT included. I just don't see long term value in that sector as it faces a secular decline as a whole. Just my 2 cents.

    1. Divhut, I'm still a novice but I'm closely looking at Staples and GE. Dividend-wise both have great growth potential but high risk.

      Staples is getting rid of its weaknesses and focusing exclusively on online and office supplies. They are number 3 in online retailers (behind amazon and apple). My only concern is weather it's too late.

      GE, while not retail, has gotten rid of its financial group and just won the Alstrom deal. They did slash dividends a couple of years ago but are trying to regain confidence and have a large cash supply on hand. GE's only weakness is the world's economy. If the US or china slows down, GE is dead in the water.

  3. Good buys but Staples is a gamble. I dont know if they can turn it out. best of luck!

  4. Target makes me a bit nervous (actually retailers in general.) I don't see anything good happening there. Will be interesting to see what earnings will show. Hope it works out for you.

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