Recent Buy – December (Part 4)

As a value investor, one should always be on hunt to find the bargain and keep investing in the dividend paying bargains at regular interval, monthly or bi-weekly or however frequently enough cash becomes available to put back to work. When bargains shifts from one company to other, we as a value investor, should follow the value stocks and maintain these frequent purchases of these value stocks to create continuously growing stream of passive income through dividends. Continuous flow of dividend income stream that can grow over the time at faster pace than inflation rate is extremely vital.

In The Dividend Karma’s journey of creating constant flow of passive income via dividend investing, I try to keep looking around hunting for the value dividend stock and post it on this blog once the purchase is made to own a piece of business within any company.

Since no one can really predict the market moods and sentiments, the highs or the lows or even future directions, it is best to keep buying all along the way thru the ups and the downs without much interruptions. Although, I do believe in keeping little more cash than usual when one feels the market is little too high and its not easy to find the value stocks, which is what I believe we should do in current market condition. I also think regardless of above, not buying on regular basis can also hurt for two main reasons. Reason one is who knows what next year or two brings, it may be possible that correction may not occur for next several years so waiting for correction may not work very well specially when you are building a portfolio in accumulation phase of your life. Reason number two is if we wait for correction and if the bull run continues then correction has to be much harder just to get back to the same price you would have otherwise bought the stock anyway while waiting for correction and even if correction comes after a year or two or longer, then in a long run, it will reduce the amount of time your investment can actually compound and in process it may be possible that reduction in power of compounding years may hurt your portfolio value and dividend income more than rather buying in value stocks at regular intervals.

With above mindset, I’ve recently bought into a few companies, which in my opinion a good value at current levels with current market conditions. Below is the list of a few purchases I have recently made:

On 15th December, I bought 25 stocks of BP at an average price of $40.37. BP pays quarterly dividend of $0.60 (paid in the month of February, May, August and November). TDK’s annual dividend increase with this purchase will be about $60.0 at a dividend yield of about about 5.945%.

On 15th December, I bought 100 stocks of KMI at an average price of $18.04. KMI pays quarterly dividend of $0.125 (paid in the month of January, April, July and October). TDK’s annual dividend increase with this purchase will be about $50.0 at a dividend yield of about about 2.77%.

On 15th December, I bought 8 stocks of FAS at an average price of $68.06. FAS doesn’t pay any dividends. There are very few companies within TDK’s portfolio that don’t pay dividends. FAS is among those ones.

On 14th December, I bought 75 stocks of GE at an average price of $17.68. GE has recently cut its dividend down to quarterly payment of $0.12 (paid in the month of February, June, September and December). TDK’s annual dividend increase with this purchase will be about $36.0 at a dividend yield of about about 2.715%.

Total invested capital is $4,682.81. These purchases will increase the TDK’s annual dividend by $146.0. Dividend on this purchase yields about 3.12%.

What are your thoughts on this purchase ? What are the stocks you are buying or looking to add ?

This Post Has 12 Comments

  1. I don’t really like GE as a stock. It is cheaper than other stocks due to its recent decline. But that’s primarily because GE’s business model (a conglomerate) is showing some serious cracks. I think businesses that succeed in the modern world need to focus on one industry.

    1. Troy @ BM,

      I totally agree that GE’s recent past wasn’t very impressive specially after not awarding any special dividend or piece of SYF from the amount of cash from SYF disarm, resulting in huge loss for shareholder’s equity from $123 B in 2012 down to $76 B. They reduced the share count by about 800 million but unfortunately that was bad timing of buy back. I actually sold my GE position at around $31 back when they sell off SYF without giving us piece of that business. Looking back it actually worked out good for me. But overall now it seems like they are taking good steps, I like new CEO s approach and cutting dividend is the right step to me. With current dividend cut, it is still pretty enticing and forward PE is about 17.

      I agree past decisions of both GE and KMI actually hurt the share holders a lot but I believe moving forward downside risk is much limited for both of these companies, I have been wrong before many times, so will see though.

      Thanks for stopping by and commenting. Happy Investing.
      TDK.

  2. Nice purchases. I do think GE will recover (not sure when). 3.12% yield is awesome 🙂

    1. Hi DG,

      I share the same opinion, GE will be alright (not sure when though). Will see. Yes, I too like 3+ % dividend yield.

      Thanks for stopping by and commenting.
      TDK.

  3. I’m a fan of BP at these levels and have been reinvesting dividends the last few years too. I think among the big players in the oil space they’re one of the better values. Dividend growth is probably still a few years of good oil prices away, but nearly a 6% yield can entice me to wait.

    1. JC,

      I’m totally with you. Can’t complaint much with 6% dividend yield. Makes the wait so much easier for better oil prices. I am still looking into add more to my position in BP if prices remain around or below 40.

      Happy Investing, thanks for stopping by.
      TDK.

  4. Hey Karma, I used to own BP and KMI. BP I sold because I had too much exposure to the integrated oil sector. I chose to focus on CVX and XOM instead. I sold KMI because of their dividend reduction a few years ago. I usually do not hold for long after a company cuts my dividend. I’m looking for an exit point with GE for that reason. I suffered the dividend cut in 2009 by GE and held. I have lost conviction now with the 2nd cut in the last 8 years. They may turn it around, but I’m not sure I want to wait to find out. I don’t own FAS as I only invest in a company if it pays a dividend. We are on the opposite side of things, but that’s okay. I hope you do very well with all these purchases and I respect your thought processes in making each of them. Tom

    1. Hi Tom,
      I totally understand your point of view Tom. I totally agree on GE’s past holding was nothing but frustrating but I am hoping future will hold better but only time will tell. I wish you best for your current holdings as well. Hope all goes well at your end as well.

      Good Luck and happy investing. Thanks for stopping by and commenting.
      TDK.

  5. Hi TDK,

    KMI seems to be turning around. They ended 2017 with over $500 million dollars in FCF after the dividend and CapEx. Their 2018 dividend policy calls out for a 60% dividend increase from $0.50 to $0.80 per share. Sometimes you just have to look forward than backwards, and the forward view for KMI’s dividend looks pretty good.

    Enough said about GE, I think they will be okay long-term, but short-term pain to continue for a while.

    I don’t follow BP, so don’t have much opinion.

    The energy sector is supposed to benefit the most from the new tax bill, and BP, KMI, and GE should benefit.

    Good luck to you and hope these investments work out for you.

    Take care

    1. Hi ATM,

      Yes I totally agree looking in rear mirror for KMI and GE both look pretty ugly but I believe future holds much better for both. Will see.
      Yes dividend policy for KMI for 60% for next year and 25% then on wards annually for next 3 years. GE seems to be taking correct steps there by taking cost cutting measures. However, Tax bill may not affect very positively to GE since their tax rate seems pretty low for past several quarters. I still believe though, GE will do good in next 3 year horizon, will see. Thanks for your well wishing, I wish the same for you.

      Happy Investing.

      Thanks for stopping by and commenting.
      TDK.

  6. Always happy to read about buys continuing to come in especially when the market is making new highs. Like the BP and GE pick up. BP has really climbed a lot on recent months and with oil making new highs too things are looking up for a leaner BP. I picked up some GE too. Just a nibble for me as I’m liking these depressed levels for the stock. Thanks for sharing.

    1. DH,

      Good thoughts on BP. Great to have you as fellow shareholder for GE. Good luck and happy investing.

      TDK.

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