I’m having a good time looking back at my early stock purchases. By December of 2017, I’d refined my strategy a bit but was still falling for high yields. Here’s what I came out with in December 2016.
This was a great month for purchases in my account. Lots of activity!
I am writing this looking back from September 2017.
12 shares of APU (Amerigas Partners) @ $45.60/share ($547.20)
APU has a strong hold on the liquid propane distribution business. Their name is everywhere. I got drawn in by the ridiculously high yield and thought I couldn’t go wrong. It would turn out to be more expensive to file an MLP K-1 than I’d realized, and all my dividends got washed away (and more). I will eventually sell APU and stay away from MLPs in the future.
2 shares of ORI (Old Republic) @ $19.72/share ($38.28)
ORI satisfied my need for a low cost stock to buy with leftover funds. The dividend yield was fairly high, but there is not as much dividend growth as I would like. I will add to this twice more, but eventually sell it and focus on other low-cost stocks with higher dividend growth.
5 shares of PG (Procter & Gamble Co) @ $82.25/share ($411.25)
Great company with a slowly growing dividend. A little too slow now looking back. I will hold onto this purchase for the long term because of PG’s history, but I probably won’t add more to it unless their dividend increases get a bit bigger.
2 shares of HRL (Hormel Foods Corp) @ $33.51/share ($67.02)
I had a few dollars left after this deposit and was trying to learn my lesson from last month’s RCS purchase. HRL fit the requirements. Low payout ratio, long dividend history, dividend growing explosively, and a solid stable business. This might have been one of my lowest yield stock purchases up to this point, but I was starting to buy into dividend growers.
8 shares of VZ (Verizon Communications Inc.) @ $51.04/share ($408.32)
I still believe VZ has good upside long term, but it doesn’t fit into my dividend growth strategy. I will consider selling this and moving the proceeds into a more traditional dividend grower.
9 shares of EMR (Emerson Electric Co.) @ $57.51/share ($517.59)
At this point I discovered the list of Dividend Aristocrats and Champions. EMR’s recent dividend increases have been minuscule, but increases have been coming for over 59 years. I’m a happy owner of EMR, but I will wait to add more until their dividend increases pick up a bit.
4 shares of NDSN (Nordson Corporation) @ $109.32/share ($437.28)
At this point, I really started buying into the dividend growth mantra. NDSN is a textbook example of companies I would like to own more and more of. They have a very low payout ratio (22.6% as of Sept 2017). Their most recent annual increases have been in the 8-13% range. Their current (Sept 2017) yield is low at 1.07%, but if they keep up their dividend growth, I will be a happy NDSN owner in a few years. In the meantime, I don’t have to worry much about the integrity of their dividend. I will later add more to NDSN and continue to consider adding to it.
6 shares of LOW (Lowe’s Companies, Inc.) @ $75.05/share ($450.3)
Another result of my Dividend Kings list. Lowe’s has paid an increasing dividend for 54 years straight. In Sept 2017, yield was 2.09%, payout ratio was a 36.4%, and I believed in the home improvement retail sector whereas the rest of retail was having a hard time adjusting to the Amazon effect. A few months after this purchase, I was rewarded with a 17% dividend hike. I’m looking forward to holding LOW for the rest of my life!
10 shares of VVC (Vectren Corp) @ $51.59/share ($515.9)
Yet another purchase after I discovered the lists of dividend champions, aristocrats, and kings. Vectren has increased their dividend for 57 years. In Sept 2017, it’s appears very sustainable with a 2.52% yield and 64% payout ratio. Utility companies may not have as much growth potential as other companies out there, but they are stable. I will later add more to this position.
5 shares of JNJ (Johnson & Johnson) @ $111.61/share ($558.05)
Buying in more to the dividend growth idea, JNJ is a must-own. 54 years of increases and a 46.8% payout ratio as of Sept 2017. I couldn’t feel more comfortable parking money in JNJ and never worrying about it again. There are some great stories out there about long term JNJ owners and I consider it the definition of dividend growth investing. I will later add a large JNJ purchase in my Roth IRA. At this point, my dividend growth journey has officially begun and I couldn’t be more excited.
7 shares of CINF (Cincinnati Financial Corporation) @ $77.99/share ($545.93)
The 75% payout ratio (Sept 2017) is a bit higher than I like, but the increase history is stellar. This is another stock I don’t consider to be flashy, but I do feel like I can count on a rising dividend income from it for the rest of my life.
3 shares of MMM (3M Co) @ $176.7/share ($530.1)
One of my favorite holdings! I will later add shares of MMM multiple times. I have admired 3M well before ever considering investing in them. I have a great respect for the variety of products they produce, and their reputation for being the best at producing those products. Scotch Tape and Post-It Notes are no longer even thought of as brand names. That’s just what those products are referred to as automatically.
58 years of increases and a (Sept 2017) payout ratio at 52.8% makes me one very excited 3M owner! I can’t wait to eventually add more shares than I already have.
1 shares of KO (The Coca-Cola Co) @ $41.96/share ($41.96)
I had a small amount left over and instead of investing in a flashy, unsustainably high yield stock with little chance of long-term value, I bolstered my KO ownership by one share.
1 shares of STAG (Stag Industrial Inc) @ $23.85/share ($23.85)
I had an even smaller amount left over after buying KO, and couldn’t resist buying a high-yield REIT. STAG does seem to be an excellent REIT, but it doesn’t fit into my dividend growth plan. The dividend growth potential is just not there. I got lucky with the timing and the share value has grown since my purchase, but I will sell after one year to reduce taxes (even though it’s such a small amount).
11 shares of SO (Southern Co) @ $49.11/share ($540.21)
I fell back into my high yield tendencies with this purchase. Although, SO is an excellent company to own. It’s (Sept 2017 payout ratio is higher than I like at 78%, but Southern Co’s slow-but-steady growth history gives me confidence in holding long term. I may not add to SO, but I am happy to be an owner.
15 shares of PPL (PPL Corp) @ $34.14/share ($512.1)
High dividend yield (4%), high payout ratio (74%) (as of Sept 2017). You can see where I was going with this one. I have years and years ahead of me to wait for a dividend grower to surpass 4% yield on cost. PPL has given me a good return after 10 months, but it’s not one I will add more to any time soon. Another utility, it just has a low ceiling for dividend growth.
9 shares of RSG (Republic Services, Inc.) @ $57.39/share ($516.51)
I’m excited about RSG. It is a competitor to the better-known Waste Management. It’s not a pretty business, but we will always need our garbage taken away. I actually love this type of business. I also love the sustainable (Sept 2017) 2.08% yield, 58% payout ratio, and 8% dividend increase I would later get. I feel great about RSG as a potential growth company if it can eat up some of Waste Management’s market share. 10 months later, I couldn’t be happier to be a long-term RSG owner and will definitely buy more as time goes on.
6 shares of CL (Colgate-Palmolive Company) @ $66.16/share ($396.96)
This is one of those companies I can totally buy it and forget about until I want to buy some more. Colgate is one of the most recognizable brands that people pick up and use twice a day. The recent dividend growth hasn’t been stellar, but it looks completely safe at a 2.21% yield and 55% payout ratio. I will definitely want to increase my CL position in the future, although I haven’t yet.