As I mentioned in my dividend retirement plan, I am an investor in the accumulation phase. I plan on being financially independent in a few years through my contributions of fresh capital into new or existing positions that are trading at attractive valuations. In addition, I also focus on strategic reinvestment of distributions into companies with whose stocks meet my entry criteria. While I do follow several strict criteria for initial screening, a large part of my asset allocation is invested based on qualitative characteristics and my own biases.
I also try to follow a strategy, where I stop contributing to an existing brokerage account, once my contributions reach $100,000. As I explained in an earlier article, the purpose behind this strategy is to ensure that I do not lose my whole nest egg if a broker fails and I have more than $500,000 invested there. I assume that over time, my $100,000 investment is going to produce capital gains that would eventually lead to my account balance exceeding $500,000. If stock prices rise by 7% annually in the future, I would likely exceed that account balance in over two decades from now.
I typically purchase somewhere between one to three investments each month. My lot size has increased over the past 3 years, as I no longer invest using brokers that offer free trades. As a result, it is much cheaper to spend $5 - $7/trade by investing $2000 at a time, rather than investing $1000 at a time. This means that if I purchase two securities on average every month, I might end up adding to an existing position approximately once an year, sometimes even less often. This is because my portfolio consists of over 45 individual stocks, although I find less than 30 or so to be worthy of my future investment dollars. The rest are holds either because they are overvalued right now [Yum! Brands (NYSE:YUM)], have slow or no dividend growth [Con Edison (NYSE:ED)], or have an abnormally high weight in my portfolio [Phillip Morris International (NYSE:PM)].
Over the past two months, I invested in the following companies:
Chevron Corporation (NYSE:CVX), through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. This dividend champion has managed to boost distributions by 8.80%/year over the past decade. Chevron has raised dividends for 25 years in a row. The stock trades a t8.80 times earnings and yields 3.40%. Check my analysis of the stock.
Aflac Incorporated (NYSE:AFL), through its subsidiary, American Family Life Assurance Company of Columbus, provides supplemental health and life insurance. This dividend champion has managed to boost distributions by 20.40%/year over the past decade. Aflac has raised dividends for 30 years in a row. The stock trades at 8.90 times earnings and yields 2.60%. Check my analysis of the stock.
Unilever PLC (NYSE:UL) operates as a fast-moving consumer goods company in Asia, Africa, Europe, and the Americas. This dividend achiever has managed to boost distributions by 9.90%/year over the past decade. Unilever has raised dividends for 12 years in a row. The stock trades at 20.80 times earnings and yields 3.30%. Check my analysis of the stock.
Air Products and Chemicals, Inc. (NYSE:APD) provides atmospheric gases, process and specialty gases, performance materials, equipment, and services worldwide. This dividend champion has managed to boost distributions by 11.10%/year over the past decade. Air Products and Chemicals has raised dividends for 30 years in a row. The stock trades at 15.30 times earnings and yields 3.10%. Check my analysis of the stock.
Abbott Laboratories (NYSE:ABT) engages in the discovery, development, manufacture, and sale of health care products worldwide. his dividend champion has managed to boost distributions by 8.70%/year over the past decade. Abbott Laboratories has raised dividends for 40 years in a row.The stock trades at 16.20 times earnings and yields 3.10%. Check my analysis of the stock.
McDonalds Corporation (NYSE:MCD) franchises and operates McDonald's restaurants in the global restaurant industry. This dividend champion has managed to boost distributions by 27.40%/year over the past decade. McDonalds has raised dividends for 36 years in a row. The stock trades at 16.90 times earnings and yields 3.50%. Check my analysis of the stock.
Enterprise Products Partners L.P. (NYSE:EPD) provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NYSE:NGLS), crude oil, refined products, and petrochemicals in the United States and internationally. This dividend achiever has managed to boost distributions by 7.60%/year over the past decade. Enterprise Products Partners has raised distributions for 15 years in a row and yields 5.20%. Check my analysis of this master limited partnership.
In order to add to new or existing positions, I tend to look at valuation, portfolio weight and my outlook for the enterprise over the next few years. I am sometimes willing to add to my position in a stock, even if doing so would result in an above average weight for a short period of time, if shares are trading at a relatively low valuation.