Last month I wrote a post titled Automatic Investing. In this post I backed into the monthly amount of money I'd need to invest to hit my goal of $50,000 of new money invested into my retirement accounts. This is new money, not dividends or options income. Money from my bank accounts. I am investing my dividend and options income, but not counting this money towards my goal. Today, I added more Target (NYSE:TGT) stock to my portfolio. I bought 22.65 shares at $66.05 per share, totaling $1,495.95. This new purchase brings my Target share total to 47.65 shares. This new lot of Target stock will increase my annual dividend income by $50.74 at current yield.
In my automatic investing post I mentioned that I'm interested in accumulating more shares of undervalued companies I already own. My goal is to get to at least 100 shares of every stock in my portfolio so I can take advantage of selling covered calls. The account I'm adding shares to is my post tax Capital One Investing account. I've setup a monthly investment of $1,500 that will be invested in the stock that's most undervalued or has the most perceived short-term upside. In this account I hold the following stocks, UNP, QCOM, MO, TGT, RY, TD, NOV, CSCO, GE and WMT.
I chose Target over the others because its had a few rough days, with the stock price down a few dollars. I was looking at UNP and QCOM, but decided to wait because these stocks have been on recent upswing.
FAST Graphs shows Target as slightly undervalued when viewed on a ten-year chart.
I've recently started using Finbox, which is a new financial service. Finbox makes it really easy to determine the value of a stock. The site does a one button click analysis of a stock's value, that looks like the image below. This calculates 11 models into one score and price. Finbox shows Target is valued at $73.84, which is 11% upside.
One of the features of Finbox that I like is the ability to quickly build and edit models. I used the Finbox Dividend Discount Model for a stable growth company and arrived at a price of $79.15.
Automatic Investing Takeaways
This Target stock buy completes my second month of automatic investing. It's not truly automatic, more semi-automatic. I have auto investing turned on, but I manually evaluate my investment options monthly. Given a lot of market turmoil lately, I've decided to add one more option to my plan. I'm committing to adding $1,500 a month to my Capital One account, but I may hold the money in the account for future purchases or to sell puts. This still allows me to add new capital to my account, but I won't always immediately buy more stocks. Long story short, if I can find value, I'll invest. If I cannot find value, I'll hold the cash for later.
Full Disclosure: Long TGT