Lanny's Stock Purchases - August 13th Through September 9th

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Includes: BBBY, D, ITW, MYBF
by: Dividend Diplomats

I have been on quite the buying spree lately and have made 7 investment purchases within a 4-week window that I'm excited to share with everyone. The stock purchases may be within a company that was already in my dividend portfolio or this could be an entire new position. The one common trait that they all share is fairly simple - the stock purchases all produce growing dividends and pay on a quarterly basis!

The stock purchases

After I released my new $7,200 in forward taxable dividend income goal article, you should have a great sense why I have so many stock purchases. I am currently two months into my six-month entry period at my new employer, before I am allowed to contribute to their 401(k) plan. Therefore, I have more cash on hand to deploy in the market and it made sense to start juicing back my taxable account. The stock purchases you will read below aren't as significant as I usually do, as another event (switching investment brokerage firms) allows me to have free trading for 90 days. Therefore, this allows smaller purchases to be made along the way! Now let's see what stock purchases occurred over the last 4 weeks!

Stock Purchase - Bed Bath & Beyond (NASDAQ:BBBY)

How many of you feel like this is the 1,000th time I have purchased Bed Bath & Beyond in the last two months? I know it feels like that for me. However, the position I was building wasn't full yet and their metrics are just phenomenal. I won't bore you with many details, except provide a short synopsis on their dividend metrics when using the Dividend Diplomat Stock Screener:

  1. Price to Earnings: At $18.00/$17.85 with a forward earnings projection of $2.28, this equated out to a P/E ratio of approximately 8, which is well below the overall market on average.
  2. Dividend Growth: Young in the infancy stages of dividend growth, BBBY has performed 2 raises, consecutively, which does date back to when they initiated a dividend. Their metrics show they can consistently increase that dividend, though! The growth rate, on average, has been 13.33%. See the Impact of the Dividend Growth Rate.
  3. Dividend Yield: With the $18.00/$17.85 price point, at a dividend of $0.64, their yield was at ~3.55%, well above the S&P 500 (on average) and also above my overall portfolio, on average.
  4. Payout Ratio: Based on forward earnings of $2.28 and a dividend of $0.64 per year, this equates to a payout ratio of 28%. A super low payout ratio. They can grow dividends by double digits, no problem, in the near term. See why the Payout Ratio is an extremely important metric.

Here is proof of my investment:

In summary, I purchased 42 shares on 8/13, 8/21 and 8/30 of 2018 at $18.00 (twice) and $17.85 with a $0 trading fee for a total cost of $753.90. The 42 additional shares add $26.88 to my forward dividend income projection. In total, my position of BBBY is now at 82 shares pumping a total $52.48 per year.

Stock Purchase - Illinois Tool Works (NYSE:ITW)

Ah.. yes, ANOTHER few/small purchases into the dividend aristocrat of Illinois Tool Works. I wanted to continue to average down my price from the initial purchase date, and I had 2 opportunities to knock down that average price even more. Here are the quick and skinny stats from our Dividend Diplomat Stock Screener Metrics:

  1. Price to Earnings: At $136.00/136.50 with a forward earning projection of $7.59, this equated out to a P/E ratio of 18, which is below the overall market on average.
  2. Dividend Growth: They are a dividend aristocrat, pumping dividends for well over 25+ years. Their 5-year and 3-year dividend growth rates are 15.52% and 17.19%, respectively. Cannot hate on an aristocrat, with a current yield (below) and that type of growth rate.
  3. Dividend Yield: With the $136.00/136.50 price point, at a dividend of $4.00, their yield was at 2.9%, well above the S&P 500 (on average) and just below my portfolio yield, on average.
  4. Payout Ratio: Based on forward earnings of $7.59 and a dividend of $4.00 per year, this equates to a payout ratio of 52.7%. A perfect payout ratio - above the 40% and below the 60%, allowing room for future growth.

Here is proof of my investment:

In summary, I purchased 9 shares on 8/13 and 8/22 of 2018 at $136.00 and $136.50 with a $0 trading fee for a total cost of $953.50. The 9 additional shares add $36.00 to my forward dividend income projection, and in total, my position of ITW is now at 17 shares pumping a total $68.00 per year.

Stock Purchase - Muncy Bank Financial (OTCPK:MYBF)

I had cash left in my Roth IRA account from post-transfer of my conversion to my new investment platform that I wanted to put out to work. We all know I love community bank stocks - such as Citizens & Northern (NASDAQ:CZNC), Norwood Financial (NASDAQ:NWFL), etc. - that it just made sense to buy another small one in the state of Pennsylvania to keep up with the trend! Muncy is a $451M total asset bank, which is in the asset range that I like to buy banks at. Further, from using our Dividend Diplomat Stock Screener Metrics, these were the quick stats:

  1. Price to Earnings: At $32.80 with a forward earning projection of $3.02, this equated out to a P/E ratio of 10.86. Muncy's ratio is below the overall market on average.
  2. Dividend Growth: They have increased their dividend for over 14 years now, a trend that continues below. Their 5-year and 3-year dividend growth rates are 9.93% and 9.78%, respectively. I love that history and high single-digit growth, no doubt.
  3. Dividend Yield: With the $32.80 price point, at a dividend of $1.32, their yield was at 4.02%, well above the S&P 500 (on average) and above my dividend yield, overall, on my portfolio.
  4. Payout Ratio: Based on forward earnings of $3.02 and a dividend of $1.32 per year, this equates to a payout ratio of 43.7%. A perfect payout ratio - above the 40% and below the 60%. They have room to continue to pump that dividend further when they want.

Here is proof of my investment:

In summary, I purchased 30 shares on 8/27/2018 of Muncy Bank at $32.80 with a $0 trading fee for a total cost of $984. The 30 shares add $39.60 to my forward dividend income projection and another community bank stock on the ledger!

Stock Purchase - Dominion Energy (NYSE:D)

I had owned 41 shares of Dominion from earlier this year. On September 4th, I noticed that their ex-dividend date was coming soon, that I wanted to have a round 50 shares (at least) and that the share price was below the first time I acquired them. Then from using our Dividend Diplomat Stock Screener Metrics, these were the quick stats:

  1. Price to Earnings: At $71.17 with a forward earning projection of $4.11, this equated out to a P/E ratio of 17.30. A very solid P/E ratio, which is below the overall market on average.
  2. Dividend Growth: They have increased their dividend for over 14 years now. Their 5-year and 3-year dividend growth rates are 8.14% and 8.84%, respectively. I love that history and high single-digit growth, no doubt.
  3. Dividend Yield: With the $71.17 price point, at a dividend of $3.34, their yield was at 4.69%, well above the S&P 500 (on average) and above my dividend yield, overall, on my portfolio.
  4. Payout Ratio: Based on forward earnings of $4.11 and a dividend of $3.34 per year, this equates to a payout ratio of 81%. This is on the higher side, but isn't abnormal for a utility company. They have higher costs, based on the huge merger this year with SANA, which should open up more free cash and earnings.

Here is proof of my investment:

In summary, I purchased 9 shares on 9/04/2018 of Dominion at $71.17 with a $0 trading fee for a total cost of $640.53. The 9 shares add $30.06 to my forward dividend income projection, and in total, I now have 50 shares of D producing $167 in dividends per year.

Stock Purchases Summary & Conclusion

4 moderate purchases, but here to put it all to work! I deployed a total capital amount of $3,331.93 and added $132.54 in forward dividend income for an average yield of 3.93%. Every dollar counts, right?

However, I still won't be done! Given my situation, as long as there are opportunities, I'll be on the path making small scoops of undervalued dividend stocks over the next few months! I'll keep everyone in the loop on what stocks I am adding to my dividend portfolio.

What do you think of the stock purchases? Feel like these stocks are undervalued? Would you have not bought one of these dividend stocks above? Thank you for sharing your thoughts everyone and, as always, good luck and happy investing!

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.