Lanny's Stock Purchases January 16th Through February 1st

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Includes: ABBV, WRK
by: Dividend Diplomats
Summary

I purchased an additional 15 shares of AbbVie at $80.29 with a $3.95 trading fee, for a total cost of $1,208.22.

I also purchased WestRock for the fourth time, and the first time since October 9, 2018.

I deployed a total of $2,454.38 in capital and added $122.40 in forward dividend income. This equates to an average yield of 4.99%.

I am happy to see the Polar Vortex didn't take anyone down, I hope. We are a full month down, and it was nice opening February up on a Friday, as I was able to squeak a purchase in on that day. What's wild, though, is we have gone from devastating cold temperatures to running outside in shorts a few days later. Thank you, Ohio! Well, enough about the weather, it's now time to check out my dividend stock purchases over the last two weeks of January and the first day of February!

The stock purchases

It's the start of the new year, and I feel refreshed on the path to add more investments and dividend income through capital contributions as the main artillery. I am soon to be eligible to contribute to my new employer's 401(k) plan (will start on 2/1/19 due to 6-month waiting period, which I'll receive on the 2/8/19 pay). Therefore, I currently have more cash on hand to deploy in the market, and it made sense to start juicing up my taxable account. The stock purchases you will read below may not be as significant of a purchase that I typically make (primarily due to building positions, etc.). Lastly, one purchase was actually/already for my Roth contribution of 2019. However, enough of my rant, let's see what stock purchases I made over the last two weeks!

Stock Purchase - Abbvie (ABBV)

First, this has been a very popular company for dividend growth investors, from what I've read in the community. Abbvie was a spin-off from Abbott Laboratories (ABT) in 2013, and has continued being a dividend machine ever since. The stock was recently on my dividend stock watch list for February, though I did buy it in January! This big pharmaceutical has the drug Humira, which accounts for the bulk of its revenue. Here are the quick stats on the purchase by using the Dividend Diplomat Stock Screener:

  1. Price-to-Earnings: At $80.28 price with a forward earning projection of $8.75 for 2019 (from 18 analysts), this equated out to a P/E ratio of approximately 9.17, which is well below the overall market on average. Further, the share price dropped from my first purchase at $85.00 per share, or 5.6%.
  2. Dividend Growth: The company used to be labeled a Dividend Aristocrat when under the ABT label. However, it is starting its own streak and is currently at 6 years in a row. Lastly, the recent increase was approximately 11%, and the company should be poised to offer upper-single/low-double digit growth if it would like to, going forward. See why the impact of the dividend growth rate is real!
  3. Dividend Yield: With the $80.28 price point, at a dividend of $4.28, the yield was at ~5.33% - well above the S&P 500 (on average).
  4. Payout Ratio: Based on forward earnings of $8.75 and a dividend of $4.28 per year, this equates to a payout ratio of 49%. A perfect payout ratio. AbbVie can grow dividends going forward, no problem.

Here is proof of my investment:

In summary, I purchased an additional 15 shares on 1/25/19 at $80.29 with a $3.95 trading fee, for a total cost of $1,208.22. The 15 additional shares added $64.20 to my forward dividend income projection. In total, now, I own 36 shares that yield over $154 in dividend income per year.

Stock Purchase - Westrock (WRK)

This is the fourth time I've purchased WestRock and the first time since October 9, 2018. You can read about the last time I purchased the stock here, which was at a prince point of $45.20. It is the 2nd largest American packaging company and one of the largest paper companies. Further, it also owns my favorite type of box - a pizza box - as the company also acquired (three years ago) the largest maker of pizza boxes. What's not to love? Well, WestRock sweetened the deal when its price dropped to $38.82 from the $45.20 last purchase point, which represents a massive 14% decline! How does the stock look now, through the diplomat stock metrics?

  1. Price-to-Earnings: At a $38.82 price point with a forward earning projection of $4.41 for 2019 (from 14 analysts), this equated out to a P/E ratio of approximately 8.80, which is well below the overall market on average. Notice the trend with the ABBV purchase above?
  2. Dividend Growth: Similarly, fairly young in its dividend growth infancy at 4 years. The company is usually between 5% and 7% per year on the dividend growth standpoint. I can be okay with that going forward.
  3. Dividend Yield: With the $38.82 price point, at a dividend of $1.82, its yield was at ~4.69%, well above the S&P 500 (on average).
  4. Payout Ratio: Based on forward earnings of $4.41 and a dividend of $1.82 per year, this equates to a payout ratio of 41%. Another, "sweet spot" payout ratio. WestRock can grow dividends going forward at a consistent rate, no problem.

Here is proof of the investment purchase below:

In summary, I purchased 32 total shares on 2/1/19 at $38.82 with a $3.95 trading fee, for a total cost of $1,246.16. The 32 shares added $58.24 to my forward dividend income projection. In total, I have over 81 shares producing over $148 in dividends per year!

Stock Purchases Summary and Conclusion

I deployed a total of $2,454.38 in capital and added $122.40 in forward dividend income. This equates to an average yield of 4.99%. Not too bad and happy with adding to current positions. The last week or so, though, has been hard finding right buy opportunities. Dig deep enough, though, you can find them.

Similarly, and keeping the message consistent, stick to the strategy that has worked for you and review to see if there is anything that you need to see out there that may impact your strategy going forward. You are in control, and the emotion button is hard to turn off. Persevere and stay consistent, if you can and are able to. Lastly, my dividend portfolio has been updated, and I am locked in and ready for further opportunities.

What other investments are you seeing out there? What industry has been your preference as of late? Anyone just stockpiling capital and/or cash? Thanks again, everyone, and as always, good luck and happy investing!

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.