What a crazy week this has been for me. Life comes at you fast sometimes and you have to be willing to absorb some punches and go with the flow. I couldn't be happier with how things have shaken out this week and I can't wait to eventually write about it all. Finally, with a few hours to concentrate, I wanted to share with you a couple of dividend stock purchases I made in March. Nothing crazy, but as always, we like to be fully transparent with the community. Plus, these names have been featured on our watch lists recently. Let's check out the stocks that I purchased and added to my portfolio!
Purchase #1 - CVS Health Corporation (NYSE:CVS)
CVS has been covered a lot on this website of late. Lanny has led the charge, performing a CVS vs. Walgreens comparison, reviewing the earnings releases, and adding the company to several of his recent watch lists. Following Lanny's lead (after reviewing his rationale and agreeing with his conclusions, of course), I have followed in my pursuit of the company. After their merger with Aetna, I am very excited about the company's prospects and merged business plan, despite the pause on dividend increases in the short term to pay down debt. With healthcare costs soaring in the country and an aging population, the new CVS is positioned to become an industry leader thanks to their drug store, and now insurance, presence. Of course, this will require proper execution. But I am excited about the prospects.
On top of it all, the metrics look great. Using my purchase price of $58.61/share, a forward EPS of $6.81/share, and a $2.00 annual dividend per share, the company had the following metrics using our stock screener:
- P/E Ratio - 8.60
- Payout Ratio - 29.3%
- Dividend Yield - 3.41%
My purchase was made on March 1, 2019, and added $1,283.44 to my position's cost basis. At the time, I added 22 shares of the company and added $44 of dividend income to my annual dividend income. I now own 36.132 shares of the healthcare giant, producing $72.62 in dividend annually.
What is crazy is that the company's stock price continued to fall after my purchase. With the price tumbling, I decided to add CVS back on my March Watch List. With a price below $55/share, I may be crazy if I don't add to my position in the company. It would be awesome to receive at least $100 in annual dividend income from the company.
Purchase #2 - WestRock Company (NYSE:WRK)
In the middle of the month, after my CVS purchase, I created a watch list for the rest of March. The watch list had three companies: CVS, Home Depot (NYSE:HD), and Westrock Company. This second purchase was a clean and easy purchase off of my watch list and allowed me to continue building a position I started at the end of 2018.
Westrock was appealing for several reasons. First, the company absolutely crushed the results of our stock screener. I highlighted this in my watch list, so I'll keep it brief. But the company's P/E ratio was below 9x, their payout ratio was below 50%, and the company has demonstrated their ability to grow their dividend recently. It was a no-brainer, in my opinion, for that reason. Second, I was starting an unrealized loss in the face from my initial purchase and I could potentially add to my position and reduce my cost basis. This purchase would allow me to increase my stake in a company that I own, thus, receiving a larger dividend and more shares each quarter, while reduces my average cost per share.
Therefore, on March 22, 2019, I purchased 21 shares of Westrock at a price of $36.97/share. This cost $780.23 in total, which included a $3.95 commission. This purchase added $38.22 to my annual dividend income. With this purchase, I now own 67.163 shares of the company and will receive $122.24 annually. Now that I am receiving over $100 annually from the company, I am pretty content with my position. However, if the price continues to fall, I'll continue adding.
What's exciting is that I was able to add $82.22 in forward dividend income in March based on stock purchases. Not a lot, but it will definitely help make a difference. But after my portfolio review earlier in the month, I was excited to see that the purchases of CVS and WRK helped me achieve a few of the action items from this portfolio review.
First, I already had established positions in the companies. Both of the purchases built upon the smaller positions in my portfolio. I realized in my portfolio review that I own a lot of companies. It is refreshing to not have to add another ticker to my tracking spreadsheet to follow each quarter. Plus, it will be nice to receive a larger dividend from each company and more fractional shares via DRIP.
Second, I mentioned how my portfolio was lacking healthcare stocks. Adding 22 shares of CVS allows me to increase my healthcare sector allocation. There is still some work to do as my allocation is only around 5%. But it is higher than it was a month ago. Another step closer to further diversifying. How could I not be happy with that result?
What are your thoughts about my purchases in this hot stock market? Are you looking at CVS and WRK? Or are you watching other stocks? What companies have you bought during the month?
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.