Lanny's Dividend Stock Purchase Activity - May 2019

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Includes: ADM, LYB, UPS
by: Dividend Diplomats
Summary

ADM is a mass producer in grains, that can be found in majority of food products consumed by us.

This is the second and third time I've purchased LyondellBasell, and the last time was in March.

United Parcel Service is a monster player in the shipping/transportation arena.

The month of May was absolutely WILD. You could not even tell what was going to happen each day, let alone each hour. Is the new saying - April Rises, brings May Surprises? It does this time around, that's for sure. The trade tariff discussions, inverted yield curves, interest rate pressure, and sensitivity really have created opportunities in the stock market. Therefore, as a dividend investor must do, I went on a slight dividend stock purchase spree!

The stock purchases

May has brought even more dividend stock opportunities than in the previous month. I was lucky to have capital/money set aside for dividend stock purchases. It is always nice to add to your portfolio, even more so when the stocks are on sale. In fact, this has been my busiest month yet, relating to dividend stock investing. I am sure it comes as no surprise based on the market downward trend from the turmoil noise constantly in the background.

Stock Purchase - Archer-Daniels-Midland (NYSE:ADM)

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It's been a LONG time since I've purchased shares in this wonderful Dividend Aristocrat! Archer-Daniels-Midland has proudly been increasing dividends for OVER 25+ Years! In addition, when considering an investment, why not buy stock in a company that is for life! ADM is a mass producer in grains, that can be found in majority of food products consumed by us.

  1. Price to Earnings: At a $41.15 price with a forward earnings projection of $3.30 for 2019 (from 15 analysts), this equated out to a P/E ratio of approximately 12.5, which is well below the overall market on average. Their price is actually now in the mid $38 range, even more enticing.
  2. Dividend Growth: Dividend Aristocrat status baby! I believe they are almost at 30 straight years of dividend increases. The last 3 increase has been 4.5%, 4.7%, and 6.7%.
  3. Dividend Yield: With the $41.15 price point, at a dividend of $1.40, their yield was at 3.40%. Their yield is well above the S&P 500 (on average).
  4. Payout Ratio: Based on forward earnings of $3.30 and a dividend of $1.40 per year, this equates to a payout ratio of 42%. ADM is always keeping it right in the 40-60% sweet spot for us!

Here is proof of my investment:

In summary, I purchased an additional 27 shares during the month for a total cost of $1,114.92. The investment firm I use is Ally Invest and since my account is over a threshold, the fees are only $3.95 per trade. We recommend Ally in our Financial Freedom Product listing, as their savings account is higher than most, as well. The 27 shares added $37.80 to my forward dividend income projection for ADM. My total position is over 180 shares, producing $252+ per year. Call me crazy, but wouldn't mind adding more here, you know, to top it off at 200 shares.

Stock Purchase - LyondellBasell (NYSE:LYB)

This is the SECOND and THIRD time I've purchased LyondellBasell, and the last time was in March. I love averaging down and when a stock price drops and your goal is to acquire more shares, anyway. In addition, when the stock drops almost 10% from the initial price point, hard not to go back to the store here.

  1. Price to Earnings: At an $85.04 and $80.75 price point with a forward earnings projection of $10.46 for 2019 (from 21 analysts), this equated out to a P/E ratio of approximately 8.1 and 7.7, which is well below the overall market on average.
  2. Dividend Growth: Similarly, fairly young in their dividend growth, at 8+ years. Their last increase was 11% but can be anywhere from 5-11%. I am okay with that, especially with where the yield stands.
  3. Dividend Yield: LYB produces $4.00 per year in dividends. At price points of $85.04 and $80.75, their dividend yield was at ~4.70% and 4.95%, well above the S&P 500 (on average).
  4. Payout Ratio: Based on forward earnings of $10.46 and a dividend of $4.00 per year, this equates to a payout ratio of 38%. Another, "sweet-spot" payout ratio. They can grow dividends going forward, at a consistent rate, no problem.

Here is proof of the investment purchase below:

In summary, I purchased 24 total shares on 5/6/19 and 5/13/19 for a total cost of $2,001.60. The 24 shares added $96.00 to my forward dividend income projection. In total, I have 41 shares producing over $164 in dividends per year!

Stock Purchase - United Parcel Service, Inc. (NYSE:UPS)

United Parcel Service, Inc. was also a position in my portfolio that I added to. They are a monster player in the shipping/transportation arena and we all know the brown truck trolling through our neighborhood streets. Due to the recession in 2009, they are on a streak of 10 consecutive years of dividend increases. When you remove the recessionary year, this would have been the 18th consecutive year, driving towards the aristocrat status.

  1. Price to Earnings: At $96.00 price point with a forward earnings projection of $7.46 for 2019 (from 24 analysts), this equated out to a P/E ratio of approximately 12.89, which is well below the overall market on average.
  2. Dividend Growth: As stated earlier, they have increased their dividend for 10 straight years. Their last increase was 5.50% but can be anywhere from 5-10%.
  3. Dividend Yield: UPS produces $3.84 per year in dividends. Their dividend yield, at time of purchase, was 4.00%, well above the S&P 500 (on average).
  4. Payout Ratio: Based on forward earnings of $7.46 and a dividend of $3.84 per year, this equates to a payout ratio of 51%. Did we just hit a triple, here? Another company in the middle of 40-60% range.

Here is proof of the investment purchase below:

In summary, I purchased 10 total shares on 5/23/19 for a total cost of $963.95. The 10 shares added $38.40 to my forward dividend income projection. In total, I have 29 shares producing over $111 in dividends per year!

Summary & Conclusion

Therefore, I deployed a total of $4,080.48 in capital and added $172.20 in forward dividend income. The average dividend yield on this round of dividend stock purchases equates to 4.22%. Further, UPS and LYB were on my watch list recently and ADM was also mentioned in my investing in dividend stocks for life. Lastly, all 3 stocks were already in my portfolio and it's nice to round out those spots. I could see myself adding more ADM, LYB, and UPS.

I will maintain my main message. Stick to the strategy that works for you, but review if there is anything 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. I am locked in and ready for further opportunities. This was one step closer to financial freedom and I hope to continue making strides. Lastly, my dividend portfolio has been updated.

What other investments are you seeing out there? What industry has been your preference as of late? Anyone just stockpiling 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.