Purchase of NSRGY – Nestle

Nestle Logo

Nestle Logo

After resolving my block for trading Pink Sheet stocks – my Merrill Edge Safepass arrived in the mail – I have finally moved forward with my Nestle purchase.  The addition of the NSRGY ADR to my portfolio is a goal I’ve long targeted.

The bad news for me is that due to the delay caused by waiting on the security mechanism to arrive, the price of the security increased by roughly $5 per share.  I had set my limit order to $68.00, and sat and waited for the purchase to trigger. While I would have preferred a sub $65 price – where it was trading a while back – I still feel it is attractive at sixty eight.

Nestle is a Swiss based firm, largely focused on the food industry, that has in the neighborhoods of 30 billion dollar brands.  It is truly a huge company, and with the breadth and depth of its product offerings it will not be going away anytime soon.  Amongst its chief competitors are General Mills, Kraft, and Kelloggs.  The firm also has a large beverage division – particularly in the bottled water arena – so also competes to a certain extent with Coca Cola and Pepsico. As I have already purchased KO I now have multiple positions in the beverage industry.

While not a hugely popular holding for individual investors in the US, many people hold them in their 401k accounts due to its presence in a large number of major index funds.  The main listing for the company is on the SIX Swiss Exchange, and one side effect of this is that many of the US based financial statistics aggregating sites have bad information for the firm.  Sites like Yahoo finance and Google finance should not be relied upon for dividend data for these international firms, it is best to go direct to the source – i.e. the firms’ corporate website.

Nestle, being a non-US forms, has some unique characteristics that makes it different to my other holdings.  For one, it only pays a dividend once a year, rather than every quarter.  Also, the dividend is paid in Swiss Francs (CHF) which is of course converted into USD for the ADR.

This means the size of the dividend – and of course the price of the underlying security- will vary over the years depending on the underlying CHF-USD exchange rates.  This does expose me to some foreign exchange risk, but since Nestle sells products worldwide I am not concerned about this.  I had a lot of trouble finding accurate historical information on the Nestle Dividend, this is probably the best reference (straight from the source) as it eliminates confusion caused by taxes and currency conversions.

With this firm I am exposed to every currency – some of which will be strong and some weak in any given year.  The major concern I would have is if I were forced to liquidate my position at a particularly unfavorable time – when the Dollar is weak against the Franc.  I plan on holding this stock for life however.

Purchase of 37 shares of NSRGY at $67.98, for a cost basis of 2,515.26. Dividend yield at time of purchase 2.71%. Dividend Reinvestment enabled. Initial dividend income $67.17 annually.  Note – this yield reflects 15% withholding.  My research indicates I should get credit for this at tax time, if this proves to be the case I will come back and adjust the yield upwards accordingly.

 

 

 

 

September 2013 Dividend Earnings

It is time to document my earnings from my dividend stock portfolio for September 2013.  The way my portfolio has been chosen a lot of payouts dates happen to fall in September, so I have quite a few items to report.

HoldingDividend/Shr# SharesDividend TotalReinvestedNew SharesAccount
$108.55
ADM$0.1975$14.25YES0.395ROTH IRA
XOM$0.6330$18.90YES0.215ROTH IRA
INTC$0.225105$23.63YES1.058ROTH IRA
RDSA$0.9038$34.20NO0Brokerage
CSX$0.15100$15YES0.5681Trad IRA
MCD$0.7710$7.70NO0Trad IRA

For several of my newer positions I received my first dividend payout ever. Intel, Shell, Clorox and McDonalds I purchased too late to received their earlier June 2013 payouts.  The ADM and Exxon payouts were a repeat of last quarter, but this time I had dividend reinvestment enabled as opposed to getting a cash deposit – so the money was invested in  fractions of additional shares.

McDonalds was an aberration this month.  I had several buys and sell of MCD while finalizing its position in my portfolio, the end result being I only received dividends on 10 shares and it was not reinvested.  This issue should be resolved now and I expect a full payment in December 3013.

I had a signficant issue with my investment with Royal Dutch Shell.  I was under the impression I would receive my dividends thru Shells’ Scrip program, where you are paid in shares – rather than in cash which needs to be reinvested into shares.  This is supposed to exempt you from paying a Foreign Dividend Tax.  Unfortunately this did not work out for me, I received $34.20 in dividends but then has $5.13 deducted for ‘Fgn Div Tax’.

I am going to monitor this issue if there is an easy way to get this back at tax time.  I may end up changing the location and type of Shell investment in the future to optimize the situation, but for now I I’m not too concerned – it is only $20 a year after all.

$108 of dividend income if my first triple digit month so far.  Here is  hoping it is the first of many!