Blue Chip Dividend History

Dividend history and growth information for your favorite blue chip stocks!

Johnson and Johnson – JNJ

Coca Cola – KO

Hershey – HSY

Tiffany & Co – TIF

Royal Dutch Shell – RDS

Philip Morris International – PM

Exxon Mobil – XOM

Proctor & Gamble – PG

Nestle – NSRGY

Diageo – DEO

General Electric – GE

Another Puff Of Philip Morris

PM Logo

PMI Logo

As the market continues its emerging market driven rout, a lot of great blue chip companies are seeing significant drops in price.  This is resulting in more of my limit orders being triggered.

When I checked the markets today Philip Morris was trading below 79 dollars, well below my $80.01 limit price.  My order was fulfilled at exactly $80 per share , resulting in a purchase of 32 additional PM shares at a cost basis of $2560.  This latest addition to my holding has a beginning dividend yield of 4.7%.

Philip Morris is now my largest individual equity position – ignoring my 401(k) index funds, which I don’t discuss on this blog.  I have a total of 92 shares with a current valuation of over $7,300.  This will result in an annual dividend payout of $345 into my Traditional IRA account.  Dividend Growth Investor has a great article on some of the merits of PM.

I still do have some uncommitted cash in that account, so could potentially buy more if the price continues to drop.  History shows that price drops in tobacco stops are just a chance to buy cheap and make even bigger returns in the future, and I am confident that this approach will hold true – however, I am not certain!  Given that I will try (and maybe even succeed) to resist the cravings to build this position further for now. Although, only 8 more shares would round my position to an even 100…

Hopefully if the markets continue to tank some of the other securities I’m pursuing will come into buying.  I have an order to add more KO at a limit of $36.77, compared to the closing price today of $37.90.  It does not seem inconceivable that this could trigger in the next couple of days if Mr Market continues with his present sour mood. I also hope to add some more Exxon-Mobil or Nestle if their prices dip down far enough.

 

More Coke? Yes Please

KO Logo

KO Logo

After much contemplation I decided today to increase my holding of Coke.  I’ve read a lot of articles and analyst research and have convinced myself that it is one of the few bluechip companies that are trading at a fair price.

Barring a significant rise in price in the near term, I anticipate making several such KO purchases when my supply of capital allow.  I am slowly converging on a list of core equities that I would like to build a large position in – KO, PM, XOM and NSRGY.  In the event of a significant market correction I will be scrambling to buy as much of these as I can!

One major factor for me in focusing in on Coca-Cola was a recent WealthTrack interview with Don Yacktman, who is very bullish on KO.  His funds have performed exceptionally well over the last 10 years, so his thoughts held a lot of weight with me.

With dividend reinvestment in place I’m hoping I will see a long term return in the neighborhood of 10 to 11 percent annually.  7% to 8% through earnings growth, plus the 3% from the reinvested dividend.  With Cokes ability to sell a few cents of syrup for a dollar or so a serving, and the strength of their brand around the world, I consider their moat and their profitability to be a relatively safe bet.

My original position from earlier in 2013 was 64 shares. Since then dividend reinvestment has boosted my hold to 65+ shares.  Taking advantage of todays price dip I purchased another 64 shares for $2510.08 at $39.24 a piece.

The Coca Cola holdings in my portfolio now total 129.112 shares with a new cost basis of $5082.54.  The yield is floating somewhere between 2.8% and 2.9%, so my annual KO dividend has now increased to roughly $145.

Purchased More Philip Morris

PM Logo

PMI Logo


A week or so ago I decided that if the price dropped sufficiently to get me a 4.5% dividend yield I was going to double my Philip Morris position.  Given the high yield on PM I have determined I would prefer to have it in an IRA account rather than a regular brokerage, so I set my limit order accordingly for my traditional IRA at $83.57.

Today, in a general downswing of the markets, PM dropped far enough that my order triggered.  I have thus added 30 shares of Philip Morris to my IRA account.

Purchase of 30 shares of PM at $83.57, for a cost basis of 2,507.10. Dividend yield at time of purchase is 4.50%. Dividend Reinvestment enabled. Initial dividend income $112.8 annually.

The action doesn’t end here however!  I also dumped the PM I had in my brokerage – 28+ shares – for $2325.64. I then purchased another 30 shares (I like buying in $2500 chunks) in the IRA.  I did have to cancel a limit order I had set for DPS to free up tentatively committed funds, but I really do like PM at this price.  Thus…

Purchase of 30 shares of PM at $83.06, for a cost basis of 2,491.80. Dividend yield at time of purchase is 4.53%. Dividend Reinvestment enabled. Initial dividend income $112.8 annually.

I am pretty confident that PM will be a solid investment in the long term.  For now I think it is suffering mainly from the strong US dollar which is really casting earnings in an unflattering light.  Eventually there will be a earnings headwind versus a tailwind for Philip Morris, and I fully expect to benefit from that at some point in the future.

In summary, my entire Philip Morris investment is now in an IRA account.   This means I can reinvest the dividends without owing the IRA a cut until withdrawal.  At a yield of 4.5 percent every bit of relief helps!

Position is now 60 shares of PM at an average price of $83.32, cost basis of 4,998,90. Dividend income as of today $225.6 annually.

 

Shell Games – RDSA Swapped for RDSB in IRA

RDS Logo

Shell Logo

I have spent some time thinking about how best to handle the Shell dividend issue I recently experienced.  As discussed earlier my RDSA dividends are subject to Foreign Dividend Tax, which is potentially a bit of a hassle for me to deal with.  Rather than cope with this I have learned that due to their setup RDSB are not subject to dividend withholding.

The RDS.A shares are not a good choice for an IRA account, as the foreign taxes cannot be reclaimed from the IRS.  The RDS.B shares, however, without this tax to deal with are a great choice for an IRA investment. See this article for a great discussion on the background of the two types of Shell shares and the benefits of investing in each using different vehicles.

Apart from the foreign tax issues, another item of import is that Shell pays a very generous dividend, currently yielding over 5 percent.  Given the choice of a Taxable or an IRA account for my various holdings, it seems logical – all other things being equal – to locate the higher yielding holdings in a sheltered account.  I’d rather pay tax on the dividend from a stock yielding 3% than one yielding 5%.

Based on both the foreign tax and dividend income tax considerations, I have decided to do a straight swap of my RDSA in my taxable brokerage account for RDSB in my Traditional IRA.  Today I sold my 38 shares of RDSA at $67.51 (2,565.34) and purchased 38 shares of RDSB at $70.81 ($2,689.07) – the two issues do not sell at identical prices.

The sale means I have a gain of roughly $1.50 from my initial purchase back in May.  This is probably going to prove taxable as short term capital gains, but I think any tax hit will be tolerable:)

Now this sale is completed I have a nice chunk of cash sitting uncommitted in my regular taxable brokerage account.  I have an urge to purchase some more Nestle, so I have placed a GTC limit order for another 36 shares of NSRGY at $70. It is hovering around $72 per share right now, but hopefully I’ll get lucky and have the opportunity to purchase on a future dip.

 

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.

 

 

 

 

Completion of KO Position

KO Logo

KO Logo

After failing to purchase NSRGY earlier today, I instead used a portion of my funds to complete my position in Coca Cola. I needed to purchase a little over a thousand dollars’ worth to achieve my desired cost basis of $2500.

While KO was a little cheaper earlier in the week, I am content with my price of $38.62 for 37 additional shares.  This gave me a very slight ‘averaging down’ in the price per share of my whole position – bringing it down to $39.52. Overall I believe this was a reasonable price to buy, but not a huge discount to fair value. I am confident that their business will continue to produce solid returns, and my position has a solid chance of being very lucrative in the long term.

My earlier Coke trades are documented first here, and second here.

With this soda company purchase complete, I will put my thoughts of buying to buy PEP (Pepsi) or DPS (Dr Pepper) on the back burner.  While they appear reasonably valued, I would like to diversify my portfolio into some other sectors with my next few purchases.

Overall position is 64 shares of KO at $39.52, for a cost basis of 2529.28.  Overall dividend yield at time of completion of position is 2.83%. Dividend Reinvestment enabled. Initial dividend income $71.68 annually.

UPDATE – added to KO position!

Completion of MCD Position

MCD Logo

MCD Logo

As discussed yesterday, I had two trades for MCD scheduled for this morning.  I have replaced the 10 shares of McDonalds in my brokerage account with 27 shares in my traditional IRA.  Both trades were market trades that executed at $95.01 per share.

This trade completes the establishment of my full position in MCD, and allows me to direct future investment capital into different companies.  With the recent dip from $100/per share it lowers my entry point a little also.

While MCD faces some tougher competition from other fast food chains – such as YUM – than it has in the past, I’m fairly comfortable that due to its sheer size and international scale it will maintain a dominant position.

I am hoping for an ongoing annual dividend increase of 9% per year or more, which is a little less that it has given in recent years.  My starting yield is over 3%, so I can live without a double digit dividend growth rate, but would certainly welcome it!

The completion of this position in McDonalds takes care of diversification into the ‘dining out’ sector of the economy. I am enjoying see my portfolio grown in breadth, and seeing these great names slowly added.  These are not exciting investments I am making, but hopefully they will prove to be successful ones in the long term.

Purchase of 27 shares of MCD at $95.01, for a cost basis of 2,565.27. Dividend yield at time of purchase is 3.13%. Dividend Reinvestment enabled. Initial dividend income $83.16 annually.

Additional KO Purchase – How Not To Trade

KO Logo

KO Logo

One benefit of having commission free trades in my Brokerage account is that I need not worry about trading fees on small purchases.  With the current drift down in the prices of Coca Cola (KO) I decided to spend the cash I had on hand to build on the partial position of Coke I built earlier.  I was able to muster about $500 for additional Coke shares today.

This is still not enough to obtain my full desired holding, but since prices are down I thought I would dollar cost average down while I could. Unfortunately I ran into a small glitch with my Brokerage…it is a bit embarrassing, but I don’t mind looking foolish so I’ll share it!

The purchase order I placed was not permitted to proceed as the sum exceeded 95% of my available funds.  The reason why was not stated, but my best guess is they like to leave a little for any trading fees (not that this applies in my situation).

To resolve this issue I went back and decreased the share count by one, then resubmitted the order.  Alas, the buy order defaulted back to sell – so I actually ended up reducing my position instead of adding to it.

Word to the wise…never employ me as your broker!!

After this giant ‘doh’ moment I placed a limit purchase for 25 shares – including rebuying the 13 I unintentionally sold – this time correctly.  The order triggered and was executed shortly before the end of trading for the day.

Increased my initial position of 25 shares by 12 net new (13 sold, 25 purchased) shares of KO at $38.78 with dividend yield of 2.89% (almost 3%, but not quite!). I still have at least one KO purchase more to complete – when funds allow – to reach my target position of $2500.

Current position of 37.1729 shares of KO has a cost basis of $1441.56. Dividend yield is 2.89%. Dividend Reinvestment enabled. Annual dividend income for position is $41.63.

 

 

Purchase of WMT – Low Price Domination

CLX Logo

WMT Logo

Today my limit order for Walmart (WMT) was triggered as the share price fell below $74.00  I had chosen this value as my entry point based on Morningstar’s perceived “Fair Value” for the company.

While I wanted to add WMT to my portfolio, I did not want to overpay.  Purchasing at a fair price (admittedly only one research firms view) seemed a good place to start. Also, as a purely psychological bonus, the price dropping to this point puts the Dividend Yield on Walmart over the 2.5% barrier.

I have a high degree of confidence the WMT dividend is safe, as it has an unblemished history of 39 years of increasing dividends. The proportion of earnings paid out as dividends is under 40%, leaving plenty of buffer for lean profit years plus plenty of scope for future dividend increases. It also leaves plenty of cash flow to be used for the ongoing stock buybacks.

For the last 5 years dividend growth has been over 13% on average, while I would be delighted to see that continue that may prove difficult to maintain over the longer term. Based on past performance I expect annual dividend growth to easily average over 10% per year, which will rapidly increase my initial 2.53% dividend yield and produce impressive yields on cost in future.

Wal-Mart has been trending down the last few days – even dropping below their 200 day moving average, for those who are into charts – after some negative news on the earnings and revenue front.

Second quarter earnings only rose 1.3%, and same store sale comparisons were flat overall.  This news appears to have scared off some investors, but I am confident that Walmart will work through these issues with time.  Eventually the US economy will rebound and low income shoppers will increase their spending again.  The bad news is a buying opportunity for me.

With the addition of a full (i.e. roughly $2500) sized position in WMT to my portfolio, I have fulfilled my desire to have an ownership in a dominant retailer.  I’m optimistic the firm – with its emphasis on low prices – will remain best in class in its field, and should prove a lucrative investment. Assuming the Walton family doesn’t end up taking Walmart private (as their share of the company grows due to the ongoing share buybacks) I plan on keeping this investment for life.

Purchase of 34 shares of WMT at $74.20, for a cost basis of 2,522.95. Dividend yield at time of purchase is 2.53%. Dividend Reinvestment enabled. Initial dividend income $63.92 annually.