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.