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.

 

October 2013 Dividend Earnings

The totals are in for my Dividend earnings for October 2013.  I had three positions pay out this month, General Electric, Philip Morris International, and Coca Cola.

HoldingDividend/Shr# SharesDividend TotalReinvestedNew SharesAccount
$65.49
GE$0.19110.842$21.06YES0.807ROTH IRA
PM$0.9428.152$26.46YES0.3117Brokerage
KO$0.2864.1729$17.97YES0.4767Brokerage

The biggest news this month for my Portfolio was the PM dividend increase taking effect.  My payout went from the previous $0.86 per quarter up to $0.94 for a whopping extra $2 in dividends.  It may not sound like much, but I’ll take it!

Of the $65 income $44 was earned in my taxable brokerage account, while the other $21 is tax-free in my ROTH IRA. I’m slowly getting closer to my initial goal of averaging $100 a month.  Probably another $5000 worth of investments will push me pat that target.