Hello everyone… here’s a quick update on my latest stock purchase.

A little over a month ago I added 4 new stocks to my Portfolio.  I was not expecting to grow each and every position, but 3 of the 4 were candidates for future purchases.

Fast forward about 5 weeks, and one of those candidate positions has now been expanded.  That stock is Chemical Financial (CHFC).

Last month I initiated a position in CHFC with a purchase of 100 shares.  Today, I expanded my position in CHFC by 50%.

As noted last month, CHFC is a regional bank headquartered in Detroit, MI, with a footprint in the upper Midwest.  I also mentioned that CHFC had an upcoming merger of equals with TCF Financial (TCF).  Well, the merger gained regulatory approval last week and is now scheduled to close on August 1st, 2019.  My understanding is that once the merger is complete, the combined companies will be renamed and operate as TCF Financial Corporation.  Also, I understand that the company stock will trade on the NASDAQ under the ticker symbol ‘TCF’.  Obviously, I’ll be watching closely to see what transpires.

Upon merger completion, the combined company is expected to be a top 10 bank in the Midwest, with a significant presence in the following cities: Detroit, Chicago, Minneapolis and Milwaukee.  Total assets are expected to be about $46 billion.  Over 500 combined branches will exist across 9 states.

I’m optimistic regarding the prospects of the combined company given that CHFC has been successful with past mergers and there’s not much in the way of geographical or customer overlap with TCF.  TCF is currently more consumer-focused, while CHFC is more business-focused.  The hope is that each company will be able to market some of its services to the new clients gained via the merger.  Of course, there should be some cost synergies as well as overlapping functions are consolidated.

Let’s take a look at the details for my most recent purchase of Chemical Financial Corp…

 

CHFC

On Monday, 7/22/19, I purchased 50 shares at $40.95/sh, for a total of $2,047.50.  The stock yields 3.32% at my purchase price (well above my Portfolio average of 2.69%).

I paid slightly more than last month for this newest batch of shares, but my overall cost basis remains under $40/share.

I consider my CHFC position about 3/4 complete now.  Thus, there’s room to continue building this position.

With the additional shares purchased, CHFC moves up to the 30th position in Portfolio value out of my 47 Portfolio stocks.  It’s tucked in nicely between Hormel Foods (HRL) and Texas Instruments (TXN) in my Portfolio.

This CHFC purchase results in an additional $68.00 in annual forward dividend income, bringing my Portfolio’s current total to $10,170.13.

Here’s another look at the dividend growth history for CHFC, dating back to the year 2000.  I showed this last month at the time of my initial purchase.

Given that CHFC is a financial stock, one can probably expect that its dividend did not fare well in the aftermath of the Financial Crisis (2008)… and it didn’t.  However, dividend growth has recovered nicely since 2012 and the stock now shows decent growth rates over the past 1, 3 and 5-year periods.

I was expecting CHFC to announce a dividend raise as early as this week, in conjunction with their upcoming earnings announcement.  However, given the merger being expected to close roughly 1 week later, who knows what will transpire in terms of a dividend raise announcement.  Perhaps nothing happens until the merger is complete.  I hope the recent CHFC dividend growth rates can continue post merger.

 

Any thoughts on my most recent CHFC purchase?  Do you own any regional or community banks, or do you prefer to own the national players instead?  I look forward to your comments!