A few days ago I wrote about a couple of stocks I sold from my Portfolio.  These stocks were D.R. Horton (DHI) and Cardinal Health (CAH).

You can catch up on those sales by checking out my last post – Recent Sell – DHI & CAH.

Anyway, in my last post I mentioned the fact that I was already deploying the sale proceeds, and that I would post about those purchases soon.  Well, the time has come!

With the DHI and CAH proceeds I was able to add on to 3 existing positions, and establish 2 new ones.

Here are the details…

 

EMN

Eastman Chemical (EMN) is a fairly new stock for my Portfolio, and a position I’m looking to build.  I only added EMN to my Portfolio this past June.

EMN is an advanced materials and specialty additives company operating worldwide.

On Monday, 8/19/19, I purchased 30 more shares at $66.55/sh, for a total of $1,996.50.  This essentially doubled my EMN position.  I paid less than a couple of months ago, and thus lowered my cost basis to $69.51.

Despite the addition, EMN is only the 41st largest position in my Portfolio out of the 47 stocks I own.

The stock yielded 3.73% at my purchase price.

I consider my EMN position about half complete now.  Given that the price of EMN continued to fall this week, I’m keeping open the possibility of yet another purchase.

This EMN purchase resulted in an additional $74.40 in annual forward dividend income.

 

JPM

JPMorgan Chase & Co. (JPM) is another position I am looking to build.  I’ve owned JPM since last December, making both of my previous purchases back then.

As many already know, JPM operates worldwide as a financial services company.  It operates in four segments: Consumer & Community Banking (CCB), Corporate & Investment Bank (CIB), Commercial Banking (CB), and Asset & Wealth Management (AWM).

On Tuesday, 8/20/19, I purchased 20 more shares at $107.94/sh, for a total of $2,158.80.  This brings my share total to nearly 66 shares.  I paid more per share than last December, but I’m willing to pay up in my efforts to build this position into what I hope will be a core holding.  My cost basis for my JPM position increased to $103.12.

With the addition, JPM is now the 27th largest position in my Portfolio.  There’s more work to do if I plan to see this stock in my top 10 holdings.

The stock yielded 3.34% at my purchase price.

I would say my JPM position is now about two-thirds as big as it needs to be in order to reach the outside of core holding status.  I’ll continue to try and add to JPM where I can.

This JPM purchase resulted in an additional $72.00 in annual forward dividend income.

 

UNH

One of the two newcomers to my Portfolio in my re-deployment of capital is UnitedHealth Group (UNH).

UNH operates in the U.S. as a diversified health care company through four segments: UnitedHealthcare (consumer-oriented health benefit plans and services), OptumHealth, OptumInsight, and OptumRx (pharmacy care services and programs).

UNH was a recent addition to my watchlist in my Portfolio Thoughts (July 2019) post.  Given that one of my sales (CAH) came from the Healthcare sector, I tried to send some investment back into that sector.

On Tuesday, 8/20/19, I purchased 6 shares at $241.32/sh, for a total of $1,447.92.

With this initial purchase, UNH starts as the 2nd smallest position in my Portfolio (46 of 47).  I will be looking to add to my UNH position over time.

My UNH purchase resulted in an additional $25.92 in annual forward dividend income.

The stock yielded 1.79% at my purchase price.  This is one of the lower yielding stocks in my Portfolio, but given UNH’s recent dividend growth, I hope that yield climbs quickly over the coming years.  Check out the dividend growth over the past 9 years!

I usually show the dividend growth history dating back to 2000, but I only show UNH starting with 2005, since that’s when the company started paying quarterly dividends and began a pattern of dividend raises.

The payout ratio is less than 30% based on current year EPS estimates of $14.82/sh.  Couple this with continued strong EPS growth, and hopefully the dividend growth continues.

 

CAT

The second newcomer arriving with my re-deployment of capital is Caterpillar (CAT).

CAT is a well-known Industrial stock, manufacturing and selling heavy machinery, including construction and mining equipment, diesel and natural gas engines, and gas turbines.

I’ve been looking for an entry point into CAT for a while.  The price hasn’t been this low in 2 years, and if I’m not mistaken, the P/E ratio hasn’t been this low in about a decade.  If earnings can hold up in the face of some uncertainty related to the economy and trade tariffs, a future price rebound should be expected.

I ended up purchasing 20 shares of CAT in two 10-share installments over the course of a few days.  Here are the details…

On Tuesday, 8/20/19, I purchased 10 shares at $117.20/sh, for a total of $1,172.00.

On Friday, 8/23/19, I purchased 10 shares at $115.725/sh, for a total of $1,159.25, including commission.

So, in all, I purchased 20 shares for a total of $2,331.25, for an average cost of $116.56/sh.

With this pair of initial purchases, CAT starts as the 4th smallest position in my Portfolio (44 of 47).  As with UNH, I plan to add to my CAT position over time.

My two CAT purchases resulted in an additional $82.40 in annual forward dividend income.

The blended yield for my two purchases came in at 3.53%.

As I do with new additions to my Portfolio, here’s a look at the dividend growth history for CAT, dating back to 2000.

The yearly dividend growth for CAT seems to fluctuate with the cyclical nature of its business, so I’ll focus more on the longer term growth rates.  If CAT can maintain a 7% dividend growth rate, I’d be quite happy with that.

Notice that CAT’s most recent dividend raise came this past May.  It was nearly 20%.

I highlighted the most recent 5-year dividend growth rate, as my calculation didn’t agree with the one from the CCC list, which was 7.0%.

 

AL

Last but not least, we have Air Lease (AL).  AL is one of the first stocks I added to my 5 legacy stocks when I began my dividend Portfolio.

AL is an aircraft leasing company.  It’s engaged in the purchase of commercial jet aircraft (from Boeing and AirBus) and subsequently leases the aircraft to airlines around the world.

I haven’t added to AL since May 2016.  It was already in my top 10 stocks prior to this purchase.  This wasn’t a big add, so the purchase didn’t really move the needle on AL’s position within my Portfolio.  However, I felt like the stock was undervalued, so might as well add a few shares.

On Friday, 8/23/19, I purchased 10 more shares at $39.19/sh, for a total of $393.90, including commission.  With the purchase, my AL position grew to just over 322 shares.  My cost basis crept up slightly to $29.60/sh.

AL is currently the 7th largest position in my Portfolio.

The stock yielded 1.32% at my purchase price.  AL is one of my lower yielding stocks, so I expect it appreciate at a faster clip than many of my other stocks.

AL is a full position, but just as I did here, I’ll sneak in a small purchase every now and then if I deem the shares to be trading at a good price.

This AL purchase resulted in an additional $5.20 in annual forward dividend income.

 

Summary

With my two sales earlier in the week, I realized proceeds of $8,240.80, but I gave up $209.79 in additional forward dividend income.

I didn’t waste much time in re-deploying the sale proceeds, however.  I purchased 5 stocks in all – 3 purchases being additions to existing Portfolio holdings, and 2 purchases resulting in new additions to my Portfolio.

In total, the 5 new purchases cost $8,328.37, but added $259.92 of additional forward dividend income.

So, all things considered, I made a net investment of $87.57, bringing in a net $50.13 of additional forward dividend income.  Wow, a yield of 57.25%!  🙂

This massive yield on my net investment was thanks to my new purchases generally providing a higher average yield than those of my sales.

I’m happy with the transactions, as I feel the departing and arriving companies make for a stronger Portfolio.  I’ll keep looking at possible Portfolio improvements over time.

 

What do you make of my most recent set of transactions?  Would you have removed different stocks, for whatever reason?  How about the additions… were there other stocks that you might have considered instead?   I look forward to your comments!