A couple of days ago, I posted that I made my first Portfolio transactions of the 2020.  They were a both sales, including one complete stock sale.  You can check out those details in my Recent Sell – TGT & O post.

Of course that left me with the sale proceeds to invest… just over $13K.  So I’ve been scouring my Portfolio for potential additions I’d like to make there, as well as looking outside my Portfolio, perhaps initiating a new position or two.

Well, as I mentioned in that Recent Buy post, I didn’t wait long to start recouping some of that dividend income I lost with the TGT and O sales.

In fact, this week I made 8 different purchases (a ‘Crazy 8’, as I called them in the post heading).  Making so many purchases was helped by the fact that my broker (Vanguard) transitioned to free stock trades at the beginning of 2020, joining the free trade bandwagon driven by several other brokers in the past few months.

While I didn’t invest all my sale proceeds yet, I have recouped all my lost dividend income, and then some.

With so many purchases to cover, I’ll try to be brief.  Let’s find out what I bought, and get some details on the purchases…

 

Gilead Sciences (GILD)

I last purchased some shares of this biotech firm in December of 2018 at $71.17/share.  My current purchase was a good 11.6% lower than that.

GILD is actually one of the few stocks in my Portfolio that has a negative return.  The fact that I’ve owned GILD since 2014 makes that a bit disappointing, but I’m cautiously optimistic that a turnaround will occur.

For the past year, GILD has been trading in the $62 to $70 range.  With the stock currently near the low end of that range, and with an opportunity to average down my cost basis, I decided to add a few shares to my position.

On Tuesday, 1/21/20, I purchased 10 shares at $62.91/sh, for a total of $629.10.  My GILD position now stands at 136.983 shares.

GILD shares were yielding 4.01% at my recent purchase price, well above my current Portfolio average of 2.56%.

This purchase results in an additional $25.20 in annual forward dividend income.

Accounting for this purchase, GILD has become the 22nd largest position in my Portfolio by value.  However, thanks to its above average yield, the stock has cracked the top 10 in my Portfolio with regard to dividend weight.  I don’t have any plans to grow this position, but if the price continues to decline, I may be inspired to add a bit more.

 

Cheesecake Factory (CAKE)

Now here’s a stock that’s probably new to most in the DGI universe.  Because of this, I’ll provide a few more details on this company compared to my other purchases.

I had some interest in CAKE a year or two ago, but never initiated a position.  However, the stock returned to my radar recently, as noted in last month’s Portfolio Thoughts (Dec. 2019) post.

The Cheesecake Factory is a casual dining restaurant chain.  The company was founded in 1972 and is headquartered in Calabasas, California.

I’ve dined there a few times and found the restaurant to be a unique dining experience.  The portions are very generous, and the menu quite large.  Usually, these aren’t the best qualities for a restaurant, but the restaurant seems to make it work, and they do have a loyal following.  Of course, the Cheesecake Factory churns out over 30 varieties of cheesecake and other desserts from their bakeries, too.  Yum!

The cheesecakes can be purchased to-go from a counter at the restaurant entrances, but of course you can have a slice as part of your meal, too.  Off-premise dining for CAKE as a percentage of sales was 16% in the most recent quarter, and management views this as a growth opportunity.

There are close to 200 Cheesecake Factory restaurants in the U.S., with perhaps another 100 that can be added domestically.  The company expects to grow the U.S. locations at 3-4% annually, which would leave several more years of expansion.  The company is also looking at up to 10 locations in Canada.  Other select international locations are a possibility as well.

However, it is CAKE’s latest growth driver that motivated me to initiate a position in the stock.  This past summer, CAKE entered an agreement to purchase two concepts: North Italia, an upscale, casual restaurant in which it already had a minority stake, and Fox Restaurant Concepts (FRC).  North Italia is expected to be the better growth opportunity.  There are currently a little over 20 locations, but CAKE sees the potential for up to 200 locations.  Meanwhile, FRC is a collection of different concepts with 45 locations across 7 states and Washington, D.C.  FRC should provide growth on the same level as the current Cheesecake Factory while being an incubator for new ideas.

The acquisitions stunted CAKE’s EPS growth in 2019, but analysts expect this to be neutral in 2020, and then add to the bottom line thereafter.

On Tuesday, 1/21/20, I initiated a position in CAKE.  I bought 100 shares at $38.50/sh, for a total of $3,850.00.

CAKE shares were yielding 3.74% at my recent purchase price, again well above my current Portfolio average of 2.56%.

This purchase results in an additional $144.00 in annual forward dividend income, going a long way in helping me replace the lost dividend income from TGT & O.

With the purchase, CAKE starts out as the 40th largest position in my Portfolio by value.  While I don’t anticipate adding to this position, should CAKE decline in price to $35, I’d consider adding another 50 shares.

Since CAKE is new to my Portfolio, let’s take a look at its dividend growth history, dating back to the year 2012, when the company started paying a dividend.

CAKE has been growing their dividend at a nice double digit clip over the 1-year, 3-year and 5-year reporting periods.  However, their raise percentage dipped under 10% with their most recent dividend last July, which came in a tad over 9%.

The payout ratio for CAKE is roughly 52% based on the current annualized dividend of $1.44 and the estimated 2020 EPS of $2.77

One interesting note, CAKE has a fairly odd dividend payment schedule, consistently paying dividends every March, May, August and November.

 

Exxon Mobil (XOM)

It was only a couple of months ago that I last purchased some shares of this energy firm at $68.99/share.  This time my shares were slightly cheaper, lowering my cost basis a bit more.

Similar to GILD, XOM is one of the other stocks in my Portfolio with a negative return.  I’ve owned XOM since 2015, so again this has been another disappointing stock for me.  However, I’m willing to give XOM more time to straighten out their performance.  It wouldn’t take much share price growth to add to their stellar yield to leave me with a fine return.

On Tuesday, 1/21/20, I purchased 10 shares at $67.95/sh, for a total of $679.50.  My XOM position now stands at 129.543 shares.

XOM shares were yielding 5.12% at my recent purchase price, double my current Portfolio average of 2.56%.

This purchase results in an additional $34.80 in annual forward dividend income.

Accounting for this purchase, XOM has slotted in right behind GILD as the 23rd largest position in my Portfolio by value.  However, with XOM’s hefty yield, it holds the #3 dividend weighting in my Portfolio.

 

3M Co. (MMM)

I continue my attempt to build up my MMM position, despite the stock creeping up in price over the past quarter.  Even at today’s prices, I’m able to average down my cost basis a bit.

My MMM position was initiated on the last day of 2018 when I purchased 25 shares at $189.50.  A couple of months ago, I was able to add 5 more shares at $169.41, but that didn’t help my MMM position grow to the point I preferred.  So, here I am making another add-on purchase.

On Tuesday, 1/21/20, I purchased 5 shares at $178.90/sh, for a total of $894.50.  My MMM position has now reached 35.866 shares.

MMM shares were yielding 3.22% at my recent purchase price, a good tick up from my current Portfolio average of 2.56%.

This purchase results in an additional $28.80 in annual forward dividend income.

With this most recent purchase, MMM continues to move up my Portfolio ranks, and has arrived at the 34th largest position in my Portfolio by value.

I’ll continue to look for opportunities to add to my MMM position.  At this point, I could still see my position growing by 50%.

 

Caterpillar (CAT)

Now here’s a stock that I’d like to see as a much bigger part of my Portfolio.  I only initiated my position in CAT last August.  I caught a dip in the stock price back then, adding 10 shares for $117.20, and then another 10 shares a few days later for a little under $116.

The shares I acquired with this most recent purchase were significantly higher than the price I paid about 5 months ago, but the stock seems fairly valued to me despite the run up in price.

On Wednesday, 1/22/20, I purchased 5 shares at $142.82/sh, for a total of $714.10.  My CAT position has now reached 25.145 shares.

CAT shares were yielding 2.88% at my recent purchase price, a decent amount higher than my current Portfolio average of 2.56%.

This purchase results in an additional $20.60 in annual forward dividend income.

Despite my purchase, CAT still holds a place in my bottom 10 spots when it comes to Portfolio value.  However, I intend to continue working on this and have the position grow well above the #43 spot it’s currently in.  I expect to at least double and perhaps even triple my CAT position in the months/years ahead.  At this time, I will look to add to my CAT position with a price in the $130s.

 

Abbvie (ABBV)

Definitely not a big add here, as ABBV is already my top dividend payer, and I don’t necessarily want to see it establish an out-sized dividend weight relative to my other top dividend payers.  However, ABBV still seems reasonably valued despite a welcome climb in price since last August, so I added a few shares.

I last bought ABBV shares back in December 2018 at a little over $84.  As it turned out, this current purchase was made at a shade under that price.  Unfortunately, I never pulled the trigger on ABBV’s dip into the $60s during 2019, so the current price will have to do.

On Friday, 1/24/20, I purchased 5 shares at $83.65/sh, for a total of $418.25.  My ABBV position has risen to 119.523 shares.

ABBV shares were yielding 5.64% at my recent purchase price, easily more than double my current Portfolio average of 2.56%.

This purchase results in an additional $23.60 in annual forward dividend income.

Despite the purchase, ABBV remains at the #20 spot in my Portfolio in terms of value.  It also slightly solidified its grip as the #1 dividend payer in my Portfolio, pulling away from Qualcomm (QCOM) a bit.

Since I get more income from ABBV than any other stock in my Portfolio, and I reinvest those dividends right back into more ABBV shares, ABBV purchases like this will most likely be few and far between, as the position will grow fairly quickly on its own.

 

Wells Fargo & Co. (WFC)

Here’s another new stock for my Portfolio.  I don’t think WFC needs much of an introduction, as it’s one of the largest U.S. banks.

I’ve been watching WFC off and on for close to a couple of years now.  I contemplated a purchase back when WFC was hovering around $45/share in the summer of last year, but the stock ran up and away from me as it had a nice run up into 2020.  However, the stock has since pulled back a good 10%+ in the new year, with a poor earnings report being the negative catalyst.

I believe this was the first earnings report under the helm of the new CEO, who started back in October.  I suspect this report may be part of creating a clean slate for the company, and that future earnings reports will reflect an upward trend thanks to the new CEO helping to put the company’s fake accounts scandal behind it.

On Friday, 1/24/20, I initiated a position in WFC.  I bought 50 shares at $47.70/sh, for a total of $2,385.00.

WFC shares were yielding 4.28% at my recent purchase price, significantly above my current Portfolio average of 2.56%.

This purchase results in an additional $102.00 in annual forward dividend income.  This is another nice chunk helping me replace the lost dividend income from my TGT & O sales.

WFC starts out as the 45th largest position in my Portfolio by value.  I anticipate growing this position some, perhaps doubling its size within my Portfolio.  However, Financials now make up the second largest sector allocation within my Portfolio, and giving it a much bigger allocation doesn’t appeal to me.

With WFC being new to my Portfolio, let’s take a look at its dividend growth history, dating back to the year 2000.  It’s quite an interesting table, as it reflects a dividend cut during the Financial Crisis, as well as a dividend slowdown while dealing with its fake accounts scandal that started in 2016.

Despite dealing with a lot of negatives over the past decade, WFC has managed to churn out some nice dividend growth over all the yearly periods.  Most recently, dividend growth has been picking up.  I hope that continues as the company begins to put recent problems in its past.

WFC currently has a 9-year streak of dividend increases.

The payout ratio for WFC is roughly 49% based on the current annualized dividend of $2.04 and an estimated 2020 EPS estimate of $4.12

 

Comcast (CMCSA)

Last but not least, we have CMCSA.  I’ve been looking to increase my sector allocation in the Communication Services sector, and decided that adding to one of the two companies I own in that sector was the best course of action.

The stock price for CMCSA dipped after earnings were reported this past week.  However, I didn’t think there was any disturbing news in the report to warrant the price decline.

I hadn’t purchased any CMCSA shares since the last day of 2018, when I added 25 shares at $33.70.  CMCSA has performed well for me, and it appears they can continue to grow their business into the future.

On Friday, 1/24/20, I purchased 20 shares at $44.40/sh, for a total of $888.00.  My CMCSA position has now grown to 149.042 shares.

CMCSA shares were yielding 2.07% at my recent purchase price.  This was the only stock I purchased this week that didn’t have a yield exceeding my current Portfolio average of 2.56%.

This purchase results in an additional $16.80 in annual forward dividend income.

CMCSA now holds down the #32 spot in my Portfolio in terms of value.

There’s room to add more CMCSA moving forward, as Communications Services continues to be under-represented in my Portfolio.

 

Summary

Quite a bit of activity to be sure.  Eight purchases were used to add shares from six different sectors to my Portfolio.

Six of the purchases were additions to existing Portfolio positions, while the other two purchases resulted in initiating new Portfolio positions.

The numbers of stocks in my Portfolio has now grown to 47.

In total, these purchases resulted in an additional $395.80 in annual forward dividend income, recouping the $339.93 I lost with my TGT & O sales, thus netting $55.87 after accounting for all transactions.

On top of that, I didn’t use all the sale proceeds yet.  There’s still nearly $2,592 left to invest.  So, I’d should be able to make further additional forward dividend income progress in the weeks/months ahead.

 

That’s a lot to digest, I know.  Did any of these purchases stand out to you?  I look forward to your comments!