It’s been close to two months since my last purchase, but I’m back in the game this week. It feels good to add a little juice to the Portfolio in order to keep it growing.
My two purchases are both in the Healthcare sector, Biotechnology industry. The first purchase was a new addition to my Portfolio, while the second was an addition to an existing position.
It’s possible these purchases end up being my last ones of 2020. However, thanks to this additional investment, as long as I don’t sell anything between now and the end of the year, I will have met my goal of adding $10K of capital to my Portfolio in 2020.
From a share count perspective, both purchases were single-digit share purchases. For the new stock, this was due to the stock having a big share price, while for the other, it was just a small overall investment.
In any case, they were Portfolio additions, and I racked up some additional annual forward dividend income to keep pushing me towards the $12K milestone… I’m getting close now!
Here are the details for my two latest Portfolio purchases…
Amgen (AMGN)
AMGN is a biotechnology company that develops, manufactures, and markets medicines for serious illnesses. The company is focused on human therapeutics and its medicines are based on cellular and molecular biology.
A couple of its more well-known medicines include Enbrel, used to treat plaque psoriasis and rheumatoid arthritis, and Neulasta, which is a white blood cell booster used by certain cancer patients subsequent to chemotherapy treatments.
AMGN was founded in 1980 and is headquartered in Thousand Oaks, California. About 3/4 of the revenue they generate comes from the U.S.
As for my purchase, AMGN is looking fairly valued today. I’ve wanted to establish a position for some time, but given the current price, only establishing a starter position seemed appropriate.
The earnings track record for AMGN has been very good over the past two decades. However, I expect this growth will slow as the company continues to get larger. Meanwhile the company’s dividend yield has been creeping up over time, as could be expected as the company matures.
On 11/23/20, I purchased 6 shares of AMGN at $221.09/sh, for a total of $1,326.54.
The stock yielded 2.89% at my purchase price (nearly half a percentage point above my current Portfolio average of 2.46%).
This purchase resulted in the addition of $38.40 in annual forward dividend income.
AMGN is a new Portfolio position… my 49th overall. AMGN is now my 7th Healthcare stock, and my 3rd biotech holding – to go along with Abbvie (ABBV) and Gilead Sciences (GILD).
AMGN will begin as the smallest position in my Portfolio, replacing Iron Mountain (IRM) with that distinction.
Given this small starting size, I’ll look to add shares as I can, especially should the stock price dip in the near-term.
As I usually do with new holdings, let’s take a quick look at the dividend growth history dating back to 2000…
AMGN only started paying a dividend back in 2011, so we don’t go all the way back to 2000 in this case. However, the history AMGN does have looks awesome.
Dividend growth has slowed to around a 10% growth rate the past couple of years after a torrid start. However, if AMGN can maintain 10% for a while I’d be quite happy.
The most recent dividend increase was 10.34% this past February. This means that by the time I see my first AMGN dividend next March, the payout should be even higher than the $1.60/share it is today.
The payout ratio is about 40% based on this year’s earnings estimate, so the door to continue raising the dividend is open.
AMGN’s streak of consecutive annual dividend increases stands at 10 years after including this year’s raise.
Gilead Sciences (GILD)
Believe it or not, this is now my 4th GILD transaction in 2020.
I started off the year with a small purchase of 10 shares in January at just under $63. The stock seemed undervalued at that time, and I took the opportunity to average down my cost basis.
However, it wasn’t too long before I turned around and sold some shares. In February, GILD moved noticeably higher on the hopes that remdesivir could be a potent treatment for COVID-19. GILD was moving up while most other stocks accelerated to the downside.
I sold 25 shares in late February at $75, then sold another 13 shares in mid March at ~$72.50. These sales were driven by my desire to realize some of the recent GILD gains and deploy them in other stocks that were rapidly declining in price at the time.
In retrospect, the timing was pretty good on my GILD sales, and I was able to use the proceeds to help build a position in Automatic Data Processing (ADP), and initiate positions in The Walt Disney Company (DIS) and Microsoft (MSFT) during the March malaise.
I wasn’t planning to add to my GILD position after paring it down, but when I didn’t have enough cash to add another share to my AMGN purchase, I took what I had remaining to invest, remained in biotech, and bought back a few shares of GILD, at a much lower cost compared to those Q1 sales.
On 11/23/20, I purchased 3 shares of GILD at $59.4267/sh, for a total of $178.28. The stock yielded 4.58% at my purchase price (more than two percentage points above my current Portfolio average).
My GILD share total has now climbed to 104.972 shares, but my cost basis still hovers over $72/sh.
This purchase resulted in the addition of $8.16 in annual forward dividend income. This is certainly not a large amount, but it all adds up, right?
With this purchase, my GILD position is now the 35th largest in my Portfolio, right behind Caterpillar (CAT), but safely ahead of Walgreens Boots Alliance (WBA).
I’m willing to give GILD another year or two to right the ship (i.e. grow the revenue & earnings), and start appreciating in price, but if that doesn’t happen, I can see myself eventually exiting my GILD position. Maybe I transition it over to another Healthcare name, possibly even AMGN.
Summary
In what may very well be my last purchases of 2020, I initiated a position in one biotech, and added to my holdings in another. You could say my Portfolio got a little bit more defensive as a result.
The new position is AMGN, while GILD was the one added to. Both purchases were single-digit share adds, but the majority of my new capital was put into AMGN.
The two purchases saw me put $1,504.82 of new capital to work in my Portfolio, and I’ve now met my goal of investing $10K of new capital into my Portfolio in 2020.
My annual forward dividend income increased by $46.56 with the two purchases, and I’m now on the doorstep of reaching $12K (hopefully by year’s end).
Since 1 of the 2 positions is new, the number of stocks in my Portfolio increased to 49… just one short of my own personal nifty 50.
Have you initiated any new portfolio positions lately? Are you looking to add to existing holdings instead? Or perhaps just stockpiling some cash for the next time the markets decline? Please share in the comments!