Time to update you on another Portfolio transaction.  It’s been about a month since my last move, so it feels good to stay in the game, if you will.

It’s just a single transaction… a buy in this case.  However, it’s a brand new position… and a stock that’s been on my watchlist for the past few months.

Let’s get some details…

 

Bristol Myers Squibb (BMY)

Since some values seem to still exist in the Healthcare sector, I decided to add another company from there.  I initiated a small position in Bristol Myers Squibb (BMY).  BMY is categorized as being in the Pharmaceuticals industry, but has a significant biotech component as well after their 2019 acquisition of Celgene.

BMY is an American multinational company headquartered in New York, NY.  Here’s more on the company profile from Fidelity’s stock snapshot page… “Bristol-Myers Squibb Company discovers, develops, licenses, manufactures, and markets biopharmaceutical products worldwide.  The company offers products in hematology, oncology, cardiovascular, and immunology therapeutic classes.  Its products include Revlimid, an oral immunomodulatory drug for the treatment of multiple myeloma; Opdivo for anti-cancer indications; Eliquis, an oral inhibitor indicated for the reduction in risk of stroke/systemic embolism in NVAF, and for the treatment of DVT/PE; and Orencia for adult patients with active RA and psoriatic arthritis.”

BMY enhanced its oncology and immunology portfolio via the previously mentioned Celgene acquisition, then boosted its cardiovascular assets by acquiring MyoKardia in 2020.

As of the end of March, 2021, annual revenues were $42.8B, and the current stock market capitalization stands around $147B.

BMY has a nice A+ S&P credit rating, and a 53% LT Debt-to-Total Invested Capital ratio.

On 6/23/21, I initiated my BMY position by purchasing 17 shares at $65.30/sh, for a total of $1,110.10.  The stock yielded an even 3% at my purchase price (about two-thirds of a percent greater than my current Portfolio average).

This purchase resulted in the addition of $33.32 in annual forward dividend income.  This keeps my income growing and it moves me closer to my annual income growth goal.

BMY will be trading ex-dividend on 7/1, so I was happy to make my purchase prior to that date.  It allows me to collect my first BMY dividend in August.

This BMY purchase bumped the number of stocks in my Portfolio to 53.  It’s also the 9th Healthcare stock in my Portfolio.  I have more stocks from the Healthcare sector than any other.

BMY actually won’t start as the smallest position in my Portfolio.  It’s just so happens that its position is just a few dollars larger than that of NextEra Energy (NEE).  So, BMY ranks #52 of 53 in terms of value within my Portfolio.

 

As I usually do with new holdings, let’s take a quick look at the dividend growth history dating back to 2000…

 

 

BMY has a spotty dividend history.  While the stock currently has a 12-year streak of dividend increases (which is good), the long-term dividend growth has generally hovered in the 2%-3% range.  This is much lower than I tend to look for.

However, dividend growth has been much better the past couple of years.  You can see that growth was 9.76% in 2020, and it should be 8.89% in 2021 if BMY continues with its current dividend payments through the end of the year.  That’s much more inline with what I desire.  We’ll see if that trend can continue in December, when BMY is slated to announce a potential dividend raise.

If the Celgene and MyoKardia acquisitions pan out as expected, I can see that kind of dividend growth (upper single digits) continuing over the next few years.

BMY’s payout ratio is 30.4% based on earnings for the year just completed.  It appears there’s more than enough headroom for future dividend raises, and for dividend growth to potentially exceed earnings growth if the company chooses to allow it.

 

Summary

Today I added the 53rd stock to my Portfolio.  I boosted my stake in the Healthcare sector by establishing a starter position in BMY – 17 shares in all.

The purchase resulted in a net investment of $1,110.10 into my Portfolio.  Meanwhile, my forward dividend income increased by $33.32.

I see BMY as undervalued right now.  Sometimes pharma investments take years to play out, but I’ll be OK with waiting given the starting dividend yield of 3%, and assuming dividend growth can stabilize in the upper single digits.

 

Is BMY on your radar?  If not, what stocks are you watching and/or buying these days?  Please share in the comments!