I made a pair of transactions last week.  The goal here is to catch you up on those moves before more time goes by.

Both transactions were purchases.  One establishes a new position and the other pads an existing one.

With the two moves, my Portfolio continues to grow and boost its forward dividend income.  In addition, the progress towards meeting some of my 2021 Portfolio goals remains in good shape.

Let’s dive into the details…

 

Omnicom Group (OMC)

OMC has been on my watchlist for a couple of months now.  I was looking to establish a small position to help increase my weighting in the Communication Services sector – my 2nd most underweight Portfolio sector.  I was looking for an entry point south of $75 and I got it.

However, before I get into my purchase details, let’s get some background on the company.

From the company website… “Omnicom is an inter-connected global network of leading marketing communications companies.  Our portfolio provides the best talent, creativity, technology and innovation to some of the world’s most iconic and successful brands.  We offer a diverse, comprehensive range of marketing solutions spanning brand advertising, customer relationship management (CRM), media planning and buying services, public relations and numerous specialty communications services to drive bottom-line results for our clients.”

To put it simply, OMC is an advertising agency.  It provides advertising, marketing, and corporate communications services.  OMC has over 5K clients in over 70 countries.  The company was incorporated in 1944, has over 64K employees and is headquartered in New York, NY.

Outside of 2009 (tail end of Great Recession) and 2020 (pandemic), OMC has posted an increase in EPS in each of the past 20 years.  Dividend growth has been a little spottier, as we’ll soon see.  OMC also sports a BBB+ S&P credit rating.

On 8/2/21, I initiated my OMC position by purchasing 15 shares at $72.95/sh, for a total of $1,094.25.  The stock yielded 3.84% at my purchase price (more than 70% higher than my current Portfolio average of 2.25%).

This purchase added $42.00 to my annual forward dividend income.  I will collect my first OMC dividend in October.

This OMC purchase increased the number of stocks in my Portfolio to 55.  It’s also the 4th Communication Services stock in my Portfolio, joining Nexstar Media Group (NXST), Comcast (CMCSA) and The Walt Disney Co. (DIS).

OMC starts as essentially the smallest position in my Portfolio, behind my other most recent addition of Bristol-Myers Squibb (BMY), but ahead of Merck spinoff Organon & Co. (OGN) – which may not be long for my Portfolio.

 

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

 

 

OMC doesn’t have the strongest dividend history.  While the 10-yr. dividend growth rates look good, the growth numbers generally get smaller as the reporting periods get shorter.

In addition, which you can’t easily see here, OMC has gone more than 4 quarters without a raise on several occasions.

While there was a nice dividend run during the first half of the 2010s, it didn’t last.

The current dividend streak is 12 years and counting.  However, there were two years prior to that where the dividend held steady.

The effective sub-2% raise during 2020 is pretty meager, but the most recent raise of 7.69% this past February hopefully has OMC going in the right direction again.

Needless to say, it’s a mixed bag of dividend growth.

OMC’s payout ratio is roughly 55% based on their trailing 12 months of earnings.  It’s closer to 46% based on this year’s projected earnings.

 

Amgen (AMGN)

I started my AMGN position last November with a purchase of 6 shares.  I followed that up with an equally-sized share purchase last February.  Since then, I’ve been holding my shares and reinvesting my dividends.

I’ve been wanting to add to my position and bring it closer to an average weighting in my Portfolio, but the price climbed a bit since my purchases.  So, I held off, looking for a better price before adding more.

Well, that time came late last week on the heels of the AMGN earnings report.  While AMGN beat on revenue and earnings, and boosted their share buyback, they lowered their 2021 guidance, sending the stock price down.

I was willing to add below $235, but the price drop took shares below $230.

Given that I put a decent chunk of cash to work in OMC earlier in the week, I limited myself to purchasing a single share of AMGN.

While one share doesn’t seem significant, it does boost my share count by over 8%.  The important part is that the position grows.

On 8/6/21, I purchased 1 share of AMGN @ $228.90/share.  The stock yielded 3.08% at the time of my purchase (or 0.83% above my current Portfolio average).

The purchase resulted in the addition of $7.04 in annual forward dividend income.

I now own 13.088 shares of AMGN.  The stock now sits as the 8th smallest position in my Portfolio, sandwiched in between a couple of my REITs in W.P. Carey (WPC) to the north, and Iron Mountain (IRM) to the south.

I’ll look to add more shares of AMGN should it stay below $230.

 

Summary

I bookended the first week of August trading with a purchase at the beginning and end of the week.

On Monday 8/2 I initiated a position in OMC after it dropped below my target price.  I then added to existing position AMGN on Friday 8/6 after it too dropped below my target price after announcing quarterly earnings.

The OMC buy allowed me to boost my weighting in the Communication Services sector.

All totaled, the pair of transactions resulted in a net investment of $1,323.15 into my Portfolio.  Also, my forward dividend income increased by $49.04.  OMC yielded close to 4%, while AMGN was closer to 3%.  Both increased my Portfolio yield ever so slightly.

With a new Portfolio position being established with the OMC purchase, the number of stocks in my Portfolio has grown to 55.

 

What have you been buying for your portfolio most recently?  Do you have any portfolio sectors in which you are trying to increase the weighting?  Please share in the comments!