The stock market has been volatile in recent weeks, trending downward. Thus, I haven’t been too eager to invest my capital.
However, with the price of one of my existing Portfolio holdings dipping rather significantly from its recent highs, I felt that adding some shares would be worthwhile.
As you may know, I’ve been looking to bolster the weighting of the Information Technology sector within my Portfolio, and this purchase helps in that regard, too.
Here are the details of my latest purchase…
Skyworks Solutions (SWKS)
SWKS designs and manufacturers proprietary semiconductor products. The company has existed for nearly 50 years and is headquartered in Irvine, CA.
Like most stocks, the stock price for SWKS took a hit in March 2020 with the onset of the pandemic. However, a tremendous recovery from the low $70s ensued, and SWKS settled in the $162-$192 range for the better part of 9 months beginning early in 2021.
During that time, I thought the stock got overvalued and so I trimmed 10 shares at just over $190. This was in February, 2021.
Unfortunately, the stock price for SWKS has been trending downward since the middle of last year – all the way to a new 52-week low in the $130s. It’s reached a point where I find the shares attractive again. It’s P/E ratio has reached ~12.5, which is the level at which I made some of my previous purchases of this stock.
On 2/17/22, I bought 5 shares at $136.75 for a total of $683.75. This increased the size of my position by 4.5%.
The stock yielded 1.64% at my purchase price (well below my current Portfolio average of 2.47%).
I basically bought back half of the shares that I sold last year at $190. I’ll look to buy back the other half should SWKS continue to move down in price.
I now own 115.08 shares of SWKS. Since most of my SWKS position was established years ago, and since SWKS has performed well since then, this purchase bumped up my per share cost basis a bit, to $77.75/share.
Dividend growth for SWKS has been terrific. Since SWKS initiated its dividend in 2014, the smallest 1-yr dividend growth rate has been 11.11%. The stock has a low payout ratio of 21%, too. Thus, I expect decent dividend raises to continue as long as earnings growth continues. Low double-digit EPS growth is expected in the short-term.
This purchase boosted my annual forward dividend income by $11.20.
In terms of my Portfolio value for SWKS, it’s become the 17th largest holding in my 55-stock Portfolio – so, in the top third. It ranks just behind Johnson & Johnson (JNJ), but comfortably ahead of Illinois Tool Works (ITW).
Since SWKS is an existing holding, the number of stocks in my Portfolio held steady at 55.
Summary
I purchased five SWKS shares this week to increase my position and bolster the weighting of Information Technology within my Portfolio.
It was my first SWKS addition since the 4th quarter of 2018.
The purchase resulted in a net investment of $683.75 into my Portfolio, and my forward dividend income was bumped up by $11.20.
Another five-share purchase of SWKS could take place if the stock price continues to decline. I may target a price that dips below $120.
Have you considered adding to an existing holding that’s dropped significantly in price? Perhaps you already made a move? Please share in the comments!
Nice! Great minds think alike – I also bought SWKS last week (new position) and added some TROW. I’m also heavily underweighted in the technology sector (compared to S&P 500).
Hopefully the downward trend will continue for a while 🙂
We are one the same wavelength, DivRider. Not only with regard to SWKS, but TROW as well. TROW has my interest too, but I held off adding there since it’s already one of my larger positions.
Nice pick up. SWKS is a name I never considered in my own dividend portfolio. Tech has really taken a bath in recent weeks so picking up some discounted shares in the sector makes sense. I’m still light in the tech sector in my portfolio with AAPL, MSFT and AVGO as the only three in the sector. Keep up the good work.
Hey DivHut! Good to hear from you.
I’ve owned SWKS for a few years and it’s treated me well. It always seems difficult to add in the Tech sector at decent values, but we may be getting a chance to do just that in the coming weeks/months. I’ll have to get my shopping list ready. I was able to add a good chunk of AVGO at the start of the pandemic when it looked like a terrific value, and those shares have appreciated nicely. Meanwhile the dividend growth continues to be strong. AVGO has been a big winner for me. I hope to find a good entry point for more tech stocks in 2022.