In the first few days of June I made a handful of Portfolio transactions.  With time slipping away, I figured I better post about them soon, so here we go.

I started by initiating a new position in my Portfolio.  It was a stock I’d been hoping to add to my Portfolio for some time.  After a recent price drop the time was right.

I also trimmed one of my existing positions after it failed to increase its dividend in either of the past two years.  You know I don’t like to see that.

Lastly, I added to a stock that established a position in my Portfolio in August, 2021.  I built up that position fairly aggressively late last year.  This purchase was my first of 2022 for the stock.

I’ll let you know how much net investment capital was involved and how my forward dividend income was impacted, too.

Here are the transaction details…

 

Medtronic (MDT)

I can’t say I need another Healthcare stock, but MDT does fill a niche in my Portfolio by providing solid exposure to medical devices.

The company has 4 operating segments (listed from largest to smallest revenue): Cardiovascular Portfolio, Neuroscience Portfolio, Medical Surgical Portfolio, and Diabetes Operating Unit.

MDT was founded in 1949 and is headquartered in Dublin, Ireland.  The company has over 90K employees.

After eyeballing MDT for quite a while, then finally seeing the stock enter into my target price range, I decided the time was right to establish a position.

On 6/1/22, I initiated my MDT position by purchasing 10 shares at $97.50/sh, for a total of $975.00.  The stock yielded 2.79% at my purchase price, which is just a tick higher than my 2.77% Portfolio average.

I followed that up by adding another 5 shares on 6/3/22 at $96.30/sh, totaling $481.50.  The yield nudged up to 2.82% for this purchase.

Finally, with the market and MDT continuing to fall, I bought another 5 shares on 6/14/22 at $88.70, which cost $443.50.  The yield on these shares was 3.07%.  This is highest the yield for MDT has been over the past 5 years.

My MDT cost basis stands at $95/share after accounting for all 3 purchases.

All totaled, these purchases added $54.40 to my annual forward dividend income.  All 3 purchases preceded MDT’s ex-dividend date later this month.  Thus, I expect to receive my first MDT dividend in July.

MDT settled as the 5th smallest position in my Portfolio, tightly squeezed between utility Pinnacle West Capital (PNW) and REIT National Retail Properties (NNN).

I plan to continue adding to my MDT position should the price remain below $90.  The yield is above 3% at that level.

 

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

 

 

There’s plenty to like here.  Dividend growth rates are sitting nicely at the 8% level over each of the shorter time periods, and closer to 10% over the past decade.

In the 2000s, dividend growth was superb, before cooling off in the wake of the Financial Crisis.  There was a brief uptick in the dividend growth in 2015 and 2016, but generally, MDT has been delivering 8% dividend growth very consistently.

The dividend growth streak for MDT currently stands at 44 years.  MDT increased its dividend just last month by 7.94%, solidifying that 8% expectation.

The earnings payout ratio for MDT has been 44% over the past 12 months, and is 49% looking forward 12 months.  The free cash flow payout ratio is higher, coming in at 57% in 2022.  However, this was a step down from the 64% in 2020.  With both of those payout ratios below the 60% mark, MDT is in fine shape to continue with future dividend increases.

The number of stocks in my Portfolio rose to 58 with the addition of MDT.  MDT also became the 10th Healthcare stock in my Portfolio.

 

Gentex (GNTX)

With GNTX having now failed to raise their dividend for each of the past two years, I decided to pare down my position some and allocate the funds to other positions that would offer both a higher yield and better dividend growth.

As you know, my Portfolio’s dividend growth is its primary growth driver for additional forward dividend income.  It delivers more forward dividend income than either reinvesting my monthly dividends or investing capital.

So, reducing the size of a position that’s not growing the dividend and putting that money to work in other stocks that do is important to my Portfolio strategy.

It’s not like I’m abandoning my GNTX position anyway.  I only sold a small portion of my position for now… about 11.6%.

However, the longer GNTX goes without raising their dividend the faster I’ll pare down my position.

On 6/3/22, I sold 40 shares at $30.55/share.  The sale proceeds were $1,221.97, after the $0.03 SEC fee.

At my sale price, shares of GNTX yielded 1.57%.  This yield is more than 1% below my current Portfolio yield of 2.77%.

I realized a long-term capital gain of $542.45 after selling part of a share lot that I bought for $16.98/share back on 6/9/2015.  I came close to holding the shares for almost 7 years.

The trim also resulted in a reduction of $19.20 in annual forward dividend income.

I still have 305.345 shares remaining in my GNTX position.  GNTX is now my 27th largest holding… right in the middle of the pack.  In terms of value within my Portfolio, GNTX ranks just behind Texas Instruments (TXN), but safely ahead of Air Products & Chemicals (APD).

 

Omnicom Group (OMC)

I established my OMC position back in August, 2021.  I made 5 purchases in total before the year came to a close.

The stock price of OMC shot up shortly thereafter, so I cooled on further share additions.  However, over the past couple of months, OMC has fallen in price (along with the stock market) and has attained a favorable price point for me again.

I used over half of my GNTX trim proceeds to make this OMC share purchase.  While OMC’s dividend isn’t as safe as the one from GNTX, it does sport a much higher yield.  In addition, its dividend growth has been better, despite a rather unpredictable dividend increase schedule.

On 6/3/22, I bought 10 shares of OMC at $71.90/share, for a total of $719.00.  This was an 11.5% increase in the size of my position.

The stock yielded 3.89% at my purchase price (more than 1% higher than my current Portfolio average).

I now own 97.237 OMC shares.  The purchase lowered my OMC cost basis ever so slightly to $72.03/share.

This purchase increased my annual forward dividend income by $28.00 – I’ll take that.

OMC now ranks as my 35th largest Portfolio position out of 58 stocks.  The stock sits behind Walgreen Boots Alliance (WBA), but ahead of Eastman Chemical (EMN).

Since my purchase, the stock price of OMC has since fallen into the $65 price range and its yield has climbed well over 4%.  I’m contemplating adding some additional shares, but I don’t see a need to grow this position further.  I’ll probably reach 100 shares fairly soon just via dividend reinvestment.

 

Summary

I’ve been fairly busy in the first half of June with regard to Portfolio transactions.  I made 4 purchases and 1 sale involving 3 different stocks

I initiated a position in MDT to start the month.  This purchase diversified my Healthcare sector holdings by providing a medical devices company.  I then added to the position twice more over the following two weeks.

I began the process of trimming GNTX due to it not having any dividend growth over the past couple of years.  It wasn’t a big trim, but it made me happy to move some of that investment into stocks that will deliver a bigger dividend over time.

A good chunk of the GNTX proceeds were moved into OMC, a stock that’s still fairly new to my Portfolio, but one I haven’t added to in about 6 months.  OMC provides a yield that’s easily more than double that of GNTX while providing more promising dividend growth.

Factoring in all the transactions, I made a net investment of $1,397.03 into my Portfolio.  My annual forward dividend income climbed by $63.20.

Also, I realized a long-term capital gain of $542.45 with the GNTX trim.  While GNTX couldn’t deliver adequate dividend increases for me, it did provide some capital appreciation.

With MDT becoming a new holding, the number of stocks in my Portfolio rose to 58.

 

I trust you’ve been adding to your portfolio during this 2022 market decline.  Which stocks have made the biggest splash in your portfolio this year?  I look forward to your comments!