A new week and a new Portfolio purchase!  This was just a small addition to an existing Portfolio position though.

In this case, the stock is one of my smallest positions.  I’ve only bought the stock one other time, and that was last September when I established my position.

Its stock price rose shortly after that purchase and the value wasn’t there for me to continue adding, so I waited.  The stock has been drifting lower since the start of 2023, following many other Consumer Staples stocks.  In conjunction with this week’s earnings report and the soft guidance provided by the company, the stock dropped nearly another 6%… below my original purchase price.

So, this purchase was a chance to continue building my position, make the stock a more significant part of my Portfolio, and average down my cost basis all at the same time.

Let’s check out the details of my purchase…

 

McCormick & Co. (MKC)

This stock always seems to trade at a premium price, but that’s understandable.  Its earnings growth and dividend growth have been remarkably consistent, and that usually gets investors to pay up.

2022 was the first time MKC saw a YoY drop in earnings in the past 20 years (perhaps longer… I didn’t look back any farther).  Dividend growth slowed in 2022 as well.  In 2023, earnings growth is looking flat to slightly positive.  So, there’s not much to get excited about in the near-term.

However, I believe the company will get earnings growing at a healthy clip again after this year.  This should lead to a good long-term return for my shares.

Should the price of MKC continue to underperform in 2023, I’m going to view it as my opportunity to build this position.

On 1/26/23, I bought 5 shares of MKC at $72.50, for a total of $362.50.  The stock was yielding 2.15% at that price… 0.60 percentage points below my current Portfolio average of 2.75%.

My MKC position grew by 19.8%, and my share count rose to 30.238 shares.

Even at the current price, an argument could certainly be made that the stock is still overvalued.  Still, it got low enough for me to want to add on.

The purchase lowered my MKC cost basis to $76.44/share, which was a slight decrease of $0.78/share.

My Portfolio’s annual forward dividend income crept up by $7.80 as a result of the purchase, too.

With regard to Portfolio value, MKC barely moved up the ranks due to my purchase.  It only climbed one spot, leapfrogging Medical Properties Trust (MPW) to go from my 3rd smallest position to my 4th smallest position.  I’d have to acquire another 25 shares or so just to get this position to break out of my bottom 10 holdings.

With MKC being an existing holding, the number of stocks in my Portfolio held steady at 60.

 

Summary

I made my 2nd Portfolio purchase of January, buying a few shares of MKC in response to its post-earnings slump.

MKC still resides as one of my smallest Portfolio holdings, but should its stock price continue to trade down, I could easily add more shares and have MKC rise.

My MKC position increased nearly 20% thanks to the purchase.  My cost basis in the stock declined just a bit as well.

The purchase resulted in an investment of $362.50 into my Portfolio.  My forward dividend income increased by $7.80.

It was a small Portfolio addition, but it keeps my Portfolio growing… slowly but surely.

 

Are you an MKC shareholder?  Are you tempted to add MKC in the low $70s, or do you still see the stock as overvalued here?  Please share in the comments!