Hello again. I’ve got a new Portfolio transaction to post about. I enhanced my position in one of my smallest holdings.
I’ve only bought this stock one other time, which was when I initiated my position about 2 years ago. Since then I’ve been looking for a chance to grow this position.
Utility stocks have had a tough start to 2023, and this stock was no exception. Lucky for me, this brought the valuation down to a point where I was comfortable adding some more shares.
Here are my purchase details…
NextEra Energy (NEE)
This stock is another that always seems to trade at a premium price. While my initial purchase 2 years ago was at P/E ratio of roughly 31, I’m buying at just a slightly higher price this time around, yet the P/E ratio has dropped to about 25. So, a better value now than it was, but still more expensive than the market.
Given the very good dividend growth history of NEE, and assuming that continues, I’m willing to let NEE settle into a lower valuation over time.
Earnings growth has averaged in the 8% to 10% range over the past 20 years, with earnings increasing in each of those 20 years. I like that consistency.
On 2/3/23, I bought 10 shares of NEE at $73.67, for a total of $736.70. The stock was yielding 2.31% at that price, which is 0.41 percentage points below my current Portfolio average of 2.72%.
My NEE position grew by 64.4%, increasing my share count to 25.536 shares.
The purchase raised my NEE cost basis ever so slightly (by $0.06/share) to $73.58/share.
Should the price of NEE decline further, I’ll plan to continue building this position. I’d like to pick up some shares below the $70 level.
My Portfolio’s annual forward dividend income got a modest boost of $17.00 as a result of the purchase.
Despite this purchase, the stock still remains my 2nd smallest Portfolio holding. It still trails Medical Properties Trust (MPW), but is ahead of Whirlpool (WHR).
With NEE being an existing holding, the number of stocks in my Portfolio stayed at 60.
Summary
With my first purchase of February, I bought some shares of NEE, bolstering my small position. I hadn’t been willing to add to my initial purchase from 2 years ago until now, as the valuation was an obstacle for me. The stock’s recent price decline allowed me to finally commit to buying more.
My NEE position increased by more than 64% with the purchase. My cost basis ticked up just a bit, too.
The purchase resulted in an investment of $736.70 into my Portfolio. My forward dividend income increased by $17.
This was just another small addition to my Portfolio, very similar to the McCormick & Co. (MKC) buy from last month. Although this time I invested about double the number of dollars.
Do you own any NEE shares? What do you make of the current valuation? Please share in the comments!
I also bought a few shares last week and looking out to build more of a position in NEE.
Let’s keep up the grind. 😉
Nice to hear that you snatched up a few NEE shares as well, Mr. Robot. I’m looking to add more, too.
NEE is still one of my smallest positions. It needs to be a more substantial piece of my Portfolio.
Nice buy, ED!
Definitely, NEE seems to be expensive most of the time, but I guess you have to pay for quality and future expectations.
I think current price seems pretty attractive, with dividend yield being above average for NEE in recent years, and the earnings still strong. Hopefully, the price can stay at these levels until I come to the point where I add some company from the Utilities sector to my portfolio 🙂
Thanks, BI. I hope to keep adding to NEE as long as its price can stay in the low $70s. I’d buy a bigger chunk in the upper $60s. I don’t think I’ll get that opportunity, but you never know.
It’s been expensive forever. I bought after the last split and had been looking at it prior. Dividend growth is supposed to stay around 10 percent through next year. Just slowly add shares.
Sounds like a plan, Doug. I’ll be waiting for my next opportunity. The stock isn’t too far above where I’d add again.