This post has been a long time coming. I made a purchase for my Portfolio exactly 1 month ago, but I’m just now getting around to posting about it. Not such a ‘Recent Buy’, huh?
As I noted in my most recent Portfolio Thoughts post, I’ve been sick for most of the past month and that’s impacted my posting routine. Regardless, I’m feeling well enough now to share the details.
It’s been a while since I’ve added a new stock to my Portfolio (this past January to be exact), but that’s what happened with this most recent purchase.
The addition came in my sector with the fewest number of holdings – Energy. I’ve only had one Energy holding, Enbridge (ENB), for nearly one year, but now ENB has company.
It was a fairly sizable initial investment in this stock. However, it still starts out as my smallest Portfolio holding, with just under a 0.5% weighting. On the bright side, since the stock has a yield north of 4.5%, the additional forward dividend income from the purchase was pretty good.
Let’s examine the details for my latest Portfolio transaction…
Chevron (CVX)
I had CVX on my watchlist earlier this year. I was looking for a price below $145 to initiate a position, however, the stock drifted higher, so it faded from thoughts.
An early August dip in price had me interested again, and then another dip in early September put the stock well below my buy threshold. With the stock clearly below the target I had, I made the commitment to open a position.
I’d been looking for a second Energy stock for my Portfolio and this buy accomplishes that. Energy remains the smallest sector in my Portfolio, but at least this purchase put my Energy sector weighting within my preferred weighting range. No longer am I considered underweight in the Energy sector.
I believe the stock was just starting to become undervalued at the level I added, so I’m happy with the entry point.
On 9/5/24, I established my CVX position by purchasing 25 shares at $141.20/share, for a total of $3,530.00. The stock yielded 4.62% at my purchase price, which is a good two percentage points above my current Portfolio yield of 2.53%.
The purchase added $163.00 to my annual forward dividend income, which is a nice chunk to realize. My first dividend payment from CVX will arrive in December.
CVX entered my Portfolio as the smallest position, with a 0.46% weighting. Thus, I’ve now got another stock below the 0.5% weighting that I hope to have for all Portfolio holdings by year’s end. Of course, ultimately, over time, I’ll be looking to increase the position size to my desired minimum 1% target weighting.
The stock currently sits less than $75 behind The Walt Disney Co. (DIS), McCormick & Co. (MKC) and FedEx (FDX) in my Portfolio value rankings. So, given that it’s not very far behind 3 other stocks, CVX may not be my smallest position for long.
As I normally do with a new holding, let’s take a quick look at the dividend growth history dating back to 2000…
Since 2000, annual dividend growth has swung from sub-1% to well into double-digit territory, however, the stock has an average dividend growth rate in the 5%-6% range over the various reporting periods. Over the past 2-3 years though, dividend growth has slightly exceeded the average.
CVX is currently on a 36-year dividend growth streak, making the stock a Dividend Aristocrat.
Finally, CVX was assigned a ‘Very Safe’ dividend safety score (90 out of 99) from Simply Safe Dividends.
Analysts predict low double-digit earnings growth over the next couple of years. Unfortunately, I can’t put too much stock in that though, as CVX often misses analyst estimates. Earnings growth will need to resume if CVX is going to provide future dividend growth.
Summary
I’m finally getting around to sharing details about my most recent Portfolio buy. It only took a month!
With the purchase, I added CVX to my Portfolio. It’s only my second Energy stock in the Portfolio, but the investment helped me no longer be underweight that sector.
This lone transaction resulted in a net investment of $3,530. My annual forward dividend income increased by a substantial $163 thanks to the hefty 4.62% dividend yield CVX sported at the time of my purchase.
The addition of CVX brought the number of my Portfolio holdings up to 58.
What was the last new stock you added to your portfolio? Do you have CVX, or perhaps its competitor Exxon Mobil (XOM), in your portfolio? I look forward to your comments!