Well that didn’t take long. Just a few days into the month of August, I already made my first purchases. With the start of the new month we have seen a couple notable stocks plummeting in a single day highlighting the knee jerk reactions investors make when earnings or guidance does not paint a growing and rosy picture. First we have seen Cardinal Health, Inc. (CAH) take it on the chin after announcing downbeat guidance for 2018 and fellow peer AmerisourceBergen Corporation (ABC), while showing an earnings beat, dropped approximately 13% on a sales miss. The market can be merciless at times but we already know that. With that being said let’s take a look at my recent stock buys in August.
I have added to my taxable account 14.0 shares at $33.44 for a total investment of $468.16 in Pfizer Inc. (PFE). This was a commission free trade. With this recent purchase my taxable account holdings in PFE now totals 25.0 shares with a market value of $835.75.
I have added to my taxable account 82.0 shares at $24.59 for a total investment of $2,016.38 in Teva Pharmaceutical Industries Limited (TEVA). With this recent purchase my taxable account holdings in TEVA now totals 98.0 shares with a market value of $2,327.50.
After a monster drop because of weaker generic drug prices coupled with slowing demand in the U.S. for their top generics, increased competition from other biosilimars on the market and an announced dividend cut of 75% created the perfect storm and dragged stock prices down to the cellar. Of course a recent buying spree for the company increasing its overall debt load did not help either. As you can see this company is facing some very serious near and mid term headwinds. That being said, TEVA is still the largest generic pharma company in the world and while I may not make TEVA a long term dividend hold for decades on end, there is definitely blood in the streets with this stock and despite the dividend cut I went ahead and increased my holdings. We’ll see where TEVA is trading in six months or a year from now. If prices rebound significantly this may be my first “swing trade” in my portfolio. For now, I think I’m content with my allocation in TEVA, barring another 25% drop, and will simply hold, collect the dividend and wait for a meaningful price rebound. Time will tell.
What do you think about my recent stock purchases? I realize that TEVA is a risky buy, trading at prices not seen in about fourteen years coupled with a very high debt load, it will need to start taking advantage of its vast generics offering and quickly make good on the fairly recent Actavis Generics acquisition. As I said above, time will tell. Please let me know your thoughts below.
Disclosure: Long CAH, PFE, TEVA
Really want to cash in on that CAH dip. Looks so appealing. I like PFE right now as well. Wouldn’t mind starting a position with them. I noticed HCP has been slipping as well. Just went below $30. Not sure if you are done with your buying spree of health REIT or not.
Dividend Daze recently posted…Dividend Update – July 2017
Hi DD,
CAH and many others are looking quite attractive after their single day drops. There are quite a few interesting buying opportunities these days that’s for sure. I’m not done with HCP. Under $30 I’m liking it. I have a plan to pick some up next week. We’ll see how it goes. Thank you for stopping by and commenting.
Thanks for sharing, DivHut. Some good buys in strong companies although I am not sure what the valuation for these companies looks like.
Best
R2R
Roadmap2Retire recently posted…Recent Buy
Hi R2R,
PFE seems to be on the radar of many of our fellow peers. TEVA, on the other hand, not so much. I’ll admit, it’s my one “dice roll” stock I own but I feel they’ll come out of this nose dive over the coming year. We’ll see, of course. As always, I appreciate your comment.
Hehe, I still can’t help but think of the sandals when I see TEVA.
I’m not really interested in TEVA, but that’s because I’m a debt prude. I’m really leery of heavily leveraged balance sheets, and as you mentioned they’ve really levered up.
To be fair, though, they generate pretty good FCF, but not enough to pay the debt off in 5 years and still cover a growing dividend which is where I draw the line. Like I said…super conservative.
I recently went long STX though, so it’s not like I can get on a high horse about not chasing yield or whatever.
As you said, the time to buy is when there is blood in the streets. Sometimes a little of it is your own from catching the falling knife. That’s how it goes though.
Good luck!
catfishwizard recently posted…Dividends and Derivatives – The Options Trading Strategy of a Conservative DGI
Hi catfishwizard,
Ha! I used to own a pair of Teva’s many years ago. Actually was a pretty well made and comfortable flip flop from what I remember. Back to the matter at hand 🙂 There’s no question the debt TEVA carries is pretty scary. I guess the one silver lining in all of this is their dividend cut which signals to me a willingness to address the elephant in the room and deal with that large debt. Layoffs and plant closures will stem some of the overhead as well. We’ll see as time goes on. This is a stock that is in a world of hurt and I’m willing to wait it out and see what transpires. TEVA is still a very, very small part of my overall portfolio and I think I’m comfortable with my position as it currently stands. As always, I appreciate your comment.
DHut,
I generally like the industry, and I have AMGN in my portfolio. Blood in the streets is certainly how I would describe them (TEVA) right now. I think both they and PFE will be good long term holdings, and its not like people will stop giving up prescriptions any time soon…
– Gremlin
Dividend Gremlin recently posted…July Review / August Preview, 2017
Hi DG,
Exactly. The big pharma companies definitely have a captured clientèle and I do not foresee people not needing generic or name brand prescription meds any time soon. TEVA is my roll of the dice. I’ll give it a year or maybe more to turn things around. In the meantime, they will still be paying a dividend and with that stock price bleeding away it’s trading at levels not seen in many years. Thank you for commenting.
I sold out of TEVA yesterday. I keep an eye on them and see if I would reinvest later. Good luck.
FiscalVoyage recently posted…3 Stock Considerations for August
Hi FV,
I don’t blame you. You were not alone in doing TEVA selling, that’s for sure. The way I see it TEVA is pretty much at rock bottom between their weaker generic drug prices coupled with slowing demand in the U.S. for their top generics and increased competition from other biosimilars on the market. It’s pretty bad for the company which is why I decided to buy a bit and just hold on. We’ll see how it turns out. If the price comes back meaningfully I probably would sell it. Thank you for stopping by and sharing your thoughts.
I’m a fan of PFE. I know it cut its dividend back in 2009 but the company has steadily raised its dividends since then. I’m also looking to add it to my portfolio, but haven’t decided yet. Not familiar with TEVA though, but I think PFE was a good buy.
Dividend Portfolio recently posted…July 2017 Dividend Income Report
Hi DP,
PFE seems to be a popular pharma stock in many DGI portfolios. I guess that’s for good reason despite a dividend cut years ago. TEVA is my roll of the dice. It’s the world’s largest generic drug maker but has fallen on some serious hard times and the stock price reflects this. We’ll see how things pan out. Thank you for stopping by and commenting.
I haven;t researched Teva, so no comment there. I like PFE though. Nice buy. CAH has been on my list for a while. I’ll look at it with fresh after after the recent price drop. Thanks for sharing.
Investment Hunting recently posted…July Dividend and Options Income
Hi IH,
CAH is looking interesting to me as well. I’d like it to go a little lower before I consider buying more. As I have been commenting, there’s no shortage of individual stocks hurting these days. Really, there are probably about a dozen well known dividend payers trading at or near their 52 week lows. It will be interesting to see if others will be buying many of the same names. Thank you for commenting.
DH –
Not to versed with TEVA but I’ll say I love PFE and great add to the div income there. Curious to see what Pfizer’s div increase will be this winter!
-Lanny
Dividend Diplomats recently posted…Lanny’s July Dividend Income Summary
Hi DD,
TEVA is not a hugely popular dividend stock but has its merits. The company is the largest generic drug maker in the world and is definitely facing a myriad of near and mid term headwinds. It’s trading at prices not seen in well over a decade and is my one “risk” stock that I’m willing to be patient with and wait for prices to recover. PFE on the other hand is quite popular for good reason. I’ll be happy with any increase from PFE at this point. Thank you for stopping by and commenting.
Don’t know too much about TEVA, but very nice buy with PFE!
My Dividend Dynasty recently posted…July 2017 Dividend Income
Hi MDD,
TEVA is a company under a lot of stress these days. It is the largest generic drug maker in the world and can potentially offer some nice rewards for those willing to risk some capital at this time. It’s not a ‘sleep well at night’ stock for sure. I’ll keep watching my PFE and maybe add more if prices drop a bit. Thank you for commenting.
I don’t know much about TEVA, but I like your PFE buy as I also own shares of that company as well. Glad to see another company we share in common Keith. Thanks for sharing.
Hi ACI,
TEVA is the risk play for me in the space. It’s still a very big company and is the world’s largest generic drug maker and I think, given enough time, they’ll be able to right the ship. Of course, on more solid footing you have the likes of PFE, JNJ, ABBV and more. TEVA is my way of mixing it up a little. As always, I appreciate your comment.
Interesting move with Teva Divhut. They definitely took it on the chin recently. I used to own them a long, long time ago actually, long before I found dividend growth investing. I sold them, but I always keep an eye on them for old times sake. I saw the price fell, but did not realized they slashed their dividend during the last earnings release. Im going to keep watching though to see if something catches my eye in subsequent months.
I do like the pick-up of PFE though and am always looking to add some more myself here. Congrats on making some strong moves and bringing in some more dividend income to your portfolio.
Bert
Hi DD,
TEVA is the one stock in my portfolio that is a potential trade rather than a long term investment for me. It’s really been beaten down so much and has a lot of negative headwinds in the near and mid term that I’m willing to risk some cash (it’s still a micro-portion of my overall portfolio) and see if it can rebound nicely within the next year or so. It still does pay a dividend but I would like to see them address their debt in other meaningful ways.
PFE on the other hand is a more reliable player in the space even though it cut its dividend not that long ago during the financial crisis. I guess no company is totally immune from a potential dividend cut no matter how solid it may appear to be. Thank you for stopping by and commenting.
I also like PFE and own some, though it seems to be lagging growth at the moment. Hopefully an acquisition will spur up some growth. TEVA was in the new, saw it on CNBC the other day. I think it dropped like 25%.
Pharma companies are my least favorite of dividend stocks as I don’t enjoy reading about all the ailments and find some of the investment material to be quite difficult to read with all those crazy drug names.
Anyway, happy investing!
Hi MATM,
I agree that PFE seems to be stuck in a range as of late but it still sports a pretty attractive current yield for those willing to wait for their next catalyst for growth. TEVA has two big black eyes after last week. Slowing demand for their drugs, pricing pressure, dividend cut, huge debt, no CEO, etc. I bought because I think the company can weather the current storm because of its size and what it does. It may also be a takeover target at these depressed prices. Who knows? I plan to keep my shares and maybe add more if there is another major drop down though I think the major bleeding has stopped for now. Once the dust clears it may actually receive some buy ratings because it appears to be quite undervalued. Thank you for sharing your thoughts.
I think there were a lot of bad news about TEVA and it gave me a good buying opportunity. I bought a few shares of TEVA at $23.97.
Hi HI,
Nice to be a fellow shareholder with you. TEVA got rocked last week and is trading at very attractive levels despite all the problems they are facing in the near to mid term. We’ll see how things pan out over the coming months. TEVA may even be a takeover candidate now that it’s trading much cheaper than just a week ago. Thank you for commenting.
Hello DivHut,
I haven’t been following TEVA or PFE recently… however, I like your thought process regarding your TEVA investment. I hope it works out in your favor. I do have some CAH, though, and did purchase some shares the other day after the decline.
Engineering Dividends recently posted…Recent Transactions
Hi ED,
We’ll see how TEVA does going forward. No doubt the near term should be quite rocky. Still, it’s the world’s largest generic drug maker and I think they have the capacity to pull out of this nosedive given enough time. Nice pick up of CAH on the decline. I have held that stock for a short while. Thank you for stopping by and commenting.
Didn´t see that coming from you DivHut. Interesting. I owned TEVA before, with a cost price around $28, but sold when it moved towards $32. Might pick it up again soon, but normally, I want around 5 days to 2 weeks before jumping in one something like this. Will not put more than maximum 2.5% of portfolio in TEVA.
Hi Stockles,
I think most did not expect me to dip my toe into TEVA. We’ll see how the price rebounds over time. I think the dividend cut was a good move on their part and I hope they will start to do something else to manage that huge debt burden. TEVA is still a very, very, very small part of my overall portfolio. I have no plans to pick up more at this time, rather just hold on for now. As always, I appreciate your comment.
Hey Keith, it didn’t take long to make the first purchase of August 🙂
Dividend Income Stocks recently posted…Portfolio Value Update – July 2017
Hi DIS,
Sometimes I get enticed to buy when I see huge drops taking place. It’s all good as every buy increases my passive income stream. Thank you for commenting.
PFE feels like owning a fantastic bond fund. It has traded inside a tight band for so long, but that’s okay when dividend keep on growing!
I have taken off from the dividend world the past 6 months and I pumped to get back into next month!
Evan recently posted…What is CAPE and Why am I Moving Future Contributions to my 401(k) to Cash?
Hi Evan,
Good way to look at PFE. I agree, it has behaved more like a bond than a stock for the last several years but if dividend investing/income is the primary goal then that’s OK with me. As long as that dividend remains sustainable I am a happy camper. Look forward to seeing which dividend stocks you deploy your cash next month. Thank you for stopping by and commenting.