With the month of April winding down I wanted to make a few more buys in my accounts before May officially rolled in. As you will see from my buys below I made several smaller purchases than usual as all trades were covered by promotional offers and thus were commission free.
As mentioned in my April stock considerations post I was looking to expand my portfolio with new industrial holding Dover Corporation (DOV). I had discussed DOV’s long dividend history as well as the diversified nature of its operations which is similar to Illinois Tool Works Inc. (ITW). There’s no doubt that DOV’s share price has been hammered in recent months because of its oil and gas products and services divisions which has seen declines in revenue because of the oil sector slow down. I was looking to add DOV at around $70 but as oil has climbed in the last week so has DOV’s share price. No matter, I intend this holding to be a long term position and will average down if necessary. The beauty of a commission free trade is that it allows you to truly nibble on a new stock without having to commit a large amount of fresh capital. In this way I get the exposure and added diversity to my portfolio from an industrial name I was eyeing.
Last week, when highlighting my recent buy, I also mentioned that I would like to add agricultural processor Archer-Daniels-Midland Company (ADM) to my portfolio. As many of you know, I have been heavily adding to my large Canadian banks (TD, BNS, RY) in my ROTH for several months, averaging down my purchase price and wanted to expand my portfolio holdings beyond the banks by adding an additional industrial name (DOV) and consumer staple (ADM). While both have extensive dividend histories I feel that they can act as a diversified proxy for the oil and gas sector (DOV) as well as have some farm exposure (ADM) without buying an oil and gas major such as XOM or CVX nor a focused agricultural play like DE. As you know from my portfolio I like to take a fairly conservative route with my long term holdings and ease into certain sectors.
As if adding two new positions to my taxable account weren’t enough I have added, for the first time, a totally new investment vehicle to my newly rolled over IRA account, the REIT. A little background first. Earlier this year I had a five year CD mature that was placed in my IRA which was earning just under 5%. Of course, once the CD matured and rolled into my IRA at my brokerage I immediately wanted to do a conversion into my ROTH as, quite frankly, I’m looking to simplify life and hold fewer accounts if possible. That being said, my accountant had advised me that an IRA to ROTH conversion will have a tax consequence which would amount to approximately $4,000! NO WAY! I work too hard for my money to simply give such a large chunk to the government. And so, I am now the proud owner of an IRA for stocks. I guess it’s not that big of a deal to hold a taxable, ROTH and IRA account as everything is electronic these days but just the idea of keeping track of another account didn’t excite me. Of course, paying a $4,000 tax bill simply to convert an IRA to ROTH really didn’t excite me and so began the mental conversation of what I should place in my new IRA account.
Back in September, I had mentioned, and added to my watch list, my interest in health REITs. Again, with promotional offers from my broker I had several commission free trades available which allowed me to nibble on the big three health REITs, Health Care REIT, Inc. (HCN), HCP, Inc. (HCP) and Ventas, Inc. (VTR). I understand the potential headwinds that may arise with interest rate hikes as well as the tenant and questionable billing issues that HCP is currently facing, however I feel the long term prospects for these large REITs are much better simply because of demographics. As I plan to invest for the next twenty to thirty years I’m willing to risk potential short term issues for long term slow growth and yield. I realize that other health REITs, such as Omega Healthcare Investors Inc. (OHI), National Health Investors Inc. (NHI) and LTC Properties Inc. (LTC) can offer faster growth but my “conservative” nature had me opt for the big three instead. To tell you the truth I am considering making my IRA an exclusive REIT portfolio. I think it would be interesting to see how an all REIT play might perform over the long haul and I would only fill it with names I deem to be of quality such as W. P. Carey Inc. (WPC), Realty Income Corporation (O) or even Digital Realty Trust Inc. (DLR). Over time I may create a mini Vanguard REIT ETF (VNQ) with an obvious concentration on just a handful of names. We’ll see. For now I feel totally comfortable buying these small dollar amounts in HCN, HCP and VTR which, at the very least gives me a little exposure to the REIT world and allows me to get my feet wet. In all, I’ll be comfortable with my total REIT holdings to be in the 5% range of all my portfolio values.
Now for the numbers:
I have added to my taxable account 6.6111 shares at $75.63 for a total investment of $500 in Dover Corporation (DOV). This is a new position.
I have added to my taxable account 10.3434 shares at $48.34 for a total investment of $500 in Archer-Daniels-Midland Company (ADM). This is a new position.
I have added to my IRA account 6.9992 shares at $75.73 for a total investment of $534 in Health Care REIT, Inc. (HCN). This is a new position.
I have added to my IRA account 12.6049 shares at $42.29 for a total investment of $533 in HCP, Inc. (HCP). This is a new position.
I have added to my IRA account 7.3659 shares at $72.36 for a total investment of $533 in Ventas, Inc. (VTR). This is a new position.
What do you think about my recent purchases? This is the first time I had spread my buys among so many different names. I guess commission free trades enables this type of activity and allows one to initiate minimal exposure and take the first step in building out a position without great risk. Please let me know below.
Disclosure: Long, DOV, ADM, HCN, HCP, VTR, TD, BNS, RY, ITW