Recent Stock Purchase II – June 2015

As a dividend growth investor it seems that we get trigger happy any time a specific amount of cash sits in our accounts untouched. Dare I say it’s almost painful watching money earning close to zero percent sitting idle when, even in an expensive stock market, there are individual sectors and stocks that still present decent value as well as great current yield.

 

These are definitely interesting times for the stock market as a whole as Fed interest rate chatter and bond yields have wrecked all REITs. Even high and mighty The Procter & Gamble Company (PG), Caterpillar Inc. (CAT) and Johnson & Johnson (JNJ) have fallen from grace. If we pick and choose carefully you will see that values are still present even in this market. With that being said it’s probably the REITs that have been beaten down the most in recent weeks as many high quality real estate plays are trading at or near their 52 week lows. It is for this reason that I made the following buys.

 

I have added to my IRA account 12.5378 shares at $63.65 for a total investment of $798 in Ventas, Inc. (VTR). With this recent purchase my IRA account holdings in VTR now totals 27.2200 shares for a value of $1,729.56.

 

I have added to my IRA account 21.4868 shares at $37.14 for a total investment of $798 in HCP, Inc. (HCP). With this recent purchase my IRA account holdings in HCP now totals 47.0247 shares for a value of $1,753.55.

 

What do you think about my recent buys in the health REIT sector? What are you buying or planning to buy this month? Please let me know below.

 

Disclosure: Long VTR, HCN, PG, CAT, JNJ

42 thoughts on “Recent Stock Purchase II – June 2015

    • Hi R2R,

      I have a feeling the REITs will become quite popular this year as they continue to get hammered via interest rate hike fears and bond yields rising. This no doubt will provide us with better buying opportunities. I’m liking the health REITs for now. I think I may just stick with the big names till I am “fully invested.” Whatever that means, right? It’s all a matter of investing and risk tolerance one has. Thank you for stopping by and commenting.

    • Hi FIM,

      As you can see from my portfolio, I basically only own traditional dividend growth stocks. No MLPs, REITs, BDCs, etc. till now.

      I started my IRA a couple months ago and decided to venture into the REIT space recently as the sector as a whole started to fall out of favor. I figure, I can accept some REIT risk as it represents just a small part of my overall portfolio and can enjoy the tax benefits by keeping them housed in a retirement account as REITs are taxed as ordinary income and not dividend income which is less.

      I decided to buy into the three large health REITs because I believe in their long term growth prospects for the next twenty to thirty years out as the need for health services will grow substantially with people living longer and a growing elderly population. I felt comfortable building my REIT foundation upon the large cap health REIT stocks. That’s not to say I am not interested in other smaller names in the space such as OHI, NHI and LTC. While their growth prospects are higher and faster than the big three, HCP, VTR, HCN, I wanted the stability of the larger players first. Hope this answers your question. Thank you for commenting.

        • Hi FIM,

          My pleasure. As I noted to you I just recently jumped into the REIT sector. I built my portfolio on the backs of dividend stalwarts, JNJ, ABT, PG, CL, CLX, MCD, MMM, ITW, BDX, KO, PEP, GIS and the like just to name a few. In other words, I did not chase yield or venture into the riskier MLP, REIT or BDC names first. I started with solid known long term dividend payers and now feel comfortable with an adequate size portfolio to jump into REITs. And when I did jump into the REITs I decided to go with the larger more established players first. Just my two cents before you buy anything.

  1. Your two REIT purchases will give your income a nice little bump. Personally, HCP provides about 3.6% of our dividend income and VTR about 1.5%. Given the uncertainty with HCP and the HCR issue, I’m reluctant to take it any higher. I am giving some thought to adding a little VTR though.

    With REIT stocks being in a downdraft, I’m not in a particular hurry to add though. My initial add price for VTR was $67, but I held off. Now it sits a little above $63 and seems to continue downward. I may have to add sometime soon as it is getting tempting. The other REIT at the top of my list is Realty Income. It has about 2.4% income weight and I would eventually like to double that. If O will cooperate and drop a little more, I’ll be picking some of that up as well.

    Keep up the good work in growing that income. It’s a beautiful thing.

    Steve
    Dividend Gravy recently posted…April 2015 UpdateMy Profile

    • Hi DG,

      Your hesitation in the REIT space is justified since they are still in a down draft. This is why I am nibbling in the space and not gorging as my buys are all around $800 a shot. At $2 commission I feel comfortable buying into the space bit by bit. Besides, these are still new positions for me and represent a tiny portion of my overall portfolio. I think the HCR issue HCP is dealing with is simply a short term bump in to road. Similar to the JNJ mess with the Tylenol recalls a few years ago or MCD a decade ago when it was trading in the teens. Long term I like the health REIT sector.

      While all REITs seem to be taking a beating these days, I think I will stick to my big three health REITs for now even though I do like O, WPC, DLR, AVB, LTC, NHI and OHI as well. Who knows… one day my IRA may hold pieces of each of those names mentioned. Thank you for stopping by and sharing your thoughts.

  2. Solid buy DH, you are slowly building your position to your big 3 healthcare REIT, solid buys in solid price range. But just like what you said, this year may be a good time to accumulate on REIT as we all wait for the Feds announcement of increasing rates. I personally like OHI/HCP combo, HCP might be a bit risky for now with regards with their biggest tenant but I trust their mgt, they are doing the right thing on reducing their exposure with HCR ManorCare. HCP is my conservative play with proven track record and OHI is my growth play. Ventas is in my watchlist as well, I might add it into the mix. Healthcare REIT is very promising. Thank you for sharing your recent buy!
    FrugalityToFinancialFreedom recently posted…Portfolio update – May 2015My Profile

    • Hi FTFF,

      While all REITs have been beaten down in recent weeks, it seems like many are liking the health REITs long term. I have been reading among many of the dividend blogs buys in HCP, VTR, OHI with fewer buys in LTC and NHI to name a few. As I mentioned to DG I do like many other REIT names not in the health space but prefer to stick to the big three health REITs for now. I see the HCP issue with their largest tenant as a temporary bump in their long term success story and while it may be riskier than HCN or VTR at present my stake in HCP is still relatively small compared to other positions in my portfolio. Thank you for stopping by and commenting.

  3. Keith,
    I added some shares of VTR to our portfolio last week. REITs are getting tempting.
    Best wishes,
    KeithX

    • Hi KeithX,

      I have a feeling that all this REIT buying will be similar to the energy sector excitement many have jumped on board as oil prices declined. It seems that every blogger is buying into the REIT sector and as you stated they are getting tempting. Like your VTR buy. I’ll continue to focus on my big three health REITs the rest of this month. It will be interesting to see how many REIT buys are being made this month among our DGI community. As always, I appreciate your comment.

  4. Id love to add to my VTR position but capital is very light right now. Theres enough for 2 small purchases but since I expect there to be more pain for the REITs in the coming months I’m trying my best to remain patient. XOM is pretty high on my list right now because the yield is up over 3.4% which is pretty rare for the company. WPC, OHI, and VTR are all up there too. So many potential uses for my currently limited capital.
    JC recently posted…Weekly Roundup – June 7, 2015My Profile

    • Hi JC,

      A familiar “problem” every DGI investor has… Not enough capital. Sometimes I wonder if we had $5K available or $10K would we want even more money to invest. I think the answer is ‘yes.’ By the recent blog updates it seems that many are piling into the REIT sector with the big health REITs being popular as well as retail names O and WPC. I agree with you that REITs will probably offer us good buying opportunities in the future as interest rate uncertainty is prevalent. If you are not interested in the REIT space I still see good value and yield in energy as you stated as well as financial (insurance, banks, asset managers) stocks. Thank you for stopping by and commenting.

    • Hi DE,

      OHI is a great health REIT with lots of growth in front of it as well as a generous yield while you wait. It’s definitely on my radar as well but for now I’ll be focusing on the big three health REITs and maybe other names in the REIT space not related to health. Thank you for stopping by and commenting.

  5. Nice buys DivHut. I’m looking to add Vanguard’s REIT Index, VNQ, and BHP Billiton right now. A lower levels I will be aggressively adding to the likes of Johnson & Johnson (~low $90) and Union Pacific (~low $90). I also hope to be able to find value in the water utilities again. As I said in yesterday’s post, I am optimistic about our future investment prospects.
    -Bryan
    Income Surfer recently posted…Why I am Optimistic About Our Future Investment ProspectsMy Profile

    • Hi IS,

      Thanks for sharing your potential picks in the REIT space with VNQ. I have looked at that along with RWR and IYR as well. All similar in nature and holdings. Like you, I also think we’ll have better buying opportunities going forward in some great names like JNJ that you mention or UL in your post. For now, I guess the best value/yield can be found in the REIT space, financial sector which includes banks, insurance and asset managers as well as energy. Given the opportunity to average down on my cost a bit with the health REITs was another reason I added to my positions. As always I appreciate your comment.

  6. Excellent stocks you purchased. I totally understand your “pain” seeing cash sitting in the account earning nothing. That’s why in my dividend investing account I am always 100% invested and small money under $1,000 I put into a commission free ETF so it pays some dividends before I save enough to buy a stock. But you know that from my blog, right? As far as the health REIT I think it is a good buy as health involved stocks will prosper in the long run.
    Martin recently posted…Stocks to buy in June 2015My Profile

    • Hi Martin,

      Where I invest I do not have access to a commission free ETF so I collect my 0.0000001% yield 🙂 while I wait to deploy my fresh capital but it’s usually not too long as I invest every one to four weeks on average. I’m waiting to read about more health REIT and other REIT buys, in general, among the dividend bloggers. Personally, like you, I like anything health long term. JNJ under $100 is generating some buzz too. Thank you for stopping by and commenting.

    • Hi DM,

      REITs are probably the most beaten down sector in recent weeks which no doubt has raised interest among the DGI community. Quite a few blogs are announcing REIT buys with many in the health space. I just bought my first REITs about a month ago and already received those first dividend distributions. Gotta love that. I’ll continue to build up my HCP, HCN and VTR positions and when I feel comfortable I’ll venture into other REIT names, OHI and WPC being a couple that interest me along with LTC, NHI, DLR, O and AVB. As always I appreciate your comment.

  7. REITs is just starting to look attractive for me. I’m long financial stocks, but if the price blow out of the water, I’ll consider selling them to buy more REITs. I tried to avoid JNJ and PG, but I now realize they are a bit of a consumer stable and less pharmaceutical, I will consider buying them too.

    I keep coming back to your website to look for insights. Thanks for sharing.
    Vivianne recently posted…Public high school versus “great” public high schoolMy Profile

    • Hi Vivianne,

      I’m sure you have noticed a lot of REIT activity among the dividend bloggers as the entire sector has been beaten down in recent weeks and better values and yields are now offered. For my money I’ll continue to watch the health REITs and average down as necessary. Both JNJ and PG look more compelling too in recent weeks as JNJ fell below $100 and PG has flirted with its 52 week low. Both offer great current yield but it looks like JNJ is a little better value than PG today. Thank you for stopping by and sharing your thoughts.

  8. DivHut,

    Nice buys. There is a lot of chatter about interest rates destroying REITs, does anyone realize it may be a short term blip, but in reality just like all other companies the buck will be passed and the consumer or someone will make up the difference? Nice buys moving in on other’s uncertainty. That IRA is starting to look nice and strong.

    -Gremlin
    Dividend Gremlin recently posted…Weird Places for AdviceMy Profile

    • Hi DG,

      I happen to agree with you that all these short term negative headlines regarding REITs and HCP in general are just part of the long term investing game. No stock or company ever has a rosy road in front of them forever. Not long ago JNJ had its issues when the stock was trading in the $60s because of all the recall issues it had. Long term, the trend for health related stocks, in every form, from pharmaceutical to consumer or from assisted living to medical devices have a huge tailwind behind them. I’ll continue to build up my REIT holdings in my IRA and perhaps add other names once I feel sufficiently invested in the big three health REITs. Thank you for stopping by and commenting.

  9. Yeahhhh! HCP!

    Love this REIT, love the long-term story and demographic trend underlying the company. I like it’s exposure breakdown across the health community (~45% Senior Housing, ~30% Post-Care/Rehab, ~25% Offices, and a few dozen hospitals and science centers). It runs the whole spectrum, and it’s triple-net lease structure keeps it more immune to troubles experienced by real estate markets as well as troubles that could befall front-line clients (like DoJ’s investigation of HCR ManorCare).

    Eric
    Retire29 recently posted…Early Retirement Lessons from a 30-Mile RunMy Profile

    • Hi R29,

      HCP is one of the few health REITs that is very diversified in its operations and revenue streams. Other smaller health REITs could be considered more pure play which is fine if that’s what you are looking for. I think many in the DGI community are liking the health REITs with a few jumping on board HCP despite its recent bumps in the road. As you stated, the long term demographic trend points to health related stocks doing well over the next two or three decades. Thank you for stopping by and sharing your thoughts.

  10. Not sure about the short term but I think all those names will be fine long term, especially JNJ. Short term fluctuations are hard to take sometimes but I try not to pay attention. I don’t like having too much cash just sitting there doing nothing but I have learnt that patience can be rewarded

    • Hi OBFW,

      Sometimes it’s the short term fluctuations that scare people the most even though they are invested in a diverse group of high quality companies. I guess that’s human nature to be fearful. Long term I like anything health related from REITs to pharmaceutical to medical devices and more. There’s no denying the mega-trend of people living longer and needing medical assistance along the way. Thank you for stopping by and commenting.

    • Hi DG,

      Each morning I wake up to read another dividend blogger buying a REIT. It may be a health REIT or retail or storage even but a REIT nonetheless. For my portfolio the REITs will represent a relatively smaller portion of my overall holdings which is why I’m comfortable owning some. And the ones I have picked are the more larger established health REITs than the smaller players. Thank you for stopping by and commenting.

  11. I am both surprised and not by your recent REIT buys. Surprised because I remember you didn’t touch them for so long and not surprised because of the new IRA that is full of REITs. They are definitely a good buy as part of a well diversified portfolio. Especially the healthcare REITs. Good job making purchases despite the prevailing high valuations of the broader market.

    – HMB
    HMB recently posted…Stuffing MoneyBags May ’15My Profile

    • Hi HMB,

      Yes, it’s true that for many, many years I did not touch any REITs, MLPs or BDCs because I was building my long term dividend growth portfolio with “traditional” stocks instead. That’s not to say I have not been interested in the sector. I have in my watch list for a long time several REITs that I have considered and now with interest rate hike fears and rising bond yields hammering the entire REIT sector a lot of value and good current yield is being offered so I jumped aboard. In general, my REIT holdings will be a relatively small portion of my overall portfolio so I am comfortable with that. Also, I did not invest in mREITs which look more risky nor smaller REIT plays. I have been buying into the health REIT space which looks to have long term tailwinds behind it as well as focusing on the larger more established players such as VTR, HCN and HCP. As always, I appreciate you stopping by and sharing your thoughts.

  12. Hey mate, all look like good solid purchases. I know you’ve commented back on my blog a few times – not sure if you’re interested in foreign equities at all but I’m about to take up a very rare opportunity to take a position in both a high growth and high dividend paying stock on the ASX and thought I’d give you the heads up.

    The company is called Corum Group (ASX ticker COO). In the “software as a service” business in the pharmaceutical space, i.e. tech+pharma which in my opinion is a very lucrative combination. Very small company by your usual standards, however therein lies the capital growth potential. Cashed up ($13million in cash compared to a $36million market cap) and currently paying a 7% dividend at the current share price from excess profits. Has just added a heavy hitter to the board that specialize in the mergers and acquisition space – looks like they are going to put that cash to work.

    Anyway, just sharing some “outside of the box” ideas for US investors looking to diversify out of lumbering (I should say “mature”) blue chips and the US market. Keep up the good work.

    • Hi TNI,

      I do have an interest in foreign equities as a good dividend paying stock is a good dividend paying stock no matter where domiciled. I own three Canadian banks, TD, BNS, RY also have British and Irish domiciled stocks IR, ALLE and UL so I am open to names based outside the U.S. Thank you for sharing COO. Tech and pharma definitely sound like an interesting combo and that yield looks very healthy too. Of course, I’d like to look into this name more and learn about COO’s dividend history and payout ratios as well as tax consequences for owning a stock from “down under.” Kudos for sharing this company with me. It’s much appreciated.

  13. Hey DH, it’s so true that I hate building up a large amount of cash. Especially now when there are some deals to be had in the Canadian market. I’ve been buying up some banks shares, but more recently took positions in a beat up utility company (Canadian Utilities) and in a global fertilizer giant Potash Corp (POT). I think dividend stocks have been hit pretty hard lately as fears over interest rates grow. I own my REITs through an ETF and might pick up a bit more of it if the carnage continues!
    My Road to Wealth and Freedom recently posted…Dividend Stock Purchases June 2015My Profile

    • Hi MRtWaF,

      I’m continuing to make my buys in the beaten down sectors as I pretty much always have. I have been buying the Canadian banks almost every month for the past year adding to my TD, BNS and RY and with REITs being the new sector to be beaten down I have jumped aboard that train too. It’s interesting you mention POT as I started looking into that one recently with that huge yield that’s sure to get some attention among the dividend bloggers. Which REIT ETF do you own? I know the major ones VNQ, RWR and IYR. Their holdings are all pretty similar. Thank you for stopping by and sharing your thoughts.

    • Hi dd,

      My buys are done through Sharebuilder and while you can buy partial shares you can also reinvest your dividends into partial shares as well so any dividend amount you receive can be turned into partial shares. Thank you for commenting.

  14. Love the purchases. Boy did you target the big hitters in the Healthcare REIT sector. I think you picked a great time to take advantage of the downturns and add to positions in the best stocks in an industry that will continue to grow overtime. I own a large stake in HCP myself and may be adding to it as this downturn is becoming too juicy for me to continue to ignore.

    Great job and way to continue to grow your dividend income. Keep up the great work!

    Bert
    Dividend Diplomats recently posted…3 Reasons I Would Sell a StockMy Profile

    • Hi DD,

      Glad you like the recent buys. Seems like the REITs have been bought up by every dividend blogger out there the last few weeks. I will continue to nibble in the space as prices remain weak and slowly build up my position. At $2 commission I can afford to make small buys at around $800 a pop therefore be able to take advantage of price declines should they occur. Happy to be a fellow HCP shareholder with you. I also like other REITs such as OHI, NHI, LTC, DLR, WPC, AVB and O. For now I’ll be focusing on my three health REITs but may want to expand into other REIT offerings. Thank you for stopping by and commenting.

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