Recent Stock Purchase II – November 2014

As the stock market continues to make new highs with each passing week some of our stalwart core portfolio positions begin to get overlooked as we seek out new relative bargains in the market. It’s no surprise that energy and material stocks have been very popular among the dividend growth bloggers as of late since depressed commodity prices are giving rise to new buying opportunities in the materials and oil patch stocks.

 

My earlier purchase this month in The Bank of Nova Scotia (BNS) was predicated on the assumption that it is still a relative bargain even among the energy names coupled with a juicy current yield and growing dividend as well. What I’m trying to convey is that while many new buying opportunities may be created with falling prices one must tread carefully not to get caught buying falling knives. Sometimes it’s better to stick with core holdings and simply add to those positions instead of jumping in to falling stocks right away. For example, I’m sure a lot of the recent BP, COP and BBL purchases I have read about could have been delayed for several more days as we watch oil and other commodities try to at least stabilize before jumping in. The stock market as we all know is an irrational place where we try to rationalize our purchases.

 

I didn’t expect to make a second purchase in November but with extra capital for the month that was not deployed, I decided to make a final buy before the month was over. I’m curious to know what your thoughts will be regarding this recent buy as seemingly everyone has been buying energy and materials names the past several days and weeks.

 

With that being said, I have added to my taxable account 27.0861 shares at $58.93 for a total investment of $1,596.18 in Kraft Foods Group, Inc. (KRFT). With this recent purchase my taxable account holdings in KRFT now totals 53.5950 shares for a value of $3,224.81. I also own KRFT in a ROTH account.

 

What do you think about my most recent purchase? Is KRFT in your dividend income portfolio? Please let me know below.

 

Disclosure: Long KRFT, BNS

33 thoughts on “Recent Stock Purchase II – November 2014

    • Hi NMW,

      I happen to like KRFT for my long term portfolio. I realize that it is a slower growth stock but has a good current yield that makes up for the slow growth. Perhaps on a pullback you’ll be able to start a position in KRFT yourself. Thanks for commenting.

    • Hi R2R,

      I think it’s a more conservative approach to investing. I’m not against energy or materials names at all. Don’t get me wrong. I think they are looking very compelling. I just like to invest once the dust settles and currently it looks like oil and other commodities are still in free fall. Thank you for stopping by and commenting.

  1. Keith,
    I completely disagree on the oils, but understand that I might be catching a falling knife. I just don’t think that oil prices will continue to drop much further, and you can miss bargains in the market if you blink. I’ve been buying BP, XOM, CVX, and BBL lately and will add more shares if the prices keep falling. If you listen to the pundits, it seems that they expect that we will quit using fossil fuels within 20 years and that oil will be extremely cheap. I am skeptical about how quickly we can convert to solar, wind, etc. I also wonder about how the good old electrical grid will handle all of the electric vehicles that we will supposedly be driving, not to mention the replacement cycle for all of the batteries. Maybe I should be buying GNRC and TSLA?

    On the other hand, I love KRFT (it occupies 2% of our portfolio). As long as the yield stays above 3.5%, I think you will do great over the long term. Do you DRIP? My wife and I use automatic dividend reinvesting for all of our stocks now and find that it’s a great way to raise all of them. Since we started earlier this year, our shares of KRFT are up almost 3%. Sweet!

    Good luck,
    KeithX

    • I should have said we have raised the number of shares of KRFT by 3%. The price is up about 15% from when I bought the shares a year ago.

    • Hi KeithX,

      I fully agree with your assessment regarding fossil fuels. It will certainly take several decades before other energy forms make a serious dent on our dependence on oil. And as I commented to Roadmap2Retire, I still like many energy names and realize that we are being treated to great discounts in some very solid dividend payers. I, however, prefer to invest during periods of relative “calm” whatever that means to you. I think there is way too much volatility in commodities and feel that investing now might be a bit too early and riskier than waiting for the dust to settle and buy when prices are somewhat more stable.

      Happy to see you agree with my KRFT buy. I have to admit that one of the main reasons I went for this buy, even though I was averaging up, was its current yield. I hold all my shares in Sharebuilder and have all dividends reinvested automatically. So it’s similar to a DRIP. Thanks for stopping by.

  2. Good post DivHut, I Agree with you that it’s easy to get tempted to jump in to early since there are no bargains to be found elsewhere right now.

    I own a smaler Norwegian company that is depended on the oil industry and the big question is, as you pointed out, where the oil price is going. The industry has had a really good period untill just recently and the question is on what level of profitability we will se the next couple of years. I agree that it’s wise to wait a little se how the oil price develops.

    I have a feeling that oil stocks will get cheaper as the market gets even more nervous. If I where to buy stocks in the sector right now, I would pick solid companies like Chevron and Exxon.

    Kraft Foods is a solid company that I will add to my Watch List. Good luck with your investments!

    /Best Regards
    Long-Term Investment recently posted…Is This Quintessential Fast-Food Giants Days Numbered?My Profile

    • LTI, I saw a report on CNBC (or was it bloomberg?) on why oil prices are collapsing. China is slowing down and manufacturing as a whole is slowing down. The world consumes 89 billion barrel of oil each day (I’m not sure if this is straight cruel oil or fuel and other byproducts). The World produces 90 billion barrel of oil a day (again not sure if this is straight cruel or fuel and byproducts). ROPEC is refusing to cut back production to challenge shale oil.

      Will we have lower oil prices in the future? I sure hope so. I’m loving these $2.5 gas prices compared to $4 a while back.
      The Broke Dividend Investor recently posted…Black Friday BuyMy Profile

    • Hi LTI,

      Sometimes I like to go with the most boring companies instead of what’s hot. I fully understand that energy names are the go to stocks these days and that everyone is piling in. For my sanity, and ability to sleep well at night, I’d rather wait till the prices have at least stabilized a bit. I know some might say I’m trying to time the market to which I would reply that I’m just trying to stay sane in this market and stick with good old reliable names. I always tell everyone who comments that I’m not against oil names such as CVX or XOM, BP and the like… I just like things to be a little calmer before jumping in. Just look at how Friday energy names closed. This is why I decided to go with KRFT instead of initiating a new position in an energy name. Maybe in a few weeks or a month when there is less volatility I’ll jump in. As you can see from my portfolio, all my holdings skew to the conservative side. Thanks for stopping by and commenting.

  3. Hi, what’s your strategy with holding Kraft in both your Roth and also your taxable account? I’m just starting out and have been trying to learn about which types of holdings are best kept in my Roth vs taxable account. Apologies if it’s relatively common to have the same holding in both. Thanks !

    • Hi Dave,

      For many years I only had a taxable account where I built my dividend income portfolio. Realizing that I also wanted to grow my dividends in a tax free environment I opened a ROTH several years later. This is why my ROTH account is much smaller than my taxable account. Quite honestly, I decided to make my ROTH account a concentrated version of my taxable account and chose names that I felt would make good long term core holdings. That is why you see many similar names in my ROTH and taxable account. The difference between the accounts, of course, is that I do not pay any taxes on dividends received in my ROTH which allows for faster compounding.

      Typically the best investments to go into a ROTH account are MLPs, REITs and some foreign stocks. Canadian stocks, for example, when held in a ROTH or IRA do not have any withholding taxes taken. This is why I hold TD, BNS and RY in my ROTH.

      Take a look at my portfolio and see some of the holdings I currently have. Also, please feel free to comment or email me with any other questions you may have. Thanks for stopping by and commenting.

  4. Nice buy DH,

    Kraft is one of my most desired stock. Kraft to me is Altria to many people. I keep looking at it and I keep wanting to buy it but it never comes down! I keep telling myself that it’s overvalued and to wait for a pullback but the price keeps increasing. Ah, such is the life of an investor.
    The Broke Dividend Investor recently posted…Black Friday BuyMy Profile

    • Hi TBDI,

      Sometimes you just have to jump in and take a starting position. These days with Loyal3 and Sharebuilder you can nibble on a position instead of just waiting on the sidelines. Who says you need to invest a large amount. Start small and get your feet wet. KRFT is one of those “boring” names that just keeps paying a nice yield which I admit is one of the main reasons I added to my position. It will be interesting to see how 2014 will finish up. Thanks for commenting.

        • Hi TBDI,

          Well, from what I know Scottrade and TD have been around much, much longer than Loyal3. I see that Loyal3 is a member of FINRA and SIPC like Scottrade and TD which would make your account just as safe as the older brokerages. If I was starting out today, I would be building my account with Loyal3 as commission free trades make it much easier to buy ultra-small amounts of stock allowing to build positions over time. Hope this answers your question.

  5. Thanks for posting, DH.

    There Kraft plant in our area and it is regarded as one of the best places to work. Solid wages and good working conditions are cited as some of the key benefits of securing employment there. Anecdotally, I know someone who’s told me many who work there have six-figure portfolios of Kraft stock from being on the Share Purchase Plan as employees.

    I don’t own any shares of this company, though I definitely use a slew of their products and have as far back as I’ve been alive. I’ve been interested to see how their split with the new Mondelez plays out over time.

    – Ryan from GRB
    GetRichBrothers recently posted…Recent Buy, November 2014My Profile

    • Hi GRB,

      That’s an interesting perspective you have given about Kraft employment and working conditions there. There’s no doubt that long time employees of such a solid dividend payer have done well over time. I think KRFT will continue to be a low growth relatively high yielding stock for a long, long time. Looking for more international growth then buy into MDLZ. I happen to own both as a result of the spinoff and plan to keep both as well. Thanks for stopping by.

    • Hi SAD,

      I’m all for a little nibble of KRFT. I have been waiting for a drop in price for the longest time but never seemed to catch any breaks. I figure to make KRFT a multi-decade holding anyway so just decided to buy in at current levels. With low growth but a nice current yield I’m happy getting paid to wait. I think Loyal3 is a great way to start really small with KRFT especially if you are worried that the price might be a tad high. Thanks for commenting.

    • Hi DW,

      As I have commented to others, I admit that one of my main reasons for buying KRFT at this point was its relatively high yield. I happen to agree that its store of solid global brands and decent payout ratio will continue to provide investors with years of solid dividend payouts. Thanks for stopping by and commenting.

    • Hi Tawcan,

      Believe me, I want to dip into the oil patch a bit with those valuations looking very compelling and dividend yields too. I just feel there is a lot more downside to oil and the volatility is way too high for my taste. We’ll see what December holds for us but in the meantime I’ll average up some of my older positions such as KRFT and enjoy the nice yield there instead. Thanks for commenting.

  6. Hi Keith,

    Man you’re in love with Canadian banks 🙂 I like it! These are strong financial institutions. I know that National Bank has plans to expand outside of Quebec and to the rest of Canada. It’s a great bank and a great dividend payer. You might be interested in taking a look at it. (NA.to)

    I gotta buy some stocks of these banks. I might Drip one or two of them… I’ll have to think about it. Sometimes I feel jealous that you guys have Loyal3 accounts and others alike. We don’t have something similar in price in Canada. There would be a market for sure…

    Keep investing my friend
    Allan recently posted…November 2014: passive income updatesMy Profile

    • Hi Allan,

      Well, for many, many years I have been very light in the financial sector holding just one bank, WFC. I was looking at USB as well for a while but that just dropped off my radar for a bit. Wanting greater financial exposure I began to look north and was very impressed with the large Canadian banks. I also like BMO and CM and have also looked at NA. For now I am sticking with TD, BNS and RY for the foreseeable future. Perhaps one day when my holdings total a much larger sum I’ll be tempted to diversify more.

      Is Sharebuilder available in Canada? Their automatic commission prices are very reasonable at only $4 ($2 if you are a Costco member). Thanks for stopping by and commenting.

  7. DivHut,

    Good buy. As a fellow shareholder, I must admit it has been a good year for KRFT. I bought them in my Roth in January, and it has picked up a surprising amount of value. I’ve seen some articles where it states supposed weakness, but I have not seen anything that concerns me as an owner.

    I’ll toast you with a blue box of mac’n’cheese.

    – Dividend Gremlin

    • Hi DG,

      As a long time holder of KRFT and many other high quality names, you’ll always come across articles or pundits claiming a time of weakness or strength in a particular stock. This is the noise that you must tune out if you want to hold quality names for the long term. Even if a stock came down from the heavens you’ll be quick to find a talking head singing the praises or bemoaning it for one reason of another. KRFT, with its boatload of brands that are consumed every day is a staple that has many, many more years of happy dividend returns. Cheers (with a box of Mac’n’Cheese).

  8. I have yet to branch into any of the solid Canadian financial stocks. BNS might be a good place to start. Any tax considerations or does the US and Canada have a tax agreement?

    Despite markets seemingly always setting record highs, it is amazing the value that is still out there. Right now it is the energy sector, but who knows what it will be in the future. Now I just need some more capital!

    I don’t understand how some people cannot have fun doing this. To me, investing is sort of like Christmas or a birthday. Anticipating getting enough money in order to buy some stocks is kind of like constantly refreshing the Amazon shipment tracking page to see if that thing you ordered is any closer. And stock investments should at least appreciate in value as well! Maybe I’m weird, but that’s kind of how I feel.
    Scott recently posted…(Legally) add more than $5,500 to your Roth IRA each yearMy Profile

    • Hi Scott,

      I think the large Canadian banks are a great place to branch out if looking for financial sector diversification. The names I would start with are BNS, TD, RY, BMO, CM and NA. I have decided to go with three of the large banks and feel that is more than enough financial diversification needed for my portfolio. If you hold your Canadian stocks in a retirement account such as an IRA or ROTH then no withholding taxes are taken from your dividend distributions. This is why my three Canadian banks are in my ROTH.

      There is always value in any market. You just have to know where to look. Though these days it’s easy to find with the energy sector hitting new lows for several weeks in a row. But when that ride is over there will be a new sector or stock that is seemingly in trouble and that’s always a good time to pounce.

      I fully agree with you about the fun of dividend investing. I have been doing this for a few years now but ever since I decided to share my results online via DivHut I have to say that I’m addicted. It’s great to read and share your thoughts and ideas with other like minded investors. We are all headed in the same direction just at different points on the same path. Thank you for stopping by and commenting.

Leave a Comment

CommentLuv badge