Recent Stock Purchase III – June 2015

There’s little doubt that current stock market headlines are creating an enormous amount of volatility in the market today. With the stock market averages at all time highs it seems like everyone is itching for that one catalyst that will hammer stocks back into submission.

 

One such potential catalyst that seems like a familiar song has been played over and over again…. Greece and the PIIGS default. Wasn’t a Greek default in the news in 2010, 2012, 2014 and now, once more, in 2015? Of course, coupled with the Greek potential default in the news we have the seemingly eternal question of when the Fed will finally increase interest rates. This gem of a headline has been making appearances since 2013. To call these events ‘market noise’ is definitely an understatement. I’m simply trying to convey that, while news and events are important, news and events sometimes are not. Despite numerous headwinds facing the U.S. and world economies, the stock market continued to move ahead with higher stock prices and increased dividends with or without you. Since our deep recession began six years ago we saw the ‘end of the U.S. dollar’ as it slid to records lows only to become one of the strongest currencies in recent months. We heard news of the weakest economic recovery, slowest job growth, greatest government bond buying, oil at record prices, oil crashing, gold and silver at all time highs and crashing, all the while high quality businesses such as 3M Company (MMM), Illinois Tool Works Inc. (ITW), Johnson & Johnson (JNJ), Emerson Electric Co. (EMR) and many others continued to march higher despite the market noise and volatility. It’s often said among our dividend community that volatility creates opportunity and that certainly seems to be the case.

 

Of course, all these headlines and volatility has continued to weaken one sector in particular in recent months, the REITs. With lower prices and strong fundamentals to their core businesses REITs continue to look attractive. With that being said let’s review my recent purchase.

 

I have added to my IRA account 11.7803 shares at $67.74 for a total investment of $798 in Health Care REIT, Inc. (HCN). With this recent purchase my IRA account holdings in HCN now totals 25.9173 shares for a value of $1,757.19.

 

For now, I continue to like many of the REITs with a focus on the large health REITs foremost. I have other names on my radar but would like to build up my holdings in HCP, VTR and HCN first. The last couple of months saw my first foray into the REIT sector ever as I have traditionally focused on ‘standard’ dividend growth stocks instead.

 

What do you think about my recent purchase? Are any REITs or other stocks on your watch list for the rest of June? Please let me know below.

 

Disclosure: Long MMM, ITW, JNJ, EMR, HCN, HCP, VTR

39 thoughts on “Recent Stock Purchase III – June 2015

    • Hi R2R,

      Timely post you wrote analysing HCN as I just completed a recent buy. Though a bit more expensive than its rivals, HCP and VTR, HCN might command that premium as it’s income isn’t as reliant on government reimbursements as a lot of its revenue comes from private individuals. I still am a fan of most health REITs with smaller plays OHI, NHI and LTC on my radar but for now feel comfortable focusing on the larger health REIT plays. Thank you for stopping by and commenting.

  1. I was very close to adding to my XOM and JNJ positions yesterday. Trying my best to hold off on adding to my REITs until we get the first rate hike or at least get closer to it becoming a reality. Im thinking that I might build up my REIT positions some by turning on the automatic reinvestment. VTR is looking really good here though. Keep up the good work.
    JC recently posted…Dividend Update – May 2015My Profile

    • Hi JC,

      Both XOM and JNJ are solid long term buys but you already know that. JNJ at $100 or less seems to be garnering a lot more attention among the dividend bloggers and for good reason. Much better valuation and great current yield, especially after that recent dividend increase. I can understand your hesitation about jumping into any of the REITs in this environment as we are all holding our breaths for that inevitable interest rate hike. However, REITs have performed well in various interest rate climates and a solid company is a solid company in all economic environments. I know we’ll be seeing a knee jerk reaction down after that first rate hike is announced but in the meantime I feel comfortable nibbling on the large health REITs while we wait. As always, I appreciate your comment.

    • Hi ANHA,

      Sorry for the delayed response. DivHut was having hosting issues with GoDaddy.

      You name a lot of great REITs many of which I am considering myself for my IRA. As I have stated I am sticking with the large health REITs for now but also have an eye on some of the smaller players and DLR too. I think we are all waiting for that interest rate hike to happen as many great REITs will go on sale immediately after. Thank you for stopping by and commenting.

  2. Estimamdo amigo, soy un gran seguido suyo, y de la inversion en dividendoss, pero como español me siento ofendido por decirme cerdo, “PIIGS”,solo por vivir en el sur de europa. Hay mucha gente que ha sido avariciosa y ha hecho las cosas mal, pero tambien en otras partes del mundo. Me siento defraudado, creia que gente como usted, con altos conomimientos y cultura, gente a la que admiro, por intentar no ser parte del rebaño a base de esfuerzo, tendria mas respecto, hay mucha gente que esta sufriendo mucho sin haberlo bebido ni comido, gente que no tiene ni para comer.

    Saludos desde España

    • Hi vicent,

      Sorry for the delayed response. DivHut was having hosting issues with GoDaddy.

      I apologize if my post offended you in any way by naming the ‘PIIGS’ countries. It certainly was not my intention. Yes, I agree that many people and countries are to blame for our current economic mess. The U.S. is certainly not alone in being fiscally irresponsible as greed does not know any political boundaries. As an individual that loves to travel and visit many countries (I had a great time in Ibiza), I want you to know that I love to learn about other cultures, languages, food and people and want you to know that my use of the ‘PIIGS’ term was merely a reference to a media moniker and not my actual opinion of a particular country. Thank you for stopping by and commenting.

  3. DivHut:

    Congratulations on the new purchase! I also recently purchased a REIT, my first one, with STORE (although much more minor a purchase than yours at commission-free $45). In regards to the current news and hype of market volatility; a buddy told me something when I first started investing which I found very comforting. I do not remember exactly what he said but it was something along the lines of, “If you are ever worried about market predictions and news, look at previous predictions and see how accurate those guys were.” Your saying, “Wasn’t a Greek default in the news in 2010, 2012, 2014 and now, once more, in 2015?” reminded me of this and made me chuckle.

    Best,
    Alex

    • Hi Alex,

      Sorry for the delayed response. DivHut was having hosting issues with GoDaddy.

      Congrats on your REIT purchase too though you don’t really read much about STORE Capital Corporation (STOR) among the dividend bloggers. For now I will be focusing on the large health REITs with some other REIT names in the back of my mind should the bottom fall out of the sector. Your buddy was definitely on to something when he gave you that advice. The bottom line is that no one can predict the future. I always like to say that there are three opinions given on the market… one predicts a higher market another predicts a lower market and a third predicts a flat market. One of those predictions will be always be right. It’s very difficult to tune out the talking heads, Internet headlines and other hype but if you do, cooler heads will prevail and you won’t be sucked into any panic selling or hyped up buying. I appreciate your comment.

    • Hi D4s,

      Sorry for the delayed response. DivHut was having hosting issues with GoDaddy.

      Thank you for your continued support. My plan is to continue to nibble on the REITs as long as they remain weak and I can average down my cost. As mentioned in other comments, I continue to like many other REIT names but will most like focus on my current holdings before adding any new names to my IRA. Thank you for stopping by and commenting.

    • Hi MRtWaF,

      Sorry for the delayed response. DivHut was having hosting issues with GoDaddy.

      HCN is a solid REIT no matter how you look at it. Maybe a little higher quality than HCP and VTR which is why it might command a slight premium compared to the other two names as it is less reliant on government reimbursement as a lot of its income comes from private individuals. I also like a lot of the Canadian names especially the large banks. I have been buying BNS, TD and RY every month for almost a year and have been happy with the yield despite being slightly lower than my cost. We’ll see how the REITs continue to fare in this environment but I suspect much better buying opportunities will present themselves once interest rates officially are raised. Thank you for stopping by and sharing your thoughts.

  4. Another solid buy DivHut. I too am tired of hearing not only about all this Greek exit/debt news, but also about how the market is too expensive and headed for a correction. I think as long as you do your due diligence and stay the course, over the long term, you’ll do fine. It’s all these short timers that are making all the noise.

    – HMB
    HMB recently posted…You Can Retire Sooner Than You Think – Book ReviewMy Profile

    • Hi HMB,

      Sorry for the delayed response. DivHut was having hosting issues with GoDaddy.

      The bottom line is that we are investing in individual stocks and not entire markets. A high quality company/stock is a high quality company/stock no matter what. Think about all the companies that continued to raise dividends through the worst economic recession in generations. That says a lot about a quality business. Trying to tune out the market noise in 2009 was very difficult for me as my entire portfolio was deep in the red. I did not sell one share of anything I held. I just continued to buy every month like always and reinvest my dividends and today I am much happier for that fact. As you stated, “…do your due diligence and stay the course, over the long term, you’ll do fine.” I couldn’t agree with you more. Thank you for stopping by and commenting.

    • Hi DH,

      Sorry for the delayed response. DivHut was having hosting issues with GoDaddy.

      Of all the REITs out there the health REITs are my favorite long term sector for stability and future growth. Of course, I do like other REITs such as AVB and DLR that are not in the health space but for now I’ll be building up my positions in the big three health REITs, HCN, HCP and VTR and wait for that inevitable knee jerk drop that will occur once the Fed raises interest rates. Enjoying my new baby immensely 🙂 Thank you for commenting.

    • Hi DG,

      Sorry for the delayed response. DivHut was having hosting issues with GoDaddy.

      We’ve been hearing that this market is overvalued for several years and while it may be true that it is, it shouldn’t prevent one from finding individual fairly valued good yielding companies in the meantime. I can go back even further and remember watching the talking heads spout off in 2009 asking if this recovery is real or just a ‘dead cat bounce.’ It’s really hard to respect the media outlets these days. There used to be a time when news agencies reported what happened. Now they have guests and ask ‘what if’ questions versus reporting just what happened. Thank you for stopping by and commenting.

  5. DH,

    As usual, you make me question my choice to go full steam ahead with index stocks. I keep thinking — it couldn’t hurt to sprinkle a few individual (dividend-yielding) stocks into the “stock” part of my three-fund portfolio, especially if it’s a company like 3M or one of these REITs I keep hearing so much about.

    But oh, that risk.

    FM
    FI Monkey recently posted…Rough Seas AheadMy Profile

    • Hi FIM,

      The beauty of following along multiple dividend and investing blogs is that you become exposed to multiple investing styles and risk tolerance profiles. It’s called personal finance for a reason because it’s, well, ‘personal.’ I always state that everyone needs to find an investment medium that they personally feel comfortable with. It may include, stocks, mutual funds, index funds, real estate, precious metals or some combination of all. The bottom line is that you must feel comfortable with whatever path you decide to go down and be able to sleep well at night. There’s nothing right or wrong with wanting to hold individual dividend paying stocks alongside an index. The way I see it, my investments are spread among approximately 45 different names and various sectors thereby mitigating any devastating risk/loss that can occur should a company ‘fail.’ Any by fail I mean go bankrupt or eliminate a dividend. From a risk perspective I prefer the ‘traditional’ dividend stock names versus REITs, MLPs, BDCs and the like. Names, like MMM, ITW, CAT, GIS, PG, VFC, BDX, MCD, KMB, ABT, JNJ, CL, CLX, KO, PM, PEP and many more (you get the point) I my preference for a first choice solid dividend payer. Just my two cents. Thank you for stopping by and commenting.

  6. The REITs continue to deliver great yields as always. And healthcare will only boom as the Baby Boomers continue to boom their way to old age (best line I could think of), so healthcare REITs and healthcare consumer staples companies like JNJ have a bright future ahead of them. I’m actually looking to open a position with HCP once I get the capital.

    Now if only REITs were taxed like other dividends rather than ordinary income tax. I guess you can’t have everything you want.

    Now for O to go below $40/share. ARB needs his monthly dividends!

    Sincerely,
    ARB–Angry Retail Banker
    ARB recently posted…Don’t Argue Other Banks’ Policies With Me!My Profile

    • Hi ARB,

      There’s no denying the long term tailwinds behind anything in the health care space, whether looking at REITs, consumer health or medical devices and services. HCP is probably the most beaten down large health REIT and if you believe in the long term graying trend of the U.S. then HCP might not be a bad pick up at current levels. I keep my REITs in my IRA therefore defer my taxes till I withdraw. In the meantime, I will be receiving all my dividends without having to pay a penny till retirement age. This is also why I keep my Canadian bank stocks in my ROTH. No withholding taxes from Canadian companies if they are held in retirement accounts. Keep fishing for those REIT buys. Thank you for stopping by and commenting.

  7. That is a good purchase as I like Reits right now. I tend to focus on stocks that are less than 50 dollars per share in the beginning stages of adding a new position. I feel this helps me build more shares faster. Thus eventually the compounding will grow faster. What do you think of my strategy?
    EL@MoneyWatch101 recently posted…The Minimum Wage DebateMy Profile

    • Hi EL,

      The REITs are quite popular these days as Fed interest rate hike chatter and rising bond yields have spooked the sector resulting in many significant price drops in just the last couple of months or so. Regarding your strategy of sticking to stocks that are below $50 a share you might want to consider the age old saying of “price is what you pay and value is what you get.” In other words arbitrarily picking a price point for selecting stocks doesn’t seem to make much sense. Why not set the bar lower at $20 a share or even $10 and pick up even more shares than at $50? Stick to finding fair priced stocks or cheap stocks based on earnings and profitability as well as sustainable payout ratios for dividends and you’ll be better off in the long run no matter the “price” that you pay. I never followed a price point strategy when picking any stock in my portfolio and I doubt most other dividend investors do as well. Thank you for stopping by and sharing your thoughts.

  8. Great pickup here Divhut. Can’t go wrong with one of the large healthcare REITs. A nearly 5% yield now too…way to pick up a solid stock and take advantage of the downturn. I am sure that you are going to have a few more chances to increase your stake as they continue to dance around a potential interest rate hike.

    Keep up the great work! Hopefully we will be seeing purchase IV and V articles soon haha

    Bert
    Dividend Diplomats recently posted…Genuine Parts Company Stock AnalysisMy Profile

    • Hi DD,

      Well, June has been unique in the sense that I made three separate buys so far this month. Typically I do one maybe two buys in a month. What can I say, it’s a DGI disease to see cash sitting around earning 0.00000001% and not take action. As long as REITs are beaten down and offer a nice yield I’ll be averaging down my buy prices whenever possible. I agree that the REIT bloodbath is not over and we’ll probably get a serious downdraft the day the Fed actually raises interest rates. Boy will that be a headline. I’ll continue to focus on my large health REIT plays for now but I do have an eye on other names as well. Thank you for stopping by and commenting.

    • Hi ricardo,

      All great names you picked up as well. I like all three big health REITs even though HCP is having some tenant issues and a DOJ inquiry. I feel it’s just a temporary bump in the road and that the overwhelming tailwind behind anything health related is too huge to ignore. Looks like we’ll have to wait for that Fed rate hike to give us better buying opportunities for the REITs. Oh well… there’s always something of value. I still like the large Canadian banks. Thank you for stopping by and commenting.

  9. I appreciated your “intro” about the market timing. US recession is over and gone for a few years already but many are still afraid? Like you said, the market is overvalued and great companies keep on giving great dividend. Alright, stay afraid and let us collect! 😉

    Cheers!

    Mike
    DivGuy recently posted…It’s Hard to Keep Going SometimesMy Profile

    • Hi DG,

      “Stay afraid and let us collect,” that statement says it all. I’m not saying that a correction or crash cannot happen sooner than later but pretending to know when it will happen is just rubbish. We have been in record territory, overbought conditions, etc., etc. for a few years already and just imagine if you sat on the sidelines the last two, three, four or even five years. Keep finding value and solid yield. As always, I appreciate your comment.

    • Hi PIM,

      We have to go to where the values are. No question the oil sector still has plenty of high yield, low value plays as does the financial sector and fairly recently the REITs, though not as much as a few weeks ago. Even with the markets at all time highs, values can still be found. Thank you for stopping by and commenting.

    • Hi GRB,

      I think many would like to finally see a real pullback so we can find more buying opportunities. The reality though, is that despite these all time highs for the markets good values and current yield can still be found. Many financial names including, banks, insurance and asset managers are trading at decent levels along with a handful of industrial names such as EMR or health care JNJ. I plan to keep buying each month in all market conditions. Thank you for stopping by and sharing your thoughts.

    • Hi BSR,

      The REITs have all been banged up pretty bad this year and a lot more in recent weeks. Why not use it as a opportunity to get some good value high yielding names? Many dividend bloggers have been adding to their REIT holdings which included health, retail and industrial REITs. Things seem to have stabilized a bit in the sector for now but I just know that a volatile future awaits as Fed interest rate hike chatter will cause knee jerk drops in price. Thank you for stopping by and sharing your buys.

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