Recent Stock Purchase III May 2017

It’s been a long time since I made three separate tranches of buys in one month but when individual opportunities come up for a variety reasons it can be too hard to pass up seemingly “good” deals especially in a market that hosts too many great stocks that are still overpriced. With that being said I decided to nibble on a dividend stalwart that was now trading at a historically high yield and a price that seemed too good to ignore. Sticking with my May stock considerations:

 

I have added to my taxable account 20.0 shares at $33.12 for a total investment of $662.40 in Hormel Foods Corporation (HRL). With this recent purchase my taxable account holdings in HRL now totals 34.4360 shares with a market value of $1,140.52. This was a free trade.

 

With only a couple days left in May I have a feeling this will be my last buy for the month unless we see another major downturn similar to what we saw a couple weeks ago.

 

Going forward, I still like HRL a lot long term. I feel the company, despite all the negative headlines and current near term headwinds, can deliver nice returns and more importantly a growing dividend for the foreseeable future. The company, much like McDonald’s Corporation (MCD), General Mills, Inc. (GIS) and others are pivoting towards a fresh, natural and/or organic fare. It wasn’t more than a couple years ago that MCD was totally written off by all the financial talking heads and experts stating that MCD was a relic of of the past that could not compete against the likes of the newer, fresher restaurant offerings of Panera Bread Company (PNRA) or Chipotle Mexican Grill, Inc. (CMG). Of course, today we see MCD making new all time highs seemingly every week. The MCD example just highlights how it’s often best to buy companies when they are in the midst of a current struggle. Buying when others shun a company, especially a long term well known brand, can be the best time to initiate or add to a position. Remember Starbucks Corporation (SBUX) back in 2008 before the return of Howard Schultz? SBUX was a company struggling at the time with a questionable menu, too many U.S. stores and other headwinds. We all know how the company has performed since 2008.

 

Similarly, I’m not one to discount the moves HRL is making towards the healthy, organic and fresh sector with its acquisitions of Applegate: Natural and Organic Meat, Justin’s: Natural and Organic Nut Butters, Muscle Milk: Protein Shakes and JENNIE-O® Turkey and other natural and organic food makers in recent years. GIS buying companies like Annie’s, Lärabar, Cascadian Farm among others is another example.

 

While HRL is often synonymous with SPAM and other processed meats, a category not known to be the most popular these days, it’s still pivoting towards changing consumer tastes and offers a sustainable dividend which is what I covet most with any purchase I make.

 

What do you think about my recent purchase? Have you been buying stocks after big price swoons? Please let me know below.

 

Disclosure: Long GIS, HRL, MCD

36 thoughts on “Recent Stock Purchase III May 2017

    • Hi Desidividend,

      Seeing HRL finally break the 2% yield mark was enough for me to take a nibble at these levels. For HRL it’s a historically high yield that is still very safe based on current cash flow. Thank you for commenting.

    • Hi FPF,

      Like you, seeing that yield cross 2% was enough to make me add to my current position. That’s a historically high yield for a name like HRL and based on current cash flow that dividend still has enough room to continue its growth. Thanks for commenting and sharing you recent pick ups.

  1. The market has been an incredible ride over the last few months. Up and down, side to side, it’s insane! I have kept my eye on HRL but I can’t seem to pull the trigger. I can’t help but feel like we’re about to see a correction and I want to keep a sizable amount of free cash to throw at it when that happens. You’ve got to ride the dips!
    Dividend Reaper recently posted…The Ups and DownsMy Profile

    • Hi DR,

      No doubt the market has been moving in all sorts of directions with a general “melt up” trend occurring since late last year. HRL has been on the minds of many of our fellow DGI peers especially with its stock price dropping giving us historically high yields. You are not alone in hoarding cash these days. I’m sure you have read multiple posts already about others doing the same. For now, I plan to remain fully invested and keep buying when those dips present better values and yields. Thank you for sharing your thoughts.

    • Hi BHL,

      After seeing HRL take it on the chin last week and driving up yields north of 2% I just felt compelled to nibble on some stock. I look forward to HRL continuing its tradition of annual dividend increases for the foreseeable future. Thank you for commenting.

    • Hi DK,

      Thanks for that vote of confidence. HRL with a yield north of 2% is enticing. Thank you for stopping by and commenting.

    • Hi DD,

      There’s no doubt HRL is a dividend stud. Besides for pumping out annual increases for five decades its dividend growth rate has been very impressive as well. With a safe dividend and a historically high 2%+ yield I’ll take my long term chances with HRL. As always, I appreciate your comment.

    • Hi SSDD,

      The way I see it, seeing HRL continue to trend lower is just giving us better buying opportunities for the long haul. They are continuing to diversify their product offerings to better match changing consumer tastes and with a safe dividend sporting a historically high yield it seems like a good time to nibble. Thank you for commenting.

    • Hi TI,

      If I had to guess, I think we’ll be reading more ‘HRL buy posts’ in the coming days. After its sharp decline and attractive current yield HRL could be a great play for the long haul at these levels. Thank you for sharing your thoughts.

  2. Hi DivHut,

    Nice buy! Hormel has a great track record with 50 years of divided raises…and there’s nothing wrong adding HRL after the recent decline. It’s just a solid play. – the 2% yield is a little bit on the low end of my range, but it won’t be long and you’re collecting a yield north of 3%.
    All in all i like Unilever and PepsiCo more in the consumer sector, but they don’t come cheap at the moment.

    Cheers
    DividendSolutions

    • Hi DS,

      All those points you mention in your comment are reasons I picked up some HRL. True, it’s current yield is not that exciting but it does sport a pretty impressive dividend growth rate. Like you, I also like UL and PEP a lot but it’s difficult for me to pull the trigger on those names at current levels. UL has really come up strong in recent months. Thank you for commenting.

    • Hi Jay,

      If you have been following me for a while you already know that I follow my investing method (to a fault sometimes) despite whatever is going on in the market or world economy. Foremost with my method is consistency making sure I make at least one buy each month. May happened to be a little busier but that’s OK too. Thank you for your well wishes and stopping by.

  3. DHut,

    I will likely be adding another position early next month as well, and HRL has been high on the list of potential adds. I agree with your assessment of both HRL and GIS. Companies in this positions have been adding to their portfolios to meet newer demands of the client base. Simply smart long term thinking.

    – Gremlin
    Dividend Gremlin recently posted…Recent Buy, May 2017My Profile

    • Hi DG,

      There is a lot to not like about HRL and GIS which is why those share prices are under pressure. I feel these are near term headwinds and that eventually both companies will turn around. I mentioned the MCD and SBUX example as those stocks were both maligned at one time. Nothing grows forever. Even the best companies falter after being in business for 100 years! I’ll gladly add to my holdings during those “bad” times. As long as the dividend remains safe I’m happy. Thank you for stopping by and commenting.

    • Hi DD,

      Averaging down is one of my favorite things to do, especially for a company that I plan to hold long term. Seeing HRL yield over 2% was enough to get me to pull the buy trigger. In our household it’s all about Skippy®. We go through gallons of that stuff in a year but it’s nice to know HRL makes some products for your famous nacho dip too 🙂 As always, I appreciate your comment.

  4. Congrats on buying HRL at 52-weeks low. GIS is probably better value still with higher dividend yield, but to diversify, I might just pick up some HRL shares.

    Nice take on SBUX.

    Cheers to many years of dividend to come!

    • Hi vivianne,

      Spreading my “bets” in the consumer staples space is something I’ll gladly do. I already added to my GIS in recent weeks and decided to beef up my HRL stake after the recent price swoon. Glad you liked my SBUX example. It happens all too often. You see the stock price of a great company go down and suddenly everyone jumps on the ‘sell’ bandwagon. That’s exactly the time I’d like to buy. Cheaper price, higher yield and better value. While not a rule, those same companies that are in the dumps often find their footing and climb back to new highs. Thank you for commenting.

    • Hi At,

      I agree. I love those free trades a lot as they allow me to invest small amounts. I still have a few left that should last me through summer. Thank you for stopping by and commenting.

  5. Hi DivHut,

    I’ve recently been eying HRL as well. I have it in my 401K account but thinking of adding more to it. I have been adding a little bit of growth stocks (TSLA, UAA) to name a couple and while I am a dividend investor, I do not want to miss out on any growth stocks either! Interestingly, your Amazon guest post was right on time and I was thinking about picking up a couple of shares even at this highly inflated price!

    But nice buy with HRL, can’t go wrong! I am heavily leaning on using the couple of grand to pick up HRL instead of jumping on AMZN. Perhaps when prices fall back down I will look at Amazon.

    Keep up the good work! Love coming to your page. It always keeps me motivated!

    • Hi DL,

      Thank you for those kind words about my blog. Believe me, whatever inspiration I can dole out via DivHut returns to me via the numerous DGI bloggers I read out there. I guess sharing our real world experiences makes us all better long term investors.

      While I hold zero non-dividend growth stocks in my portfolio I would not be against adding an AMZN and the like for the long haul. That being said, I am not prepared to buy at current levels. In the meantime I’ll stick with my dividend stocks and buy the ones facing near term headwinds. Thank you for stopping by and sharing your thoughts.

  6. Nice buy. It is almost always prudent to purchase a big name stalwart when it is going through a rough patch. More often than not, it is a blip in the radar. This is not always true but has ben most of the time. If you do your research, you have a better than average chance of being right. I think this is a smart buy. Kudos.

    -Brian
    Brian recently posted…April Dividends 2017 are here !My Profile

    • Hi Brian,

      Look at any long term chart for many “old” stocks and, as you stated, those rough patches appear as tiny blips. It’s exactly during those ‘rough patch’ times that I like to initiate or add to a position in my portfolio. HRL, GIS, GWW and many others are facing these near term bumps which I think will eventually pass. Of course, my main concern is dividend safety and even with these near term headwinds the dividends continue to look safe. Thank you for commenting.

  7. Great purchase on HRL. I also own HRL and I agree with your assessment of HRL. I think that they are going to do great and continue growing those dividends from a long-term perspective. I’m not too worried since they are making the right moves to adapt to changing consumer tastes.

    • Hi ACI,

      Exactly my assessment of HRL. Every stock falters from time to time. Where was MCD a couple years ago. Now every talking head loves that stock. Sometimes you have to buy when everyone else is selling. While never a guarantee of success, it does offer you cheaper prices, better value and higher yields. For a dividend stalwart like HRL, I’ll take my chances when things look “sour.” As always, I appreciate your comment.

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