Recent Stock Purchase III September 2015

Things are definitely starting to get interesting with the market these days. Increasingly, more and more companies are trading at much better values and yields as prices have tumbled. Of course, the question of dividend reliability comes into play when dramatic price swoons occur. This is why we diversify among dozens of high quality companies in case the dreaded dividend cut or elimination occurs. For now, I am not too concerned over the sustainability of the dividends being paid from any of my portfolio holdings. Even with world economic bellwether Caterpillar Inc. (CAT) announcing massive layoffs signaling a slowdown in global growth, I do not feel overly worried about the longer term prospects if this cyclical giant.

 

As you know, I have been adding to my Canadian bank holdings in earnest for quite some time building up a nice position in The Toronto-Dominion Bank (TD), The Bank of Nova Scotia (BNS) and Royal Bank of Canada (RY). These days, many quality industrial names are getting hammered as well and value and yield is looking compelling in this sector as well. With that being said and sticking with my September stock considerations:

 

I have added to my taxable account 17.9720 shares at $44.63 for a total investment of $802.00 in Emerson Electric Co. (EMR). With this recent purchase my taxable account holdings in EMR now totals 57.9694 shares for a value of $2,530.94. I also hold 53.0756 shares of EMR in my ROTH account.

 

We’ll see what’s in store for the last few days of September. If heavy price slides continue in many of the names I currently hold another buy might be warranted before the quarter ends.

 

What do you think about my recent purchase? Are any of the names mentioned above in your portfolio and/or watch list? Please let me know below.

 

Disclosure: Long TD, RY, BNS, EMR

32 thoughts on “Recent Stock Purchase III September 2015

  1. I’m really wanting to add ETN to my portfolio but there’s no capital to be found currently. EMR is a great pick and it was one of the early additions to my portfolio although I was obviously early with adding to my position. I’d also like to add to UNP here to average down my cost basis some. Mr. Market is definitely giving much better value now. Thanks for the update!
    JC recently posted…Changes to my portfolio over the last couple monthsMy Profile

    • Hi JC,

      Ever since you mentioned ETN I have started to look at that name. A lot looks compelling for this industrial giant in terms of its business and dividend. Clearly, a CAT slowdown and other factors are hurting ETN’s bottom line but like all industrial plays things go from boom to bust. Of course, the best time to add to any of these names is during a bust cycle when value, price and yield are much better. Buy when other are selling, right? Thanks for the ETN mention again. I have them on my radar now. As always, I appreciate your comment.

    • Hi JT,

      You mention great names. It’s no secret that I have liked the large Canadian banks for a long time and have been adding to them slowly for over a year now. I also hold RY. It’s amazing what a stock price beat down can do for yield and while I’m not a yield chaser it’s nice to buy into a 4%+ high quality company that has a sustainable dividend. Things have to get a lot worse for a lot longer for these names to freeze, cut or eliminate their dividends. We are no where close to that at this point. Thank you for stopping by and commenting.

    • Hi R2R,

      Thank you for your continued support. If the market remains this weak going forward I’d expect a lot more industrial buys as yields push well over 4%. These are historic highs for the dividend and for now CAT, EMR and other beaten down industrial names seem to be safe. I always say, as long as the dividends can continue to be paid out and rise, I’ll be happy no matter the stock price. Thank you for stopping by and commenting.

    • Hi FV,

      I’m not shaken by CAT’s recent price move at all. I have held CAT during the 2008/09 crash and simply kept buying. Business cycles can’t always go up and these tough times facing CAT, EMR and the like are just giving us better buying opportunities and yield. Thank you for your comment.

    • Hi Jim,

      The time to buy cyclical names is when they are in the bust cycle. I know it’s comfortable adding to a stock that’s rising but with these recent price swoons we are being presented a high quality dividend paying stock with a much higher yield and trading at much better value. Odds are that EMR will be just fine when things start to pick up again worldwide and economic growth is the word of the day. You may have to wait a year or two or more for that to happen but that’s the nature of economic cycles. Thank you for sharing your thoughts.

  2. DH,
    You may be very happy someday with your CAT purchases. I’m still leery of cyclicals and having enough problems with EMR :-). Still CAT is something of a dividend machine and I can’t blame you for being attracted to it. The yield is very high on a historical basis. I continue to watch it in hopes that it will drop below $60. Might be a bit much to hope for, but we’ll see.

    I’ve been getting spanked bad on EMR. It has dropped further than I expected. I guess that’s the nature of investing though. I’m down about 22% and it has a 3.6% weight currently. My original intent was to give EMR a 5% max weight, so I’m seriously considering topping it off. The 4.3% yield is getting rather tempting.

    Yesterday, I made a small initial purchase of AMGN. My only healthcare holding was JNJ and I’ve been looking to spread that out a bit. Based on analyst forecasts and ratings, AMGN seems undervalued by a fair amount. Of course it is the wild world of biotech, so I’m not going to buy a boatload. There is potential for both significant dividend growth and capital gains, so our portfolio should benefit. Right now it has a little less than 2% NAV weight. If it drops another 10%, I may bump it up another point but I’ll stop at 3%.

    Looks like you are doing well for yourself. Happy investing to us both.

    Steve
    Dividend Gravy recently posted…August 2015 – Purchases & Income ProgressMy Profile

    • Hi DG,

      I feel very comfortable holding cyclical names in my portfolio. I guess you have to be OK knowing that these names will always go from boom to bust cycles but have faith in management and the business as a whole to hold through the tough times and add to your position when stock prices swoon. For it’s very long history, CAT has seen many, many tough economic climates and always seems to pull through fine especially with its dividend. That has to say a lot about the company. Same goes for EMR. As long as, at minimum, the dividend can be paid and, at best, increase on an annual basis I’m happy regardless of stock price. This is why we spread our investments over various companies in different sectors. I’d put odds in our long term favor that our portfolio will be just fine cranking out dividends like always. Stick to those aristocrats, diversify and don’t sweat the price swoons.

      I have started to see AMGN come up a little bit among our DGI community. My health holdings include, ABT, ABBV, BCR, BDX, JNJ, HYH, VTR, HCP and HCN. I still want to add much more to my JNJ and BDX but waiting for slightly better pricing/value. I really like the consumer staples, health and industrial names the most for my long term portfolios. Thank you for stopping by and commenting.

  3. I’ve added some CAT, planning on adding some more and EMR. I was hoping for the government shutdown. But Wall Street now says the chance is 8% after John Boehner steps down in 5 weeks, oh well!

    • Hi vivianne,

      It’s funny how we are kind of looking for “bad” news to impact stock prices negatively so we can buy more shares at better prices. Congrats on the CAT buy. I’m also looking at that name and may buy before September is over. We’ll see how next week begins. As always, I appreciate your comment.

  4. Keith,

    Great buy there. I also recently added to my Emerson stake as well down here in the mid-$40s. Very, very attractive right now, in my opinion. I think I’m going to hold now, but I’m very excited by the opportunity to cap that position off way down here with that monster yield. And almost 60 years of dividend raises?? It’s a no-brainer. 🙂

    Keep it up!

    Cheers.

    • Hi JF,

      No brainer is right. Clearly these cyclical industrial names are facing currency headwinds as well as slowdown in world growth. This is to be expected with all cyclical names and the dips are just better long term buying opportunities. No doubt, these yields are enticing many to nibble in the sector. I’m sure in several years we will be happy we added/initiated positions in these classic long term dividend payers. Thank you for stopping by and commenting.

    • Hi R2R,

      Gosh, I remember not too long ago seemingly every blog post was lamenting the lack of buying opportunities that existed and now a short while later we have so many awesome companies trading at such discounts during this uncertain economic climate. CAT, EMR and more at these yields look good to me. Meanwhile, I’ll get paid to wait as things will inevitably get better in the coming year or two or three even. Thank you for commenting.

    • Hi ARB,

      It’s really hard to argue with the price, value and yield of a dividend stalwart like EMR. Congrats on your buy too. The time to buy cyclicals like EMR and CAT is when times are tough and everyone else is selling. The dividends, for now, are very safe and things have to get a lot worse for a freeze or cut to occur. Thank you for commenting.

    • Hi IH,

      Thank you for the kind words. As I stated to ARB, “It’s really hard to argue with the price, value and yield of a dividend stalwart like EMR.” I think we always feel more comfortable buying stocks on the upside than the downside not realizing that sale prices always offer us better longer term yield. As always, I appreciate your comment.

  5. DH,
    Looks like a good choice there with EMR at these prices. A solid business and good payout ratio, this dividend should be safe and growing for years to come. Wish I could add to my CAT position at these levels, but I think I’m already topped out on that one.
    I really appreciate how open and honest this community is with their ideas. It makes it so much easier to single out a few good names to research and make some decisions with confidence going forward.
    Dividend Daydreamer

    • Hi DD,

      That’s one of the great things about being a dividend growth blogger. You get to read, share and exchange different investing ideas and themes with an online community and get feedback directly from other like minded investors. If market conditions pretty much stay the same I think I’ll be adding to my industrial names going forward. There’s little doubt that the best time to add to cyclical industrial names is during bust cycles and I’m still very confident that CAT, EMR and other names offer a safe yield. Thank you for stopping by and commenting.

  6. DH,
    There are so many good opportunities out there right now. I’ve seen EMR getting bought a bunch of places and I would do the same if I had the means right now. I hope this market keeps it up for a while so the deals can continue being extra sweet. I’ve been putting most of my money into Consumer Staples arena of late, but I really desire more financial and industrial stocks like the ones you mention.
    Keep it up!
    – Gremlin
    Dividend Gremlin recently posted…Loyal3 Buys, September 2015My Profile

    • Hi DG,

      If I had to guess I’d say that this market volatility is not going away any time soon. I think good buying opportunities will be around for a while so I wouldn’t fret too much about not having some cash today. I’m adding to my industrial names as of late like EMR and DOV as much better price, value and yield are being offered. Of course, I really want to add more to my consumer staples but still see the sector as overpriced relative to others. I tend to buy where the best values and yield lay. Thank you for stopping by and commenting.

  7. Keith!

    I love it. EMR was my last purchase and has been one of my favorite stocks recently. Strong dividend paying and growth track record and a leader in its industry. What’s not to love. Nice job adding some rock solid dividend income to your portfolio.

    Bert

    • Hi DD,

      The yields on some of these beaten down industrial names are too hard to ignore. For the foreseeable future the dividend of EMR is considered to be safe so I’m not concerned about adding to this beaten down stock. I still have a long term horizon of a couple decades before I consider tapping my dividends which is another reason why I like to add to these cyclical names on the downside. Thank you for commenting.

  8. Very good buys divhut! We still have our eye on EMR since our intial purchase, We shall hold off a little while to we get more funds haha, otherwise we would buy!

    Also CAT has our attention as well, although we are a little hesitant to pull the trigger on CAT due to its volatility at the moment, and due to the various other bargain buys out there.

    -dividendcouple

    • Hi DC,

      When considering most industrial stocks you have to expect volatility and boom and bust cycles as that is the very nature of a cyclical stock. The key is to have a longer term horizon measured in years to weather the stock price swoons along the way. My primary concern, of course, is dividend growth and as long as these industrial stalwarts, such as CAT and EMR can continue to pay out and raise dividends I am happy regardless of stock price. I’m sure more pain is ahead for many of the industrial names out there so no reason to rush into a buy. There are certainly a lot more bargains out there these days than just a few months ago when it seemed like energy was the only sector to offer us better prices, values and yields. Thank you for stopping by and commenting.

  9. DivHut,

    Love the purchases. EMR and CAT are both very attractive right now. I’m also trying to accumulate more of BRK-B. It doesn’t pay a dividend now, but it generates so much cash that it will have to eventually. I’d like to get as many shares as possible before that happens, preferably when it is down like the rest of the market.
    Scott recently posted…New Options StrategyMy Profile

    • Hi Scott,

      Looks like CAT and EMR are the names of the day. Seems like we may be seeing energy fatigue as most portfolios are swimming in oil and the question of dividend sustainability starts to come into play. My two favorite sectors are consumer staples and industrials and as long as dividend stalwarts like CAT, EMR, DOV, MMM and more continue to offer much better prices, value and yield, I’ll be a buyer. As always, I appreciate your comment.

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