Recent Stock Purchase May 2016

With the month of May quickly coming to an end, I decided it was time to pull the trigger and make my minimal once a month buy. My buying has really slowed since the beginning of the year as the market rebounded quite nicely from the early 2016 lows making desirable dividend stalwarts we all know and love less compelling from a value and dividend yield standpoint. In fact, the total investment I have made during the last two months have only equaled $1,330. Not a high figure by any measure for a sixty day period. My last big buy was back in February when I picked up $2,362.28 in Archer-Daniels-Midland Company (ADM) at $32.36. Well, building on my small investments made in March and April I continued on the same path in May and:

 

I have added to my ROTH account 11.221 shares at $71.12 for a total investment of $798.00 in Caterpillar Inc. (CAT). With this recent purchase my ROTH account holdings in CAT now totals 63.1785 shares for a value of $4,553.91.

 

I also own 72.9243 shares of CAT in my taxable account.

 

With an attractive yield of over 4%, albeit with a slightly high payout ratio, I was able to average down my buy price in my ROTH account. Looking forward towards June, I’m really at a loss of where I’d like to deploy my fresh capital. I know that no matter where the market will be next month I will remain consistent and make at least one buy as I have been doing every month since 2007. I do not try and time the market by staying out of it rather I simply put the brakes on heavier investments when I do not see any clear direction for my fresh capital.

 

What do you think about my recent stock purchase? Have you been putting on the brakes with your new purchases in recent days and weeks because of a “more expensive” market or are you remaining consistent with your buys making purchases at least once a month? Please let me know below.

 

Disclosure: Long ADM, CAT

27 thoughts on “Recent Stock Purchase May 2016

  1. DH,
    I like equipment companies such as CAT or DE. Commodity and construction/mining industries have been punished of late, leading to the attractive prices in the sector. However, over the long term this should be just a hiccup and our patience should be rewarded.

    Enjoy that new income.
    – Gremlin
    Dividend Gremlin recently posted…Loyal3 Buys, May 2016My Profile

    • Hi DG,

      As you already know, the real great values are much harder to come by these days and with this recent buy I had the chance to average down on a long term holding I already like. Of course, earning a 4%+ yield doesn’t hurt either and hopefully with the U.S. economy starting to turn more positive we’ll see greater demand for industrial equipment and services. Thank you for stopping by and commenting.

    • Hi JC,

      No doubt the industrial machinery companies are all hurting a lot these days, though they have bounced quite a bit form their recent lows of a couple months ago. I like CAT very much long term and it has been in my portfolio since the beginning. One thing I’m not too crazy about is the relatively high payout ratio but for now the dividend still remains safe. As always, I appreciate your comment.

  2. Nice buys. I think it’s interesting that both Deere and CAT had very dour projects in their latest quarters. I am bullish on the agricultural space, although the leverage on Deere’s balance sheet is a concern. I can tell you, from our cross country trip, that I am seeing far more Case/IH and Agco farm equipment than I did in past years……and far fewer machines from Deere. I surmise that they have lost market share.

    -Bryan
    Income Surfer recently posted…Why We Are Glad We Didn’t Grow Up RichMy Profile

    • Hi IS,

      That’s an interesting point you bring about what you are actually seeing on the farms as you drive across the country. I have never shopped around for CAT or DE equipment but I wonder if those other names are significantly cheaper which is why you are seeing more Case/IH and Agco farm equipment. Sometimes people shop based on price and not necessarily long term quality. In the city I still see plenty of CAT equipment working on the roads, etc. Still, it’s something to consider. Thank you for sharing your insight.

    • Hi EL,

      Income Surfer brought up an interesting point as he is driving across the country and seeing less DE farm equipment in favor of Case/IH and Agco. Now that you mention it, I do see more Komatsu machinery as of late at construction sites. As I mentioned to Income Surfer, I wonder if CAT is the “name brand” heavy machinery company and therefore costs more to buy/lease than Komatsu and other brands. This recent buy allowed me to average down my cost in my ROTH account which was nice but I do agree with your comment about starting to watch my total CAT investment a bit as it is becoming one of my larger plays. I’m still comfortable with my ownership stake but will probably put the brakes on this name at these levels unless a major decline occurs. Thank you for stopping by and commenting.

    • Hi DFG,

      I really like CAT a lot long term and at these levels, at this yield and value as well. I agree with you that the one thing I do not like is the relatively high payout ratio but I think the dividend is still quite safe going forward. I don’t expect a high dividend increase but that’s OK as the stock is currently yielding well over 4%. The reality today is that finding really great value and yield is a lot more difficult. At least with this recent buy was able to average down my cost which was a factor in my decision to make this current buy. As always, I appreciate your comment.

    • Hi IH,

      I’m happy I added to my ADM when I did. It has really come up quite a bit within the last couple of months and I still like it a lot long term. I’m still not sure about my potential June buys as real value and yield is getting harder and harder to find. Thanks for sharing your TGT buy. I’m not much of a fan of any retail stock out there but I know TGT is quite popular among many of the dividend bloggers we follow. Thank you for commenting.

  3. Hi DH, I like the ADM buy. It is currently on my watch list.

    Although, I’ve come to a halt when it comes to buys and will be liquidating to hoard cash now.

    • Hi Jeff,

      Glad you like my recent buy. I can understand where you are coming from starting to hoard cash. I think you are not alone. While I’m not sitting on cash, I have slowed down my new buys significantly over the last three months or so as good value and yield are harder to come by. As always, I appreciate your comment.

  4. DH,

    Congratulations on the purchase, as you said – tough buying stocks now-adays. I did an analysis on UPS that seems intriguing – solid EPS, Solid P/E, payout ratio, yield, growth etc.. That has caught my interest. But I’ve been lucky it’s been tough – as being in two weddings in the same month was expensive! Looking forward to deploying capital in June, no doubt!

    -Lanny
    Dividend Diplomats recently posted…United Parcel Service (UPS) Stock AnalysisMy Profile

    • Hi DD,

      Wow, while weddings are certainly happy occasions worth celebrating, I can imagine being in two in one month can definitely throw a dent in any budget. Thanks for sharing that UPS analysis. While I’m not currently looking to add any new positions to my portfolio, it make come to that if stocks remain relatively overvalued going into June. We’ll see how next month progresses. I also have in the back of my head potentially investing in some of those “spin off” stocks too though in the past that has never been a reason to buy stock for me. The bottom line, I think we are all wishing for a little pullback like we experienced earlier this year and let the floodgates open on our cash reserves. Thank you for commenting.

  5. I like CAT, but I don’t know how I feel about it long-term. Competition seems to be crushing these manufacturing companies. I did pick up a couple shares when it was sub-$60, so I’ll just forget about those and let that dividend accumulate. 4% is still a pretty good yield though.

    • Hi James,

      I have held CAT for many years and plan to stick with it for the foreseeable future. However, my position between my taxable account and ROTH are getting to be on the large side relative to my other holdings and it may make sense to hold off buying more shares in this name until a significant drop occurs. In the meantime, I’ll be collecting that pretty nice yield which is still safe, for now. Thank you for stopping by and commenting.

  6. Hi DivHut,

    Both are great buys at these prices. I purchased some CAT when it crossed the 4% yield (about $76/share) and ADM when it crossed 3% (about $38/share) so I am a little envious of your prices. But we both are getting good cash flow from solid companies!
    Jon recently posted…Dividend Laddering SpreadsheetMy Profile

    • Hi Jon,

      Like you, I noticed the unusually high yield these names offered and decided to nibble on each. At one time CAT was around 5% not that long ago but anything north of 4% is a healthy yield for that stock. I’m still not too keen on the payout ratio for CAT but the dividend still appears to be safe at current levels. I’ll be happy as long as these holdings continue to pay every quarter like clockwork. Thank you for stopping by and commenting.

  7. Great buy DivHut! I am always watching CAT. However, their dips in stock price never seem to correlate with having capital available. I’ll own this stock one day though! The yield is attractive and it is the top company in the industry. It may be in a cyclical industry, but if you are holding it in the long term, the overall trend of the company will be upward!

    Nice buy, congrats on the great add!

    Bert
    Dividend Diplomats recently posted…Lanny’s May Dividend Income SummaryMy Profile

    • Hi DD,

      Maybe it’s time to have a little CAT fund on the side just for those moments when prices dip and yields become too juicy to ignore. As you already know, CAT is a highly cyclical name going from boom to bust cycles every few years but long term has really delivered. I’ll admit, even at these levels CAT isn’t the cheapest of stocks nor has the safest yield when compared to other names out there but I still felt safe nibbling here. As always, I appreciate your comment.

    • Hi TMB,

      I agree with you. While a juicy yield north of 4% is enticing, you must also make sure that it can continue to be paid. I mentioned that I was not too keen on that high payout ratio but for a small buy (nibble really) and the chance to average down my cost a bit in my ROTH I went for it. Thank you for sharing your thoughts.

    • Hi Dividendsdownunder,

      That’s the name of the game for now…. small, consistent buys. As long as I can add something each month I’ll be happy and wait till there are more buying opportunities. Thank you for stopping by and commenting.

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