Recent Stock Purchase November 2015

With the stock market marching ever higher in recent weeks finding great value and yield has, once again, become more challenging. Of course, challenging is a relative term as any long term investor knows we typically invest in a market of individual stocks rather than the stock market. With that being said, amazing value and yield can still be found in the energy sector, materials (commodities), certain financial stocks, such as any of the large Canadian banks and more recently the REITs. It seems that a strong jobs report is putting pressure on the Fed to, once again, talk about raising interest rates and as anyone knows, every time there is chatter about an interest rate increase, sensitive stocks, such as REITs bear the brunt of the “bad” news. So what does all this mean? It means we are presented a great opportunity to initiate or average down our costs on some solid long term REITs sporting sustainable and growing distributions. With that being said, let’s review my recent stock purchases in November.

 

Sticking to my November stock considerations I have added to my IRA account 15.9068 shares at $50.29 for a total investment of $800 in Ventas, Inc. (VTR). With this recent purchase my IRA account holdings in VTR now totals 43.6709 shares for a value of $2,190.10. With VTR currently yielding 5.82% it becomes difficult to ignore.

 

I have added to my IRA account 13.3848 shares at $59.77 for a total investment of $800 in Welltower Inc. (HCN). With this recent purchase my IRA account holdings in HCN now totals 39.6117 shares for a value of $2,352.93. Like VTR, HCN is currently sporting a very generous distribution of 5.56%.

 

I continue to believe that interest rate hike chatter will continue to hammer all REITs and not just in the health sector. The next month and a half or so may be a great time to continually nibble on this sector as lower prices, better value and higher yield will present itself in earnest.

 

What do you think about my recent stock purchase in the health REIT sector? What are you buying or planning to buy this month? Please let me know below.

 

Disclosure: Long VTR, HCN

37 thoughts on “Recent Stock Purchase November 2015

  1. The REITs got hammered after that jobs report but that’s good news for long term investors because they were getting to be expensive. I have way more ideas than capital right now which is a shame. I really want to add to my HC REITs and if O and WPC can dip a bit more I’d like to add to those too. I’d like to nibble a bit on them at these levels and hope to add more on the interest rate hike. Solid purchases DH!
    JC @ Passive-Income-Pursuit recently posted…The Coca-Cola Company Is Priced For Near Double Digit ReturnsMy Profile

    • Hi JC,

      Too often we have more investing ideas than capital but I guess as long as we continually deploy something we are headed in the right direction. I have a feeling we’ll be reading about a lot more REIT buys in the coming days and weeks if rate hike fears persist. As you said, it’s a pleasant occurrence as many of the REITs were becoming a bit too expensive to warrant an investment but after falling so much recently we are given much better buying opportunities. Thank you for stopping by and commenting.

  2. Keith,
    I really like VTR and HCN, but added to O and started a position in HCP since I already had full positions in VTR and HCN. I used cash sitting on the sidelines to make the purchases and bring REITs up to 9% of our portfolio. Other than O, all of the REITs are in the healthcare business.
    Best wishes,
    KeithX
    Long HCN, HCP, O, OHI, VTR

    • Hi KeithX,

      Nice to read about a fellow investor in so many different health REITs. Of all the REITs, the health sector is my favorite with an eye towards apartments such as AVB. If conditions remain the same in the next week or so, I’ll most like be adding to my HCP as well. I still don’t have a target for REIT allotment in my portfolio. For me 9% seems a bit high for my taste but I guess if it’s diversified among several “blue chip” REITs any potential disaster in a particular name is mitigated by the other holdings. Nice pick up on O by the way. What’s your take between O and WPC? As always, thank you for commenting.

      • My wife and I owned WPC, but sold it recently. WPC is diversifying in Europe (maybe other areas) and I wasn’t comfortable with the direction the company was going. O, on the other hand, is the gold standard of REITs IMO. You might look at the direction WPC is going and come to a completely different conclusion than I did. But selling WPC allowed us to double our stake in O, and we are more comfortable with that even if the dividend yield is slightly lower.

        I think 10% would be the maximum exposure to REITs that I would be comfortable with. My wife and I had a long conversation shortly after I retired regarding buying rental property. We concluded that REITs offer an attractive alternative, so we consider them to be an investment in real estate as much as an investment in stocks. Our decision was based on getting an immediate 5 to 7% return on investment without all the hassles of direct ownership.

        • Hi KeithX,

          Thank you for giving me your take on WPC and O. I happen to agree with you that O does seem to be the gold standard among retail REITs and it seems to be in almost all DGI portfolios that I have seen. I can understand your reasoning for wanting to focus more on the U.S. market with O and the bottom line always comes down to your comfort level with owning any stock/investment.

          I like how you and your wife look at REITs. It’s a real proxy for owning real estate without any of the hassle and does have the element of being both a stock and a real estate investment. REITs, for me, are still a very new investment owning them for less than a year considering almost all my other holdings are over eight years old. I think if I diversify adequately among the REITs I may feel more comfortable making them a larger portion of my overall portfolio. Thank you for the reply.

  3. Great timing on the buys, DivHut. Like the other commenters – I am also nibbling around the edges of the pie and averaging down on positions I’ve held for quite a while, or initiating new one’s, like with VTR. You’re so right, in that the yields cannot be ignored and that yes, panic sellers will create even more buying opportunities for us. I expect REIT’s and UTE’s to get slammed harder than ever when the rate hike decision is actually made, simply because of the number of day traders and shorts piling in. No worries, here. I sold out of most CEF’s and BDC’s earlier in the year to build dry powder piles for just these types of buying opportunities.

    My REIT’s: O, HCP, HCN, STAG, OHI, WPC, and VTR

    Happy Investing!
    Dividends @ Affinity4investing.com recently posted…DGI Portfolio Update – 11-10-15My Profile

    • Hi A4i,

      Any time there is some irrational fear in the market as a whole or a market segment as with the REITs and interest rate hike fears it makes sense to jump in and buy up at better prices, values and yields. I think we are not done seeing the blood run in this sector and as you mentioned the utilities. We have quite a few more weeks of Fed speculation which is a lot of time for panic sellers to drive prices even lower. You have a nice list of REITs there each offering very attractive yield and solid dividend histories as well. For now, my focus will remain among the health REITs but I do have an eye on other REIT segments as well such as AVB. Thank you for stopping by and sharing your thoughts.

    • Hi FV,

      Sitting on the sidelines regarding the REITs is definitely an option as no one really knows what the Fed will ultimately do. Of course, simply mentioning an interest rate hike is enough to make the market tumble and as of late the chatter has really affected the REITs quite hard. As always, I appreciate your comment.

    • Hi R2R,

      No need to fret over a few dollars more on VTR. Wait, watch and I’m sure you’ll have another opportunity to average down on that position in time. I have a feeling we have not seen the end of the bloodbath among the REITs. Thank you for commenting.

  4. DivHut,
    REITs in general look very juicy (at least the healthcare oriented ones do). They are a nice way to get a slice of real estate and healthcare in one shot. I’ve contemplated added one of HCN, VTR, HCP, or OHI to my Roth early next year. I like their history, love the yield, and think they are very reasonably priced.
    – Gremlin
    Dividend Gremlin recently posted…October Review / November Preview 2015My Profile

    • Hi DG,

      You mention all the reasons I like the health REITs too. With the recent downturn in the sector the better prices, value and yield are becoming too hard to ignore. Each of the health REITs you mention seem to be good long term bets and I wonder how much lower this sector can go once interest rates ultimately do rise. Of course, I think any move down will be a knee jerk reaction which will just give us better buying opportunities in some solid companies. Thank you for stopping by and commenting.

    • Hi ARB,

      Thank you for those encouraging words regarding my recent buys. REITs are still a relatively new investment for me as I have focused exclusively on “standard” stocks as opposed to REITs, BDCs and MLPs. Not that I’m against any of those types of investments, I just did not feel comfortable buying into them while my portfolio size was much smaller. Of all the REITs my favorite sector is the health followed by apartments such as AVB for example. I welcome the interest rate hike fears in this space as we are given a chance to buy into some great, high quality, long term businesses at much better prices. Thank you for commenting.

  5. Nice purchases DH! I like both VTR and HCN. Due to fed rate tantrum in near time, I fully expect more volatility in REITs and generally in others as well. But, it is a good idea to keep buying in both up and down market as no one has a crystal ball to predict an absolute low. I bought many energy stocks last several months and now, its turn of REITs and hREITs are in excellent space to be in. Keep racing!
    Race2Retirement recently posted…Crossed Finish Line to $100K Milestone!My Profile

    • Hi R2R,

      As I have been commenting elsewhere, no need to fear an interest rate hike. The truth is that all the big health REITs existed during a time when interest rates were much higher and somehow made their business plan work. I agree that we should be seeing quite a bit more buying opportunities in the REITs and utilities too as many panic sell because of the Fed. Thank you for stopping by and commenting.

    • Hi DH,

      Looks like we’ll be getting our Xmas presents early this year with all this interest rate hike chatter. No doubt, many are panic selling, fearing a less than certain rate hike going into the end of this year. Others sell, we buy, especially when it’s in a solid long term sector with a massive tailwind. Nice to know a fellow shareholder. Thank you for your comment.

  6. Good timing on your pickups with the price dip. I am slightly concerned about a rate hike going forward, but I think the REITS look attractive right now. Thanks for your insight, I value your opinion.

    • Hi LBC,

      No need to fear an interest rate hike. The market often behaves in very irrational terms. Just think about what has been happening. As of today, the very notion of a rate hike is just speculation. The truth is no one knows what will happen in December and by how much. Yet, just because there may be a rate hike, REITs, utilities and the like have been hammered. What has changed? Nothing! But panic selling has gripped those sectors because there may be a rate hike in December. Has any of these REIT businesses fundamentally changed? Do the health REITs still have a strong demographic tailwind for the next two or three decades as the population grays? It’s about buying when others are selling and that’s what I have done. As always, I appreciate your comment.

  7. DivHut,

    There has been a lot of good discussion on REITs here, but do you have any thoughts on indexed REITs such as Vanguard’s REIT Index Fund (VNQ)? They seem give a good return and have experienced some good growth over the past few years. As a novice investor, I am more inclined to put my money in something like VNQ because I am not sure I am competent enough to distinguish between different REITs. Any thoughts?

    Jim

    • Hi ST,

      In general, I favor investing in individual stocks rather than ETFs. This is evident by my portfolio holdings. Of course, there is nothing wrong with many ETFs and it really comes down to individual risk tolerances one has to investing. Personally, I prefer to select individual stocks and create my own, albeit smaller, fund of sorts buying multiple names in a specific sector I like. Typically, the yield is higher investing in this manner and though less diversified does offer a greater chance for better total returns. When you think about it, REIT ETFs like VNQ, RWR and IYR, for example, typically hold about one third of their holdings in just 10 stocks. So while they may be diversified among many, many different stocks, VNQ has a total of 145 holdings, a large chunk of those assets reside among just 10 stocks. How diversified is that? REITs are relatively new investments for me holding them for less than one year as opposed to about eight years for my other stocks. Among the REITs, my favorite sector is health. Among that sector I have diversified among the big three health REITs, HCP, HCN and VTR. CCP was a spin off from VTR. I may, one day, add other REITs to my IRA account. I like apartment REITs as well such as AVB but for now my focus will be on the health sector. I hope this response gives you a little more insight about my take on ETFs and individual REIT names. Thank you for commenting.

    • Hi SD,

      Thank you for your kind words. I fully agree that interest rate hike chatter/fears are way overblown and what we are witnessing is simply knee jerk reactions from many investors who are selling among this panic. Of course, we all know, that the demographic trends favor the health REITs and the best time to buy is when others are selling. Senior care, hospitals, medical office buildings, rehab facilities and the like will be needed for the foreseeable future. Why not add to existing positions at better prices, value and yield.

    • Hi Charlie,

      I fully agree with your statement. The market often behaves in a very irrational manner and overreaction seems to be the trend especially in recent years. I just see this fear/volatility as an opportunity to buy some solid companies at much better prices and yield. Thank you for your comment.

  8. Nice purchase and an impressive yield. At the moment Australian banks are yielding in excess of 6%. They also carry a lot of risk. REITS with low debt levels are generally safe.

    • Hi Sam,

      Typically, the higher the yield the higher the risk associated with a stock but with these large health REITs the higher yield is a direct result of falling share price because of interest rate hike fears rather than a fundamental change in any of their businesses. Of course, I’m comfortable spreading my investments within the sector. The bottom line for me is a safe and sustainable dividend/distribution. Thank you for sharing your thoughts.

    • Hi DD,

      For now, the REITs seem to be offering us the best value and yield because of interest rate hike fears. I wanted to add to my industrial names but they came back fairly strong in recent weeks and those large health REIT yields and long term business prospects remain very sound. Thank you for stopping by and commenting.

  9. DIVHUT,
    Those were nice pickups with the market being on “SALE” this week. I was about to pick up BP stock yesterday, but I didn’t quite pull the trigger. I agree with Race2Retire, I may wait until December and see if the market is down some more before making my next purchase. Anyway, those are nice purchases that will reward you well in the coming years. Keep it up and stay in touch my friend.
    LOMD
    Liveoffmydividends recently posted…New Purchase: Main Street Capital CorporationMy Profile

    • Hi LOMD,

      When the market has a sale it’s time to buy. Of course, we always wonder about how long and steep the sale may become but sometimes you just have to dive in and take a bite of a stock especially when the price, value and yield are looking a lot more attractive. I kind of expect more volatility till the end of the year as everyone speculates about a Fed interest rate hike. It’s funny how just talk about a rate hike impacts stocks so severely. The way things are going it looks like you’ll have plenty of opportunity to buy into energy names, REITs, maybe industrial names once again and more in the future. The large Canadian banks are still pretty depressed for the foreseeable future. Thank you for stopping by and commenting.

  10. I like them both, my portfolio is only yielding 2%. I’m looking to add some high yielders pretty soon to balance things out. The next coming months would be an awesome opportunity for energy and REITs as I’m easing off my Financial sector buys which currently making up >50% of my porfolio.

    • Hi vivianne,

      Remember, it’s not only about how much your portfolio currently yields, rather how much it currently yields and how much dividend growth it offers. I think you will have a lot of time to buy into the energy space as it seems oil will be depressed for a while longer and energy companies will be suffering for it. Same with the REITs as everyone is fearing an interest rate hike and thus giving us better buying opportunities in that sector as well. Thank you for commenting.

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