Recent Stock Purchase – September 2014

Finding bargains in the market today has become an ever increasing challenge as the months have been rolling by and the market as a whole kept marching to all time highs as well. With that being said, I find that several stocks in the financial sector, despite being near or at all time highs, still present the best relative values when compared to many other S&P sectors such as consumer staples. Of course there are always exceptions within every sector.

 

In my recent post, “September Stock Considerations” I outlined my continued affinity towards the financial sector and my recent new investments in The Bank of Nova Scotia (BNS),The Toronto-Dominion Bank (TD) and Royal Bank of Canada (RY) along with additions to my current financial holdings in AFLAC Inc. (AFL), The Chubb Corporation (CB) and Wells Fargo & Company (WFC). I also noted in another post, “Dividend Portfolio Sector Allocation” how I was generally still light in the financial sector as it only accounted for about 10% of my taxable account and ROTH account and how I wished to increase my exposure there.

 

With that being said I added 17 shares at $60.58 for a total investment of $1,029.86 in AFLAC Inc. (AFL).

 

AFL is currently my largest holding in my portfolio and with three decades of dividend increases under its belt along with a decent yield of 2.50%, low payout ratio of 23.8% and low PE of just 9.39 relative to its 5 year average, I anticipate lots of room for future, generous dividend increases.

 

Other stocks that continue to be on my September consideration list are McDonald’s Corp. (MCD), General Electric Company (NYSE: GE), Kraft Foods Group, Inc. (NasdaqGS: KRFT) and potentially new holding me Unilever plc (UL). We’ll see how the rest of the month continues to play out.

 

What do you think about my recent stock purchase of AFL? Please let me know below.

 

Disclosure: Long TD, BNS, RY, AFL, CB, WFC, KRFT, MCD, GE

57 thoughts on “Recent Stock Purchase – September 2014

    • Hi R2R,

      I know AFL has been making the rounds among many of the dividend bloggers because it seems to offer a decent value relative to the market today and has a pretty decent yield with a great annual dividend growth rate too. As long as the fundamentals stay the same I expect we’ll be hearing about AFL from many of the dividend bloggers for a long time. Thank you for stopping by and commenting.

    • Hi MDP,

      Thank you for the encouraging words. Always nice to hear when others think along the same lines as you. MCD started to looking interesting today as well with its recent decline. I’m still waiting to pull the trigger on that one. Thank you for your comment.

  1. DivHut,

    Nice! AFL is one of my larger positions, and I’ve been a happy shareholder thus far.

    However, I do hope we get a larger dividend raise this year. We should hear the announcement by the end of next month, so I’m looking forward to something a little larger than what the last couple of raises were.

    Keep up the great work!

    Best wishes.
    Dividend Mantra recently posted…Income/Expenses For August 2014My Profile

    • Hi DM,

      AFL is my single largest holding and like you I have been happy with it over the years for many reasons. While I hope for a substantial raise this year I’ll take what I can get from this company. A raise is a raise and often times with many years of stellar dividend increases come less than stellar future increases as things always seem to revert to a mean. Still, AFL is a great company with a very long dividend history that should make us both happy for many years to come. Thanks for commenting.

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  3. DivHut,

    Excellent company to put that cash into, especially as your biggest position! I’m a big fan of AFL’s current valuation and have been loading up myself. I’m also likely to follow you into Chubb Corporation which is also presenting an attractive valuation. I’m pretty sure my very next purchase is going to be UTX, which I’m hoping to build along with GE.

    Congrats again and I hope you have a nice week!
    Ryan
    Ryan @ My Dividend Growth recently posted…Recent Buy: September 4th, 2014My Profile

    • Hi MDG,

      Thanks for the kind sentiments. I have been investing in AFL almost every month since around April. I know it is very popular among the dividend bloggers for many of the same reasons you mention, valuation. I also happen to like their excellent history of dividend growth too. Regarding your UTX choice it looks really good from a forward PE perspective. Seems a little above fair value at current levels but not far off. Thanks for sharing your investing thoughts.

    • Hi Tawcan,

      AFL is a solid long term grower and dividend payer. In the insurance space I own AFL and CB. That’s it. For me it’s enough exposure to the sector. As you know, I have added to my financial holdings as well via purchases in several new banks, TD, BNS and RY with shares added to my WFC holdings as well. You can see that AFL is a popular holding among many of the dividend bloggers too. There’s good reason for that. Thanks for commenting.

  4. Love AFL, it’s my 7th largest holding. MCD and KRFT are in the top 10, and I also own WFC, GE and UL. I’m still looking at the Canuck banks and may end up with positions in TD and/or RY.

    Good choices all IMO.

    • Hi KeithX,

      As I commented to others, clearly AFL is a very popular stock among the dividend bloggers and with good reason. It also seems to reflect larger positions in their portfolios as well. Every name you mention is rock solid as well. Quite frankly, I’d love to add to each of those positions too. Sometimes we have to make choices in our portfolios and just pull the trigger on something we like without worrying about getting the absolute “best price.” When investing for the long term, buying a stock for a $1 or $2 higher or lower won’t make a difference. Thanks for commenting and wonder where you’ll be investing for the month.

  5. Great purchase Divhut. I have been looking to initiate position in AFL for sometime now since I don’t have any exposure in the sector. I hold GE and MCD and both are great options. GE is the biggest in my portfolio. MCD has dropped quite a bit since I initiated a position and might add if it continues to go downwards.
    Dividend Growth Journey recently posted…New trading accountMy Profile

    • Hi DGJ,

      Every name you mention is a solid all around pick. Sure MCD has its troubles in recent weeks and GE has been very flat, in the mid $20s for a long time, but both present great values and future growth with very nice current yield. I would like to add more to my CB exposure as well as AFL and CB are my two exposures to the insurance sector. I’m sure you have seen AFL in many dividend growth portfolios across the web too. I think there is good reason for that. Thank you for stopping by and commenting.

      • Hi DD,

        I’m hoping for any decent increase for GE. The company seems to be headed in the right direction in recent years going back to its industrial roots after divesting a large chuck of its financial business, media and low margin home appliance units. Bottom line, I’ll take any increase GE throws my way. Thank you for stopping by.

  6. Hey! Cant go wrong with AFL right now, I purchased it last month! Whats not to like, low PE, low payout ratio, high dividend growth rate. I purchased MCD today coz it hit a 52week low, to me its a buying opportunity with a solid fundamentals! Take care!

    • Hi ogie dg,

      Your sentiments are the reason I added to my AFL position. MCD too, with its recent troubles looks like an attractive play especially with that nice current yield too. Thanks for sharing your thoughts and recent buy as well.

    • Hi LAH,

      I think AFL makes almost every one of the dividend bloggers fellow shareholders. I guess it kind of validates your reasoning when many others reach the same conclusions about AFL’s attractiveness. Thanks for commenting.

    • Hi RBD,

      I decided to pull the trigger on AFL when it got close to the $60 mark. Plus, minus from that level and I feel comfortable adding to my position. I understand your concern about the 2.50% current yield of AFL but you also have to take into account the amazing annualized dividend growth rate this stock has achieved along with an incredibly long dividend payment history. I think, too often, many dividend investors miss out on some amazing dividend payers because they screen out stocks that yield some arbitrary percentage. I appreciate your comment.

  7. Hi Divhut,

    AFL is a great buy. I recently bought some shares. I also recently added a lot to my MCD position. I’m a little Big Mac hungry I guess… It is now my largest holding and I’ll eventually have to rebalance my portfolio but at 91$ I believe MCD is pretty interesting.

    I also initiated a position in DE which is interesting at a p/e of 9 and a yield of 2.9% vs its 5 years averages.

    And I might add to my PM holding pretty soon…

    Keep going my friend
    Allan recently posted…Sold! 40% profit in 3 months!!! Thank you Mr Buffett!My Profile

    • Hi Allan,

      Thanks for sharing your recent dividend buys. I think you and many others are Big Mac hungry these days. Ever since MCD dropped from its highs of around $103 in mid summer along with their meat supply issues the stock has been becoming very popular among the dividend blogging community. The current yield of MCD definitely makes it look very compelling too. I know DE too has been popular as of late for the reasons you state. I went along with CAT many years ago and essentially never looked back. I may consider DE one day but only after I sell off a position or two from my portfolio. Thanks for stopping by.

  8. I’ve been reading several purchases of AFL from fellow bloggers recently. The numbers, as you presented, seem very attractive and seem to be a good point to enter into a holding. I’d really like to start a position in the financial sector soon, but I’m trying to build the positions I recently started to a good base level first before expanding. Thanks for sharing!

    • Hi AD,

      Like you, when I first started to build my dividend base I focused on the consumer staples and industrial sectors which is why they account for about 40% of my portfolio. Only in recent months did I begin to increase my exposure to the financial sector by way of additions to my AFL, CB and WFC holdings along with new holdings TD, BNS and RY. I am looking to further increase my financial sector exposure in the coming months unless some fundamental change occurs in that space. Thank you for commenting.

  9. I like Aflac. I added additional funds to my position a month or so ago after some weakness. I would personally like to add more when funds are available (depending on the rest of the market).

    Have you considered buying some exchange traded debt for AFL? I have considered AFSD (5.5% note), but just haven’t pulled the trigger yet.
    ILG recently posted…Is “follow your passion” good advice?My Profile

    • Hi ILG,

      I have never considered buying exchange traded debt for AFL nor any company for that matter. I am not familiar with that type of financial instrument and prefer to stick to purchasing regular dividend paying shares. I know some like to buy higher yielding preferred shares or warrants even but that is not for me at this time. Thanks for sharing your AFSD consideration. Curious to know if you’ll buy it in the end.

  10. I’ve been watching AFL for a while along with MCY; I’m pretty full in the financials right now with pickups in TD and some BDCs recently . I’m light in the Consumer staples sector and have been eyeing CLX as my next pickup.

    • Hi DH,

      Your portfolio, by your description, seems to be the opposite of mine. Currently my consumer staples and industrial sector holdings account for about 40% of my portfolio while my financial exposure is limited to about 10%. This is why I have been adding to many financial names in my portfolio such as AFL, CB, WFC, TD, BNS and RY in recent months. CLX is a great long term holding of mine and I plan to keep it for many more years. Their latest dividend increase was a bit of a disappointment though and they do have considerable debt but it is a company with many billion dollar brands that are consumed daily worldwide and future long term prospects look good. Thanks for stopping by.

      • Yea, I have a personal philosophical problem with a lot of the traditional consumer staples: MCD, KO, LO, WMT, PM, etc. So I ventured elsewhere in the short term before convincing myself of some solid pickups. I have had PG for 3 years, and in addition to CLX am looking at KMB to balance things out. Most of my current exposure comes though the various index tracking and regional funds I still have.

        I’m a recent convert to the DG model so rebuilding the portfolio will take some time, but I’m looking forward to it.

        • Hi DH,

          In time your portfolio will be fully converted to the DG model. I have been doing it since 2007 and have not looked back. In fact, I only buy dividend paying stocks. I know there are opinions out there that will say it is a bad strategy as I’m not investing in high growth or that rising interest rates may make dividend paying stocks less attractive but for the foreseeable future I have no plans to change my ways. I spent too many years “investing” and just spun my wheels. I feel happy with a solid, conservative portfolio that generates increasing cash year after year. Thanks for your reply.

    • Hi DW,

      The overall sentiment seems to be that AFL is a great buy at current levels. I know many like KRFT and UL too because they both offer a great current yield as well, though much less growth. That’s the trade off I guess. I appreciate your comment.

    • Hi DFG,

      AFL is not without risks as any stock you might buy, but it does have a very long dividend history and a very impressive annualized dividend growth rate as well. I’m sure you have seen it as a holding among many of the dividend bloggers. Thanks for commenting.

  11. Aflac is not a bad choice but not on my top list (in fact #40 for potential buying). Ratio C/B is too low. Ok, this may look weird but when something is too good to be true, then it is probably too good to be purchased. This very low ratio when combined with a dividend payout of 2.48% make it much more a capital gain choice than a dividend payer.

    Other negative point is the dividend growth for the last years that has been pretty conservative but the dividend coverage is great and there is room for dividend growth if the company decide to change their policy.
    hemgi recently posted…DÉVELOPPEMENT D’UN INDICE DE QUALITÉMy Profile

    • Hi hemgi,

      You bring up some valid points regarding an investment in AFL however, I do currently see it a both a capital appreciation and dividend stock as there is plenty of room for future dividend increases left based on current cash flow with room for the stock to go up as well. I’m curious to know how you screen for your stocks and how AFL made it to #40. Thank you for sharing your opinion.

      • My Quality Index is not really a screening index, it is based on deviation from the ideal stock:

        P/E=15, Dividend = 4.25%, Dividend coverage =250%, Estimated 2019 dividend growth of 40% and annual dividend growth for the last five years of 10%.

        So a company with a P/E of 10x and a dividend of 6% get penalized, same with any company that reduced their dividend during the last five year.

        My Quality Index is far from being perfect but the objective is to identified stock that will be able with a great confidence to deliver on a constant basis a return of 7.1% per year for the next five years, not selecting stock that can skyrocket.
        hemgi recently posted…DÉVELOPPEMENT D’UN INDICE DE QUALITÉMy Profile

        • Hi hemgi,

          Thanks for sharing your Quality Index formula. It’s basically looking for a total return and not just a dividend focus. I appreciate you stopping by again.

    • Hi HHaWG,

      If not already in your portfolio, you should really consider AFL. A very good relative value in the market today with a decent current yield and a very healthy annualized dividend growth rate. Just something to consider if you are looking for some financial exposure for your investments. Thanks for stopping by.

    • Hi Seraph,

      Like you, I have been a happy shareholder of AFL for some time and plan to keep it a lot longer. I think there is plenty of room for future dividend increases and as the stock hovers around $60 it looks a lot more compelling to invest in. Thank you for stopping by and commenting.

    • Hi EL,

      AFL has a high dividend growth rate along with a low payout ratio based on current cash flow which makes it very attractive going forward as future dividend increases are very likely. Another insurance company with a low payout ratio in my portfolio is CB. These companies may not have a high current yield but their dividend growth is above average. Thank you for commenting.

    • Hi ES,

      Determining best in class for any stock is very difficult as there are many components that make up the ultimate value of a stock and personally, what you find to be most important. Some people might think the most important component to make a best in class stock is one with great growth prospects. Others, such as myself, look at stocks from a dividend and income perspective to determine best in class in that manner. As far as insurance companies are concerned I have determined from a dividend/income/growth perspective that AFL and CB are best in class and are the only two insurance companies I own. There are other names in the sector to be sure, but I have found those two stocks to be great long term components in my portfolio. Thank you for stopping by.

    • Hi AFFJ,

      Happy to be a fellow shareholder with you and many other dividend bloggers as well in AFL. The most appealing thing to me about AFL is its great annualized dividend growth rate. I’m quite happy having held it for about seven years and plan to keep it for many more like you.

  12. DivHut,

    NICE! Getting the duck – I like it. Great dividend growth and the yield on cost will be amazing for you. I’ve bought it quite a few times and am always looking forward to October dividend increases – so get excited for that! It’s a great dividend aristocrat and will be for a long time coming. Congrats and enjoy the dividends.

    -Lanny
    Dividend Diplomats recently posted…Bert’s August Dividend SummaryMy Profile

    • Hi DD,

      Thank you for the sentiments regarding AFL. It is a definite solid player among the dividend aristocrats out there and has incredible dividend growth. I know it may not be the highest yielding of the bunch but, as you said, the yield on cost should be amazing if I continue to hold this one long term. Thank you for stopping by and commenting.

    • Hi AnhaInvesting,

      Glad you approve of my purchase of AFL. It is a great stock with lots of future growth and dividend potential I feel. Let’s hope for nice dividend increases in the future as well. Thank you for stopping by and commenting.

  13. How close are you with pulling the trigger on MCD . Do you have an entry point or are you just looking to buy on possible dips if the market turns? I go there every once in a while and I have the tea and a couple of side salads. The restaurants around here are somewhat run down and probably need a makeover soon. Any thoughts?

    DividendDreamer

    • Hi DD,

      Good question. MCD has run into troubles in the past and always seemed to bounce back. I remember about ten years ago MCD was trading in the low teens! Can you believe it? There were too many stores being opened and cannibalizing one another, the food was particularly terrible and suffered through many flops (McLean Deluxe anyone?) and the stores were filthy. New upper level management, a menu overhaul and fewer opened cleaner stores saw an incredible decade of growth from 2003 through 2014. And here we are all over again. For now, despite a great yield and low PE, I am on the sidelines with regard to MCD. Of course, a 5% drop from current levels will get me more interested. I am up about 25% on the stock currently and don’t feel the pressure to add to my position immediately. Let’s just say I’m not quite ready to pull the trigger on MCD just yet. Thanks for stopping by and commenting.

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