Being a dividend growth investor I try to always focus on stocks that have a history of rising dividends and make my stock purchases accordingly while at the same time make consistent investments on a monthly basis. Of course, this is easier said than done in today’s market environment where PE’s and other traditional metrics used to value stocks are at or near all time highs. Sometimes, a month or two may pass without any new investments. Over time, this may limit your yearly dividend income as you forfeit compounding time that would naturally raise your dividend income on an annual basis. That being said let’s review my recent trades made in my taxable brokerage account.
First, we have Johnson Controls Inc. (JCI), a consumer goods manufacturer that operates in three distinct business sectors (Building Efficiency, Automotive Experience and Power Solutions). JCI’s building efficiency unit designs, produces, markets, and installs integrated heating, ventilating, and air conditioning systems (HVAC). It’s automotive experience division designs and manufactures interior products and systems for passenger cars and light trucks. If you ever sat in a vehicle, chances are you saw and used a JCI dashboard. Finally, the power solutions segment produces lead-acid automotive batteries and lithium-ion battery technologies for hybrid and electric vehicles. Think all the hype about Tesla’s new battery facility being built. With that being said, JCI is a very good candidate for creating a stock spin off of any one of its divisions.
JCI has a long history of dividend payments going back about 30 years. JCI’s payout ratio is extremely low by any measure at 28.0% which can ensure a dividend payment and even a raise in coming months. Though not a traditional annual dividend grower it does offer a consistent yield now at 2.00%. The PE is a little rich these days at 22.35 but I was light in this sector at only 2.63% of my portfolio and was looking to boost my interest in this space.
Next, I increased my General Mills, Inc. (GIS) holdings in my portfolio. GIS doesn’t really need an introduction as I’m sure everyone has been a consumer of at least some of their many products. GIS has been a long time favorite of mine through thick and thin offering a very generous 3.03% yield and modest payout ratio of 57.1% and with a PE of 19.84 it’s a “relative bargain” in these markets. GIS also has a long history of paying dividends and about a decade of growing dividends. As you can see from my portfolio I do favor consumer staples a lot which is why I added to my GIS position.
Finally, I increased my position in AFLAC Inc. (AFL) this month. AFL is another name that everyone should be familiar with as it is one of the better known supplemental health and life insurance companies out there. AFL is another longtime holding of mine that sports a low PE of 9.74 with a yield of 2.30%. I am generally light in the financial sector within my portfolio, only accounting for 7.42%, and was looking to increase my exposure in that sector. AFL has a very long history of raising dividends going back several decades and with a low payout ratio of only 23.7% one can expect future divided raises from this company.
What do you think of my recent buys for the month of May? Do you have any of these holdings in your portfolio?
Disclosure: Long JCI, GIS, AFL
23 thoughts on “Recent Stock Purchase – May 2014”
I like the buys here. I’ve never looked at JCI before. I’ll have to take a peek.
I’m a big fan of AFL at today’s prices. I’m already fully allocated to the insurer, but wouldn’t mind more if the time was right and capital was available.
Great job staying consistent and keeping the snowball rolling. 🙂
Thank you for stopping by! JCI is worth looking at, though maybe not at these levels to initiate a position. It’s got a very long history of tremendous growth (capital appreciation and long dividend history) and offers products and services that are always in demand. I’m trying to invest every month to keep that snowball growing and rolling, though some months it becomes very difficult to find a value purchase. AFL has been that value purchase for this month. Good luck in MI!
Great purchases, DivHut.
Last time I checked JCI was a bit too expensive for my taste. I’ll have to take a look at it again.
I agree with you regarding JCI. It has been a very long time since I added shares. JCI is a great company but I would not initiate a position at these levels. I have been a longtime shareholder and was very light in that sector which is why I added some this week. Thanks for commenting.
I’m also a big fan of AFL and have been adding to my position regularly.
AFL has been a longtime holding for me and I wanted to add more to my financial sector. It has been a long time since I added to that position. I was also considering Chubb (CB) another great long term dividend play in the insurance sector. Thanks for stopping by!
Just added to AFL myself, so I can only agree with you on that one. Never looked at JCI before, but added it to my watchlist thanks!
AFL seems right even in these markets. Plus as a dividend growth investor they have averaged an annual 16% raise for about the last 10 years. That’s real dividend growth. For JCI, read my comment I left to R2R. Thanks for stopping by.
Nice buys DivHut. I am looking to add Aflac very soon. I have a large holding of General Mills, but you’re right that the valuation is stretched.
Thanks for stopping by. AFL seems to be a favorite of many here in the blogging community. I guess in this market it still holds some decent value, great cash flow and an amazing history of dividend growth which is my way to play. I always go for dividend growth rather than current yield.
AFL is on my watchlist as are a few other financial companies. That is one sector I am very light in. I like GIS and started a position around the current prices.
JCI is one I will need to look into, it has fallen through my screening process due to the yield being lower that 2.5.
Keep up the compounding
Always nice to hear from you. AFL seems to be the one stock many bloggers like these days. I think it’s because the valuation is a “relative bargain” in these markets and the dividend growth has been amazing for the past 10+ years with double digit raises on an annual basis. As I mentioned, JCI is a longtime holding of mine and while I like it a lot I would not start a position at these high valuations. Just something to keep on the radar. I added because I was light in this sector.
I like the growth potential in your purchases. Out of curiosity, what brokerage do you use to hold your accounts? I wonder how you keep costs down while purchasing low dollar amounts in 3 different companies. If you have covered this in a post, I apologize.
Great questions about my low dollar purchases. The stocks (brokerage and ROTH) are done via ShareBuilder. I usually make my monthly purchases with automatic trades which are $4 per trade. I like to keep my costs at or below one percent which means a $400 minimum investment in any particular stock. Now for the fun stuff. A lot of my recent trades have been made for free with coupon codes. Simply search the phrase “sharebuilder coupon code” and a list of sites will come up with codes you can enter into your Sharebuilder account for free automatic trades or free real time trades. Thank you for stopping by.
I haven’t looked at JCI in a while so I’ll take another look. I’ll never buy another insurance company after the TWGP debacle. I do like GIS, however, and need to increase my position soon since it’s a lower weight than I’d like. Thanks for sharing.
JCI is one of those stocks that isn’t really talked about on these blogs. I have a few others like GWW and BMS which are great dividend growers and have long histories of dividend payments that also don’t seem to get much love. Not sure why. My main reason for adding to JCI is the same reason you are looking to add to GIS. Thank you for commenting.
Nice purchases! Been monitoring GIS myself and do have a position with AFL and their YTD (as of the date I’m writing this) is down ~8%, becoming more and more attractive. In fact, I am doing my research analysis today, and may end up buying more here in the coming weeks. Nice work and keep at it, those dividends will begin to steam roll!
-Lanny, one of the dividend diplomats
Thanks for noticing my recent purchases. AFL seems to get a lot of love from the blog community. I guess it’s because it is so hard to find any real value in most stocks that trade these days. GIS an AFL have been longtime holdings for me and I was just looking to add more shares to my current holdings. Believe me, it is very difficult in deciding what to buy these days.
I have Johnson Controls. I tried to Pin this to my Investing Tips board in Pinterest but I can’t because there is no picture (I guess)
JCI is a great long term investment, though a little pricey at today’s levels it has been with me for about 7 years now. The dividend blogging community doesn’t seem to give it much love, not really sure why. Too bad about Pinterest. I appreciate you wanting to “pin” the story. Maybe do a pingback from your site 🙂 ? There is just too much “social” noise online these days. First, you have to worry about your own site, then work on FB, Twitter, SeekingAlpha, Pinterest, comments, Tumblr, etc. You get the idea. Thanks for visiting. I appreciate it.