Friday, March 1, 2013

New Buys: $9k of Net Additions this Month!

As part of my goal of achieving $5,000 of dividends this year, I need to continue to put fresh capital to work into owning high quality companies. I have been sitting on a pretty large amount of cash for a while, waiting on a market pullback. With payday being yesterday, I decided to put a bit of cash to work. I still expect a correction in the near-term - and have plenty of dry powder - but don't want to get burned if the market takes off.
I added to my existing position in Friedman Industries (FRD). I should have bought more shares on my initial purchase, but am now comfortable to add exposure. The company makes steel pipe. With the massive infrastructure buildout for natural gas, oil, and water, industry fundamentals remain robust. Friedman has a hefty 4.78% yield. I purchased 250 shares at 10.90 for a total of $2,725. This purchase will add $150 to my annual dividend income.

I bought 25 shares of Dr. Pepper Snapple (DPS) earlier this month for $43.50 or a total of $1,087.50. I like the fundamentals of the beverage industry and believe DPS is cheaper than KO and PEP. The fairly small purchase is meant to be a foothold for a position I hope to add to in the future. This position will add $38 to my annual dividend income.

Finally, I bought 150 more shares of Just Energy (JE) for $7.30 or $1,095. The company recently right-sized their dividend from $0.10/month to $0.07/month. Analysts have been expecting a cut for a while now, so the downward price movement is overdone (in my opinion). The new JE shares will add $126 to my annual dividend income, just slightly increasing my total expected income from this position following the dividend cut.

Somehow I managed to put over $9,000 to work this month between my prior purchases and this week's purchases. This is definitely an anomaly. Most months will not see purchases of this size. I'm still sitting on a large amount of cash and will be ready to deploy it if we get a market correction.

7 comments:

  1. I just ran across your site. Congrats on adding 9k in a month. That will definitely get you closer to your 5k goal.

    I will have to take a look at FRD. Since you like FRD, what do you think about US Steel (X)? Their stock seems pretty depressed right now.

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    1. Thanks for the comment. Yes, adding $9k this month will help me get closer to my dividend goal - though I fear I'll end up falling a bit short.

      Friedman is a pretty cool little company. I think they may get taken out in the next few years because the founding family recently gave up managing day-to-day operations of the company, a first step towards selling out.

      I've always been a fan of US Steel. With the low cost of energy in N. America relative to the rest of the world, the continued buildout of our infrastructure, and a manufacturing renaissance, I'm bulled up on everything industrial and domestic. Making steel is very energy intensive, which fits perfectly into our continent's new energy cost advantage. I can't speak to US Steel's valuation, but the fundamental are in their favor.

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  2. Hrmm...I'll be looking into FRD more. That's a nice yield and I totally agree with their prospects due to the energy sector expansion and necessary improvements in our water/sanitary/storm sewer systems. It reminds me of the ASCE documentary "The Crumbling of America", at least if I recall that's the name of it. Our infrastructure is so far behind right now because the proper maintenance/replacements were never done. It's amazing how bad of share our roads/bridges are in due to the government using the gas tax that's supposed to pay for the fixes being used elsewhere. Of course that's steady as she goes for our government.

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    1. Yeah, the rebuilding of America will definitely create opportunities for companies to grow and make shareholders money. Let me know if you find something sinister with FRD.

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  3. FRD looks interesting, definitely a small-cap value play. I'll have to add it to the watch list.

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    1. If you end up doing some research on it, I'd be very interested in another viewpoint on the company.

      As an aside, how many companies do you typically have on your watch list?

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    2. It varies. I add companies that I think are interesting and follow them over time. If a company doesn't continue to spark my interest after a few weeks, I remove it. It's usually in the 20-50 range.

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