Tuesday, November 26, 2013

This week's stock purchases - passing $6,000 of forward dividends

This week, I've been very active in the stock market. One move was driven by the worst fear for all dividend investors - a dividend cut - while the other moves were outright purchases of companies that don't look as expensive as the market.
A position I initiated late last year has cut the dividend twice since then. I let the first cut pass because of the recent memory of a special dividend the company paid. This latest cut was my last straw - and frankly, my read of the company's opportunity to benefit from continued expansion of our nation's oil and gas pipelines didn't materialize.

I sold my 500 shares of Friedman Industries (FRD) for about $9/share. With dividends, I lost about $0.20/share, or $100 total. Not too bad for a company that twice cut its dividend, all things considered. I used the proceeds to round out my Deere (DE) position to a clean 100 shares by adding 60 new shares.

I also added to my CSCO position by purchasing another 150 shares, bringing my total to 350. CSCO looks extremely cheap, has tons of cash, and increased their share buyback program to about 10% of market cap. I think tech stocks are very cheap here, and while risks may abound for consumer-facing companies, CSCO as a tech infrastructure player should be ok.

I bought 50 shares of Natural Resource Partners (NRP) as well. The yield is super (11%) and a strategist I respect began recommending the energy sector lately. Coal prices have been absolutely smashed this year, and I'm not convinced coal is dead. This company should benefit from that view.

Finally, I purchased 700 shares of Roundy's (RNDY), a regional grocer. With all of the Chicago-land Dominick's stores closing, a window of opportunity is opening. I've toyed with RNDY in the past and have even traded it a few times since it came public. It has been looking very attractive as a long-term hold lately, and with one of my favorite Seeking Alpha authors writing about it, I knew I was on the right track.

These trades will increase my forward annual dividends to above $6,000. Recall, I only surpassed $5,000 of dividends in August. $6,000 is a key marker because it means a clean $500 of cash per month that I don't need to work for. I'm really excited about reaching this key milestone.

No comments:

Post a Comment