Monday, April 7, 2014

Weekly Purchase - ABT & GE

5 shares ABT, 2.29% yield, $4.40 annual income
8 shares GE, 3.40% yield, $7.04

1 shares GE, 3.39% yield, $.88 annual income (FRIP purchase from last week)

I added shares to two existing positions today.  Even though the yield is kind of low, I'm a big fan of Abbott Laboratories.  It has a very reasonable 15.5 forward p/e, excellent growth prospects, plenty of room for future dividend raises, and will help shore up allocations in the healthcare sector.  Abbott has been paying & increasing dividend payments for many decades (40+ years excluding the Abbvie spinoff last year).  At this point dividend increases are ingrained in Abbott's culture, and that's the sort of mentality which will serve patient investors well in the years ahead.  It's a company in the same vein as say PG, JNJ, PEP, EMR, and other high quality businesses where yearly dividend growth is almost automatic.  That's how I see it anyways...

General Electric Company was the other buy for reasons I wrote about last week.

Well I still have four planned purchases left for April.  One of those buys will be in my ROTH where I don't have access to free trades.  I must buy larger quantities in that account to make up for the fees/commissions.  Have to hope stock prices continue to slide.

I have many free trades available and did not pay commissions today.  I plan to continue small weekly purchases until my supply of free trades run out (July).

Symbol: ABT
Core Position: No*
Speculative Position:
Steady income; 7% (average) annual dividend growth
Automatic Sell: Dividend cut
Consider Selling: 
Frozen dividend, business fundamentally changes, management becomes untrustworthy, fundamentals deteriorate, wildly over valued stock price, or position fails to meet expectations

*ABT will be designated as a core holding if/when I expand the list.  Core stocks are select holdings that I deem to be the highest quality (it's subjective).  They will be sold last in the event of a forced portfolio liquidation.


  1. I think ABT may be back on track with their dividend payout. I like them just a little bit lower though. Given P/E IS above 20.

    1. I agree that ABT is back on track with dividends. Last year's 57% boost telegraphed the company's intentions imo. No way can they maintain a pace that high, but I think 5-10% is a reasonable expectation.

      Personally, I no longer pay attention to the ttm p/e. So yeah 20+ ttm p/e seems high, but it includes all kinds of one time charges that won't affect the business moving forward. Forward p/e isn't perfect because it takes into account analyst's expectations. I do find it more useful than past (tainted) results.

      Have a good one!

  2. Great companies, jealous you can take advantage of the free trades. Do you usually buy in lots of $500, $1000, or greater to make up for the commissions? I'm starting to build the nest egg up now, and a $8 hit on $500 doesn't seem like much, but certainly adds up.

    1. Hey Rob!

      Normally I buy in chunks of $1250 or higher. I happened to get a bunch of free trades so it made sense to start buying weekly. I'd be comfortable buying in lots of $1000 if I didn't have free trades though. I guess it depends on what kind of commissions we're talking about. I pay $7.95 with fidelity and $7.00 at scottrade.

  3. Both are great although I need to check up on ABT a bit more. For some reason I don't really follow them much, not really sure why. I bought some GE recently as well and think it's a pretty good spot around current prices. Looking forward to your planned purchases to see what's on your radar. I've got a few that I might buy even though the price isn't the greatest right right now. I still try and make at least one or two purchases each month to avoid building up a huge cash position. BTW jealous of those free trades.

    1. ABT doesn't seem to have the same appeal it had a few years ago. To me it's even better these days (except for the yield) because I don't have to worry about Humira blowing up when it loses patent protection in 2016. Well I'm hoping to acquire more GE and BP this month. I don't know other than that!