Wednesday, May 21, 2014
New Purchase - SBSI
The plan for May was to do four weekly purchases, plus one extra purchase in order to use up free trades before they expire. As you can see I chose Southside Bancshares for the planned extra purchase. SBSI was actually the first purchase I made after starting this silly little blog back in January 2012. That's roughly two and a half years ago! Well, I've been very pleased with this company to say the least. SBSI offers a nice yield, dividend growth, special dividends, and even yearly stock splits. It has been a truly exceptional dividend growth stock.
The big news right now is that SBSI is in the process of acquiring a smaller Texas bank. I honestly don't know enough about the banking industry to say it's a steal, but I did read some positive articles about it and checked out some presentations as well. I more or less have to trust Southside's management here, and that's fine. They are the experts. I'm not. Anyways the OmniAmerican M&A is supposed to bring growth and cost savings which might translate into higher dividend checks down the road.
SBSI now has a 1.34% weight (by income) for me. I wouldn't mind grabbing even more shares here since it's weighted so low and is trading about 15% below my calculated fair value.
Core Position: No
Speculative Position: No
Expectations: Steady income; 7% (average) annual dividend growth
Automatic Sell: Dividend cut, frozen dividend
Consider Selling: Business fundamentally changes, management becomes untrustworthy, fundamentals deteriorate, wildly over valued stock price, or position fails to meet expectations