Tuesday, May 27, 2014
Weekly Purchase - GE
My final May purchase is General Electric. I continue to think GE is a half way decent buy at current levels. No, it's not a steal but it does trade at a most reasonable 14.5 times forward earnings. I think shares of the business are worth about $27.50 so perhaps I got in with a small margin of safety this week? Again these are not bargain prices in my opinion, but I don't think I'm paying a premium either.
At any rate GE comes with a juicy yield over 3% which should grow faster than inflation. My objective as an income investor is to replace employment income with investment income. Nothing more. Nothing less. While I always wish the stock market would go down, I can and will achieve my goals even if Mr. Market won't cooperate. These GE shares are certainly valuable towards building passive income and a passive income stream is what I'm about!
General Electric is now weighted .76% (by income) for me and I'd ultimately like to for it to be weighted around 1.5% to 2.0%.
OHI is the only stock I DRIP simply because it offers a dividend reinvestment discount. I actually received a dividend of $52.97 from the company, but a 1% discount was applied so $53.50 worth of new shares were credited to my account. Well that's nice and all (love me some discounts), but I think I'll have to stop DRIPing Omega. It has a 3.57% weight (by income) which is too high for a non core stock. Think I'll take dividends in cash and use it to maintain a better income balance moving forward. One thing I seriously hate about DRIPs is that they make portfolio balance difficult to maintain. Especially with high yielders.
The money I deposit each month is now less than 1% portfolio value. Since that barely moves the needle I feel I need to start paying closer attention to weightings. That said, I think I can achieve the weightings I want over time without rebalancing.