Monday, July 7, 2014

Weekly Purchase - DE

6 shares DE, 2.66% yield, $14.40 annual income

I'm building a position in Deere & Company right now.  I think the company has a very bright future as the world population grows and modern farming techniques are adopted in other parts of the world.  It seems to me I could profit on a trend like that and also collect rising dividends in the process.

I'm looking to buy great companies with rich histories of taking care of shareholders.  Even then I cannot pay any price when acquiring parts of these businesses.  The cheaper I acquire shares the more shares I can buy with the same amount of capital and therefore collect more dividends.  I have a predetermined list of 50 companies I plan to own.  The only thing left is acquire the shares at favorable prices to the best of my ability.  I think DE shares should be worth $117 so yeah I believe I'm getting a nice discount with today's purchase.  I could be wrong about its fair value.  However I do prefer to at least have some idea about what shares might worth as opposed buying stocks based on stocks charts or even completely in the dark.  I find my system to be quite useful yet it isn't perfect.

With 24 shares, DE now has a dividend weight of 0.94%.  I could easily build up to a 50-55 share position as part of a balanced portfolio built for sleep well at night income generation.  Besides DE I'm looking to start new positions and to beef up holdings with dividend weights less than 1%.  At this point I'm keeping an eye on GPC (.56%), BP (.38%), GE (.78%), and XOM (.77%).  UL (.56%), KRFT (.93%), and ITW (.80%) are pretty much uninvestable  for new money as much as I'd like to add.

Today's purchase was commission free as I still have free trades available.  I plan to purchase income paying securities, most likely dividend stocks, on a weekly schedule for the rest of July.  Then I'll resume larger purchases.  I have extra free trades for August and beyond, but not enough to burn through them via weekly buys.


Midyear Financial Goals Update

1. Increase forward annual dividend income to $6,880 ($573 per month)
Starting the year at $5,680 I need $1,200 of progress.  Not including today's purchase my annual dividend income went up by $623 so far this year.  52% of $1,200 is slightly ahead of schedule half way through .

Looking ahead:  Monthly capital infusions have been better than expected allowing me to purchase more stock than previously thought.  Higher market prices have been working against me since I can't buy as many shares with the same amount of money.  Not only that, but I'm working on weightings which means I can't really buy high yielding stocks such as REITs or tobacco companies at the moment.  The typical stock I'm buying right now pays less than 3% making this goal somewhat problematic.  I also expect fewer dividend increases for the back half of the year.  Accomplishing this goal will be challenging, but I think it is possible if I want it bad enough.

Status: on track, but I need to increase my savings rate.

2. $20 monthly Lending Club interest
Last month I received $14.82 worth of Lending Club interest.  During December 2013 I received $8.75.  I'm very pleased with the progress.  I plan to change nothing.

Status: on track and looking good.

3. Average monthly brokerage deposits of $1,300
I averaged $1,717 so far this year.  I'm really doing well here.  A few things have changed since I crafted this goal late last year.  First off my employment income went up by a nice amount on the back of some decent raises.  Second of all I have taken steps to reduce fixed monthly expenses.  I switched car insurance, I ditched cable and bought a digital antenna, and started using cash back credit cards for everyday purchases.  Small things like that do add up!  Also my rent went up by less than $1 per month and I fully funded my savings account for a future vehicle.  Yep.  When it comes time to purchase a new vehicle (used obviously) I will be paying cash.  The money has already been saved, and it feels awesome!

Looking ahead:  I think I could easily save upwards of $2,000 per month later this year.  Right now I'm working through some large expenditures and will likely only deposit $1,700 per month for the time being.  I need new tires for my vehicle, I just bought a new smart phone, I still need to buy my season ski pass, I'm buying snowboard boots, and will continue getting preventative maintenance done on my truck here and there.  Once I get through that, savings will pick up.

Status: on track and looking good.

12 comments:

  1. Nice buy! DE is high quality and looks cheap! I'll probably take a closer at them too. Thanks.

    Cheers,
    Henry

    ReplyDelete
    Replies
    1. I see DE is under $90 now which is good news since I plan to keep on accumulating. I hope it keeps going down in the short term at least!

      Delete
  2. CI,

    Good stuff here. I'm starting to think more about DE myself. I think the next couple years might be a little rough, but I'm in this for the next 10-20 years. I was looking at V and IBM, but both have run up a bit since I started looking. GE also seems to make sense and I have some room to buy more.

    Best wishes!

    ReplyDelete
    Replies
    1. I should be gaining a shiny new GE share tomorrow through the FRIP program. Still plan to buy DE next week unless something else dips enough to pique my interest.

      To be honest I'm still not too keen on IBM. Not that it's a bad company or anything like that. It's just that I don't understand how the business makes money and I've definitely tried to put the pieces together... I have to stick to things I understand and sadly I don't grasp most tech companies. It's a shame really. A chink in my armor perhaps. Luckily there are plenty of businesses I can easily understand so I plan to stick with those.

      Take care!

      Delete
  3. CI,

    Lots of questions! Hope you don't mind:

    "I have a predetermined list of 50 companies I plan to own."
    - Have you ever shared that list? How many do you currently own today?

    " The only thing left is acquire the shares at favorable prices to the best of my ability."
    - Do you have a spreadsheet or something to determine which of the 50 you buy that week/month? With google sheets and its interaction with google finance may be something that can be created.

    "I think DE shares should be worth $117 so yeah I believe I'm getting a nice discount with today's purchase."
    - What method are you using to value?

    ReplyDelete
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