Friday, May 18, 2012

New Purchase - OMI

The stock market was red yet another day, this is getting interesting.  The hard part for me is figuring out which stock to buy, there are many attractive prices to choose from.  After scanning my watch list I decided today would be a good time to pick up OMI or APD.  My first instinct was to place an order for APD which is a stock I've wanted to own for a long time.  I later flip flopped and canceled the order before it was executed.  After thinking it over one more time, I placed an order for OMI which was filled at $27.72 + commissions.  The 45 shares I bought came with a yield of 3.15% and will pay me $39.60/year in dividends. 

OMI is the third healthcare stock in my portfolio.  It has a history of strong dividend and earnings growth.  Infact OMI has grown its dividend 10+% every year since 2001.  In total it has a dividend growth streak of 15 years which is quite impressive.  I don't intend to base my decisions solely on the past and I don't forecast this level of dividend growth to last another 10 years, but it does give me an idea of future outcomes.  Owens & Minor is expected to grow EPS by 8.7% for the next 3-5 years which should fuel dividend income down the road.  It has a healthy payout ratio of 44.8% and strong balance sheet.  Another selling point is its beta of .55.  APD has a high beta of 1.13, which might work to my advantage as a potential buyer if the market continues to decline.

How low will this market go?  I have no idea, I'm certainly not an expert.  I think the S&P is back to reasonable levels, but we will have to wait and see what unfolds.

Have a great weekend, it's Miller time!

4 comments:

  1. Nice purchase! I think OMI will do well for you. I also noticed that APD has fallen to an attractive price.

    Like you, I'm not an expert and I have no idea where the market will go from here. Even though I lament having no cash to deploy at the moment, it might be a good thing in the sense that if the market continues to decline over the coming months, then I will have fresh capital from monthly savings that I can invest at regular intervals. That way I can invest on the way down to wherever the market bottoms out. I'm just hoping the market doesn't shoot back up right away. :)

    Have a good weekend!

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    1. I'm with you Deedubs, it would be nice to see attractive prices for a while. I love low prices as long as the prospective companies are still making nice profits and raising dividends.

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  2. Nice buy on OMI. I had a limit order two weeks ago on OMI and CVX. I ended up buying CVX but I still would like to add more OMI at these prices. I'm also looking at adding more INTC or iniating positions in NUE or MCD.

    I'm in the process of buying a house and it's so hard to hold onto this cash when there are a lot of companies selling at attractive prices with the recent correction. I'm hoping some of the correction continues through the summer so I don't miss my opportunity.

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    1. Buying a house is probably more important. I know I can't live in my OMI stock. Seems to me that right now is a great time to buy a house. I hope that works out for you.

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