Mid September Purchases

On 9/4/2015 I bought-to-close two LEAPS on JCP with a strike price of $5. These were set to expire on Jan 15th, 2016 and were in the money, since JCP stock was over $5. I purchased these LEAPS for 4.58 each on 3/7/2014. My hope was that JCP would not go bankrupt and the stock would take off. My breakeven point was $5 + 4.58, or $9.58, not including commissions.

JCP did not go bankrupt but hasn’t taken off either. The stock has traded near my breakeven point. Recently JCP has been trading a few cents over so I decided to sell, take a very small profit, and invest that cash into a stock that has dropped in price. I sold these two options at 4.65 and netted a small profit of $7.86 after commissions, admittedly not great after being invested for a year and a half (equivalent to only a 0.9% yield over that period)!

I then transferred that plus a little extra sitting in cash that I had in my TD Ameritrade into Loyal3. On 9/9/2015, a purchase of 7.5665 shares of BRK-B went through. BRK-B is down roughly 3% since I first bought them so this was an excellent opportunity to dollar cost average down in a company that has huge amounts of incoming cash. I’m anticipating BRK-B paying a great dividend at some point in the not too distant future as well. I’d love to be positioned well into the stock before then.

I have been also selling covered calls on some of my Apple shares. I’ve been wanting to sell some and use that profit to invest in other businesses which have been hurt in the recent market drop. So, I sold a covered call on 9/4/2015 to expire on 9/11/2015 at a strike of 111. For that sale, I made $158.98 after commissions. Apple recently jumped up in price above the strike so on Saturday my shares were assigned. I was hoping this was the case. I now have a bunch of cash that I’m excited to invest!

On 9/14/2015, I averaged down in Chevron, BHP Billiton, and Kohlberg Kravis Roberts. I also added to JNJ at a price very near my cost basis. Finally, I initiated a new position in Archer Daniels Midland (thanks for the suggestion DivHut!)

These purchases increase my forward 12-month expected dividend by $544.68.

I hope stock prices stay depressed so that I can continue buying. Next on my list of purchases will be a railroad company. I’m still deciding on which one (or two). Contenders include UNP, CNI, and CSX. CNI is currently at the top of the list.

Another upcoming purchase will be BMY. I did very well in BMY in 2013 but, in retrospect, would have done very well had I continued to hold. BMY does pay a dividend but has not been growing the dividend as much as other companies, like JNJ. However, I’m very excited by the prospects for immunotherapy and BMY is one of the companies that is poised to really benefit from that trend. For way too long the best cancer treatment has been surgery, chemotherapy, and radiation therapy. Immunotherapy drugs will, in the not too distant future, form another completely new line of treatment. My next investment in BMY will be for growth and the dividend it pays will just be a bonus.

Lastly, there’s recently been many large investors and insiders purchasing mining and resource companies. While I don’t agree with everything Carl Icahn does, he is very savvy and recently purchased an 8.5% stake in Freeport-McMoRan Inc, a mining company. I’ve already been dollar-cost averaging down in my commodity positions in oil and mining (most recently with the purchase of BBL and CVX). However, I may want to get a few smaller positions in the junior mining companies. I have an open order on one right now, but I’ll write about that separately when it goes through.

Other new companies that I’m looking at include Boeing and Lockheed Martin. Both are dividend payers. I’m really excited about Lockheed’s research division; there’s a lot of cool technology being developed there!

Company Symbol Shares Price Yield Expected Annual Dividend
Archer Daniels Midland ADM 58 42.809 2.6% $64.96
Berkshire-Hathaway BRK-B 7.5665 130.84 N/A N/A
BHP Billiton BBL 50 33.0699 7.5% $124
Chevron CVX 26 75.379 5.7% $111.28
Johnson & Johnson JNJ 21 93.589 3.2% $63
Kohlberg Kravis Roberts KKR 108 18.449 9.1% $181.44

Forward 12-Month Dividends: $4,951.34 ($412.61/month).

Full disclosure: Long all the above stocks (except JCP)

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6 Responses

  1. DivHut says:

    Thank you for the DivHut mention. ADM is a great long term dividend payer and raiser and I still may add to it as it’s a relatively small position in my portfolio. This crazy market is giving us a lot of great buying opps in lots of solid dividend payers.
    DivHut recently posted…Recent Stock Purchase II September 2015My Profile

    • scott says:

      No problem, DivHut! Thanks for visiting. ADM was a stock that I had no idea what they did before reading your post and checking out their site. I agree; lots of good choices in this market right now!

  2. DivGuy says:

    A lot of action for you! Actual market seems to inspire many dividend investors. There are indeed some nice opportunities out there. I don’t really follow the stocks you mentioned (besides AAPL), but looks like sound decisions.

    Cheers,

    Mike
    DivGuy recently posted…In the Search for Optimal Numbers of Stocks in your Portfolio Part 1My Profile

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