New March Purchases – T, CAT, GE, JNJ, KKR, TROW, V
There was a ton of activity today.
First, I sold 100 shares of AAPL for a total of $12,660. AAPL is still the largest portion of my portfolio by far and will continue to be that way for awhile. However, I did want to diversify into other investments. I was able to sell AAPL near its high today, and while I was planning on doing this regardless of market movements, thanks to the sell off today I was able to pick up some companies on my watchlist at a greater bargain than I was expecting.
Prior to selling AAPL, my forward 12-month dividends stood at $3820.90. This dropped to $3632.90 after the sale, a decrease of $188.
My first purchase, which actually was not using money from the AAPL sale, but rather transferred in from my checking account, is the final $1500 to max out my Roth IRA contributions for 2015. (Satisfying Goal #1 for 2015!)
With that final contribution I decided to purchase T. Rowe Price Group (TROW). TROW was recently written about both by Passive Income Pursuit (Why T. Rowe Price Group, Inc. Is At The Top Of My Watch List) and Dividend Growth Investor (T. Rowe Price Group (TROW) Dividend Stock Analysis). Dividend Mantra also just recently covered it as well. It looks like I am in good company.
Rather than commenting on it too much here, please read the excellent analyses on their sites. I purchased this stock because it sort of combines the best of both worlds: a decent dividend with excellent growth.
I picked up 18 shares of TROW at 81.78, adding $37.44 to my annual dividends.
Next, using proceeds from the sale of AAPL, I bought $1616 of Visa (V), $1610 of Caterpillar (CAT), $1915 of General Electric (GE), and $1508 of Johnson & Johnson (JNJ). I have capital gains in all of them except for Caterpillar, in which I am down a little over $1000 (about 20%). I’m very happy to pick up more shares of this strong cyclic company now to reduce my cost basis. Since I’m holding this for the long term and get paid a nice 3.5% dividend to wait, the reinvested dividends will have a little more kick to them, purchasing more shares at this discounted price.
I also added two new additions to my portfolio: AT&T and KKR & Co.
AT&T needs no introduction. As one of the two major US telecommunication companies, it pays a very generous 5.7% dividend, while only providing dividend growth recently on the order of 2% a year. However, I feel that they are positioning themselves very well with recent spectrum purchases as well as the acquisition of DirecTV, which will add a growth component back into the mix. I pay AT&T for Internet and cellular service so it will be nice to get a small portion of that given back to me!
Kohlberg Kravis Roberts (KKR) is a private equity firm that might not be as familiar with many people. According to their website, KKR is “a leading global investment firm that manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, capital markets, credit strategies, and hedge funds.”
Seeking Alpha had some recent articles on them too:
1) KKR: A High-Yield Dividend Stock With Reasonable Growth Potential
2) KKR: Don’t Judge A Book By Its Cover, This 7% Yielder Is A Great Value For Long-Term Income Investors
KKR doesn’t actually pay a dividend per se. Since it is an LP, it has distributions rather than dividends. And, instead of receiving a 1099-DIV at tax time, you receive a K-1. I have no experience filing taxes with a K-1, but since I use tax software for my preparation, I can’t imagine it being too hard.
KKR is very diversified and is a way to participate in emerging markets and other high growth but more risky businesses that I wouldn’t otherwise be able to. Yahoo Finance recently published a thorough article on it here: The $100 billion alternative asset manager
They also pay a very attractive dividend. (I’m going to keep using that term rather than distribution.) If you look on Yahoo Finance, you will see an annual dividend of 1.40, giving a yield of 5.9%. However, if you look on Schwab, it gives an annual dividend of 1.90 for a yield of 8.3%. What gives?
The issue is that KKR pays irregular quarterly amounts. Yahoo Finance takes the most recently announced quarterly dividend of 0.35 while Schwab uses a TTM (trailing twelve month dividend) method. While KKR’s quarterly payments are up and down, the annual trend over the last 5 years has been up. The dividend grew 209% in 2010-2011, 18% in 2011-2012, 93% in 2012-2013, and 25% in 2013-2014. Their 5 year and 3 year growth rates are 88.4% and 36.9%, respectively.
For growth like that I can stomach some uneven payouts. As each dividend is declared, I’ll just update my portfolio appropriately. My hunch is that 5.9% will be on the lower end of what I can expect.
Did I at least make up for the lost dividends from the sale of AAPL? You bet I did.
These seven purchases add $569.16 in annual dividends. My forward 12-month dividends are now up to $4,202.06 ($350.17/month). This is already $102 more than my goal for 2015. I guess I didn’t expect that I would sell some AAPL and invest that cash in higher dividend paying stocks. At the half year mark I’ll have to taken another look at those goals and make some revisions.
I am now invested in 30 companies. My online portfolio has been updated to reflect these changes.
|Company||Symbol||Shares||Price||Yield||Expected Annual Dividend|
|Johnson & Johnson||JNJ||15||99.93||2.8%||$42|
|KKR & Co LP||KKR||118||22.795||6.1%||$165.20|
|T. Rowe Price||TROW||18||81.78||2.56%||$37.44|
Forward 12-Month Dividends: $4,202.06 ($350.17/month).
Full disclosure: Long all the above stocks