Pedal To The Metal

Hello,

A lot has been going on since my last post, although it hasn’t been that long.
Due to the presidential elections, I had been piling up some cash in case blood would be running on the streets (with Trump), but still expected Hillary to win.

The night of the elections, I woke up in the very early morning (Belgian time) and checked my phone to see who was winning. It was Trump!!! What a nightmare! Most investors were expecting a serious sell-off in case Trump would go to the White House. I decided to go in big and load up my guns. I got out of bed and transferred €7,000 from my cash savings account towards my investment platform. 

When the final votes were counted, and it became clear Trump won the presidency, I was expecting to see a lot of red numbers flying around. With more than €10k cash lying idle, I could go bargain hunting.

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However, the big sell-off stayed out and at the end of the day, we even saw green numbers?! Pharmacy & banks did very well, although infrastructure and consumer goods had a rougher time. 

So what did I do? I loaded up some infrastructure and consumer goods companies. Most companies fell more than 10-15% due to the new president. In my opinion this is oversold and the results won’t turn out to be that bad. Donald’s character will be tempered a bit and I don’t expect more than a small struggle for those sectors due to possible new regulations.

I went in full force and last Tuesday when consumer & infra were heavily down, I bought big, on some other days I took more normal positions. I won’t go in detail, just a brief explanation on why I initiated them.

So let’s take a look at what positions I opened or strengthened. FYI some shares I bought in two times, but I will give the average total buy price including purchase fee. For the dividend calculations, I will already take in account the higher tax on dividends due to the lovely Belgian government (from 27% –> 30%)

First buy: National Grid: 300 shares at a total price of €3376. What’s not to like about a monopoly position in infrastructure worth almost €40 billion? They have been taking several hits and are trading around a more than fair P/E. Nice dividend increases and exposure to pound & dollar. Annual forward dividend: €91,01.

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Next, I have been following the tobacco industry since mid-september and was eager to pick-up shares at a reduced price. I bought 3 tobacco companies in total.

Second: Imperial Brands, 75 shares for a total price of €3085. They have taken a hit due to their year results, negatively affected by one-time losses with financial swaps. Nonetheless their current P/E is pretty low and they own a strong business. Annual forward dividend: €94,62.

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Third position: British American Tobacco, 30 shares at a total price of €1497. Very high margins, strong brands, successful in upcoming vapor/e-cigarette market and willing to buy-out the rest of outstanding Reynolds American shares at a fair price. Acceptable P/E for a company with very nice growth prospects. Annual forward dividend: €37,85.

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Fourth position: Altria Group, 15 shares at €897. I know, small position but I didn’t want to switch any more euros to dollars right now because of the weak euro. I still had some dollars lying idle so I put them at work. Why Altria? It’s not undervalued, no indeed it’s not. In fact it’s trading around a P/E of 21. Yet, this company has strong financials, it is the parent company of Philip Morris and holds a 9.6% stake in brewer AB Inbev. I doubted to go with PM at first as it yields more, but Altria has more chance/possibilities to create shareholder return over the years and a higher dividend growth rate, as PM has a payout ratio of more than 90%. I expect this company to outperform the index and if the dollar wouldn’t be this strong, I would have bought more. Maybe in a couple of months, weeks, who knows… Annual forward dividend: €20,54.

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So far for the tobacco industry, with these 3 positions I cover a very high percentage of (e-) cigarette brands, cigars… Every time I see people smoke I don’t get fed up anymore because they’re killing their lungs, I relax and let my wallet be filled.

Fifth buy: Nestlé SA, 20 shares at the Swiss stock exchange, for a total of €1307. Big love for this company… I’ve known it since I were a little kiddo. Who doesn’t love Nesquik? Annual forward dividend: €19,13. Swiss withholding tax sucks, but the company is too strong not to have in my portfolio. Time will make up for this lower yielding stock.

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Sixth buy: strenghtening my Unilever position by 50 shares, total price €1854. The second time I buy into this stock, raising my total position to 110 shares. They were a couple of percentage points down compared to my first position so decided to load some more up of this high-quality business. I will keep on doing this if the price stays at this level when my new paycheck comes in. Already regretting I didn’t buy more. Hope I didn’t jinx it! Annual forward dividend: €44,80.

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Seventh buy: God does this ever stop? Nope not yet, stay with me.
Verizon Communications, 40 shares at a total price of €1897. This American based telcom is a big, fat, paycheck-writer. Trading at a P/E of 13, it seemed a good time to load up some VZ. Annual forward dividend: €51,87.

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Eight and last buy: the almighty, beer & beverages conglomerate, AB Inbev, 18 shares at €1745. Facing some headwinds right now due to a falling Mexican peso but the shares have lost more than 15% since then, which is more than fair enough in my eyes. Beer, awesome investment if you ask me ;). Annual forward dividend: €45,36. One of my personal favorite stocks due to its Belgian roots.

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Another part of the good news show: Peugeot and Allergan are gonna start paying dividend. For Peugeot I expect to receive €21, Allergan €9,43. These non expected events nicely boost my forward annual dividend income, nice!

If I add up all the dividends of my acquisitions, including the start-to-pay dividend stocks, my dividend next year should be raised by a whopping €435,61, with a total dividend forecast of €1835. This is like a 13th month of pay for me without lifting a finger. Gotta love dividends. Fun fact: every day I wake up, I receive €5,03 for breathing. 

Last days were certainly one of the best of my life, buying stocks like socks. Another thing off the bucket list :D. Reading 10k’s and seeing my dividend income going up with a nitro boost. Awesome.

A little bit more sad: my cash savings decreased like hell. Oh really? No shit Sherlock. I still have €5,500 in immediately accessible cash. I might drop this to €3,000 for the benefit of investing, but I would need a damn good reason. Psst, Unilever?  The odds that I go under the €3,000 mark are pretty small as I want to be able to have some cash in case of an emergency. Car repair, accident…

What about your last acquisitions? Had fun as well? Can’t wait untill my new paycheck comes in and my tax refund, yay!, already have some stocks in mind. Do you guys care about ethical investing (no tobacco companies, brewers…)?

 

 

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Dividend income Sep-Oct + New buys

Hello folks,

A quick update on how the dividend has been hitting my bank account the last 2 months and which buys I have made.

First, let’s take a look at what fruits September and October bared us:

Royal Dutch Shell: €49,51
HSBC: €40,59
Euronav: €35,77
Vanguard S&P500 ETF: €9,24
Melexis: €56,94
Wal-Mart: €11,79
IBM: €7,82
Gilead Sciences: €14,58

Total Dividend Income September + October: €226,24

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In overall I’m pretty happy with my dividend income the past 2 months. We can notice big checks from RD Shell, banking company HSBC and Belgian-based Melexis (sensors for cars).
These 2 months surely compensated for the no-dividend August month. In the end, it’s the total dividend per year that counts. After making the sum of all months YTD, I received a dividend total of €915,84. Almost at the €1000 dividend mark in my first full year of investing. Yippee-ki-yay!

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So far for the dividend income. Which stocks did I buy last month?

First, I decided to take advantage of the recent dip of Novartis to add another 10 shares to my position, raising to a total of 50 shares. It cost me a little under €700. The small amount is due to the fact that I start having a rather big position in Novartis. I also changed my ADR’s into the real Swiss stocks as it turned out there was no benefit of holding the American for a smaller tax on the dividend. These extra 10 shares add €12,81 to my annual dividend income. Not much, but it stills yields around 1,85% net which is not bad for a Swiss stock.

Secondly, I bought 60 shares of the well-known Unilever PLC for a total of €2324. Unilever’s stock price is experiencing some headwinds which are a perfect opportunity for me to start building a position. The shares will yield around 2,40% net. This buy raises my next year’s dividend by a solid €53,76. If the shares would decline further, I would buy again.

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In total I invested around €3000 in the stock market since half September with a total dividend increase of €66,57.

I decided to transfer some money from my savings towards my investment account, which made it possible to invest a bit more. It considers €9000 in total which I will be investing the next months, spread in time. The reason I transferred savings goes back to the financial meeting some weeks ago. While I was talking to other people, one guy pointed out that I still have too much cash in the bank. I gave it some thought and I think he was right. By the time I might think about needing some money, it still takes 2-3 years so in the meantime it can work nicely for me and give me capital increases.

For now, I still have €5000 in cash begging me to invest. Next months I will build or strengthen positions. It turned out Apple didn’t go down since my last post, so I will remain patient untill it becomes a bit cheaper again. Currently I have my eye on Nestlé, AT&T, Verizon and IBM. I intend to take positions in them in the long haul. With my new paycheck strolling in, I hope to raise the cash position to €6250. This surely gives me some buying power.

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To conclude, I’m happy with the recent dividend checks and I hope my recent acquisitions turn out into a long-term value play with ever raising dividends :D.

What about your recent buys?