Recent Buy

This article originally appeared on The Div-Net August 25, 2011

buyHow does the saying go? You can’t keep a good man down? Well…you can’t keep a value investor out of a depressed market! My available capital has been extremely limited lately, as I deployed all of my dry powder during my recent buy streak, adding to my position with CVX and initiating a position with COP.

I decided to pull some money out of my emergency fund to make a purchase. I have typically had a high amount, for my personal circumstances, set aside as an emergency fund for myself. I’m single, and I don’t have any major liabilities. I don’t own a home or a car. I am not married and I don’t have children. Due to this, I think that carrying a smaller balance in my emergency fun in the short-term will be fine as I dry it up a little to make a purchase. I didn’t alleviate the entire fund, just a portion of it. I’ll likely build it back up over the next couple months as my expenses continue to decrease and my income (hopefully) increases in turn.

With my new-found capital I decided to add to my holdings with ConocoPhillips. I’ve been a little high on energy lately, and my spree of buying up equities in Big Oil is coming to an end. Energy now comprises of just under 25% of my entire portfolio, which in my eyes is too large an allocation for one sector. I don’t have a firm number, but I think keeping individual sectors to no more than 20% of an entire portfolio is probably prudent. Allocation levels can be managed and balanced actively, so I’m not concerned about this. As I buy equities in other sectors my energy allocation on a percentage basis will decrease.

I purchased 18 shares of ConocoPhillips (COP) on 8/22/11 at $63.65 a share. I was happy with this purchase. My entry point on a per-share basis was much lower than my initial purchase which lowers my overall cost basis on this position. This purchase doubles my position with COP.

The yield on my purchase is at 4.14%, which is absolutely solid. It will provide me with a yearly dividend total of $47.52 based on the current payout. I’m ecstatic with this entry yield. I am very bullish on energy, if you couldn’t tell by my last three purchases. This sector is currently overweight in my portfolio, so my next few purchases will be in other sectors…likely to be consumer staple and finance sectors.

S&P currently has COP at a 4-star BUY with a 12-month target price of $93.00. Morningstar currently rates COP as a 5-star value. I’m in good company!

What are you buying?

Thanks for reading.

Photo Credit: Stuart Miles/FreeDigitalPhotos.net

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18 Comments

  1. I have also make a small purchase so far this month. My choice was an UK low price car insurance company (similar to GEICO) that was hit hard despite a 20% raise in its interim dividend.

    And I will deploy more money as funds from dividends become available this month.

    It is a good time for dollar averaging

  2. I think you can’t go wrong with oil. I picked up some Royal Dutch Shell a few days ago yielding over 5%. A good buy I think.

  3. In your “moving day” article you said you had a girlfriend. That change all of the sudden? That would increase your expenses such as rent living alone.

  4. I bought some shares of Chemtrade Logistics(cgiff), it consistently pays a pretty decent dividend. It’s a Canadian income trust. Most of their income is derived outside of Canada, so they won’t be changing their corporate structure like so many of the other Canadian trusts have done.

  5. Oculista,

    It IS a good time for a dollar cost average!

    I think a lot of insurance companies are great values right now. I’ve got quite a few, including Aflac, on my list right now.

  6. cashflowmantra,

    INTC seems like a great buy right now. I think anything below $20 is fantastic on Intel. It sports an over-4% yield, which is awesome.

    I look forward to the write-up.

  7. MoneyCone,

    I think Big Oil is ripe for the taking right now..but I’m done buying any more. I’m a little overweight in that sector, so it’s time to rotate into others.

    You nailed it on the head brother..buy low!

  8. Westphalian,

    I’ve looked at RDS, but it has frozen dividends for quite a number of quarters now. I look at it like my TOT holdings. It has a high yield, but smaller growth. Not bad for diversification!

    Take care.

  9. Anonymous,

    Good catch there. I didn’t even notice I wrote that until now. I phrased that incorrectly. I meant single as in unmarried, not unattached. I should have written that in a different way. I’m still with my girlfriend, as we just moved into this new apartment together. Thanks for the catch.

  10. Mantra,

    My most recent purchase was Reaves Utility Income Fund (UTG). I think I mentioned a while back I was hunting a utility play. I bought it in mid August on a nice pull back. It pays a monthly dividend and yields 6%. I am already up 3.46% in two weeks. My first dividend of $12.50 is due end of September, compounding monthly from there…

    Another great post!

    Income Pirate

  11. Good call on COP, Mantra. I tripled my holding last month in the $63.50 range. Gotta love when the yield surpasses 4%.

    Any insights on how COP’s future “breakup” will affect the stock price and dividend? I haven’t heard much talk about this lately.

  12. Pey,

    It seems I am in great company with my move on COP in the mid-$63 range.

    The split seems to be extra shareholder value in the waiting. They have said that the old company will continue paying the dividend as promised and the new company will also pay a dividend. It seems to me almost like the Altria split, where you get multiple companies all paying you a dividend. Only time will tell…but this seems positive from all indicators I’ve seen.

    What do you think about it?

  13. Big J,

    Thanks for the encouragement. I appreciate it.

    I haven’t looked at CLMT before. I don’t have investments with any limited partnerships yet, but that may be something I involve myself with in the near future.

    Take care!

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