The market's volatility has been a little head-spinning lately. It's easy to get blurry eyed and dizzy, but I try to keep my head on straight and stay focused on my long-term goal to build a passive income stream to exceed my monthly expenses. This week has actually been pretty light, with the Dow Jones Industrial Average having a rough start on Monday, but bouncing back quite nicely over the last couple days. The DJIA finished up 131 points today.
My recent buy was a little different from my normal moves. I haven't documented any stock sales since I started this blog, as every position I enter I plan to hold for a very long time. However, the choice to sell a position was essentially made for me, as Harleysville Group Inc. (HGIC) agreed to be bought out by Nationwide for $60 per share. This was great news for me, as HGIC was trading well below my cost basis. This instead turned out to be quite a large profit for me. I decided to sell all 64 shares of HGIC on 10/3/11 for $58.73 per share. I then took those funds and reinvested it into three separate companies. This will be one of the rare times I use profit from a sale to make other purchases, as I usually use collected dividends and capital from my day job to buy stocks. I will highlight my three purchases below:
I purchased 25 shares of Philip Morris International Inc. (PM) on 10/3/11 for $62.50 per share. This was an addition to my current position with PM, and I now own 60 shares of PM. I'm bullish on PM and have written the reasons for being so. I think it's going to be a solid performer over the next couple decades. While smoking rates are slowly decreasing here in America, emerging markets with additional disposable income are going to fuel profits for PM as it gains new clients and simultaneously raises prices on its products as demand rises. My entry yield on this purchase is 4.92%, which is very solid. This purchase will provide me with $77.00 in yearly income based on the current payout. Incidentally, this is one my Dividend Growth Index picks.
I also purchased 20 shares of ConocoPhillips (COP) on 10/3/11 for $61.53 per share. This was another addition to an existing position, and I now own 55 shares of COP. I think energy is a great place to be in. While it will be especially volatile as a lot of major oil stocks are tied to the price of oil, volatility can produce opportunity. When oil drops, it's time to purchase quality oil stocks. COP fits in that category for me. My entry yield on this purchase is 4.29%. This purchase will provide me with $52.80 in yearly dividend income based on the current payout. This is another of my Dividend Growth Index picks as it turns out.
My last purchase was 32 shares of Aflac Incorporated (AFL) on 10/3/11 for $33.85 per share. I opened a position with AFL last month at a price slightly above this purchase. I don't mind averaging down when a stock I purchased falls in price. If the fundamentals remain the same, then I consider it a great time to lower my cost basis. This was one of those times for me. I now own 74 shares of AFL. My entry yield on this purchase was 3.54%, which is the lowest of my three buys but still solid. This purchase will provide me with $38.40 in yearly dividend income based on the current payout. This wasn't one of my picks for the Dividend Growth Index, but The Passive Income Earner did pick it. Dividend Monk recently did a fantastic analysis on this company!
Some analyst opinions on my buys:
*Morningstar currently rates PM as a 3/5 star valuation.
*S&P currently rates PM as a 5-star Strong Buy with a 12-month target price of $83.00.
*Morningstar currently rates COP as a 5/5 star valuation.
*S&P currently rates COP as a 4-star Buy with a 12-month target price of $93.00.
*Morningstar currently rates AFL as a 4/5 star valuation.
*S&P currently rates AFL as a 4-star Buy with a 12-month target price of $42.00.
This may not be the last of my buying action this month, as these buys were not fueled by fresh capital, but rather by a rebalancing from the sale of HGIC. I'll be receiving fresh capital in the form of a commission check tomorrow, and I'll be waiting for the next market dip. I'll be updating my portfolio at the beginning of November, which will include these recent additions.
What are you buying??
Thanks for reading.