Wednesday, May 9, 2012
It looks like we're starting May much the same way we started April: with weakness in the stock market. Headlines regarding the recent French elections, the never-ending eurozone crisis, Greece's possible departure from the zone and slower growth here and abroad has allowed volatility to rule the day and caused commotion for many investors. With some people heading for the exits, I'm running in the exact opposite direction. I'm buying what they're selling as I know that 30 years from now many high quality companies will be worth many times what they are today. With that said, I recently purchased additional shares in a high quality technology firm that I feel will reward me as a loyal shareholder for decades to come.
As part of my Recent Buy series, I try to let my readers know of any equities I purchase soon after the transaction is completed. This is just one way I try to document my progress toward early retirement and financial independence.
I purchased 50 shares of Intel Corporation (INTC) on 5/8/12 for $27.11 per share. I already had a position with INTC, but decided to add to it today after some recent weakness. It's down 5.46% over the last 5 days, which allowed me to swoop in and add to my existing position. Although INTC has had quite a run since I purchased my initial lot of shares last summer, I think there is still value in this tech giant. It's currently trading for a P/E ratio of 11.59 with a great balance sheet behind it. I think it's a value as-is, but if they're able to really get a foothold in the mobile market then the growth could explode. This is currently my only tech holding, but I feel comfortable with a relatively small percentage of my portfolio in technology. Although I think INTC is a winner long-term with their top of the line chips, huge R&D budget and innovation, the world of tech changes quickly.
Intel is the largest microprocessor manufacturer in the world.
Intel is a great dividend growth stock. The recent dividend boost of 7.1%, going from $0.21 quarterly to $0.225 quarterly, was the third dividend increase in 18 months! They're definitely showing shareholders that they are interested in continuing to grow the dividend. INTC currently has a 5-year dividend growth rate of 14.4%. The entry yield on my purchase price is 3.32% and this purchase will add $45.00 in yearly dividend income to my annual total.
I still have enough capital to make one more purchase in May. I'm still hoping for further volatility with a "sell in May" mindset. We'll see if we get this or not. If there is a strong general sell-off in the market then I will definitely make one more large purchase (or two small purchases) this month.
With this recent buy I still have 27 positions in my portfolio.
Some analyst opinions on my purchase:
Morningstar currently rates INTC as a 3/5 star valuation.
S&P currently rates INTC a 3/5 star Hold.
I'll update my Freedom Fund in early June to reflect my recent addition.
What are you buying?
Thanks for reading.
Edit: Corrected dividend rate.