Tuesday, May 15, 2012
The last month has seen round after round of headline news about slower growth, a "new normal" economy, Greece, eurozone debt problems and the like. All that talk and the S&P 500 is down 2.9% over the last 30 days. Not what most people like to see, unless, of course, you're a net buyer of stocks and accumulating assets for long-term investments at the cheapest price possible. Since that's exactly what I am, I'm buying.
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 15 shares of Chevron Corporation (CVX) on 5/15/12 for $102.06 per share. I have been watching CVX lately after the recent 11% dividend raise, increasing the quarterly payout from $0.81 per share to $0.90 per share. This was the second dividend increase in 6 months and the 25th consecutive year of increasing dividends. I was hoping to see CVX closer to $100 or lower after the recent weakness in oil, but I did want to purchase CVX before it goes ex-dividend on 5/16/12, so I purchased just in time. I don't try to time my stocks, but I do try to get an attractive long-term entry point. It may draft lower from here with weak oil, and if it does that gives an excellent opportunity to increase ownership in a fantastic integrated oil company.
Chevron is the second largest oil company in the U.S. They have worldwide exploration, production and refining operations.
CVX is a wonderful dividend growth stock. It's currently attractively priced at P/E ratio of 7.41 and P/B ratio of 1.6. With 25 years of dividend growth behind it, I see no reason this won't continue. I'm no genius, but I do know that 10 years from now people will still have to fill up their vehicles with gasoline and engines will still need lubricating. The entry yield on my purchase is 3.53% and this addition will add $54.00 in yearly dividend income to my annual total. CVX has a wonderful balance sheet with extremely low debt and the payout ratio is only 26.5%.
I'm not sure if I'll make another purchase in May. I still have a little capital left over, but I may keep a small cash position as I look forward to June. EMR, JNJ, MCD and PM are all on my shopping list if I do decide to buy more equities this month.
With this recent buy I still have 27 positions in my portfolio.
Some analyst opinions on my purchase:
Morningstar currently rates CVX as a 4/5 star valuation.
S&P currently rates CVX as a 5/5 star Strong Buy.
I'll update my Freedom Fund in early June to reflect my recent addition.
What are you buying?
Thanks for reading.