Recent Buy

As promised, I’m publishing my second recent purchase. I’m generally fairly inactive in the stock market, casually watching the market move up and down when I can. I stay fairly busy throughout the workday, so I can’t really watch the market’s sways to and fro…and wouldn’t much want to even if I had the time. But, this week will likely be my only activity for the entire month of October, unless there is a major price drop in some attractive dividend growth stocks allowing me ample opportunity.

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 40 shares of Kinder Morgan Inc. (KMI) on 10/9/12 for $35.22 per share. This purchase gives me a 3.98% yield on my price. I originally initiated a position with KMI last month, and was anxious to add to my holdings on pullbacks. Although this purchase is only at a price of about 1% lower than my initial purchase, I talked at length in my last article as to why I’m such a fan of this business and why I think it’s attractively valued. Buying it at an even lower price makes it even more attractive. 

One of the key points to remember about this company is that they are mostly shielded from commodity price fluctuations, as volatile as they can be. As they mainly operate the pipelines that transport natural gas, petroleum and other energy commodities, and terminals that store these and other products, the price of these goods matters little. Think of it as your local toll highway. They are going to charge you $1.25 to cross that highway whether the gasoline that’s propelling your car down the road costs $3.50 or $4.00 per gallon.

This purchase adds $56.00 to my annual dividend total based on the current payout.

With this recent buy I still have 29 positions in my portfolio.

Some analyst opinions on my recent purchase:

*Morningstar currently rates KMI as a 3/5 star valuation.
*S&P currently rates KMI as a 4/5 star Buy.

I’ll update my Freedom Fund in early November to reflect my recent addition.

Full Disclosure: Long KMI

What are you buying?

Thanks for reading.

Comments

  1. says

    Nice purchase! It’s nearly identical to the KMI purchase I made yesterday, proving yet again that great minds think alike. :)

    My buying is also done for October — I’m out of cash. Once I have new capital at the start of November, hopefully there will be a good opportunity or two in the aftermath of earnings season.

    • says

      DGM,

      Great minds do think alike, indeed! I think this one will be fantastic long-term, especially if natural gas usage picks up. Like your CMI holding, this one could benefit too due to the increasing need to transport it. If it dips significantly I’d take that as a sign to load up.

      Yes, I’m very low on cash. I would rather really hold off until November if I can. Unless I’m completely compelled to purchase something my activity in equities will be nil until next month.

      I don’t know about you, but I’m kind of glad when I exhaust my capital for the month. It allows me to really focus away from keeping such close tabs on stocks I’m likely to buy. I can focus on other things and I don’t really care too much about entry prices until the following month. I still keep an eye on the market and keep my watch list updated, because the next round of purchases are only a few weeks away, but certainly the “anxiety” is gone.

      Best wishes!

    • says

      DM: I feel the same way — a kind of “relief” that I don’t have to focus on what to buy for a while. In addition, by having no choice but to wait for new capital, I’ll get a chance to fully digest the earnings reports later this month before I decide on my next purchase.

  2. says

    That’s a great price to add further to your KMI position. I’m mostly out of cash. I have enough to make a small purchase until my call option gets executed which will give me another $1600 to add to my $1250 ish that I have right no. I’m thinking I’ll be adding to a current position but we’ll see how the markets go. I like toll road companies for all the reasons you mentioned.

    • says

      PIP,

      I’m with you. I’m mostly out of cash as well. I could scrounge up enough ($1,400 or so) for another purchase if I had to, but I’d really rather keep that in cash. Hopefully the earnings season brings us some volatility in solid companies and allows the long-term investor opportunities for next month!

      Best regards.

    • says

      FI Fighter,

      Great stuff. So glad to have you as a fellow KMI shareholder. I think it’s a solid move for us. If it dips significantly from here I would most certainly be looking to pick up more shares. I mean, imagine if it goes to 4.25% yield and you’re able to lock that in with a 12.5% growth rate? Not much out there with numbers like that.

      Best regards.

  3. says

    I ended up picking up some KMI in my Roth IRA at 34.48. I also picked up some DOV and WFC this week, the latter because I think bank stocks have a lot of room for growth. I will prob purchase a railroad stock this week–are there pros and cons to CSX vs. NSC? I’m torn between the two.

    I think there will be more good deals over the next two weeks. Fingers crossed!

    • says

      kolpin,

      Nice purchase on KMI. I really like DOV too. It’s such a diverse business, and it’s been on my watch list for a while now. The low yield is just about the only thing that’s kept me away. WFC is interesting. I wrote an article about WFC and USB a while back on the Div-Net…and kinda wish I would have picked them up as they were significantly cheaper than they are now.

      NSC and CSX are both great railroads. They are very similar in most metrics. Both are cheap, but NSC has the higher yield. They are similar in size, and both have tremendous dividend growth. CSX has really been picking it up in terms of its dividend growth over the last few years. NSC was a better deal just a couple weeks ago, but it’s still cheap on a long-term basis. I wouldn’t mind owning both at today’s prices.

      I’m keeping my fingers crossed for deals as well!

      Best wishes!

    • says

      wes mantooth,

      Thanks for stopping by. UTX is a very solid company. A lot of cyclical industrial companies have been weak lately, and UTX is no different. UTX is down almost 6% over the last month, so it’s definitely getting interesting and 3% yield on UTX would be fantastic.

      Best regards.

  4. Anonymous says

    Great purchase. I’m pretty well fixed for energy at the moment. I’m currently accumulating LEG as long as it stays under $25. I own T and am interested in what happens as a result of the Sprint deal. T is falling now but I’m not sure if I want to accumulate more shares or not. They are a heavy weight but have strong competition.

    • says

      Anonymous,

      I’ve looked at LEG a few times now, and just have not been compelled to purchase yet. It seems to be turning the corner, so it’s a company I continue to monitor.

      T is mainly an income play, in my opinion. I don’t see any reason it won’t be able to continue paying its dividend and raise it by a cent every year like usual, but it’s not much more than that. I look at it like a utility holding. I prefer VOD in this space, to be honest, due to their lack of legacy fixed line costs and geographical diversification.

      Best wishes!

    • Anonymous says

      I agree that T is no dividend grower. I bought it quite a while ago because I was impressed with their ability to transition from land line service into mobile service. However, as you said, probably all one can expect at this point is the one cent increase each year. I considered making a sideways move into another telecom but its hard to give up the 6.5% dividend on cost that I’m getting. Oh well.

  5. Anonymous says

    Hey Mantra Man,

    Do you Dividend Re-invest all 29 of your positions or just the headliners your going to hold forever.??

    • says

      Anonymous,

      Thanks for stopping by. Good question.

      I selectively reinvest 100% of my dividends every month into the most attractive opportunity I can find, while still maintaining a proper diversification/allocation.

      I hope this helps!

      Best wishes.

  6. Anonymous says

    Hello DM,

    Curious to know did you buy anything in the last two days? Stock market seems to have taken a hit, I am wondering should I wait till Monday or buy now.

    • says

      Anonymous,

      Thanks for stopping by.

      I used over $4k worth of fresh capital to add to three positions over the last couple days. The latter half of this past week definitely provided the long-term investor some great opportunities, and so I decided to take advantage of that. I’ll be discussing these recent buys very soon!

      Best wishes.

Join The Discussion!