Three Solid Stocks To Purchase On Weakness

Will "sell in may and go away" strike fear into the market and leave investors screaming for the hills? I'm certainly hoping it does! Broad weakness and raised volatility is music to my ears. When the prices drop on my favorite stocks, it's like going to the local grocery store and finding that bread, cereal and milk are all on sale. I was going to buy these products anyway, but buying them for less money is even better. That's how I feel when share prices drop. I was going to purchase shares in quality companies anyway as part of my long-term plan, so getting a stellar opportunity to purchase them at lower prices is certainly something that I'm excited about. As a net long-term buyer of stocks, a sideways, or declining, market is better for me than a steadily rising market.

There are a lot of solid dividend growth stocks that have very solid underlying fundamentals but have become fairly expensive in the current environment. With Treasuries currently starving fixed-income investors looking for big yield, there is likely a lot of investors bidding up the cost of strong dividend growth stocks. I've been scanning for value in this market, and although it's difficult to find I'm okay with paying a premium for quality. With that said, however, long-term returns depend on the price you pay. Price is what you pay and value is what you get. I love quality companies, but I love value even more.

Here are three stocks that I'm interested in purchasing on weakness:

Do You Own Or Rent?

As someone who is voraciously seeking financial independence, I regularly go over financial decisions big and small and analyze them all to make sure I'm giving myself every opportunity to reach FI as soon as I possibly can. One area I've continued to analyze lately is my continued decision to rent instead of purchase my habitat. I currently live in a 2 bedroom condo that I rent directly from the owner. This probably sounds like a bad financial decision to some, but as I continue to hash out the numbers I have found renting to provide me a number of benefits. Let me explain below:

Five Awesome Things You Can Do When You're Financially Independent

As I continue to live well below my means so that I can save and invest gratuitously, I often picture what I'll be doing when I no longer have to go to a job that I generally find a lack of satisfaction from. Let's take a look at 5 amazing things you can do when you're financially independent (but are hard to do when you're employed full-time).

Income/Expenses For March 2012

Each month I will post my income/expenses for the previous month. I track every dollar in and out, so what you see is exactly what I earned and spent (rounded to the nearest dollar).

Recent Buy

So, the market have finally cooled down. The weakness we've experienced over the last week or so has been most welcome by many of us value seekers and dividend investors. I don't know if we're on the cusp of a major sell-off or if this weakness is just a quick cooling off period. The market did get a bit ahead of itself, in my opinion, so the drop across all sectors is not surprising. I was holding on to some capital waiting for a pullback and I got what I was waiting for. I may have jumped the gun, or I may have timed things perfectly. I don't know. What I do know is that I buy when I see attractive long-term opportunities, and I found a couple over the last couple of days. I'll share them below.

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.

Dividend Income Update - March 2012

Another month has passed by, and it's time for me to post an article on my favorite subject: dividend income. The reason why I love to post articles on dividend income is because it's pure numbers. It's hard to argue the success of long-term dividend growth investing when you can slowly and surely see dividend income rise over time and get closer to covering one's expenses.

I'm including the dividends I received from the month of March. This past month, I received the largest total of dividends in one month so far in the two years since I started investing. It feels really great to see the progress I've made over the last couple years. One of the best things about dividends is that they are tangible. You can see them hit the brokerage account, and it surely makes it easier to separate your emotions from the day-to-day stock price fluctuations. 

I hope these monthly dividend income reports provide inspiration for any investors out there that are just starting out. It's easy to see these payments rising month after month and it shows that it's possible to one day pay for monthly expenses with dividends, which would provide an investor opportunities and freedom to pursue other interests than full-time work. Without further ado:

Weekend Reading - April 7, 2012

It was a rough week for the market, which may provide us value oriented investors an opportunity to deploy cash as the weakness is likely to continue. The recently released U.S. jobs report was weaker than even the most pessimistic forecasts and highlights my belief that the economy is not really "recovering", but simply not getting worse. I think the economic weakness will continue for some time, and that's why I also believe the stock market has gotten a little ahead of itself. There may be some drops in the market early next week, which will be most welcome. A small correction looks to be on the horizon.

This past week a group of dividend stock bloggers, including myself, provided an update to the Dividend Growth Index. If you haven't already, check out the other bloggers involved in the project and see their picks.

Here are some excellent articles from fellow dividend growth investors, frugalists and personal finance bloggers from the past week.

Dividend Growth Index Update Q1 2012

As some of you may remember, I was picked to be part of a Dividend Growth Index back in September of 2011. I joined a number of well-known and respected dividend bloggers, where we formed an index of high-quality dividend stocks that we all decided we would keep track of over the long-term. It's an exercise determined to show the power of dividend investing over the long haul.

A total investment of $24,000 on September 30, 2011 in the Dividend Growth Index would now be worth $28,978.


As we compare the index to applicable benchmarks, the SPY would be worth $30,188 and the XDV would be worth $26,328.

I'm going to remind everyone of my picks below, and their performance in the index thus far. I picked my three stocks based on solid fundamentals of the underlying companies, strong cash flows, durable competitive advantages, attractive valuations and most important: solid dividends that are growing at a pace that exceeds inflation.

2012 Best Dividend Stocks Q1 Results

At the beginning of the year I was asked to be part of a friendly stock picking contest among fellow personal finance bloggers. There is little at stake other than bragging rights. With the first quarter behind us it's time to report the results YTD.

Keep in mind that my idea of investing does not involve putting capital to work with companies for the short-term on hopes that a trade makes me money. I invest for the long-term and hope that the company I invest with continues to make money for decades on end. However, that isn't what this is about. This is simply a friendly little contest between fellow bloggers.

Freedom Fund Update - April 2012

Well, the time has come to update the Freedom Fund once again as we start another month. The Freedom Fund is my portfolio, and I think it's aptly named. My portfolio is my way to freedom; freedom from working at a job I don't enjoy to purchase goods I don't need to impress neighbors I don't care about.

I feel extremely fortunate and thankful that I'm able to post these updates every single month which shows the power of monthly contributions to investments because of the high savings rate I maintain. It shows how a relatively large sum of money can be built through the power of time, patience and perseverance.

The stock market continues its historic run. It had its best first quarter start in 14 years as everyone seems to be buying into the economic recovery. Me? I'm not so sure that we're "recovering". I think that things have stopped getting worse, but it seems that wages have been stagnant and our unemployment rate is still extremely historically high. I think that we have a long way to go, and because of that I believe the market has gotten a little ahead of itself. I don't necessarily think that one needs to stop buying stocks. However, I do believe that one has to be a bit more careful and choosy as to which stocks one purchases. Instead of looking at the market as whole when deciding whether to continue purchasing stocks, I look at the individual securities. There will be equities that are performing better than the overall market, and of course there will be individual equities performing worse. Some will be overvalued and some will be undervalued.