Recent Buy

ByDividend Mantra Team

buyTalk about Black Friday specials!

Some of my favorite dividend growth stocks in the energy space were down huge this past Friday, with some stocks that I personally track down near 10%. Exxon Mobil Corporation (XOM) was down 4.17%. Chevron Corporation (CVX) was down 5.42%. My recent investment in National Oilwell Varco, Inc. (NOV) looks foolishly timed – its stock was slashed by 5.96%. But you know what that is? That’s music to a long-term investor’s ears.

I believe there’s just a supply-and-demand issue at play here, but the recent OPEC meeting where it was decided that members would not cut production to curb a rather rapid fall in oil prices certainly caused some extra volatility.

At any rate, it’s just business as usual for me. I’ve always said that volatility is another word for opportunity, so an extra-volatile day like we saw two days ago was a rather large opportunity. And I took that opportunity to once again add shares to the world’s largest miner, where a lot of my attention has been focused lately due to what I perceive to be strong value in its shares.

I purchased 25 shares of BHP Billiton PLC (BBL) on 11/28/14 for $47.33 per share.

Overview

BHP Billiton Plc is the world’s largest diversified resources company. They’re engaged in the exploration, development, processing, and production of a number of minerals. They also have a substantial oil & gas business.

The company operates in five segments: Iron Ore (32% of fiscal year 2014 revenue); Petroleum and Potash (22%); Copper (21%); Coal (14%); and Aluminum, Manganese, and Nickel (13%).

Their production operations are located primarily in Australia, the Americas, and southern Africa. They have a workforce of approximately 123,800 employees and contractors at 130 locations in 21 countries.

This is a dual-listed company structure. They have two parent companies – BHP Billiton Limited and BHP Billiton PLC – that operate as a single economic entity, run by a unified management team. The company is headquartered in Australia. This article is referencing the BBL shares that trade on the London Stock Exchange and are offered as ADR (American Depository Receipt) shares on the New York Stock Exchange for US investors. One can also purchase the BHP shares which trade on the Australian Securities Exchange, which are also offered as ADRs. Since the BBL shares trade in the UK, the dividends they pay are not taxed by a foreign government due to a tax treaty between the US and the UK.

Conviction

This post will be rather brief. I discussed at length BBL’s fundamentals when I decided to add to my position in October after a pretty substantial downturn in its stock price (but not the underlying business). I also discussed some recent news regarding the company when I decided to basically triple my position in the company just over a week ago. This most recent transaction has now almost quadrupled the size of my initial investment, and this will probably be the last investment I make in BBL for the foreseeable future due to allocation within the portfolio.

But I think this recent sell-off in energy stocks is an important reminder to always be mindful of why you initially invested in a company. I think when one wakes up to see a substantial number of their investments down by 5% to 10% in one single day, that either elicits joy or fear. If it elicits fear, you may not be fully confident as to why you invested in the the first place. If you feel joyous, as I did, then this is simply an opportunity to buy more shares and more dividend income for the same amount of capital invested. That propels you along the path to financial independence even quicker over the long haul, cheaper stocks being like the turbocharger to your financial independence engine.

BBL shares now yield 5.12%, which isn’t all that far off from what shares offered during the financial crisis. Combine that kind of yield with a five-year dividend growth rate of 10.6% and a low enough payout ratio – 47.9% – and you have a recipe for outstanding dividend income and dividend growth.

Risks

I’ve pointed out the risks with this investment a few times now, and they shouldn’t be taken lightly. The prices of the underlying commodities the company controls can change rather quickly, and these changes can have a substantial effect on BHP Billiton’s profitability. These commodities are also cyclical in nature, so there can be years of high or low profits for the company. There’s also geopolitical risk, though I believe this is somewhat low for BBL. Lastly, one should consider competition.

Valuation

So it should be obvious that my opinion on the valuation of BBL’s shares haven’t really changed. Lower oil prices will of course have an effect on the company if these low prices are sustained for a protracted period. However, I think the long-term story is still intact. I suppose it really comes down to whether or not you think the world will demand more energy 10 years from now, and where you think that energy will come from. I think at some point it’s reasonable to expect renewable energy to produce measurable energy for the world, but I happen to think this is still a long way off. Cheaper oil actually has the ironic effect of reducing demand and investment for such energy products. One other note to keep in mind here is that oil only accounts for 20% of the company’s revenue, so it’s somewhat perplexing to me that its shares were even harder hit than some more direct oil plays. Nonetheless, I’m quite happy that was so.

Shares are now trading for a P/E ratio of 9.12 right now. That appears to provide a rather significant margin of safety, especially considering BBL has typically traded for a P/E ratio of 14 over the last five years.

I valued shares using a dividend discount model analysis with a 10% discount rate and a 5.5% long-term growth rate. The growth rate I used for the model is about half of BBL’s growth rate in EPS and its dividend over the last decade. So there’s room for the company’s earnings power to basically halve and still meet the model’s numbers. The DDM analysis gives me a fair value of $58.14.

Conclusion

Fear or greed? It’s up to you how you react when a high-quality company goes on a fire sale. I choose the latter. I’ve been greedy with BBL lately, so I’ll probably have to move on to other opportunities moving forward. But I can’t imagine the me of 2024 will be unhappy that the me of 2014 averaged down on BBL all the way into the $40s.

I think the valuation here is extremely compelling, and perhaps one of the better values in the market. Even my extremely conservative model values shares at a level approximately 25% higher than where shares trade at now. So the company’s growth could be permanently and significantly impaired by 50% (which I don’t believe to be the case), and shares are still cheap.

This purchase adds $62.00 to my annual dividend income, based on the current $1.24 semi-annual dividend.

I’m going to include a couple of other valuation opinions below, as I use these to concentrate my reasonable valuation estimate:

Morningstar rates BBL as a 5/5 star value, with a fair value estimate of $70.00.

S&P Capital IQ rates BBL as a 4/5 star “buy”, with a 12-month target price of $59.00.

Full Disclosure: Long XOM, CVX, NOV, and BBL.

Did you also buy some energy stocks on Friday? Why or why not? 

Thanks for reading.

Photo Credit: Stuart Miles/FreeDigitalPhotos.net

Similar Posts

99 Comments

  2. haha I knew this was coming! I too purchased BBL on Friday – this was my initial position in this company. Thank you for getting this on my radar.

  3. I think this a wonderful investment, as you topped off your BBL position at an amazing price. I’ve added to BBL the past two weeks but missed out on Friday. Sadly, I was watching from the sidelines and totally forgot about the market closing at 1! I was trying to decide which oil based company I was going to purchase with my limited amount of capital on hand and was waiting to see how far it fell. Then bam, market closed lol. Oh well, I’m hoping for the opportunity on Monday to get in on the action; still not sure which company yet. Nice buy!

  4. ahhh tough luck, Special Agent. Don’t worry, this obviously won’t be the last great buying opportunity that you’ll come across.

    As mentioned above I added BBL to my portfolio, and I also doubled my position in BP on Friday. 🙂

  5. Hi DM,

    I have a feeling you like this company?? 🙂

    Who wouldn’t! As I mentioned before, I’m hoping they’ll remain at this level for a week, so I can become a shareholder too.

    Cheers
    Huw

  6. Hey Mantra!
    I have to agree with you, these drops are music to a long-term investor’s ears. For myself I decided to look what happens on Monday. Panic means money.
    Cheers!

  7. Hi Jason

    You sure are building up your BHP Billiton holding, I want to do the same, so may need to dip into my backup cash to cover the cost until I have accumulated enough in my monthly investing money to pay it back.

    It’s great to see that you are still investing strongly even though you are not in a wage paying job, you sure have a lot more freedom than you did before, as I am sure you are still putting the work in to your writing and investing, but you can pretty much choose when you do the work.

    Best Wishes
    FI UK

  8. I slept through all the sales since the market closed at 9 am (west coast). Think I’ll add a new NOV position or double up on CVX Monday, unless all the prices shoot back up, as they tend to do lately.

  9. Dividend Mantra,

    I tried to average down via a limit order on one of my energy positions but the stock fell within 5 cents of my limit. I use a limit order as I don’t have the ability to trade the markets as I have no way to access the brokerage account when the markets are open as I am at work. I could but in a telephone order but that costs around $45.00.

  10. I wanted to pull the trigger again but I hesitated this time as I reached my target purchases for the month. Hopefully it stay at this level until December so we can keep on adding to our position. It appears that the theme for the last quarter is on energy, everybody is selling and we at DGI community keeps on buying. Again, another great buy Jason, slow down the pace so I can keep up! Hahaha!

  11. What other/oil energy stocks do you like right now? What about COP? Most seem to be trading at or near their 52 week lows.

  12. AJDZee,

    Glad to be a fellow shareholder. I think you got in at a great value there for the long haul. As I was mentioning before, anything could happen in the short term. But I think over the long haul this company and its shareholders should do pretty well. 🙂

    Cheers!

  13. Agent,

    Yeah, the market isn’t always open the full day, so that’s something to be mindful of. Generally speaking, the holidays cause some odd hours.

    But I’m sure you’ll have plenty of opportunities to get in. These stocks aren’t going anywhere, and I doubt oil is going to rebound significantly any time soon. 🙂

    Thanks for dropping by!

    Best regards.

  14. Jose,

    Energy has been weak, but BBL has been particularly hard hit. I find it strange that shares were down so much, considering that oil isn’t even its largest division. But such is the market and I’m glad for the opportunity. 🙂

    Glad to be a fellow shareholder.

    Take care.

  16. Huw,

    Tough to pass up on value like this. The company has really strong fundamentals, and those fundamentals can actually deteriorate rather significantly before this investment would turn out to be a poor one. The margin of safety appears pretty compelling. 🙂

    Hope you’re having a great weekend!

    Best wishes.

  18. DM,
    Energy really took a beating last week. Great timing for me as I’ve been looking to add to my energy holdings beyond CVX which I’ve owned for a while. I added some HP to my portfolio last week, both before and after the OPEC meeting. Plan on holding for many years. May pick up some more.

    If this market continues up, and energy keeps going down, I may have to pick another.

    -RBD

  19. FU UK,

    I’m extremely fortunate to be able to continue investing at roughly the same rate as before, and I’m so grateful for that. My journey’s timeline hasn’t really been impacted much at all, while I’m certainly enjoying most of the benefits of financial independence in the meanwhile. It’s a wonderful arrangement. I’m truly the happiest I’ve ever been. 🙂

    I hear you on dipping into cash. I did the same. I was actually going to carry over the cash from the SYY sale until next month, and I was kind of earmarking it for UL. But that Black Friday sale was too much to pass up on. BBL was down 7% from already really depressed levels. Had to move on it.

    Hope all is well over there and that you’re having a great weekend!

    Best wishes.

  20. I don’t keep up with the market as much as I use to, but I still glance over the news from time to time to see what’s going on. Guessing Mr. Market didn’t take too kindly to OPEC’s decision not to cut production on Thursday eh? It’s times like these that my interest gets piqued and I pay a little more attention to certain sectors. Wonder what the coming weeks will bring??? With Q4 earning not too far off and oil prices as low as they’ve been I’m guessing there might be another dip around the corner. Thoughts?

  21. I got in at $51 about a week ago. Totally missed the dropped but should I buy more BHP or maybe get some Exxon or Chevron. Tough decision!

  22. Justin,

    Tough to say how energy stocks are going to react next week, but I don’t anticipate any of them bouncing right back as if nothing had happened. In fact, I think some, like XOM and CVX, can probably fall a lot further. They were both priced at cheaper levels not all that long ago when oil was priced higher. Should be fun to see how it goes. 🙂

    Happy shopping.

    Take care!

  23. IP,

    Ahh, I’ve heard of that happening to a lot of people. I use market orders. I simply find a stock I want that’s trading at a reasonable price and I buy it. I don’t quibble over dimes and quarters. But it’s unfortunate you can’t access the market during open hours. I was always able to buy/sell stocks during my lunch hour at work using my old iPhone 3G. I would “hang out” near the customer lounge so I could use my employer’s Wi-Fi signal. 🙂

    Cheers!

  24. EWB,

    I think a lot of them are attractive for a long-term investor, but I also think quite a few of them could fall further in the short term. XOM and CVX, for instance, were cheaper not all that long ago when oil was priced much higher. But I think now’s a good time to dollar cost average into just about any of them. I almost added to my NOV position, especially with the ex-dividend date around the corner. But I felt BBL was too compelling.

    Best regards.

  26. RBD,

    I’m with you. If the broader market continues to advance while energy falls, I may have to add more than I’d really like to. I don’t want to go too crazy with energy here, as it’s already beyond my target weight. But I’ll have opportunities to balance things out a bit down the road. We’ll see how it goes!

    Best regards.

  27. The Stoic,

    Yeah, I think some of the energy companies, especially supermajors, can fall further. I don’t know if the drop is really fully priced in. You see the earnings as they already stand, and so I think people are kind of pricing stock as they sit. But XOM and CVX were both available just a year or two ago at these prices or less, and that’s when oil was higher. So you certainly might see some volatility when earnings drop due to lower prices and investors are “shocked” to see that. I’m not really concerned as someone in it for the long haul, but expecting to see major gains over the next six months or year with some of these plays in energy probably is probably a false hope. That said, I can’t time the market or predict investor emotion, so I just stick to quality and value as I see it.

    The issue with oil is that it might fall further as well. You might see some of the countries that rely on it for their respective economies pump out more than they’re supposed to, which will only add more supply and further strain prices. We’ll see how it goes.

    I hope all is well over there! 🙂

    Cheers.

  29. Hello Jason,

    I’m reading your blog since a couple of weeks, awsome lecture. Regarding BBL, I thinks this is a very cyclical stock. During the 2008/2009 disaster it went down from around 30€ to to 13€. This is unfortunatly not a stock I would consider to be conservative. Macro environment tells us we are heading to a recession (once again). I know Warren and you argue macro development is a waste of time, you guys are probably right – maybe not.
    Keep up the good work, always willing to learn. Unfortunalely english is not my mother lingo, sorry for the inconvenience.
    cheers,
    Stef

  30. DM

    How do you keep purchasing so many shares with your income/expense? I thought you had used a lot of your emergency funds being aggressive these past couple of months…it seems like you continue to have reserve money for these great prices. Just curious ^_^

    DLee

  31. I was looking very closely at this on Friday, but because BHP is already a decent sized holding in my portfolio I held off. If there’s a big fall again today though I don’t think I’ll be able to resist though, will be just far too compelling a value proposition to pass up!

    Nice work DM, wasn’t expecting any more recent buy updates for a while, but great to see you snap up some more bargains while the sales are on!

    Cheers,

    Jason

  32. FFF,

    I can’t promise any attempts at slowing down. 🙂

    I’m confident you’ll have plenty of opportunities in December and beyond. Like I was mentioning in prior comments, I think some of these stocks can actually fall further. I honestly can’t imagine how BBL’s downside isn’t severely limited here, but Mr. Market can throw some surprises at you. You never know what he’ll be willing to sell a high-quality asset for.

    Thanks for dropping by!

    Best regards.

  33. Stef,

    No problems with the English. You did fine. 🙂

    BBL is a cyclical stock. Not all of the dividend growth stocks out there are secular in nature, so that’s always something to be aware of. But even secular stocks fall too – Coca-Cola’s stock price fell by more than 28% during the year of 2008. For reference, BBL fell by nearly the same amount of the S&P 500 index that year, near 40%. But it was paying out a higher dividend as well. But volatility can lead to opportunity, as I said above. BBL has actually done quite a bit better than KO going back as far as one can go with the BBL shares (July 2003). However, this isn’t a stock for everyone. And so if it’s not for you, you definitely would be better off investing elsewhere. No potential return is worth losing sleep over.

    Cheers!

  34. DLee,

    Well, this purchase was made with the capital from the SYY sale. I had that capital earmarked for next month, and most likely for UL. But the big moves Friday made me reconsider. 🙂

    Cheers!

  35. Jason,

    Gotta go where the value is, right? 🙂

    I hear you on BBL, though. It’s now a position that I don’t really have any plans on increasing any time soon. I never intended for it to be a core position for me, and still don’t. So I’ll probably just let these 90 shares ride for a while now. I may shop a bit in the energy sector over the coming month, depending on values. But I’ve got some great stocks at some great prices there already.

    Thanks for dropping by! Have fun shopping over there.

    Best wishes.

  36. I think the general weakness over the last month or two may be partially due to the forthcoming demerger. The ‘new’ company was not originally announced as having a listing in London, only Australia and South Africa. Neither of which has a tax treaty with the US and thus the likelihood of dividend taxation. In the last week they did finally say they would apply for a listing in London which will help me since I hold BBL in my IRA.

  37. Eddie,

    Right. The big decline in shares kind of timed with the demerger announcement, though iron ore was dropping there as well. And you are correct there in regards to the LSE listing. That should bode well for US investors due to the tax treaty. 🙂

    Take care!

  38. Nice buy Jason, i’m with you BBL,just gonna avg cost dollar in, great for long-term. Agreed on further potential downside, the commodity / energy is the weak stuff right now, tax loss selling, low demand etc just general negativity on the sector and will probably continue well into next year. As for CVX, tough, great company and posted about a crude analysis on it but not apples for apples – need to see where oil stabilizes. Last time oil at $60, CVX was $80 or so….in no rush to buy yet, i think more to go like yourself. cheers T

  40. Mantra,

    Was waiting for your post on this! Nice job and great pick up – you got it 27 cents cheaper than me, punk! Joking, joking, but like you’ve said – if you are in fear when this happens it bids you to ask yourself if you even should have invested in the first place, if something fundamentally changed within the company or maybe you are with the average person – afraid/scared when stock prices decline. That is when we, dividend investors, get excited – as for the most part we invest into companies for fundamentally sound reasons and look to this as our “black friday” deal and are able to get a great “product”/asset at a flash sale discount!

    Great pick up and feels great to be part of the BBL crew!

    -Lanny

  41. Every day is a new day, and opportunities always seem to be presenting themselves. Pursue the value, and asset allocation will come over time. I’m happy to put more money to work into the energy companies should they continue to fall.

  42. COP is great, have you looked at XOM or CVX yet? Dividend aristocrats right there with CVX having an amazing near 4% yield coupled with an over 10% dividend growth rate, with the track record to prove it. Thoughts?

    -Lanny

  43. Tales,

    Right. Exactly. I think the rush to buy supermajors and some of the other big oil stocks might be a bit premature. My timing was off with NOV as well, though I still contend that dollar cost averaging your way in is the right way to go if you’re in it for the long haul. After all, it’s impossible to say which way anything is going. But many of these stocks were much cheaper at one point with oil anywhere near this level, so I’m not in a particular rush. I wouldn’t mind buying XOM below $80, though. 🙂

    Cheers!

  44. Will be interesting to see where we bottom out as I feel we are almost there. Some small players are gonna shut down if we hit 50$. How long is cheap oil going to be sustainable? 1-2 year max maybe?

  45. Lanny,

    I think we’ll be happy buying in anywhere near $50 over the long term. If iron ore and oil stays low for a protracted period, then the returns might be limited to the dividends themselves. But getting paid a 5%+ dividend until some of these commodities bounce back doesn’t sound like all that bad of a deal to me. And as I pointed out, BBL’s growth could permanently slow down fairly dramatically and we’d still be looking at a rather solid investment. 🙂

    Cheers!

  47. A-G,

    Yeah, tough to say where oil goes and how long it stays there. But the last few years have been good times for many of these companies, and they’ve been investing at record rates. Those investments should propel the big players for a long time that are used to MUCH lower oil prices. I wouldn’t be surprised at all to see lower oil prices, as these things can kind of feed on themselves. There’s speculation that a number of countries need $100+ oil to keep running, so they may increase production to make up for the loss in revenue from the price drop. That floods the market with more supply, further driving prices down. I’d stick with large, proven players that have been at this a while.

    Cheers!

  49. HI Jason,

    may I ask you what you consider to be a core position. We already know BBL isn’t – and JNJ for sure is.
    Is T, PG, XOM part of what you would call a ‘core position’?
    I’m asking since I exactly want to build this up before I inrcease risc (and potential revenue).

    cheers
    Stef

  50. Ditto to AJD. It’s so hard not to buy staples like this when they take such huge hits. I think I’m taking the plunge for 25 shares or so of BP on Monday assuming there isn’t an early morning rebound. Thanks for the added vote of confidence in the sector!

    JAy

  51. Captain Dividend,

    Indeed, a double whammy. Although, the demerger news is what seems to have started the tailspin, which is interesting. In addition, I find it strange that BBL suffered more than a lot of direct oil plays on Friday even though oil is ~20% of the business. But if oil drops more and stays there and iron ore does the same, there could be a protracted period of poor profitability here. I think the dividend is safe by a considerable margin, but it could grow slower than anticipated. I think the future is fairly bright for their resources, and they command a good portion of the world’s available supply. But we’ll see. 🙂

    Cheers!

  52. Stef,

    Well, I wouldn’t recommend buying core positions just to buy them if the valuations aren’t appropriate.

    That being said, I consider stocks like JNJ, KO, PEP, PM, PG, UL, XOM, WFC, O, and GE as good enough to form a core around. What one person considers a core position is subjective, of course. But that makes for a pretty good starting lineup, in my view.

    Best regards.

  53. Jay,

    It’ll be interesting to see where BP goes. I know they were pretty confident about their ability to continue paying the dividend and settle the worst-case scenario ($18 bil or so) regarding the spill, if oil prices remained high. Not sure how $70 oil factors into all of that over the long haul, if it stays this low or goes lower and stays there. But the fines will be dragged out for years anyhow, so I imagine they should be okay. Their FCF remains a concern, however.

    Best regards!

  54. Jason,

    thanks again for the reply. I will have to dig into the numbers, as far as I’m capable of. It is nice to have a point to start from. You didn’t give me fish…I have to learn fishing.

    Thanks!

    Stef

  55. Thanks for sharing this recent buy. November has been a very busy month for you to say the least. And why not? When some great value falls on your lap jump on in. I have added BBL to my watchlist and may pull the trigger on it myself. It certainly is very. very popular among the DGI bloggers in recent days. Curious to see where we’ll be headed this first week of December.

  58. Interesting buy DM. I’m curious to see how they will do in the next few months. Their petro segment will probably be down due to lower oil prices, especially after OPEC decided to keep production steady + increasing US energy production. Although the lower gas pump prices is supposed to support business and consumer spending through lower costs, so their other resource segments will hopefully offset that for you. BBL has a very attractive div yield/growth, and the share price is down $16 in the last three months, so seems like a good pickup to me! And I would guess that most of that share price decline is from oil prices going down, hopefully they dont decline much more than they do!

    Happy saving!

  59. The market closed at 9 am PST, so I missed out on all the action as I was spending that morning sleeping in. It was glorious, being able to sleep as long as I wanted, even though it cost me a potential addition to my portfolio. Oh well 🙂

    Crossing my fingers for lower prices in December! It just so happens that I am quite light on energy, so this may be an opportune time to load up while things are cheaper!

  60. It’s funny you mention limit orders as I’ve been eyeing BBL last week and just put out a $50 limit order good for the week or whatever the option is for more than one day. Luckily the limit order went in at open at $48.01, but a little bummed I wasn’t able to get it in the $47’s.

    To be fair though it’s not a big deal as even $48 is a great price and if it drops another 5-10% from here, I can always add more.

    As far as the oil majors, if price per barrel go to $60 or below, I imagine the majors will also move to the downside. It’s super hard to hold off as I’m just starting my portfolio and currently have zero oil, but I think there’s farther downside in the short term as OPEC seems dedicated to $60/barrel oil…time will tell.

  61. DM,

    I see I’m not the only one who went Black Friday shopping. I think I set a personal record for purchases on Friday and never set foot in a store or even turned on my car. Another purchase might materialize Monday that starts with B and ends with L 🙂

    It doesn’t look like energy/commodities are setting up for a quick rebound anytime soon so I’ll continue to slowly even out my positions while this sale persists.

    Best,

    DWC

  62. DW,

    Yeah, I’m very interested to see what operations look like when H1 results are released in February. That’ll probably be a bit sobering, but I believe in this company and its assets over the long haul.

    “And I would guess that most of that share price decline is from oil prices going down…”

    It appears their tailspin started around the time the demerger was announced. But it’s a combination of factors. Oil ore has been dropping, and oil’s drop has just exacerbated the stock’s slide, especially as of late. The question is whether oil and iron stays low for a protracted period. If so, this could turn BBL into a rather lousy investment until those commodities bounce back. But I can’t imagine that I’ll be disappointed piling into BBL around the $50 mark when I look back on this decision, say, 10 years from now.

    Thanks for dropping by!

    Best regards.

  63. Sundeep,

    $48 is a great price. It won’t really make much of a difference at all over the long term. What will make a difference is how BHP Billiton performs as a business. From everything I can read about the company, it seems they have the right people, assets, resources, and diversification to ride out any storms that come their way.

    I can definitely see oil going lower. I usually don’t make predictions or worry about macroeconomic factors, but these events tend to cause overreaction. Plus, I think there could be short-term supply surpluses causing further price downside. It’ll eventually stabilize and move back up, just like oil always does. It’s a highly volatile commodity, historically speaking.

    Cheers!

  64. Hi Jason, Oh ya! I bought several of the energy stocks: COP, BP and RDS.B last Fri that I’ll be posting on my blog. They are excellent value play now and also sports a hefty dividend yields. Are these energy stocks on some After Thanks Giving sale 🙂

    Cheers!

  65. Seraph,

    If you’re light on energy, this could be a great time to average your way into some high-quality names. I’m not going to go too crazy here, as I’m already heavy on oil. But I may pick up an opportunity here and there, depending on capital.

    Happy shopping! 🙂

    Take care.

  66. DWC,

    Haha! That’s awesome right there. Who needs the mall when you’ve got the greatest market in the world at the tip of your fingers? Even better, the merchandise pays you to buy it. 🙂

    I’m with you on not being in a rush. I’m comforted by the knowledge that my energy holdings were mostly purchased at excellent prices, and I’m pretty heavy there already. But if the occasional opportunity comes my way, I won’t say no.

    Keep up the great work!

    Cheers.

  67. PIM,

    Nice move there!

    I wouldn’t be surprised to see a number of these stocks drift further lower, but it’s obviously impossible to really time or predict any of this stuff. So I always prefer to average my way into stocks, almost regardless of macroeconomic events.

    Thanks for dropping by.

    Take care!

  68. So many of my watch list stocks in energy sector were down 8 to 10% but I couldn’t pull the trigger because I was scared.
    I had capital to invest so I wanted to put somewhere when crude oil drop almost 9% so I purchase some CVX and XOM.
    I think CVX can go below $100 and XOM can go below $85 but they don’t trade up or down with oil price so we will see.

    I also couldn’t pass close to $47 price on BBL so I also purchased some on Friday.

    I have 17% weight on energy sector so I have to be discipline not to go over 20% weight on short term. Over the long term I am buying lot of securities so weight will come down itself when I make purchase in other sectors in the future.

    I want to buy more CVX and XOM but I want to resist.

    I am watching OXY, HP, and SU. I couldn’t pull trigger on them on Friday. BP could be interesting to add at around $36.

  69. Seems like everyone is buying BBL. I should join the party one of these days. 🙂

    Another great buy Jason. BBL is very undervalued at the current price level.

  70. Hi Jason,

    Wow! What a drop in oil stocks! I didn’t buy any stock since the october dip. I have 1300$ in my brokerage account waiting for a good opportunity. I guess I found it! I think that’s where I’m going to allocate my money tomorrow. I like Exxon at 90$! I already bought 29 shares at that price this year and I would have bought more if I would have had the necessary capital.

    But I might instead buy some CVX to diversify a little…

    Keep going my friend!

  71. Nice buy Jason! I still need to do some research on BBL before I add it to my watchlist although it looks like a great company at a nice value. I wasn’t able to take advantage of the market drop on Friday. I was about to put in a buy order for BP and then realized the market was closing early. I just submitted some orders for the morning though, hopefully the oil stocks remain down for at least one more day. 🙂

    Best wishes,
    SFZ

  72. AJ,

    Sounds like you made some very reasonable moves there. Just be aware that further volatility is probably ahead, especially when you compare where some of these stocks were when oil was last this cheap. But I always prefer to average my way into high-quality companies, rather than worrying about timing the market. If you’re in this for the long haul, buying quality at attractive prices is where you want to be. 🙂

    Thanks for dropping by and sharing. Keep that BB gun firing!

    Best regards.

  73. Tawcan,

    It’s a fun party. Feel free to join in at any time. 🙂

    Seriously though, BBL seems particularly cheap. I can’t imagine I’ll be unhappy with this purchase over the next 5-10 years, but anything is possible. I love the value, but I’m also probably done buying here. I’m okay with the allocation to BBL right now. Time to move on to value elsewhere.

    Cheers!

  74. Allan,

    Yeah, that was an exciting day. I now know how shoppers feel on Black Friday. My heart was racing, and I didn’t want to pick just one stock! 🙂

    I expect plenty of opportunities ahead, especially with some of the more direct investments in oil (like CVX and XOM). Have fun deploying that $1,300!

    Thanks for dropping by.

    Best wishes.

  75. SFZ,

    I imagine you’ll have your opportunity. I can’t imagine any of them bouncing back right away, and it seems oil has slid further over the weekend. 🙂

    BBL appears to be one of the more compelling values in the market right now, especially considering they’re not experiencing some kind of major operational problem or scandal.

    Should be a fun December!

    Take care.

  76. Pingback: Take advantage of stock market ‘hangovers’ to improve your investing performance

  77. I sold my position in AXP today (solid stock from the standpoint that it increased approximately $20/share from when I purchased it, but the low dividend was a bit frustrating and there are concerns about future growth) and then added that money to what I had recently set aside to buy BBL today at $46.70/share. Here’s to hoping that I look back in a few decades and smile about these moves!

  78. TGGD,

    I actually don’t really follow AXP at all, but I’m sure you did your homework and made a rational decision there. BBL and AXP are very different stocks, and so they’ll likely behave and perform very differently. But I think, while anything could happen in the short term, BBL is a compelling long-term value.

    Glad to have you as a fellow shareholder!

    Best wishes.

  79. Pingback: Recent Buys - NOV and BBL - DividendDeveloper.com

  80. DM,
    Not too long ago we were all hoping to get shares in quality companies with great valuations! Now all of a sudden its upon us in regards to energy, commodities etc. and we make excuses why not to buy these stocks. Who would have thought!!!!!!!!

    Adding the value names as well.

    All the best,

  81. j-harr,

    Greed and fear. Stocks are the only thing in the world I can think of that people hate buying cheaper. Housing would be a close second. Useless consumer goods? People love to buy that stuff cheaper. Funny how the world works.

    Take care!

  82. It’s heartwrenching to be “out of the game” temporarily when a wonderful sale like this comes along. I still don’t feel that the market, as a whole, is fairly valued. I still have the (unfounded) opinion that the market is overinflated, but I would still be buying regardless. Fear paralyzes. Pretty soon I’d be invested 100% in bond and losing money to inflation!

    The house is coming along, though. I bought a new door awhile back, got a drill so I can do more repairs, found a free granite sink, a little bit of paint and I can hopefully calm down on all these house shenanigans.

    WE

  83. WE,

    The market could very well be overvalued right now. Hard to say. Various indicators and tracking tools will give you different opinions on that, but it really doesn’t matter to me anyhow. I simply look at the market like a true market – a store. Which is what it is. Lots of merchandise in the store. Even if the bulk of it is relatively expensive, I can usually find something in the back clearance section. 🙂

    Glad to hear the house is going well! I’ve just never personally had any desire to source doors, buy a drill, perform any repairs/changes, paint stuff, etc. Just not in my genes, I suppose. But it just gives me more focus and firepower for what I’m doing, which is something I enjoy. Different strokes for different folks.

    Cheers!

  86. Hi Mantra,
    Looking forward for your watchlist for December.
    Here is mine:
    BNS UL GE KMI ETN

    In addition, what do you think about the rumor about RDS buying BP?

  88. Khen,

    Nice list there! I’ve been trying to find the time and money to buy more UL. And it just keeps advancing on me.

    Looking forward to putting some capital to work this month. I know it won’t be anywhere near as busy as the last couple of months, but I’ll see what I can put together. 🙂

    That’s an interesting rumor. I wonder who actually puts those rumors out there. I wouldn’t be completely surprised to see a larger major like Shell try to make a move on BP, but I would have thought it would have been a much more attractive target earlier this year with higher oil prices. But that’s all speculation in the meanwhile.

    Have fun shopping!

    Best wishes.

  90. Michel,

    Buying what’s popular can be expensive. Conversely, being greedy when everyone else is fearful can be scary. It’s not for everyone, but I think that’s where a lot of long-term wealth can be built.

    Cheers!

  91. Hi Jason,

    Nice purchase and great write up as usual.

    I’m surprised you let bi-annual dividend payments put you off investments. As you probably know already here in Europe divies are usually twice of four times a year, at the end of the day it doesn’t really matter because you still get your money.

    In a way less frequent dividends can be better. If you invest shortly before the ex-div date you get a nice big cheque sooner that can be re-invested earlier with more impact. It’s all psychological really.

  92. UTMU,

    Well, the annual payout is a bit of a drawback because my bills aren’t annual. So I’ve always preferred the quarterly schedule that most US-domiciled companies offer. Not a real big deal since I’m pretty hardcore with tracking expenses/budgeting, but I do think it’s a small drawback. Perhaps we’re just spoiled here in the US. 🙂

    Less frequent dividends can be indeed better, however. Although, you could look at it also that the dividend comes “later”, depending on your point of view. Either way, it encourages long-term investing. Knowing that they pay out a small dividend just once a year, you’re not in it for the regular source of income. You’re in it because you think they can grow as a business and you want to grow with them.

    Cheers!

  93. Pingback: Weekend Fish Wrap: Best Get You A Snappy Resume - 101 Centavos

  95. Benjamen,

    Nice! I wish I would have waited a bit longer, but I’m pretty happy with the price I got in at. But you got a steal over there. Not much growth is even necessary to turn that into a satisfactory investment, assuming they can continue to pay out their dividend.

    Cheers!

  96. Hi there!

    Looking through BHP Billiton I don’t get the dividend right. It say’s the yield is over 5% but with a dividend of $1,26 for 2015 only becomes 3% (1,26/42,29). I thought maybe 4-traders.com hade uploaded misleading information but looking at their website about their dividend, the 2014 dividend also only becomes around 3% ($1,21/share). Can you maybe help me straighten this up? I don’t get it 🙂

  97. Martin,

    Happy to help. 🙂

    I explain this at the bottom of the article:

    “This purchase adds $62.00 to my annual dividend income, based on the current $1.24 semi-annual dividend.” (Emphasis mine).

    BHP Billiton pays a semi-annual dividend. If you take $1.24 and multiply it by two, you get $2.48. That’s the annual payout as of right now. They typically raise the dividend with the second payout in the fall. So the yield could technically be higher if you’re anticipating a raise, but I use the known dividend for my calculations (as do most financial sites).

    I hope that helps.

    Cheers!

  98. Hey! always follow your blog and its very interesting, but i have the following question, i’m from Holland and as you know the euro has dropped hard, that was a good thing for me because i just stockpiled Apple, but i don’t know what to buy anymore, in europe the dividends are not as good as in the us, but now stocks in the US are really expensive, what is your view on this?

    Keep up the good work

    Greetings from the Netherlands.

  99. Glenn,

    Thanks for following along! Much appreciated. 🙂

    I’m not sure I’d agree with: “…in europe the dividends are not as good as in the us.” It appears to me that there are high-quality stocks in Europe, but I mostly follow those based out of the UK and Switzerland. So I like companies like Unilever, Vodafone, BP, Nestlé, BHP Billiton, Shell, and Diageo. I’m not sure how that works for you – buying stocks in other countries from Holland. But I don’t think you lack choices over there, per se.

    Thanks for stopping by!

    Best wishes.

    Edit to add: Those companies aren’t necessarily recommendations. I was just pointing out that there are many candidates for potential research/purchase over there, without having to worry about the US market and currency issues.

Leave a Reply