Putting Money Where My Mouth Is: Buying ABBV, BLK, ITW & SWK

The last two weeks were memorable for my DGI portfolio. I’m heavily invested in REIT’s and depend quite a bit on their dividends (I know I should write distributions instead 😊). The total dividend I receive from five REIT’s make about 38% of my total dividend income.

Some readers asked me why I didn’t allocate more money on high-growth, low-yield stocks. A good question, indeed. But after failing to obtain solid investment returns by investing in Magic Formula stocks and microcap stocks it felt good to invest my money in some low-growth, high-yield stocks. Finally, I saw money coming my way. I continued doing this and sometimes built a position in stocks with other characteristics like CVS, DAL, PEP and SBUX. But these were more exceptions to the rule.

New positions

As I wrote, the last two weeks were a breakthrough for my DGI portfolio. At least, it felt that way. I initiated positions in Blackrock (BLK), Illinois Tool Works (ITW), Stanley Black and Decker (SWK) and added to my position in Abbvie (ABBV). These stocks have been in my league of buy candidates for a longer period of time, but they tend to trade against multiples which I considered too high. But as they say, quality comes with a price. So when trading prices came down substantially and I had some ammunition left, I decided to buy some shares of these wonderful companies.

Fundamentals

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I guess the weighted average yield on cost of my DGI portfolio sits around 5%. As you can see, the yield on cost of all these stocks is way lower. But, the dividend growth rate over three years is extremely high. Right now, I think the dividend growth rate of my DGI portfolio is also around 5%. This is caused by my relatively large positions (in comparison to my other positions) in businesses which pay a high-yield, low-growth dividend. Besides the five REIT’s that I hold, these companies are Philip Morris (PM), Souhern Company (SO), AT&T (T) and Exxon Mobil (XOM). Luckily, the dividends of my four new positions are extremely safe. So there’s enough room for high dividend growth numbers out of their earnings per share and even more if earnings continue to rise. By buying these stocks my DGI portfolio got a nice quality boost.

I do believe that there’s no harm in missing out better opportunities at the moment like AT&T (6.7% yield) and Kimco Realty (7.1% yield) which I already own. It was attempting to add more shares to my existing positions, but I have to overcome my bias for having a fat yield at the moment and missing the buy opportunities which will do well for me over a longer period of time. As the Rolling Stones sing “Time is on my Side” if I invest with at least a 20 year horizon. I feel very excited with these new positions! 🤩

What did you buy with the current market dip? Please let me know. Thanks for your time.

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2 thoughts on “Putting Money Where My Mouth Is: Buying ABBV, BLK, ITW & SWK

  1. Hello Dividend compounder,

    These are a few nice purchases. I bought ITW a few weeks ago. The dividend will not always be increased as much as this year. But it’s a very nice company. I also expect the dividend is safe.

    The price of BlackRock has dropped considerably in recent times. Have you been able to figure out why?

    Keep going!

    Like

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