Wednesday, July 8, 2015

Recent Buys (Again)

Hello,

It looks like a lot of selling these days.

When the market is all red, I see opportunities to average down and to add new positions. 

For me, it's like Black Friday - except it's the beginning of July.

Some companies seem to be always expensive. If you are patient  enough, you can wait until it is way below its fair value to make the purchase, or you can just go for it. 


Today, I made the two buys:

DateActionSecurityPriceQuantity
7/8/2015BuyUNP9617
7/8/2015BuyMMM15310

I averaged down on UNP. I bought UNP last month when it was just over $100. Now, it has dropped around 5%, I am happy to average down to reduce my basis. 

The other is MMM, which is a new position. Originally, I said MMM is too expensive at $159. And yes, it is still expensive, but I feel that it is close enough to my fair value point to make the purchase. 

MMM is one of these companies that is always slightly a little expensive. 
The yield over average yield is 1.13 meaning that MMM is actively raising its dividends even though it's current PE is still way over its median PE. 

You can check out my analyses of UNP and MMM below:


The fundamentals of both of these companies did not change. 

Due to the current market volatility, I believe there is still some near term downside with both of these positions. However, with an investment time frame of decades, I am okay with making these purchases and averaging down accordingly.

The purchases will add $78 to my forward yearly dividends. 

Lastly, with the (potential) market downturn, I have opened up my emergency fund/war chest and will slowly add to my positions. This was part of my strategy building up diligently the war chest for times like these. Hopefully, I can deploy the funds effectively. 

Did you make  any recent buys?

Div4son

14 comments:

  1. Great purchases, Div4Son. UNP is starting to look attractive now that it is in the mid-90s. Like you said, MMM is almost always trading at a bit of a premium...hopefully, this market downturn will bring better prices.

    Congrats on adding to your portfolio.

    cheers
    R2R

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    1. R2R, thanks for visiting. Hopefully, I can slowly build up my position on MMM. I have it on my watch list for a while - but I think there may be more opportunities later this year to add.
      UNP and other transportation companies are being hammered by the market so it's an obvious choice to avg down.
      D4s

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  2. Div4son,

    Very nice! You can't go wrong adding to those two timeless companies. Great job adding an extra $78 to your forward dividends. Hopefully the markets will continue to fall so we can add more bargains to our portfolios!

    MDP

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    1. MDP, I am taking your advice to continue to invest. Ultimately, it's about the dividend income and if the companies continue paying and growing their payments, I've essentially locked in part of my future.
      D4s

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  3. I have been eyeing that MMM for a while but may just need to pull the trigger on this market pullback. It's a great one to own long term for sure. Congrats!

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    1. Adam, thanks for your comment. MMM is still expensive, and I think it may drop more. Like you, i waited a while, but since it's an initial position, I don't mind adding some capital at its current level.
      D4s

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  4. Hi D4s,

    Great timing on the new buys! Looks like we have several holding in common. Keep up the great work!

    ~Blake

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    Replies
    1. Blake, thanks for visiting. You know what they say about great minds thinking alike. :)
      D4s

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  5. Excellent buys and great timing too. Both are very solid companies.

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    1. Thanks Tawcan. I am not sure about timing, but I am happy with the forward dividends.
      Thanks for your encouragement.
      D4s

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  6. Two solid long term holdings and I own both of them. I need to look at MMM again to check my valuation because the company is rock solid and will continue to be so for decades to come. I'm probably done adding UNP unless we see the low $90's for the share price. Nice purchases Div4son!

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    1. Thanks Passive Income Pursuit for your comments. I think MMM is still a little expensive. From a long term perspective, I think it's okay - especially for an initial position.
      D4s

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  7. MMM is a great company that is rarely on sale. I think you have to wait for a major meltdown like we had in 2008 to get MMM at a great price. The bottom line is that in ten or twenty years from now there is a high probability that you'll be happy with your current MMM buy. I also would like to add to my holding but focusing on other names in my portfolio for now.

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    Replies
    1. DivHut, thanks for visiting. Yes - I agree completely. It doesn't matter in 10 or 20 years.
      D4s

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