Friday, May 6, 2016

Recent Buy - ABT



At the end of last month, I bought some shares in GILD. This is partly due to my re-balancing of my portfolio to add more healthcare companies. It is also partly due to the some weaknesses in the sector (at least for some companies).
To continue this trend, I added to my position in ABT in my tax deferred account.
By the way, my strategy of buying companies when the sector is performing poorly hasn't been too great. Last year, I bought a bunch of industrials. Not much action there. So, please don't follow me:). Anyway, I plan to sit on these companies for years and collect the dividends.


On May 6th, I bought 90 shares of ABT in my tax deferred account.


Date
Transaction
Ticker
Price
Quantity
Amount
Divs/Year
Est. For Dividend
5/6/2016
Buy
ABT
37.95
90
$3415.50
1.04
$93.60




Total
$3415.50
Total
$93.60


I bought ABT last September and again earlier this year. So, this is not a new position for me.





My criteria table is very similar. The difference is S&P Capital IQ rates it a 3 star now. So, buying ABT still makes sense. For my son to understand ABT’s business, here are some brands he is familar with.




Of course, its not just nutritional products. You can read more about ABT here - http://www.wikinvest.com/stock/Abbott_Laboratories_(ABT)


What's new with ABT since my last purchase?


Abbott Laboratories ABt will acquire medical device maker St. Jude Medical Inc. STJ, in a deal with an equity value of $25 billion using a cash and own stock. Whether this will be successful, time will tell. For me, it's all part of doing business.


Valuation


After revisiting my DDRM, PE and Yield theory tools, my fair value estimate is around 45-50.

Ticker
ABT
High
2.90%
Low
1.90%


Current Price:
37.97
Current Div:
1.04
Current Yield:
2.74%


Current Year:
2016
High Price:
54.74
Mid Price:
45.30
Low Price:
35.86


DDRM

Dividend Rate ($)
1.04
Divided by: share price
37.97
Current yield (%)
2.74%
Core Growth Estimate (%)
10.00
Divided by: ROE (%)
11.25
Multiplied by: EPS ($)
1.70
Cost of Growth (%)
1.51
Earnings per Share ($)
1.70
Minus: Dividend
1.04
Minus: Cost of Growth
1.51
Funding Gap ($)
-0.85
Divided by: Share Price ($)
37.97
Share Change (%)
-2.24
Core Growth (%)
10.00
Plus: Share Change (%)
-2.24
Total Dividend Growth (%)
7.76
Plus: Dividend Yield (%)
2.74%
Projected Total Return (%)
7.79


Dividend Rate ($)
1.04
Required Return (%)
10.00
Growth (%)
7.76
Price
46.40


Dividend Rate ($)
1.04
Required Return (%)
10.00
Growth (%)
8.00
Price
52.00


Average
49.20


P/E High and Low

High P/E
24.00
Mid P/E
15.75
Low P/E
7.50


High Price
70.32
Mid Price
46.15
Low Price
21.98


P/E 5 Yr High
30.05
P/E 5 Yr Low
7.44


P/E 5 Yr Median
15.69


Current P/E
12.97


2016 P/E Est
15.37


I continue to see weaknesses with ABT. I have enough to add another small position if ABT drops to the low 30s.


What do you think about ABT?

D4s

11 comments:

  1. Great purchase D4S. I like the healthcare space a lot and have been thinking about this stock. Thanks for sharing and "will" be a shareholder with you :)
    Have a great 1 bud.

    ReplyDelete
    Replies
    1. Thanks Div Hustler,
      The sector is currently attractive, at least for some companies. Whether this is go according to plan, we shall see... but anyway, good luck with your decision!
      D4s

      Delete
  2. I am bullish on ABT for the long haul, even though the market is not at the moment. I currently own shares and will be adding more shares soon

    ReplyDelete
    Replies
    1. Kenny,
      Thanks for visiting. Definitely a long haul company. In the near term, I see some weaknesses - especially if the whole market tanks. Then, we'll really be in the buying range.
      D4s

      Delete
  3. I am bullish on ABT for the long haul, even though the market is not at the moment. I currently own shares and will be adding more shares soon

    ReplyDelete
  4. I am seeing this name pop up in DGI community a lot,maybe i will buy it in small lots.

    ReplyDelete
    Replies
    1. Desi,
      Thanks for your comments. My approach is to go with small lots and 'average' into a reasonable position. And yes, ABT is quite popular. With its dividend history, it's been around for a while. Good luck!
      D4s

      Delete
  5. hi D4s,

    ABT dividend growth will probably slow down for the next 2 years while it continues to digest STJ so I don't think ABT is going to skyrocket this year. ABT will probably follow industrials from last year but that's fine by me. ABT's long history of dividend increases, spinoffs, and management makes this a very attractive company bought on any weakness.

    I'll be a shareholder with me you soon once my money is in order. cheers

    ReplyDelete
    Replies
    1. Broke Div Investor,
      I agree with you on the slower growth next couple of years. It's funny - GILD is like the other end of the spectrum. Anyway, the total ROI is within my acceptable range, so sitting long term is completely fine with me. Glad to be (future) shareholders with you.
      D4s

      Delete
  6. You are buying in all market conditions which makes sense when trying to build up your passive income stream and buying ABT is as solid as they come. Great company that I personally held since 2007 with no intentions to sell. Thanks for sharing this good pick.

    ReplyDelete
    Replies
    1. Thanks DivHut, it is definitely a company to keep for the long term.
      D4s

      Delete