Monthly Investing Recaps: June 2014

At the start of each month I detail all the buy/sell activity here for each of my 3 individual stock portfolios: Loyal3, Roth IRA, and Taxable Brokerage accounts. It’s just one way I am chronicling my journey to financial independence here at Starting From Zero.

In addition to these 3 accounts, I also continued investing in my Thrift Savings Plan (TSP) again this month. Right now I’m contributing 4% of my base pay but may adjust this in the future. The majority of my investing will still be in my taxable and Roth accounts. The TSP is basically a 401k plan for federal employees including the military. It only offers index funds but does have probably the lowest expense ratios around, even lower than Vanguard. Right now I’m putting my contributions in the C Fund which mirrors the S&P 500 and the S Fund which is a small cap index fund. Since these deposits typically take a while to reach my account, I won’t be detailing those transactions here.

After not investing any new funds in May, I pooled all the cash I had and made one final purchase for my Roth IRA for the year and used the excess to make some smaller purchases through Loyal3.

Loyal3 Account

Buys

3.43 shares of Target (TGT) @ $58.31 per share.

3.3624 shares of Dr. Pepper Snapple (DPS) @ $59.48 per share.

Sells

None.

Quick Hits: With Target continuing to trade at an attractive long-term entry point and recently announcing a 20.9% dividend increase, this dividend champion was a no-brainer to add to.

Dr. Pepper is a new position for my portfolio. DPS is a manufacturer and distributor of non-alcoholic beverages that are sold in the United States, Canada, and Mexico. The company’s brands include its flagship Dr. Pepper and Snapple drinks, Sunkist soda, 7UP, A&W, Canada Dry, Crush soda, Hawiian Punch, Mott’s, Schweppes, and my personal favorite as a kid, Yoohoo. Unlike its main competitors, Coca-Cola and Pepsi, both of which are trading at P/E’s of 19+, Dr. Pepper’s P/E comes in at 17.5 with a forward P/E of 15.2, both of which are less than the S&P 500′s current and forward P/E ratios of 18.3 and 17 respectively. Although they have only been growing their dividend for 5 years, the stock does sport dividend growth rates of 10.4% for the past year, and 22.8% average for the last three years while still keeping the payout ratio at 47%.

Roth IRA

Buys

23 shares of Deere (DE) @ $91.80 per share.

Sells

None.

Quick Hits: Deere is another new position for my portfolio and one I’ve been looking to add for a while now. Growing up in a rural town and with plenty of farmers and other users of Deere tractors and equipment in my family, I guess I have a soft spot for the stock. Although earnings are expected to decrease in the coming few years, I like the long-term growth story of this company which is summed up nicely at their investor page. After keeping their dividend static for five quarters, Deere recently announced a 17.6% increase, bringing the quarterly payout up to $0.60 from $0.51. Sweet. :) Even after the recent run-up in price the stock continues to trade at an attractive valuation with a P/E of just 9.9.

Taxable Brokerage

No activity this month.

 

Full Disclosure: I am long TGT, DPS, DE, and KO. This post is not intended to be a buy or sell recommendation for any stock mentioned and is intended for educational/entertainment purposes only.

How was your June for investing? What do you think of my stock picks this month? Share with a comment below and thank you for reading!

5 comments

  1. SFZ,

    Nice moves! You put some serious capital to work. 🙂

    I like the Deere investment for the long haul. I expect some volatility for the next couple of years with a potential drop in earnings, but this should be a great company to own for the next couple of decades.

    I continue to watch V and IBM this month, but both have shot up over the last week or so. I may have to look elsewhere.

    Keep up the great work.

    Best wishes.

    1. Hey Jason, thanks for stopping by man.

      I expect Deere will probably be one of my more volatile positions share price wise as a cyclical stock, especially with earnings expected to drop here in the short-term but with the low payout ratio and buyback plan I think the dividend should be all right.

      V and IBM are good picks, I don’t think you can go wrong with those two. It’ll be interesting to watch IBM over the next few years to see how the revenues play out as they are definitely a company in transition. I’d like to add more to my positions in both of them at the right price.

      Best wishes,
      SFZ

  2. Like several people I’m lackluster on DE because of their 5 quarter dividend hold. I’m also from a rural town (in Minnesota), so I know nothing runs like a Deere.

    Also, TGT is a great entry price after being battered lately. Canadian ramp-up didn’t work out so well, credit card breach, etc. I’m not sure how I feel on big-box retailers in general – Sears, Wal-Mart, Kmart, Target, etc. Target has already been around for 110+ years…. Does that mean it’ll be around for another 100? Will 3D printing or online e-tailers kill (completely) big box? [I’m long TGT – financially it’s a good choice].

    Thanks!
    Wallet Engineer #1

    1. It will be very interesting to see how big-box retail as an industry plays out over the next 10, 20 years. I like to think both Wal-Mart and Target will still be successful going forward. I don’t think we’ll see retailers completely replaced with online businesses anytime soon. I’d like to see Target work to increase their online retailing business though to better compete with Wal-Mart and better keep up with the shift towards e-retailers. I was reading an article recently about Target’s almost non-existent online business in Canada. Hopefully that changes soon.

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