With the recent pullback, I decided to move some money out of my emergency savings/house purchase/home furnishings account. Reviewing my finances, I felt like I could pull some money out of this account without harming my ability to have more than enough for a potential down payment on a house once my condo sells while have money left over for emergencies or furniture or repairs, etc. With the carnage of today, I think the market is likely to have a bit more follow through, at least, to the downside but I went ahead and made 2 purchases today, 2/3/2014, as I am seeing more value in the DGI space than I have seen since I started last summer. I do not consider myself a market timer and am not worried about trying to catch the bottom. I figure if I keep buying, some purchases will be near market bottoms and some near tops with many in between but my progress will be steady. Having decided that I could afford to release some savings reserves left me with only one difficulty? Deciding what to buy with my limited funds.
To add new positions or take advantage of a chance to average down? That was my first question. I decided I had enough for a normal size buy ($1500-$1600) and a smaller buy so I decided to average down with the small purchase and add a new position.
When looking at current positions, there were 3 positions I felt offered compelling opportunities to average down. These were MCD, PEP and PM. While I think all three are good values, it was an easy call. I added 15 shares of PM at $77.20 this (2/3/2014) morning. Really wished I had waited until the afternoon but who knew PM would fall nearly $2 more and approach a 5% yield. My previous purchase was at $83.50 so this was just over a 7.5% discount to my original purchase price and I was very happy with the first purchase. I am now overweight PM with 34 shares which is approximately 11% of my DGI portfolio. The purchase adds $56.40 to my forward annual dividend income.
With my PM purchase complete, I now turned towards making a new purchase for my DGI portfolio. I had quite a few positions that I was really liking and even looked closer at F as I think it is a downright steal at $14.50 but it isn’t DGI material, at least not yet. As they day went on, I focused on 4 companies and then 2. They were CVX, GIS, JNJ and KO. I want all of these in my portfolio and I am not sure which is the best deal at current prices. It seemed like I could not make a right or wrong decision and I hope all of these continue to remain at the same or better prices for as long as possible. Ultimately, I felt KO and JNJ were the most ‘must have’ positions and I set out to get the best possible price. I wanted KO at $37.30 but pulled the trigger on JNJ at $86.85 mere minutes before KO hit my price. I purchased 18 shares of JNJ at $86.85 this afternoon (2/3/2014) which adds $47.52 to my forward annual dividend income. JNJ has a 3.04% yield at $86.85 and I expect a dividend increase next quarter (June payout). Getting KO or JNJ at 3%+ yield is something I consider an attractive opportunity.
What do you like better here, JNJ or KO? Are you buying now or waiting for further downside?