I really want to write up my June monthly summary to see how the first half of the year ended. But before I do that, here’s a summary of a June stock purchase that I made last month.
As part of my general simplification strategy in my portfolio, I aim to hold around 10% of the portfolio in individual stocks. I also favor holding fewer individual stocks for easier management. The 428 companies in VHDYX and 931 companies in VIHAX provide diversification since those two funds make up the bulk of my portfolio.
I decided to make a small purchase in June to take advantage of a lower priced stock and add to an existing position. This purchase came from Income Fund cash and is in addition to the regular purchases I make each month.
Bought: L Brands (LB)
I bought 8 LB shares for a total of $404.72 on June 6th. This includes a $2 commission at my Vanguard brokerage. I now own 31 shares.
My reasons for buying
- Under-valued with a P/E of 13 at the time of purchase.
- Long-term dividend payer with a good ratio of payouts to free cash flow (72% for FY16)
- Strong brand names used in popular culture.
- Room for international growth as most revenue comes from US, Canada & China.
Five-year growth forecasts for T range from 8% at Finviz to 0.4% at Morningstar. Short-term growth is expected to be slow as the company stopped selling clothes and swimwear in order to focus on their core product lines.
The company recently paid its 170th consecutive dividend. However growth is low with the last six payments remaining constant at $0.60. This equates to a 4.7% yield at the time of purchase and above 5% at current prices.
The Retail industry has been under siege for the last few years as the traditional mall-focused culture declines and shopping patterns continue to evolve. The LB share price took a hit this week in July due to lower sales as they focus their products. However I think there’s still long-term value in the Victoria’s Secret brand.
With this purchase, LB represents 0.5% of my Income Fund including the portion of LB I hold within VHDYX.
Quote of the Day
The true currency of life is time, not money, and we’ve all got a limited stock of that.