June 2014 – Stock Purchase (1)

I’ll be making more stock purchases this month as I have more monthly cash available after my house sale. I’m still using Sharebuilder for my purchases at the moment and I’m on their automatic plan which charges $12 for 12 stock purchases in a month. The $12 is paid via credit card out of my monthly living budget so I don’t really think of it as a commission fee even though it is.

Stocks by sector (June 1, 2014)

Here’s a view of my Portfolio grouped by market sector with the lowest valued sector highlighted in red and the next two lowest sectors in orange.


The chart shows some additional details such as the target value needed for equal weighting and if stocks are over or under that target.

Individual Stock Purchases

My lowest value sector this time around is Consumer Cyclical where I own LB, HD, MCD and MAR. I have $330 to invest this week so I’ll be buying HD and MAR in proportional amounts to weight the sector more evenly.

L Brands [LB] is probably more well known by its main brands, Victoria’s Secret and Bath & Body Works. It’s a $17B retail company based in Columbus, OH. I originally picked this company because of its strong brand names and the fact that its products more or less sell themselves. Its P/E is 18.3, a little lower than the industry average of 21. Its current dividend yield is around 2% although it does have a tendency to pay out special dividends [1] in addition to its regular ones. Payout ratio is a reasonable 39% (from Morningstar; it shows as 15.5% on my Porfolio page due to the calculation of dividends per share / earnings per share).

Home Depot [HD] has been increasing its dividend steadily over the last 14 years, and its dividend is currently $0.47 a share with a yield of 2.3%. Its P/E ratio of 20.4 is higher than the industry average of 18. HD’s payout ratio is a reasonable 41.7%.

McDonalds [MCD] has increased its dividend for the last 37 years and its dividend is $0.81 a share with a yield of 3.19%. Its dividend payout ratio has been increasing over the last 6 years and now stands at 57.4. Its P/E ratio (18.4) is lower than the industry average of 28.5.

Marriot International [MAR]. Based on market capitalization, MAR is the second largest hotel operator after Hilton. It has increased its dividend since 2009 when it lowered payouts, and the yield is currently 1.30% with a payout ratio of 32.4%. MAR is a stock I own ‘just for fun’ [2] as I am loyal to the brand and the rewards program.

My purchases

In summary, here’s what I’ll be buying this week.

$250 Vanguard High-Yield Dividend Fund (VHDYX)
$100 Vanguard Total International Stock Index Fund (VTIAX)
$100 Vanguard High-Yield Corporate Fund (VWHEX)
$330 Individual Stocks (MAR, HD)

These investments should increase my yearly dividend income by about $22.

Full disclosure: I am long MAR, HD, LB and MCD.

What are you buying this month?

Live life fully while you’re here. Experience everything. Take care of yourself and your friends. Have fun, be crazy, be weird. Go out and screw up! You’re going to anyway, so you might as well enjoy the process. Take the opportunity to learn from your mistakes: find the cause of your problem and eliminate it. Don’t try to be perfect; just be an excellent example of being human.

[1] Special dividends are taxed at regular tax rates, not the discounted rate for qualified dividends.

[2] Or possibly that I have more money than sense! But I believe in the company and that it will continue to grow.

4 thoughts on “June 2014 – Stock Purchase (1)”

  1. Hi, You got a good portfolio. I am a dividend growth investor and have been focusing on dividend stocks for a few months now and looking to grow my portfolio with quality dividend payers.
    I had a quick question about the Sharebuilder plan that you mentioned here? What is this plan that you are talking about? $12 for 12 trades in a month? How does it work? I checked their website and I don’t see that option. They have the $3.95 per automatic trade plan and regular one at $6.95 listed on their site.
    I am current with Scottrade and looking to open another trading account in addition to the one I already use. So was curious to know who this $12 plan worked.

    1. Hi DividendJourney,

      Thanks for stopping by! I’m enrolled in Sharebuilder’s “Advantage Plan” which is a $12 monthly fee and includes 12 free automatic trades a month. I just checked their website again and it looks like they no longer offer this program to new subscribers, but you could ask them to confirm. They also have reduced pricing for Costco members hidden away on their site I think.

      I do have trading accounts at Sharebuilder, Vanguard and Charles Schwab, and Iused to have a Scottrade account but I closed it a couple of years ago.

      A quick summary of my thoughts about these brokerages:

      Vanguard.com – I use this brokerage account if I want to buy more than $700 in a single stock. They have reduced pricing when you have higher funds / retirement accounts with them (part of my 401k is there) all the way up to free stock trades (although brokerage account values don’t count to this total). I like Vanguard and own some of their low cost funds in taxable accounts as well as use their brokerage. Look for Vanguard Voyager Select / Flagship if you’re interested about the reduced stock pricing – $2 a trade upon qualifying for Voyager Select and $0 a trade for Flagship.

      Sharebuilder – I use this account for dollar cost averaging as I usually buy stocks in less than $700 amounts and I was trying to diversify. I’m not sure I would continue with this brokerage except for the Advantage Plan I mentioned above. It’s hard to transfer assets to another brokerage (they don’t do electronic transfers out of the account).

      Schwab – I opened this account to qualify for their High Yield Investor Checking account which refunds all ATM fees worldwide. I’ve never bought stock in their brokerage, although I did purchase some of their low cost mutual funds (which you can buy starting at $100 instead of the more typical $3000 for most funds). I don’t have any assets with them now except for the checking account which is great.

      Scottrade – I closed this account a couple of years ago in favor of Schwab and moved my assets to Vanguard. Shortly after I closed the account they offered free ATM checking; I probably would have kept this account for this but it was too late. I do my taxes at HR Block and they charge extra for each brokerage entry, so there was no point in keeping assets here.

      Your blog looks interesting, so I’m off to read it now. Thanks again for your comment!

  2. I checked with Sharebuilder and looks like they discontinued the advantage plan. Currently it is $3.95 per automatic trade. Looks like you got a great deal 🙂

    1. Hi DGJourney,
      It’s a shame they stopped that program. You could look into loyal3.com as they offer free trades and DCA but with a restricted stock selection – I’ve not used their site but it might be something worth checking as an alternative to a regular brokerage.

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