Finally a week without ANY selling! I’m just sitting back and re-investing my dividends at this point plus a little bit of extra capital as we get closer to the new year. I’ve done a little recession proofing the last few weeks/months and am happy with almost all of my positions going forward. The few exceptions, for which I have sell orders in waiting to be filled:
HCP: If I break even, I’m going to sell this position due to its recent dividend cut. REIT stocks are harder for me to gauge and after HCP cut its 20+ year dividend streak, I no longer find it predictable enough to invest in. That being said, I’m not cutting bait while it is at its lowest point in months.
OHI: No cut yet, but similar to HCP
F: I bought some shares on the way down in order to value average my position. Ford is now one of my largest positions and although I like the company long term (and its high yield), I’m going to trim my position whenever I break even.
So the buys for this week:
GILD: Buy 3 shares @ 72.40 ($217)
Just a little averaging down here, as I owned 14 shares that were down roughly 10%. Still have faith in this stock as a growth play, given its large EPS and low payout ratio. I might add a little bit more going forward, but right now I like my position of 17 shares.
GNTX: Buy 32 shares @ 20.18 ($647)
Deviating from my strategy a bit to invest in a growth stock. I’ll go into this one since most people haven’t heard of it (including me before research!). A while back I read one of my favorite books: The little book of BIG DIVIDENDS. I highly recommend this book as it gives some great pointers and they have an updating website that gives plenty of ideas for investors. I check it every week. The book’s philosophy differs a little from mine in the fact that it recommends more low payout ratio stocks with room for growth rather than your usual Coke, Proctor & Gamble, Johnson & Johnson recommendations. I find that the recommendations jive well with my strategy of building a core position in safe stocks and then smaller positions in these growth stocks.
I have invested in several of these stocks, and although EVERYTHING seems to be up at the moment, they have been highly successful for me:
I think these companies are a perfect complement to my positions that I expect dividends from, but maybe not big price growth. I invest in a little of stocks that have raised dividends for 25+ years, with yields anywhere from 3-5%. These stocks won’t ever double but they are low and steady growers with consistent dividend payouts. What I’m looking for here are stocks that might yield 1.5-2% with payout ratios that indicate there is room for growth within the dividend. In addition to this – I’m looking for high EPS, indicating that there is a possibility for price growth AND dividend growth. These companies (not saying they will!) all have the potential to grow into consistent dividend payers, or double in share price. Keep in mind these positions are not as safe, so you won’t see me commit a large amount of money to any of them.
Let’s take a look at GNTX, who manufactures rear view mirrors and various electronics for the automotive industry:
Dividend Yield: 1.87%. A little low for a dividend portfolio, but plenty of room for growth
Payout Ratio: ~30%. The dividend seems very safe as their payout ratio has been steady around 30% for years
10 Dividend Increase Avg: 6.4% annually. Outpaces inflation and then some.
Dividend Increase Streak: 5 years. Definitely a little shorter than I’d like, but with a low payout ratio, I’m a little more confident.
EPS Growth: 13.8% annually for last 10 years. Impressive!
I’m going to give GNTX a try and invest in a small position over the next month or so. After so much investing in our safe stocks with long histories of dividend increases, I’d like to add some growth potential into my portfolio. GNTX will never be as safe of an investment as Johnson & Johnson (JNJ) but there are reasons for optimism when looking at their growth over the last 10 years.
Thanks for reading!