Dividend Growth Portfolio

2019 retrospective about my stock purchases

2020 has almost finished January already and I would still like to give you a brief update regarding my stock purchase performance from last year.

As you will see, I haven’t bought that many stocks last year. Generally I’m using an investing approach which is a combination of value-investing and dividend growth investing. This means that I’m not necessarily every month purchasing new stocks, because I’m typically looking for stocks at a price below fair-value.

The good thing is that every year there are always several opportunities to purchase some stocks when having a watchlist portfolio of, in my case, approximately 40 stocks. Also in a bull-market on steroids, so 2019 was no difference ๐Ÿ’ช

Therefore I will share with you my retrospective on last year’s purchases using factual data. I do such retrospective on a continuous basis, because it allows me to learn from both my successes and failures and hopefully further improves my investment philosophy.

Stock Purchase United Technologies

United Technologies Corporation ($UTX) is an industrial company with a wide and diverse portfolio in the Aerospace and Industrial Building sector

UTX has been paying a growing dividend for 26 years and back in January the price came down quite a bit into my fair-value zone ($115).

Source: Google Finance

Therefore I entered a position in United Technologies ($UTX) on 7 January 2019 at $106 per share. The yield on cost is 2.85%.

As you can see in the chart, the price relatively quickly appreciated again towards the ~$130 area which means that I’ve not purchased any additional shares. UTX currently sells for $154,40 which is a price appreciation of 45.66%.

While it feels good definitely good that the price appreciated this much (confirmation bias ๐Ÿ˜‰), my main goal is to see a growing dividend. Luckily also the dividend got increased last year from $0,70 to $0,735 per quarter / per share, which is a 5% dividend increase.

My portfolio expectation is to see a growing dividend of 6% on average, so in my opinion it could have been a bit more.

Conclusion

UTX has performed reasonably well last year. It was a no-brainer for me to purchase at the time. I didn’t feel any stress and at the time there was nothing wrong with the company. It went down as part of a wider market sell-off back in December 2018.

Unfortunately the price shot up too quickly there after and therefore it stays a relatively small position in my portfolio. I wish to add more in case the stock becomes attractive again.

PS: recently UTX merged with Raytheon, so I will have to evaluate this position once I know more about their dividend policy after the merger.

Stock Purchase Koninklijke Ahold Delhaize

Koninklijke Ahold Delhaize ($AMS:AD) is a Dutch / Belgium retail company operating supermarkets in several European countries and the United States (i.e. Food Lion and Stop & Shop). Ahold Delhaize also runs the biggest e-commerce in the Netherlands called bol.com (Dutch equivalent of Amazon).

$AMS:AD has been paying a growing dividend for 11 years and I bought the stock at 20 Euro per share on 31 May 2019. My fair value estimation at the time was 19.80 Euro and for me this was a case of buying a great company at a fair price. The yield on cost is 3.5%.

I already owned half a position since 2017 when there was a general market sell-off after Amazon announced to acquire Whole Foods.

Ahold Delhaize currently trades for 22.33 Euro, which is a price appreciation of 11.65%. Their latest dividend increase was from 0,63 to 0,70 cents which was a 11.11% dividend increase.

Conclusion

I’m pretty happy with this purchase. I got to increase my position in the stock and at the same time the dividend increased with more than 11%. This was a very good dividend increase and contributed a lot to the current dividend yield. I believe that this company has still a lot of room for growth, thus also the dividend.

I might add more to my position if the share-price drops back to approximately 20 Euro per share.

Stock purchase Apple inc.

Well, who doesn’t know Apple? So let’s skipp their intro ๐Ÿ˜Ž

$AAPL has been paying a growing dividend since 2012 and I bought the stock at $170.65 on the 3rd of June. My fair value estimation at the time was $225 so I decided at the time to add some to my position. The yield on cost of this purchase is 1.8%

I already owned some $AAPL from earlier purchases when the price was around $130, but I am still below half of a position size.

$AAPL currently trades at $318.73, which is a price appreciation of 86.77%. Their latest dividend increase was from $2.92 to $3.08 which was a dividend increase of 5.48%.

Conclusion

For me Apple Inc. is just a great company to own. Actually, I would love to add more when the price drops below $200 again to further build out my position.

I do wish however to see some bigger dividend increases in the upcoming years instead of all the share buybacks. I prefer cash in my pocket instead of price appreciation, because it also allows me to add more to the position at a lower cost basis with a higher dividend yield.

Stock Purchase Abbvie Inc.

Abbvie Inc. ($ABBV) is an American biopharmaceutical company and was spun off from Abott Labatories back in 2013. Abbvie is most known for its drug product Humira, a medication to treat for instance rheumatoid arthritis. It is the biggest selling drug currently in the world.

The share price dropped quite a bit last year for two reasons: Firstly, shareholders are concerned about the potential loss of revenue due to the competition launching biosimilars and secondly due to the increased debt load by purchasing Allergan.

$ABBV has been growing its dividend since the spin-off from $ABT, but don’t worry, because if you would take Abbott’s dividend growth history into account, then the dividend has been growing for 47 years.

I went quite agressive here and bougth the stock in 4 tranches last year:

  • 26 June 2020 at $68.20
  • 5 July 2020 at $74.60
  • 11 July 2020 at $70.00
  • 31 July 2020 at $66.00

My fair value estimation still stands at around $110. The average yield on cost of this purchase is 6.8%.

$ABBV currently trades for $88.00, which is a price appreciation of 26.51%. Their latest dividend increase was from $1.08 to $1.17 which was a dividend increase of 8.33%

Conclusion

I am really happy with this purchase. The average yield on cost is very high for a company that I feel very comfortable owning with. Also their latest dividend increase has put a very big smile on my face.

My position size is currently 2/3rd or my desired position and I wish to add to a full position on any future pull back.

Stock Purchase 3M Company

The 3M Company ($MMM) is an industrial conglomorate. The company produces over 60.000 products and is among consumers best known for their post-its.

$MMM has been growing its dividend for 61 years, which means that it is a true Dividend Aristocrat. I bought the stock for $155.00 on 28 August and my fair value estimate was $156.00, so therefore I decided to initiate a position. The yield on cost for this position is 3.72%.

$MMM currently trades for $181.35 which is a share price appreciation of 17%. Their latest dividend increase was from $5.44 to $5.76 which was a dividend increase of 5.88%.

Conclusion

$MMM is usually pretty expensive from a Price/Earnings ratio, so I was very happy that I got the opportunity to initiate a position in it. I am looking to purchase another tranche if $MMM would hit my fair value estimate of $156 again.

Summary

I am very happy with last year’s stock purchases. The bull market is very hot and last year I heard many people speaking about the lack of value investing opportunities.

I have actually not allocated that much capital as envisioned, but it has proven again that there is always some undervalued stock out there. Last year’s stock was $ABBV and I hope that there will be something similar again in 2020.

On average the price appreciation for these purchases was 30.17% in approxamity half a year. The average yield on cost added to my portfolio was 5.40% in 2019. This is a very high yield and it is mainly a result from the stock purchases of $ABBV.

I do not expect to replicate such performance in 2020. I consider 2019 as a very exceptional year and my performance was mainly driven by market forces and luck, rather than wisdom.

I do realize though that I do sound very satisfied with my last year’s stock purchases. Please don’t confuse that with being happy with the price appreciation. If I would purely benchmark myself with the S&P500, then yes, I have done pretty well knowing that I purchased most of the stock over the summer.

However, price share appreciation like this is not something that I’m very happy about, because it limits my opportunities to buy more. My strategy is about buying cash flow in companies that I believe will keep on growing their dividends for decades to come.

I would also like to recommend to do your own research and to not blindly purchase stocks based on popular stocks in the community. As an example: many people don’t feel comfortable to own $ABBV due to the amount of debt they had to issue to be able to purchase Allergan. It is definitely a lot and it requires management to keep a really close eye on their financial performance.

You need to judge yourself whether you feel comfortable with that and whether it fits with our tolerance for risk.



What do you think about my stock purchases from last year?

What where the stocks that you purchased in 2019 and how does your return look like?

I’m very curious to hear your opinion and to learn and get inspired by you. Feel free to leave your thoughts in the comment section.

A like to this post always put a smile on my face ๐Ÿ™ If you want to get notified about any upcoming post, then feel free to subscribe to this blog by leaving your email address in the right sidebar at the top.

0 comments on “2019 retrospective about my stock purchases

  1. Thanks for sharing! Anything interesting that you’re looking at now? UTX seems interesting considering the geopolitical uncertainty around the world.

    • I just purchased some Exxon Mobil ($XOM) the other day. Other than that I’m currently doing some research in European Stocks. Too early to say which one i’m finding interesting. Last but not least: $ABBV is something that I will futher increase my position in on any pullback ๐Ÿ˜‰

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