Investments

As anticipated in the previous shopping list update, Omega Healthcare Investors, Inc was the purchase of the month this time around. On September 19th I bought 30 shares for 34,64 USD per share. Current quarterly dividend being 0.51USD per share, the projected impact on annual income is 61,20 USD before taxes.

Company profile from http://www.omegahealthcare.com/CorporateProfile.aspx?iid=103065:

Omega Healthcare Investors, Inc. (NYSE:OHI) is a Real Estate Investment Trust (“REIT”) providing financing and capital to the long-term healthcare industry with a particular focus on skilled nursing facilities located in the United States.

At June 30, 2014, the Company owned or held mortgages on 563 skilled nursing facilities, assisted living facilities and other specialty hospitals with approximately 63,733 licensed beds (61,353 available beds) located in 37 states and operated by 49 third-party healthcare operating companies.

As a source of capital to the healthcare industry, Omega continually evaluates the opportunities, trends and challenges affecting the industry. Our goal is to identify long-term investments in quality healthcare properties with outstanding operators that provide the most favorable risk/reward ratio to our investors.

Stock information: http://www.omegahealthcare.com/stockinfo.aspx?iid=103065

 

While waiting for the stock market correction everyone is talking about, I’m considering the following stocks for my next purchases. Expected order is roughly as follows:

• Omega Healthcare Investors
• Allianz
• Nordea
• Telia-Sonera
• Aflac
• Deere

Bubbling under:

• Adidas
• Travelers Companies Inc.

OHI has been on my watch list for a while now so it is the most obvious pick. Aflac and Deere are existing positions but both are very likely to present attractive opportunities during the next 6-24 months. I’m not in hurry to add on those positions but instead will start on adding positions in european companies before the spring payouts. This is pretty much the preliminary shopping list for the next six months. Execution depends on the moods of Mr. Market.

I’ve had couple of companies on my watch list and lately few of those have dropped down to really tempting levels. I was considering adding on to existing positions on DE and AFL but in the name of diversification decided to pull the trigger on Lockheed Martin Company. Defense sector was missing from my portfolio and when it comes to defense, LMT can deliver. I wouldn’t call it exceptionally cheap but today’s slight drop was enough for me and I bought 9 shares for 163,10 USD per share as an initial position.

Forward P/E is below 14, current yield is about 3.2o% and payout ratio about 61%. Fits very nicely to my current strategy.

Links: http://finance.yahoo.com/q?s=LMT

In attempt to streamline my current portfolio I decided to sell all the exchange traded funds I had. The position on those was not significant to begin with and I feel that limited set of dividend oriented stocks is the way to go for now. For this operation I didn’t inject new money but reallocated the funds received.

First I opened a new position on Deere & Co and bought 20 shares for 87,33 USD per share. This was high on my watch list and this reallocation allowed me to open this position sooner than expected. DE seems fairly valued as the P/E is around 10 and it yields about 2.60.

Rest of the money went to strengthen an existing position on Realty Income Corporation. The key factor here was the need to focus on the short term income due to tax reasons as described before so I bought 25 shares for 44,78 USD per share.

Links:  http://seekingalpha.com/symbol/DE, http://seekingalpha.com/symbol/O

Current watch list: LMT and weapons & defense sector in general, OHI (REIT, exposure to the healthcare sector), AFL (reasonably priced company and position I plan to add on)

JNJ dropped a bit after posting their latest earnings report. The report itself was actually positive so I decided to use this rare opportunity to add on existing position and bought 15 shares for 100,73 USD per share. This will add 42 USD to my annual income as dividends before taxes. No specific reasoning was needed for this purchase as this is one of the best companies in the world to own a piece of. Personally I wouldn’t consider this price as super cheap but it is acceptable in the current market. I’ll consider adding on this position again in 98-101 USD range but I’m certainly going to invest as much as possible if it drops below 95 USD.

Current watch list: DE (new), AFL (existing), JNJ (existing), LMT (new but a bit far fetched at the moment)

Links: http://www.investor.jnj.com/divhistory.cfm, http://seekingalpha.com/symbol/JNJ

As much as I dislike buying something when everyone else is buying exactly the same thing, I decided to hop on to the bandwagon and bought 20 shares of Baxter International Inc. for 73,96 USD per share. All the relevant information can be found from the link below. It’s quite obvious that the expected spin-off for 2015 is the key thing here for most of the DGI investors who have had their eyes on this lately.

Recent buy analysis by dividendmatra.com: http://www.dividendmantra.com/2014/06/recent-buy-7/

Realty Income Corporation does not really fill the primary criteria I have for passive income stock but there’s another factor that has slight impact on the applied strategy. Due to tax reasons I’ve been forced to maximize the short term dividend income instead of focusing solely on the long term potential to raise the dividend. Therefore I decided to add on the position I opened last month and bough 20 shares for 43,73 USD per share.

I also opened a new position on Aflac Inc. which seems to be one of the few reasonably priced stocks out there. It also allows me to open a position on insurance sector  and provides exposure to the Japanese market. Dividend aristocrat, P/E below 10, low payout ratio and current value well below the 52 week average are properties that do fill the primary criteria I’ve set for a passive income stock. Bought 30 stocks for 61.50 USD per share. This is position I plan to add on in the coming months.

Links:

Tax reasons (only in Finnish): http://www.nordnetblogi.fi/tulo-ulkomailta-syo-verovahennyksen/03/04/2013/

Realty Income Corporation: https://finance.yahoo.com/q?s=O

Aflac Incorporated: https://finance.yahoo.com/q?s=AFL

There are few holes in my current portfolio. I didn’t have any direct exposure to realty, banking/insurance or technology but in the current market situation it’s really hard to to find any strong candidates to fill such holes. After  some consideration I decided to open a very modest position on Realty Income Corporation (O). I still have a bit mixed feeling of the company but it has some positive attributes but the most obvious one is the monthly dividend of 0.18USD per share.

Summary: bought 20 shares of Realty Income Corp. for 41,90 USD per share. Current dividend being 0.18 USD per share per month, this will increase my quarterly dividends by 10,95 USD before taxes.

Links: http://www.nasdaq.com/symbol/o/dividend-history, http://www.realtyincome.com

Valuations in general are very challenging so it wasn’t that easy to pick the stock for this month’s purchase. However after some consideration I decided to add on an existing position on AT&T (T) which seems like a reasonably safe bet. Dividend aristocrat with P/E below 10 and dividend yield close to 6% (with acceptable payout ratio) seems like a no brainer. On the downside I don’t expect to see significant increases in dividends even in the distant future. What I do expect is 0.01 USD increases annually which is fine considering the current dividend. This purchase maximizes the short term development of the quarterly dividends which eventually will be invested in companies with greater dividend increase potential.

Summary: bought 30 shares of AT&T for 33,90 USD per share. Current dividend being 0.46 USD per share, this will increase my quarterly dividends by 13,80 USD before taxes.

Links:  http://www.att.com/gen/investor-relations?pid=5675, http://finance.yahoo.com/q?s=T