Black Friday Oil Blowout!

Happy Thanksgiving everyone!  I hope you had a great time with your friends/family or whatever ritual you follow for the holidays! My ritual involves spending a week with my family and using the computer as little as possible.

After a relatively peaceful week, I turned my attention to the OPEC meeting that was occurring over the last few days.  I was waiting to see what the decision was regarding whether or not they were going to cut production.  There is quite the oil glut on the markets right now.   I didn’t really expect any cut because of the pressure that Saudi Arabia wants to put on the US drillers in Texas and North Dakota.   Plus, the other OPEC members that want a cut in production Saudi (the biggest producer) doesn’t like.  So, what happened?  As expected, the production of oil didn’t change and the price of WTI crude fell.

Sure enough, there was plenty of blood in the streets.

Black Friday Purchases

Company Shares Income!
BBL 25 62
BP 25 60
COP 20 58.4
CVX 10 42.80
XOM 11 30.36

I added to all of my oil positions besides KMI.  I was somewhat disappointed that it didn’t take as big a hit as the other companies, but there is plenty of time.  I used funds that have been left over from purchasing my house.  I could have bought more, however I plan on using that cash to buy on dips and for any house emergencies that occur.  I will slowly deploy all that capital as the cash in my house fund grows from my paychecks.

Additionally, my biweekly purchase of $200 occurred in my Loyal3 account on Wednesday.  I purchased 4.08 shares of Unilever.  This added approximately 6.6 to my income.

Over the last week I added $260.15 to my 12 month forward income, which now stands at $4884.15.

Conclusion

Was today the best day to buy oil stocks?  Could macro factors make a better price tomorrow? Yes and Yes, but there is no time like the present.    The price of oil does affect how profitable these companies are, but all of the companies I bought have been around when oil prices were low.  I do not expect the price of oil to destroy or adversely hinder any of the above.  Today was a great buying opportunity and I took advantage of it.

Did anyone increase ownership stake in an oil companies?

Disclaimer: BBL, BP, COP, CVX, KMI, UL, XOM

Recent Buys

The market and my activity have been rather quiet during the month so far.  Loyal 3 recently announced that they will no longer accept credit cards, this news is less than a week old and spread like wildfire.  I am sure you have probably read about it somewhere else!  Not to worry though.  They remain cost free at the moment and you are able to transfer money to and from a checking account to them.

I have continued to invest 100 per week into the account and will try to do so for the remainder of the year.   I have focused my buys for the month on two stocks UL and MAT.  I have added 150 (including this weeks) to those positions.  These new investments will add around 14 to my dividend income for the year.

A new company joins the family!

I have been looking to add additional diversification to my portfolio for a while.  My current portfolio has a significant amount of Consumer Cyclical/Defensive and Energy.  These make up the largest by both sector and dividends.  I have been doing research (when able) on trying to find some good companies in the Basic Materials and Financial sectors.  My allocation was further skewed by the steep drop in oil companies and my subsequent additional share pickups of (BP, CVX and XOM), while being only slightly offset by a purchase of AFL.

Sector Breakdown

Dividends by Sector

After doing my research and finding another company that sold of sharply recently, I decided to pull the trigger and add a half size position of BBL.  I bought 30 shares at about 54 and that will add ~74 dollars to my 12 month dividend income.   BBL adds the diversification that I need in a variety of Basic Materials and geography.  They are planning on spinning off some of their mine assets, but I like the business with or without those assets.  This will make a great addition to my portfolio and will join APD in the Basic Materials sector.

After these purchases my income is now at $4650.10 for the next twelve months.  I am continuing to march steadily upward.

Conclusion

The market is providing some good chances to deploy capital and in a few days I will have enough to potentially make another purchase by the end of the month.  All is rather quiet right now and I am trying to decide what my next addition will be.  A few compelling opportunities right now are EMR (recent raise of 9.3%),  BBL and BP.  I have also been looking at T. Row Price and like what I see there.  A very solid company with a long dividend history.

Disclaimer: Long EMR, BBL, BP, UL, MAT, AFL

Loyal3 Purchase: Target

Late last week I initiated a transaction for TGT in my Loyal3 account.   When you use a credit card (or a portion of the transaction goes on a card) it takes approximately 2 business days for the transaction to complete.  I had collected about $21 dollars in dividends and used another 29 from my budget for this transaction.  The purchase executed the following:

.8740 shares @ $57.21 adds ~$1.82 for the year

This purchase still leaves my portfolio with plenty of room for additional shares of TGT, which I may buy a larger stake soon depending on the availability/valuation of other dividend stocks.

TGT has had an interesting year.   TGT continues to have fallout from the customer data breach of last year.   This is the sad reality of the ever changing technology landscape.  Coming from a software background, the frequency of these events doesn’t surprise me and on a number of occasions my credit card has been stolen.   Fortunately, I have an aggressive bank that “knows me” well enough to stop those charges.  TGT is taking the event seriously and rolling out a series of changes that I feel will help mitigate future issues.  They have since hired Brad Maiorino to serve as the Chief Information Security Officer.

Oh Canada! TGT has struggled in Canada.  Have you seen those pictures of TGT stores with empty shelves? Google away if you haven’t.  Since that escapade, TGT has axed the leader of their Canadian operations.  I am not surprised that they struggled in Canada, WMT did too.  It does boggle me a bit that they didn’t learn from WMT’s mistakes.  As long as Target realizes that “Canadians are not Americans”, they should get on the right track.

The latest news is a massive dividend increase of 20.9%.  This raises the current yield to about 3.6% with $2.08 paid out yearly.  This was very surprising, I had expected a smaller dividend increase than the previous years given the preceding events.  I do like this move, it tells me that they are serious about the dividend and that it remains a priority.

Depending on the moves of the market, I may continue to add to TGT or one of the other positions that I currently hold in the Loyal3 account.

Thanks for reading!

Disclaimer: Long WMT,TGT

Loyal3 Purchase: TGT, MAT, MCD, UL

The house is moving right along.  I had a few extra dollars from the budget and so I decided to use it to add to a few of my existing positions in my Loyal3 account.

Changes to purchases

Recently Loyal3 changed how you can buy with a credit card.  You are able to buy up to 2500 dollars of an individual company per month.  Now, the total amount is the same, but if you use a credit card you can only buy in 10, 25 or 50 dollar lots.  I’m guessing people were taking advantage of the credit card rewards of several percent and then selling the stock quickly.  This would increase the transaction cost to Loyal3 and goes against the purpose of the brokerage.  They want to foster long term ownership and brand loyalty.

I added $25 to…

Mattel (MAT):  .6447 @ 38.77 (Executed on May 19)

Unilever (UL):  .5453 @ 45.84 (Executed on May 19) – I had erroneously stated that my only exposure to products of consumer goods was PG.  UL is one of my positions that I forget I have, along with EMR and LEG.

McDonalds (MCD): .2445 @ 102.22 (Executed on May 19)

Target (TGT): .4403 @ 56.77 (Executed on May 21)

I actually goofed and used my bank account for the TGT transaction, which takes longer to execute. In this case it benefited me because TGT had a reasonable drop from May 19 to 21.

Goal going forward

I am planning on trying to use 100 dollars each month from my budget to add to my Loyal3 positions.  I feel like this is possible and probably not much of a stretch goal.  I will probably not worry too much about portfolio weight, value or dividend yield when picking among my positions in the account.  The 100 dollars will be split anywhere from 1-4 companies.

I had added the goal to my goal pages and will update my positions page to reflect the new shares at the beginning of June.

Disclaimer: Long EMR, LEG, MAT, MCD, PG, TGT, UL

 

Loyal3 Purchase: DPS and TGT

After doing the most research per dollar invested ever (Round 1 and Round 2) the results are in!  Today I executed a trade in Loyal3 for both DPS and TGT.

I have been paid 55.31 in dividends for the first quarter and part of April.  The bulk of the dividends in this account will come in March, June, September and December.  With a few (KO,DPS) coming at the beginning of the following month.  Unless I add additional funds to the account, I will probably post only a few times per year after the dividends have been paid.

Making the trade

Loyal3 makes it very easy to purchase additional shares of a company (including fractional). On Sunday I logged into my account and placed the trades:

  • TGT : $27
  • DPS : $28

You are unable to use any cents when making a purchase with available funds.  However, if I had made a purchase with a credit card, then all available funds would be used prior to charging the card. That means that if I placed a single trade for $60, then $55.31 would be used from the Loyal3 account and $4.69 would be charged to my credit card.

Recently, Loyal3 made a change that would allow same day trades if using available funds and the trade was placed before 2pm eastern time.  When using a bank account or credit card, it takes about 2-3 business days before execution.  This is not really a problem, the market doesn’t usually change that much over a few days.

The lag time between placing a trade and execution can be frustrating.  I like my trades to happen instantly!  Half the time you will get it for a better price than your limit order with a specific price, but what’s a few pennies in the long run anyway?

The Purchase

After the trade executed, I purchased the following:

  • TGT : 0.4546 shares @ 59.39 (+$0.78)
  • DPS : 0.5451 shares @ 51.37 (+$0.89)

Raising my income by a total of $1.67 per year.

Conclusion

This has been a valuable exercise for my investing career.  I filtered a watch list, analyzed each security and chose the two that I felt provide the best value at the time.  I currently have 12 positions in the account and probably will not look outside these twelve in the future.  There are a few positions I added to the watch list, but none of those are that close to getting a spot in my portfolio.

Thank you for reading!

Disclaimer: Long DPS, KO, TGT.  My holdings are visible in the Portfolio tab.