Tuesday, September 3, 2019

August 2019 Dividend Stock Purchases

While the past few months had been quiet on the capital deployment front for the past few months heading into August, that changed majorly because of two factors. First, I felt like I wanted to reward myself for having recently finished undergrad (and what better way to do so than by purchasing ownership in fantastic businesses that will pay me for many years to come?). And secondly, although I do still have to save up to purchase a car and I have a couple other expenses to prepare for, I did have a bit of flexibility with capital deployment for the month.

With that said, we'll take a look at how I deployed over $500 in capital in August (aside from the $231.80 in net retirement contributions) to begin my new series on my purchases each month.

As illustrated above, I started off August like how I start off many months. I was simply deploying capital I had amassed from dividends received by purchasing another unit of Energy Transfer (ET) for $14.25 in my Robinhood account.

As detailed in my most recent Seeking Alpha article on Energy Transfer a few weeks ago, I believe this company is rather mispriced given its strong operating fundamentals.

At a basic level, the concerns over an escalation in the US-China trade war and the 5 year bear market in the midstream sector, along with the industry wide concern of pipeline projects being halted by environmental activists have left Energy Transfer's unit price absurdly low.

This purchase of Energy Transfer added $1.22 in annual distributions. The yield on this purchase was 8.56%.

I then initiated a position in GEO Group (GEO) in my Webull brokerage account. I initially purchased 8 shares of the company for $17.96 a share and I added 3 shares to my Robinhood account.

Like Energy Transfer, GEO Group is also grossly mispriced in my opinion. I recently highlighted my decision to initiate a position in the company for those that would like a more comprehensive explanation on why I added GEO Group to my portfolio.

In spite of GEO Group's relatively strong operating fundamentals, my cost basis on GEO Group of $17.77 a share means that the price to AFFO that I paid for my position in GEO Group is 6.56 using the midpoint AFFO figure for 2019 of $2.71 a share.

GEO Group has been beaten down due in large part because its balance sheet is a bit lacking (although it isn't terrible per se), and that there are also political concerns, such as the uncertainty of funding from its revolving credit facilities beyond 2024, not to mention the risk that the 2020 elections are perceived to bring into the mix.

These purchases of GEO Group added $21.12 in annual dividends. The yield on my purchases to date is 10.8%.

Another position that I decided to add to just a few days ago was Prudential Financial (PRU). While I technically have a fractional share of Prudential in my M1 Finance account, this purchase marked the first purchase of whole shares in Prudential.

Since I wrote about the company on Seeking Alpha back in May, the stock price has plunged from $101 a share to a touch above $80 a share as I write this post on the last day of August.

For context, that is barely above its absolute bargain price of $75 a share when the market experienced a meltdown last December, culminating in a precipitous Christmas Eve sell off.

When we consider that Prudential is likely to generate at least $12 in EPS during this fiscal year, that implies that Prudential is trading at less than 7 times EPS using my cost basis of $77.98 a share.

While falling interest rates certainly aren't a boon to Prudential's business and the threat of a recession in another year or two isn't encouraging either, the company is priced quite attractively over the long-term.

The long-term value proposition has shifted dramatically from the time that I wrote about Prudential in May to now so much that I envision writing about Prudential once again in the near future.

The 3 shares of Prudential that I added to my portfolio will add $12.00 in annual dividends at an entry yield of 5.13%.

Finally, I added to my position in Altria Group (MO) following the announcement of its 5% dividend increase in the week prior.

The company is trading at a highly compelling valuation and the past week of rumors and now news that Altria and Philip Morris International (PM) are considering reuniting since they split 11 years ago has sent both stocks plunging.

While I think that the merger could be great for both in a number of ways (i.e. PM's expertise in operating in international markets and the ability for both companies to reduce redundancies within their operations), I believe that Altria is priced for favorable results regardless of whether the merger actually occurs.

At my purchase price of $44.25 a share, Altria is yielding 7.59%. With a yield that high, it simply doesn't take much for Altria to prove itself as a great investment over the long-term.

The 2 shares of Altria that I added to my portfolio will add $6.72 in annual dividends.


I was debating starting a series summarizing my monthly purchases due to the fact that outside of this month, I won't be able to make any meaningful fresh capital contributions until early next year, once my car is funded and I have a 3 month emergency fund.

However, I came to the realization that over the past two years that I have been investing, my account has slowly been built up outside of a couple of $1,000+ buying sprees spread out over a number of stocks.

I see this as a great opportunity to encourage other newcomers to DGI that this strategy produces results for everyone. It just takes time for those results to amount to a life changing passive income.

I have also been curious to track how much my annual dividends grow from month to month as I have never actually tracked that figure.

In summary, the $41.06 in dividend income that I have added through purchases in my taxable accounts and the $8.29 in dividends that I have added through contributions to my retirement account have increased my annual dividend income from roughly the $600 mark to $649.56.

I'm very much looking forward to building upon these results and despite the lack of capital available for the rest of the year, I am confident I'll be able to end 2019 with $700+ in forward annual dividends.


Have you initiated any new positions lately? What positioned have you recently expanded? Was August as great of a month on the capital deployment front for you as it was for me?

As always, I thank each and every one of you for reading. I look forward to replying to any comments that you may have.


  1. Great job continuing to invest in companies that you believe are undervalued. I added some more Altria in late August myself and went on a bit of a buying spree picking up some other companies too. I'll have to check out ET and PRU for sure with those juicy yields.

  2. PIP,

    Thanks for the comment. Congrats on adding to your MO position. The company undoubtedly faces it share of risks but I'm quite confident they'll be able to navigate risks as they have for 50+ years now.

  3. Kody - Compliments on your analysis of PRU. One of the best analyses I have ever seen in terms of JUDGMENT which is what it is all about. I have been investing for 40 years (I follow Ben Graham value investing principles). So I read some of your other comments - we are very like minded. I made a fortune investing. Maybe we should chat for 5 minutes? dorit@doritlaw.com

  4. Attorney Dorit,

    Thank you very much for the high praise. It would be a privilege to contact you and I'll get in touch with you in the next week or so.