All About Interest

One man's journey to financial independence.

Weekly Purchases – 05/20/14

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I’m reporting my automatic purchases for this week:

I Bought:

$200 of TGT (Target)
$150 of ESV (Ensco)
$250 of KMI (Kinder Morgan)

I used $600 in new capital and added $27.81/year to my dividend income.  This is an average yield of  4.3%.

Note:

Target is still below my cost basis and near a 52-week low.  I plan to build up to at least a $10k valued position in the company in the short term as long as I can keep averaging down.  I ended up closing out a put I had sold yesterday that I’ll also mention soon.

I continue to average down on shares of ESV and am targeting a 300 share position as long as prices stay depressed.

KMI is another company I think could be undervalued.  There’s several ways to invest in Kinder Morgan but my money is going where the owner, Richard Kinder, is investing, in KMI.  They also have preferential tax treatment.

Picture:

Just for some fun and to add some color I will be posting pictures of places I’ve been to.  It’s also motivation to reach FI so I can travel and do what I want to when I want to.

This is a picture from Salzburg, Austria from a trip I took in 2012.  My next trip planned is to Hawaii in July.

Comments

    • Hi DivHut,

      I know the reasons why people aren’t fans of TGT right now. I think all of the negatives are already baked into the price and I’m confident they will do fine in the long-term. I’m curious what you don’t like about KMI? My only problem is that all three of these companies are currently overweight. While I know it will average out of time, I need to start adding to other positions.

      Thanks for stopping by!

      • I just don’t like high payout ratios for the dividends. I know REITS and MLP’s have different corporate structures but looking at how KMI’s payout ratio has grown from 89% to in 2011 – 2012 to 139% for the trailing twelve months makes me wonder about future dividend increases.
        DivHut recently posted…My String Cheese Just Got DownsizedMy Profile

  2. Target looks like a good value right now but I am still very concerned with the place. Canadian operations need a major revamp. I went there yesterday and the place was empty. More employees than shoppers by like 5 to 1. Still bare shelves and very inefficient cashiers. There self checkout was not working and only one till open in the whole store and I still had to wait 10 minutes because Of items not scanning properly. Talk about a clusterfuck for Target in Canada. My same story echoes with all the targets in Canada. Very concerning. I wouldnt invest in TGT until they turn things around up here. Right now Walmart is crushing it up here as they did it right!
    Asset-Grinder recently posted…GIVE AWAY and New buys May 21 = Buy $TD $AFL $CVX and Sell $GMEMy Profile

    • Hi Asset-Grinder,

      Thanks for the first-hand perspective. I appreciate that. The stores where I live are always busy and full of shoppers in TX. I’m just hoping with new management that the Canadian stores will eventually mirror the US stores. It will take time but I believe it will happen. It sounds like TGT has a lot of work to do though.

      Thanks for the information!

    • FFJ,

      Thanks, that’s one thing I like about the weekly purchases. I get to watch my future income stream keep going up on a weekly basis.

      Congrats on grabbing what I believe to be an undervalued driller and a retailer that I think will weather this storm of bad news. TGT has a long history of paying dividends.

      Thanks for stopping by!

  4. I like your purchases on TGT and KMI. I do not know ESV but take a look at it. It may be a good addition to my watch list.

    What are you planning to do once you reach your target allocation? I wonder as I have a target stocks and allocation I want to own at some point, but not a dollar or shares amount and I am equally investing in them based on that allocation. You seem to have a definitive number you want to reach.
    Martin recently posted…Inflation or risk of deflation? No, hyperinflation, but hidden.My Profile

    • Hi Martin,

      Thanks! ESV looks good for selling puts also. It’s one worth researching more.

      I have short-term and end goals. My short-term for stocks like TGT would be about 10k. My end target for is 40 stocks that produce 60k in dividends. That requires around a portfolio size of 1.6m. I have a ways to go. I’m watching my weights a little bit as I go but don’t mind going temporarily overweight in one company since I know I still have to build the rest of my portfolio up. Eventually these weights should even out more. That’s why I’m not too concerned with weights up to almost 5% right now.

      Thanks for stopping by!

    • MDP,

      ESV will be approaching 5% of my portfolio soon. The weight is much higher if you look at just dividend weight. My total energy sector weight is about 22% which is probably a little high. I realize I have a long ways to go though and I don’t mind going a little overweight into a company or sector I view as a good value. I’ll worry more about balancing later on.

      I also plan on buying pieces of other companies that have a lower weight. I’m also thinking of adding a new company, possibly PG or UL soon.

      Take care!

  6. I’m building positions in all three companies. My largest holding is KMI…bought both ESV and Target this week with plans to buy more… Gotta love that 6% yield

    • MrStockFox,

      Nice job! Those are some great companies for yield and growth. I love the pipelines and the tolls that KMI charges to move liquids through it. It seems like a great business. ESV just seems undervalued on a lot of metrics but will stay beaten down as long as the rest of the drillers do. I have a hard time not to keep adding to my position at these prices. TGT will be back and I think these prices will look great in 5 years. u

      Cheers!

  7. I am not familiar at all with ESV and I never really looked at KMI since the dividends are below a 20 year dividend increase.

    I like TGT been buying that myself recently. I like that it has been depressed recently since this is a decade+ hold. I started buying when the market didn’t like the expansion plans into Canada.
    Evan recently posted…Making a Financial Confession to All the ReadersMy Profile

    • Evan,

      ESV and KMI don’t have long histories of dividend increases. They would definitely be considered riskier than an investment in TGT. That’s also why they are yielding a lot more. I’m ok taking on a little bit of risk if I can understand the company and the fundamentals make sense. I’m with you though on Target, I will slowly add a few more shares to average down here and there. I don’t think it will but if it drops another 10 points I might have to back up the truck 🙂

      Thanks for stopping by!

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